12 February 2010: The Organisation for Economic Co-operation and Development (OECD) has published a working paper on “Assessing the Role of Microfinance in Fostering Adaptation to Climate Change,” which focuses on delivery mechanisms to channel adaptation resources towards the poor, who are also often the most vulnerable to the impacts of climate change.
The paper offers the first empirical assessment of the linkages between microfinance-supported activities and adaptation to climate change. Specifically, the lending portfolios of the 22 leading microfinance institutions in two climate vulnerable countries – Bangladesh and Nepal – are analyzed to assess the synergies and potential conflicts between microfinance and adaptation. The paper 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. [The Working Paper]