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Microfinance and ecosystems conservation How green microfinance interacts with Socio- Ecological systems Lessons from Proyecto CAMBio in Nicaragua and Guatemala

Davide Forcella and Guja Lucheschi

No 16-008, Working Papers CEB from ULB -- Universite Libre de Bruxelles

Abstract: Environmental degradation is the result of complex human-environment dynamics, often sustained by socio-economic inequalities. Recently microfinance has been proposed to be an interesting tool to support environmental protection strategies that aim at once to foster rural development and promote ecosystems conservation or adaptation to climate change. In this paper we provide one of the first analysis of the link between microfinance and ecosystems conservation. We base our analysis on the assessment of the first large-scale microfinance programme for biodiversity conservation: Proyecto CAMBio. Our empirical analysis exploits a unique set of secondary and primary data collected by the authors in Nicaragua and Guatemala. We introduce a theoretical framework and a practical methodology to assess such programme, and we apply it to our case studies. Even if with different peculiarities, the two cases studied show that microfinance for ecosystems conservation has good potentialities to introduce environmental elements in the rural activities of small farmers and in the products provided by microfinance institutions, and it is an interesting path to pursue. However, they also underline that choices and actions of rural households and local financial intermediary institutions are strongly influenced by habits and local dominant development pathways, which are among the main causes of socio-economic inequalities and environmental degradation. Green Microfinance per se does not seem to be able to revert such dangerous dynamics while, interacting with them without a proactive strategy, it risks to have no effect or eventually support the causes of environmental degradation. We then call for a renewed proactive role of green microfinance for ecosystems that, articulating with local actors and territorial dynamics, should aim not only at providing a green product to individual farmers, but instead support new alliances and collective, socially informed, actions to redirect the habits that support environmental degradation towards environmentally friendly and socioeconomic inclusive rural development.

Keywords: Microfinance; Green Microfinance; Rural Development; Payments for Environmental Services; Agricultural microfinance; Central America; Proyecto CAMBio (search for similar items in EconPapers)
JEL-codes: G21 O13 O15 Q01 Q12 Q14 Q15 Q23 Q57 (search for similar items in EconPapers)
Pages: 49 p.
Date: 2016-01-21
New Economics Papers: this item is included in nep-agr, nep-env, nep-mfd and nep-pay
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Handle: RePEc:sol:wpaper:2013/224879