Mitigating environmental risks in small-scale activities: what role for microfinance? A case study from El Salvador

Marion Allet

No 12-021, Working Papers CEB from ULB -- Universite Libre de Bruxelles

Abstract: Small-scale activities in developing countries face environmental risks that represent direct threats to populations’ health and livelihoods. Recently, some donors and experts have claimed that microfinance institutions (MFIs) could play a role in fostering pro-environmental behaviours among their client microentrepreneurs. This paper seeks to identify the challenges that an MFI can face when implementing an environmental risk management program. We based our analysis on a case study of a pilot program in El Salvador, where we conducted 95 semi-structured interviews with microfinance clients, loan officers and managers. Our study first revealed that, despite a real interest from its staff, the MFI had some difficulties in building internal skills and conciliating its environmental and performance objectives, which compromised the effective implementation of the program. Furthermore, we identified that the pilot program, as it was designed, did not sufficiently take into account the psychological and economic barriers to behaviour change. Finally, we found that the effort of the microfinance institution was in some cases countered by external factors out of its reach, such as inadequate national regulations.

Keywords: Microfinance; Microenterprises; Small Enterprises; Environmental Behaviour; Behaviour Change; Environmental Management; Environmental Risks; Pollution (search for similar items in EconPapers)
JEL-codes: D30 G21 O17 Q53 Q56 (search for similar items in EconPapers)
Pages: 26 p.
Date: 2012-07
New Economics Papers: this item is included in nep-ene, nep-env and nep-mfd
References: View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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