The conventional path to economic development is through the use of fossil fuels and the associated negative environmental impact. One alternative to encourage actual sustainable development is green microfinance, using small loans for environmentally beneficial or neutral business enterprises. Unlike traditional micro loans, conditions or incentives placed are placed on the loan condition to encourage the sustainable use of resources.
Although the concept of green microfinance can be widely defined, the GreenMicrofinance Center, a non-profit, is the leading organization that embodies the ideals of addressing climate change and environmental justice through action and education. They represent a unique form of capitalism that actually solves the problems that unchecked enterprise often creates.
One of the biggest challenges facing poor economic areas is that although residents are highly dependent upon the land for survival individuals often sacrifice long-term sustainable practices for short-term gain on loans. In essence, the short-term gain of the individual is emphasized over the long-term gain of multiple generations of the community. For example, trees are often cut down, either for sale or for agricultural pursuits, poor soil management is practiced, and often areas are subject to overfishing.
Some of the most common conditions placed on green microfinance loans are the use of green agricultural techniques, sustainable water practices, the use of renewable resources, and carbon credits.
The Permaculture Credit Union is another organization that makes modest loans to individuals who need financing for a green Permaculture effort, such as a water harvesting tank for your home, a sustainable business or even a small loan to take a Permaculture class from one of the world’s accredited instructors.
Some green micro-loans simply encourage the use of some sustainable environmental practices even if the primary business is not eco-friendly; for example, a borrower may be required to plant trees to help prevent soil erosion or ensure that discharged water is not contaminated with pollution.
Other green microloans are solely intended for green economic development. These may include the development and installation of green technologies such as solar ovens, solar water pumps, biofuels, and sustainable agricultural practices.
The success of small green microloans for individual energy options are dependent on the loan being used for items that are less expensive than traditional sources of energy and technology. While items like solar cookers and biogas stoves are relatively cheap, electrical solar power systems can be quite expensive, surpassing the typical “micro” loan size and can only enter the microfinance market if they are subsidized or the technology becomes less expensive than it is today.
For more information regarding this topic and how you could qualify for a green microloan visit:
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