Rural Microfinance and Climate Change: Geographical Credits Allocation and Vulnerability. An Analysis of Agroamigo in Brazil’s Northeastern States

Davide Forcella, Rafael Moser and Lauro Emilio Gonzales Farias

No 16-011, Working Papers CEB from ULB -- Universite Libre de Bruxelles

Abstract: In this paper we discuss the climate change (CC) vulnerability for rural microfinance. In particular, we seek to assess how the geographical allocation of services influences the vulnerability of microfinance institutions and clients to climate change impacts. As case study we analyse the biggest rural microfinance programme in Brazil: AgroAmigo, that operates in a particularly drought vulnerable area, i.e. the Northeastern region. Accordingly, we implement a correlation analysis between Agroamigo’s geographical credit allocation and local climate change vulnerabilities. The paper shows that the geographical distribution of services increases the climate change vulnerability of the microfinance institution’s (MFI) portfolio, whilst not necessarily offsetting CC vulnerability of clients because fewer credit amounts per person is allocated to the most vulnerable regions. Such results call for a better understanding of the climate change risk and the introduction of tailored strategies for microfinance programmes that could, at once, provide more adapted services to the most vulnerable population while aid manage and/or mitigate potential climatic risks of MFI’s portfolio, in particular those operating in hazard prone areas.

Keywords: Climate Change Adaptation; Climate Change Vulnerability; Geographical Credits Allocation; Agricultural Microfinance; Rural Microfinance; Green Microfinance; Climatic Risk; Credit Risk; Brazil; Agroamigo (search for similar items in EconPapers)
JEL-codes: G21 O13 Q14 Q54 (search for similar items in EconPapers)
Pages: 28 p.
Date: 2016-01-27
New Economics Papers: this item is included in nep-env and nep-mfd
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Citations: View citations in EconPapers (1)

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