ABSTRACT
An increasing number of poor live in urban locales without proper water and waste management, so normal daily activities of living and working impact infrastructure, air, soil and water quality (see McFarlane, this volume). The impact of climate change is likely to fall disproportionally on poorer groups (see McManus, this volume). Their ability to cope with these impacts is different. Microfinance programs have been recognized as tools for helping to increase capacity and reduce the vulnerability of the poor living in these climate-constrained urban environments. Microfinance activities are meant to support the poor by providing the means to diversify, accumulate and manage the assets needed to become less susceptible to climate shocks and stresses and/or become better able to deal with climate change impacts. Whilst microfinance programs have become widespread, they are often criticized for their inability to reach the chronically poor. Such programs may encourage short-term coping at the expense of longer-term vulnerability reduction, or even increase vulnerability. Accordingly, the links between microfinance programs targeting the poor clients are an important aspect of inclusive urbanization in the context of climate change.
