310
The interconnectedness of finance modalities (credit, savings, insurance) supports the different pathways towards CSA adoption. These linkages also might help
ascertain the real impact of local rural finance on CSA outcomes (see Fig. 26.2).
Common approaches for measuring the net effects of climate-smart input intensification (pathway 1) are usually based on the comparison of sites with and without
CSA credit by means of the matching of households and assessing income and yield
differences. Assessment of CSA capital investments (pathway 2) could be complemented by more dynamic analyses of household resource allocation (using bioeconomic farm household simulation models) that provide insights into the
implications of changes in the expenditure patterns for CSA investments. This could
also inform decisions on resource allocation in non/off-farm activities that result in
improved expenditures and enhanced farm-level investments in CSA practices.
Finally, changes in risk behaviour (pathway 3) can be analysed by using experimental designs that offer insights into farmers’ willingness to invest in CSA practices. A
more forward-looking analysis of finance impact would also need to consider
changes in attitudes toward risk that influence both intra-household resource allocation and extra-household supply-chain linkages. These behavioural changes are
considered to be crucial for supporting long-term CSA resilience.
26.5 Implications for Development
A broad and scalable process of climate adaptation will require comprehensive
interventions that both improve income and change attitudes toward risk. At the
regional level, it is important to make use of the identified complementarities in
rural finance systems that generate multipliers through simultaneous changes in
expenditure patterns and risk attitudes. The latter changes tend to have more longterm implications and favour continuous engagement by farmers in CSA investments beyond increasing short-run profitability. Upscaling of CSA practices can
thus be encouraged by systematically linking credit, savings and insurance products
that influence different dimensions of the rural farm household decision-making
structure. In addition, the effectiveness of finance products in fostering CSA adaptation depends heavily on the wider institutional, policy and market environments (Ruben et al. 2007). Therefore, local rural finance should be embedded in a
framework of financial intermediation involving multiple stakeholders.
Our literature review suggests a number of strategies for better tailoring local
rural financial products and services towards CSA anchoring:
• A broad use of CSA practices cannot be based on single financial products but
requires the development of integrated financial markets.
• Effectiveness of rural finance for CSA upscaling is heavily supported by the
combined offer of finance with technical assistance and business support.
• Prospects for scaling of CSA practices increase alongside coherent public investments in market development and institutional arrangements.
R. Ruben et al.
The interconnectedness of finance modalities (credit, savings, insurance) supports the different pathways towards CSA adoption. These linkages also might help
ascertain the real impact of local rural finance on CSA outcomes (see Fig. 26.2).
Common approaches for measuring the net effects of climate-smart input intensification (pathway 1) are usually based on the comparison of sites with and without
CSA credit by means of the matching of households and assessing income and yield
differences. Assessment of CSA capital investments (pathway 2) could be complemented by more dynamic analyses of household resource allocation (using bioeconomic farm household simulation models) that provide insights into the
implications of changes in the expenditure patterns for CSA investments. This could
also inform decisions on resource allocation in non/off-farm activities that result in
improved expenditures and enhanced farm-level investments in CSA practices.
Finally, changes in risk behaviour (pathway 3) can be analysed by using experimental designs that offer insights into farmers’ willingness to invest in CSA practices. A
more forward-looking analysis of finance impact would also need to consider
changes in attitudes toward risk that influence both intra-household resource allocation and extra-household supply-chain linkages. These behavioural changes are
considered to be crucial for supporting long-term CSA resilience.
26.5 Implications for Development
A broad and scalable process of climate adaptation will require comprehensive
interventions that both improve income and change attitudes toward risk. At the
regional level, it is important to make use of the identified complementarities in
rural finance systems that generate multipliers through simultaneous changes in
expenditure patterns and risk attitudes. The latter changes tend to have more longterm implications and favour continuous engagement by farmers in CSA investments beyond increasing short-run profitability. Upscaling of CSA practices can
thus be encouraged by systematically linking credit, savings and insurance products
that influence different dimensions of the rural farm household decision-making
structure. In addition, the effectiveness of finance products in fostering CSA adaptation depends heavily on the wider institutional, policy and market environments (Ruben et al. 2007). Therefore, local rural finance should be embedded in a
framework of financial intermediation involving multiple stakeholders.
Our literature review suggests a number of strategies for better tailoring local
rural financial products and services towards CSA anchoring:
• A broad use of CSA practices cannot be based on single financial products but
requires the development of integrated financial markets.
• Effectiveness of rural finance for CSA upscaling is heavily supported by the
combined offer of finance with technical assistance and business support.
• Prospects for scaling of CSA practices increase alongside coherent public investments in market development and institutional arrangements.
R. Ruben et al.