Case study

The Role of Microfinance in Environmental Projects: A Case Study

Examining the feasibility of microfinance as an incentive for forest owners to reduce deforestation
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This case study examines the feasibility of providing microfinance to farmers and forest owners to encourage them to participate in the Reducing Emissions from Deforestation and Forest Degradation (REDD+) project. REDD+ uses market and financial incentives to discourage forest degradation and deforestation. The Wildlife Conservation Society approached Silver Upholders, a microfinance company in Kampala, to provide financial services in this project. Silver Upholders was eager to identify the possibilities and challenges their involvement in the project would encounter. A research trip to the project area and meetings with involved parties identified varying perceptions and possibilities as to the roles microfinance could have in the project. But the REDD+ project is currently stalled waiting for approval by the Ugandan government. Conclusions include:

  • Large amount of capital is required to provide services and financial products that would really benefit private forest owners, farmers, communities, and the project overall;
  • Silver Upholders has a high cash flow and cannot afford to finance these products and services alone;
  • Silver Upholders cannot achieve much until the project itself is off the ground.