Assessing the role of microfinance in fostering adaptation to climate change

OECD environmental working paper no. 15:

This paper offers the first empirical assessment of the linkages between microfinance-supported activities and adaptation to climate change. It assesses the synergies and potential conflicts between microfinance and adaptation using the lending portfolios of the 22 leading microfinance institutions in two climate vulnerable countries – Bangladesh and Nepal. It identifies areas of opportunity where microfinance could be harnessed to play a greater role in fostering adaptation, as well as its limitations in this context. It also explores the relationship between the top-down macro-financing for adaptation through international financial mechanisms and bottom-up activities that can be implemented through microfinance.