Green Microfinance and Ecosystem Services: A Quantitative Study on Outcomes and Effectiveness

Date Published: 
Mar 2016
Forcella, D. & Huybrechs, F.

Assessment of a large-scale green microfinance program for biodiversity conversation in Nicaragua

There has been growing interest lately in the role of microfinance to support environmental management of microenterprises and poor households. Worldwide, the number of green microfinance projects increases, yet there seems to be little discussion on how effective green microfinance is in achieving its environmental goals.

This paper aims to position itself in this debate. It looks at the first large-scale green microfinance program for biodiversity conservation: Proyecto CAMBio, which consists of a combination of credits, technical assistance and conditional payments for environmentally friendly agricultural activities (PES). It focuses on its implementation in Nicaragua by the microfinance institution FDL and the NGO Nitlapan. 

The paper performs an in-depth econometric analysis of a survey conducted on a sample of 128 rural producers. It then assesses the clients’ characteristics that influenced the evolution of the environmental value of their farm - as defined by the indicators used - on a span of five years, as well as assesses Proyecto CAMBio’s possible role in this evolution. Moreover, the paper further looks into the effectiveness of PES in rewarding environmental betterment.