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

Author

Listed:
  • Davide Forcella
  • Rafael Moser
  • Lauro Emilio Gonzales Farias

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.

Suggested Citation

  • Davide Forcella & Rafael Moser & Lauro Emilio Gonzales Farias, 2016. "Rural Microfinance and Climate Change: Geographical Credits Allocation and Vulnerability. An Analysis of Agroamigo in Brazil’s Northeastern States," Working Papers CEB 16-011, ULB -- Universite Libre de Bruxelles.
  • Handle: RePEc:sol:wpaper:2013/225715
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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).
    2. Cyril F.S. Fouillet, 2009. "La construction spatiale de la microfinance en Inde," ULB Institutional Repository 2013/210254, ULB -- Universite Libre de Bruxelles.
    3. Ahlin, Christian & Lin, Jocelyn & Maio, Michael, 2011. "Where does microfinance flourish? Microfinance institution performance in macroeconomic context," Journal of Development Economics, Elsevier, vol. 95(2), pages 105-120, July.
    4. Shardul Agrawala & Maëlis Carraro, 2010. "Assessing the Role of Microfinance in Fostering Adaptation to Climate Change," Working Papers 2010.82, Fondazione Eni Enrico Mattei.
    5. Annabel Vanroose & Bert D’Espallier, 2013. "Do microfinance institutions accomplish their mission? Evidence from the relationship between traditional financial sector development and microfinance institutions’ outreach and performance," Applied Economics, Taylor & Francis Journals, vol. 45(15), pages 1965-1982, May.
    6. Hiedanpã„Ä, Juha & Bromley, Daniel W., 2014. "Payments for ecosystem services: durable habits, dubious nudges, and doubtful efficacy," Journal of Institutional Economics, Cambridge University Press, vol. 10(2), pages 175-195, June.
    7. Navajas, Sergio & Schreiner, Mark & Meyer, Richard L. & Gonzalez-vega, Claudio & Rodriguez-meza, Jorge, 2000. "Microcredit and the Poorest of the Poor: Theory and Evidence from Bolivia," World Development, Elsevier, vol. 28(2), pages 333-346, February.
    8. Annabel Vanroose, 2014. "Factors that explain the regional expansion of microfinance institutions in Peru," Working Papers CEB 14-030, ULB -- Universite Libre de Bruxelles.
    9. Shardul Agrawala & Maëlis Carraro, 2010. "Assessing the Role of Microfinance in Fostering Adaptation to Climate Change," OECD Environment Working Papers 15, OECD Publishing.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Climate Change Adaptation; Climate Change Vulnerability; Geographical Credits Allocation; Agricultural Microfinance; Rural Microfinance; Green Microfinance; Climatic Risk; Credit Risk; Brazil; Agroamigo;

    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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