Climate Change as a Crisis-Multiplier
Climate change fuels a growing humanitarian and economic crisis in low-and middle-income countries (LMICs). Worsening drought, shifting raining seasons, more intense floods, heatwaves and storms combine to increase rural poverty, reduce food and water security and spur rural migration. Migrant remittances, estimated at $656 billion in 2023, are now a vital financial lifeline for millions in these countries. These private flows help to support recipients’ household expenses, including education, health and many productive activities. Can these intra-family cash transfers also assist families in becoming more resilient in the face of climate change?
Migrant Remittances and Climate Resilience
Remittances are personal financial flows, not development aid or foreign investment. These transfers deliver value directly and efficiently to loved ones back home. Remittances also support climate resilience in agriculture and rural enterprises, enabling the purchase of products and tools, like drought-resilient seeds and crops, water catchment and efficient irrigation among other climate-smart practices. The impact of these actions will be amplified when families access greater financial options, including tailored financing for solutions that expand climate resilience such as low-cost microloans for resilient farming tools and products, climate insurance and access to know-how for more resilient practices.
Greater Financial Choice for Greater Impact
The focus is not on channelling or directing remittance flows, but on broadening the choices, information and capacities recipients need to build climate resilience. Private and public actors have an important role to play by supporting financial and other products services that encourage resilience building. This should include efforts to lower remittance transaction fees for a range of climate-resilient solutions and activities among other incentives.
The IFAD Approach: A Model for Scaling Good Practices
The International Fund for Agricultural Development (IFAD), through its Financing Facility for Remittances (FFR), leads projects in climate vulnerable regions and supports financial inclusion and development impact. With the critical support of the European Union, Luxembourg, Spain and Sweden IFAD seeks to expand the productive options for families to use their remittances. Pilot projects demonstrate that with the right financial tools and options, families will invest a portion of their remittances in climate resilience, thereby improving agricultural productivity and resilience to climate hazards. IFAD is focused on scaling these models to enable more rural families to harness their remittances for greater resilience, household incomes and sustainability.
A Call to Action: Leveraging Remittances for Resilient Futures
Public and private support for accessible, climate-resilient financial options for rural remittance families is crucial. With this backing, these private migrant resources can also have a beneficial public impact on furthering climate adaptation and resilience in LMICs. It is time to recognize and encourage this form of migrant climate finance.
Pedro de Vasconcelos, Manager Financing Facility for Remittances, International Fund for Agricultural Development
