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Microfinance and climate change: threats and opportunities, the case of Brazil’s largest rural MFIs, Agroamigo and Cresol

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  • Rafael Moser
  • Davide Forcella
  • Lauro Emilio Gonzales Farias

Abstract

This paper reports a cross-case study of the interface between rural microfinance and climate change in Brazil. We use a simple theoretical framework to analyse climate change opportunities and threats of Brazil’s largest rural microfinance institutions, Agroamigo and Cresol, along three main metadimensions: economic, financial and additional services. Our analysis focuses on vulnerability and adaptation to climate change and, to a lesser extent, mitigation. As proxy for climate change effects on clients and institutions, we use the recent droughts and floods affecting some of the areas of operation of these MFIs. We argue that the absence of a combination of climate change strategies in MFIs operating in weather hazard prone regions may result in greater and additional credit risks for their portfolios and a missing opportunity for these players to support their clients better respond to climate change impacts. The case studies under scrutiny corroborate our hypothesis.

Suggested Citation

  • Rafael Moser & Davide Forcella & Lauro Emilio Gonzales Farias, 2016. "Microfinance and climate change: threats and opportunities, the case of Brazil’s largest rural MFIs, Agroamigo and Cresol," Working Papers CEB 16-010, ULB -- Universite Libre de Bruxelles.
  • Handle: RePEc:sol:wpaper:2013/225672
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    References listed on IDEAS

    as
    1. Agrawala, Shardul & Carraro, Maelis, 2010. "Assessing the Role of Microfinance in Fostering Adaptation to Climate Change," Sustainable Development Papers 92709, Fondazione Eni Enrico Mattei (FEEM).
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    4. Marion Allet, 2011. "Measuring the environmental performance of microfinance," Working Papers CEB 11-045, ULB -- Universite Libre de Bruxelles.
    5. Shardul Agrawala & Maëlis Carraro, 2010. "Assessing the Role of Microfinance in Fostering Adaptation to Climate Change," Working Papers 2010.82, Fondazione Eni Enrico Mattei.
    6. Ahmed , Syud Amer & Diffenbaugh, Noah S. & Hertel , Thomas W. & Lobell, David B. & Ramankutty, Navin & Rios, Ana R. & Rowhani, Pedram, 2009. "Climate volatility and poverty vulnerability in Tanzania," Policy Research Working Paper Series 5117, The World Bank.
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    More about this item

    Keywords

    Climate Change Adaptation; Climate Change Vulnerability; Agricultural Microfinance; Rural Microfinance; Green Microfinance; Climatic Risk; Credit Risk; Brazil; Agroamigo; Cresol;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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