In this section, we present now some new trends or innovation in the finan- cial systems that could in principle foster the ideas of commons and avoid what is thought as the “tragedy of the commons” or “drama of free access.”
Poor people in developing countries and especially if their livelihood depends on agricultural, pastoral or fish activities in a competitive market, are highly affected by local environmental degradation and climate change, which also sustains socioeconomic inequalities. Unequal access to opportu- nities way too often constraints poor people in buyer-driven value chains and consequently exposes them to food and energy price volatility.
Inequalities and environmental degradation are often interpreted in the modern economic paradigm as residual effects that can be then treated ex-post.
They are indeed often associated with the lack of financial capital, which prevents microenterprises from investing in more efficient and less polluting technologies and activities; and the lack of human capital, which con- straints poor microenterprises to old inefficient traditional practices and precludes the undertaking of more environmentally friendly or economic- ally rewarding activities.
211 Finance as a Common
In particular, environmental degradation is often seen as a market externality, because the costs and benefits related to it are not reflected in economic transactions. Green microfinance20has then emerged during the last decade, together with the shift from microcredit for poverty alleviation to inclusive finance, with the idea of combining microfinance services and technical assistance to promote the undertaking of environmentally friendly activities by smallholder farmers: such as the access to reliable, efficient, or clean energy, sustainable agricultural practices: like agroforestry, or climate change adaptation strategies.
The recent development of green microfinance, which is attracting the interests of various actors and becoming an important topic in the interna- tional scene (as can be observed by the growing amount of dedicated con- ferences, the development and implementation of specific programmes, and the increasing number of stakeholders that introduce environmental responsibility as part of their social responsibility), allows us to close our path in this chapter, that, starting with the idea of commons forming a nat- ural resources management, has then passed through the interpretation/
proposal of (micro)finance as a commons, and it ends now with a discus- sion on the environmental management of environmental good through microfinance as a common.21
To discuss threats and opportunities of the intervention of microfinance in the management of the environment we focus on the set of microfinance practices/products dedicated to promote ecosystems services. By that we mean the microfinance projects that aim to provide specialized financial and nonfinancial services to foster the development of rural environmen- tally friendly practices such as agroforestry, silvopasture, organic farming, etc. We discuss such programmes, basing our reasoning, on an explicit pro- gram: Proyecto CAMBio.22
The aim of this discussion is to show how green microfinance, which could potentially foster the development of microfinance along the princi- ples of a common (because it deals indeed with natural resources, a com- mon by excellence), could instead fail to do so if the provision of green microfinance products is made along the usual individualistic market logic of more standard microcredits. Understanding these limitations should then foster the need to dress the design and provision of green credits with the strategy and implementation of commons, inspired by the natural resources themselves which it aims to promote and preserve.
Proyecto CAMBio is the first large-scale program that incorporates microfinance, technical assistance, and Payments for Environmental Services (PES), trying to foster biodiversity conservation and environmentally
friendly land-use practices. It has been implemented in Central America, a hot spot for biodiversity, and a fundamental biological corridor between species in the North and South America, but that has undergone at the same time an important deforestation process that has put pressure on natural resources and biodiversity. The project offers microcredits to finance, among others, agroforestry activities such as coffee, cardamom, cacao, and cattle raising that integrate trees into the rural production. The PES-component seeks to reward the additional efforts towards adopting biodiversity-friendly practices such as planting more trees; technical assistance is provided to rural producers to support and monitor the implementation of the financed activities. The program ran from 2007 till 2013 in five countries in Central America: Guatemala, Honduras, El Salvador, Nicaragua, Costa Rica. It was led by the Central American Bank for Economic Integration (CABEI), the Global Environmental Facility (GEF), and the United Nations Development Program (UNDP) and implemented by 26 local financial institutions.
It is clear that the intervention of such a program in the livelihood strate- gies of smallholders inevitably interacts with the complex socioeconomic and environmental system, shaped by power relations, unequal opportunities, habits, cultural values, and local development pathways. The results of the program are hence inevitably the outcomes of such interaction with the local socioecological and economic dynamics. The result can be twofold. It could induce the community appropriation of the environment and hence its con- servation in the dynamics of commons or it could instead induce new private, monetary values on the environment, and or indirectly foster pre-existing socioeconomic unequal dynamics and environmentally dangerous develop- ment pathways that would eventually result in a tragedy of commons.
A series of studies23 with primary data collections and long-time pre- sence in the field provides a mixed picture for this program, and for micro- finance for ecosystems and green microfinance in general. If on one hand the program allowed MFIs to introduce the environment in their activities and products, and it has been observed in certain cases that MFI can suc- cessfully implement such complex programs, on the other hand the out- comes of such a program on the environment remain doubtful. Indeed it seems that credit allocation and targeting of MFIs has been done without careful consideration of the environmental aspect of the product, but mostly interpreting it as another microfinancial product. The appropriation of a program for ecosystem conservation as a financial product of an MFI pushed it inside market and economic logics, and even if able, from time to time, to provide positive environmental outcomes, it tends instead to 213 Finance as a Common
finance existing structures, among which the causes of exclusions and envir- onmental degradation. As a consequence, the additionality of the program has been quite low and the possible potential synergies that could have been developed among various actors and institutions remain quite unexploited. The different actors involved acted as almost isolated and without coordination. In certain cases it has been observed that environ- mental incentives distorted the local value of rural communities, which sometime claim a payment to preserve a natural resource that would have been previously naturally conserved without monetary incentives. In parti- cular it has been observed that the program was not able to address the causes that support socioeconomic exclusion and environmental degrada- tion, while without proactively trying to redirect environmentally danger- ous and socioeconomic exclusive pathways, in certain cases, it ends supporting them.
It is indeed clear from such an example that the financialization logic of nature, even if it could in principle push for a reappropriation of nature inside our economic transactions, instead has the risk to expel social norms and cooperative behaviors fundamental for the conservation of biodiversity and the environment. What prevails is, due to the framework under which such programs are implemented: business as usual in which the product is different but the logic and procedures are the standard ones for microcredit provision. Dedicated strategies to proactively redirect environmentally dan- gerous and socially exclusive pathways are not implemented.
Indeed a quantitative analysis24 allowed to confirm such observations and in particular to conclude that: the green microfinance program did not have a significant impact on the evolution of the ecosystem value of the farm of the rural households that participated in the program; while instead the access to credit, the development pathways of the clients, and their livelihood strategies had significant positive and negative impacts on the evolution of the environmental value of the farm. Environmental incen- tives of the program did not reward environmental betterment, but instead the capitalization of the farmers in terms of land amount and land acquisi- tion, access to credit, and certain activities.
The appropriation of the program, and its benefits by certain individual interests (of MFIs and clients) hampered the positive outcomes of such green products on communities and environment.
Indeed, even if in principle green microfinance is thought to support environmental conservation and avoid the tragedy of the nature common, it seems to have some difficulties in the achievement of this broad perspec- tive, while instead it could have some manifest opportunities in fostering
product innovation and services delivery for poor households, and provide a new public image and fundings to the MFI.
The specific example analyzed here manifests some explicit drawbacks undermining the actual potentiality for nature conservation that is worth analyzing using the lenses of commons as presented in “The Idea of Commons”. It indeed seems that the project did not develop commons (and that was probably not in the idea of the project itself) for at least two reasons: it has been mainly designed at the international cooperation level, without direct consultation of involved actors, in particular rural produ- cers; the management of the project and the internal strategy has been mainly the one used to deliver other microfinance products, avoiding in this way a management of commons and the conservation of financial flows and the environmental goods. The absence of a strategy employing the principles of the commons in the implementation of green microfinance projects for ecosystem conservation can be seen as one of the reasons that hamper the potentiality of green microfinance to avoid the tragedy of the natural environment. Indeed, based on a more standard microfinance pro- duct delivery logic, the project was not able to support reciprocity and soli- darity among the actors that could have instead reshaped some of the causes underlying local environmental degradation and the increase of socioeconomic inequalities. We believe that finance has its (potentially important) role to play in the conservation of environmental commons, but to do that it should be dressed with a new logic embracing some of the strategy of the management of commons management.
CONCLUSION
From a theoretical point of view, as we have proposed here for the example of microcredit, the idea of common can be applied to various fields (in the present case merging the natural and financial aspect). Moreover it is easier to analyze the processes of deterioration of commons in these different domains and the positive and negative externalities among the different stakeholders.
The quest for short-term financial profitability often negatively affects environmental sustainability and vice versa environmental conservation is an additional cost at short-term. However the medium- and long-term financial investments that respect the natural rhythm of reproduction of financial and environmental stock strengthen the resiliency of the activity 215 Finance as a Common
financed, the social ties, and the common well-being. However, the run for short-term profitability increases the systemic risk for the financial and environmental system.
However the present economic development based on debt, that calls for short-term return to minimize the risk (that is even more true for microcre- dit) and satisfy the quest for material wealth, shows difficulty in matching with the long-term strategy required for socioeconomic and environmental resilient investment.
Private foundations or public bodies should promote long-term responsible actions. However that sometime seems difficult too, due to the short-term legislation period and quest for short-term impact among the newcomer investors.
The difficulty to find a concrete example of the management of finance as a common, is certainly due to the relative novelty of extending the con- cept of common beyond the environmental fields.25 Moreover a clear diffi- culty is also related to the requirement of subsidies to develop such projects, while the financial sustainability and marketization are rhetorics that gradually invaded microcredit,26 meaning that the diffusion of micro- credit should not cost taxpayers, and even better that those who make wise investments in the sector should gain the profit.27
Difficulty to develop such projects thus appears fundamentally induced by the dominance of short-term approaches and the context of increasing financialization that is even more increasingly widespread in human socie- ties over the past three decades. It imposed the hegemony of the interests of groups that dominate finance that supports the destruction of the spirit of common at the heart of the currency (matter of finance) and finance itself.
The remnant of this logic goes far beyond the actual quest for short- term profit, while instead it also manifests in highly subsidized and long- term projects, as is the case for the example of green microfinance presented in “The Innovations of Green Microfinance Seen Under Common’s Lenses”: 30% subsidization, and 7 years term project. Indeed the individualistic competitive logic has entered in the common way of thinking, underlying almost all the possibility of investment and develop- ment, inducing the feeling that it is the only “working” strategy. In the case of finance for environmental goods, or more in general finance for social impacts, the stated objectives are different, while the underlying strategy is almost the same as usual finance. This struggle between aims and means threatens the social-environmental common good.
The (re) establishment of common, in terms of (micro) finance as in many others domains, opposes the mechanical interdependence to the competition
of human activities, supported by the logic of private interest in itself with- out a social objective. The (re) establishment of commons involves the recon- ciliation at the short-, medium-, and long terms, of those interests in a logic of cooperation and sharing. Moreover this process should be democratic and participative. The societalenvironmentaland monetary costs pro- duced by the present market logic should be recognized, incorporated in the market itself with the aim to go beyond the market and install a new logic and structure of value that understands that working for the common good with individual engagement of all partners is what could increase the resili- ence of the society as all both at short- and long-term and avoid excessive and immoral power and wealth accumulation.
NOTES
1. For a discussion of how the 2008 crisis affected real economy and how it could be interpreted in a historical perspective, see:Servet (2010).
2. Michel Aglietta proposes to associate a social value to the carbon avoided (VSC) and to link this principle with a complementary currency aiming to integrate the existing fundings for ecological investments. This is a double proposal: on one hand it gives a social value to the CO2avoided, aiming to foster low carbon invest- ments, on the other hand it supports circular economy thanks to the use of a local currency (Aglietta, Espagne, & Perrissin Fabert, 2015; Blanc, 2015).
3. In this chapter we use the term “common” and not the expression “com- mon good.”
This last expression indeed refers to a medieval concept of ethics limiting private property and its use by the Church’s social doctrine. The new concept of commons, used in this text, is instead based on an economic and political approach of the appropriation and management of goods and services. This framework naturally provides a critical perspective on the evolution of microcredit in the past few years.
4. Wade (2002),UNIneq (2013).
5. ByChrematisticswe mean the quest for wealth accumulation, not to satisfy any needs, but for the accumulation itself.
6. Schumacher ([1973] 1999).
7. Hall, Collins, Israel, and Wenner (2008), Schuite and Pater (2008), Allet (2014), Forcella (2012), Forcella and Hudon (2014), Servet (2011), Huybrechs, Bastiaensen, and Forcella (2015).
8. Some papers with an anthropologic, sociological, or socioeconomic approach, at the end of the nineties, raised certain doubts about the contribution of microcredit to poverty reduction (look at the references in Gue´rin, 2015, and Servet, 2015a, 2015b). However these concerns were not understood and still in 2010, major MFIs could claim about the magic role of microcredit in poverty alle- viation (see for example: ACCION International, FINCA, Grameen Foundation, Opportunity International, UNITUS, and Women’s World Banking, 2010). This 217 Finance as a Common
behavior seems more difficult now after the publication of the works ofDuvendack et al. (2011),Stewart et al. (2012), andBateman (2014). An important contribution that allowed to change the perspective is that of Banerjee, Karlan, and Zinman (2015).
9. Servet (2011).
10. Brundtland (1987).
11. Polvorosa (2015).
12. Forcella (2012),Forcella and Lucheschi (2016, January).
13. Mader (2015).
14. See: Ostrom (1990), Jean-Pierre Chanteau, Benjamin Coriat, Agne`s Labrousse and Fabienne Orsi, “Introduction,” Revue de la re´gulation [En ligne], 14|2e semestre/Autumn 2013, online the 12th December 2013, consulted the 9th Match 2015. URL:http://regulation.revues.org/10516;Coriat (2015),Dardot Laval (2015),Servet (2014, 2015a, 2015b).
15. Aglietta and Orle´an (1998),The´ret (2006).
16. Chanteau, Coriat, Labrousse, and Orsi (2013).
17. Dupre´, Longaretti, and Servet (2015),Servet and Swaton (2015) 18. Coriat (2015).
19. The “Socie´te´ d’lnvestissernenl pour la Promotion des Entreprises (SIPEM)”
in Madagascar is one of the known examples among few organizations that exclude these kind of activities from their portfolio, while an important part of MFIs finance the purchase and sale of such goods (among the most common energy source for the poor) and the activities that use it.
20. Hall et al. (2008), Schuite and Pater (2008), Allet (2014), Huybrechs et al. (2015).
21. The concept of management of commons is discussed in Section 4.
22. http://www.proyectocambio.org and http://www.universitymeetsmicrofi- nance.eu/uploads/2/5/8/2/25821214/poster_forcella.pdf.
23. Forcella (2012), Lucheschi (2014), Huybrechs, Bastiaensen, Forcella, and Van Hecken (2015a, 2015b), Verde Bastiaensen and Merlet (2015), Forcella and Huybrechs (2015),Forcella and Lucheschi (2016, January).
24. Forcella and Huybrechs (2015).
25. What we observe for the microcredit is easily extended to complementary currency. Michel and Hudon (2015). They realized a summary of literature dedi- cated to economicsocial and environmental effects of complementary currencies.
They conclude, based on the analysis of around 60 examples, that the majority of the knowledge is on the social dimension. It is worth observing that the concept of common is not discussed in this study.
26. Mader (2015),Servet (2015a, 2015b).
27. Even if quite often the public support the risk of investment while the private sector acquire the benefits. See for example the structure funds of various invest- ment funds.
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219 Finance as a Common