Credit for Climate Change: Promoting Asset-Collateralized Loans for Water Tanks

Climate change-induced rainfall and temperature variability pose a substantial economic risk to smallholder dairy farmers in low- and middle-income countries. Rainwater harvesting tanks may help farmers adapt to climate uncertainty. Previous work, led by William Jack, Michael Kremer, Joost de Laat, and Tavneet Suri, found that Asset Collateralized Loans (ACLs) help farmers purchase water tanks in Kenya. Nyala Vision, a dairy cooperative and the implementer in that study, has partnered with Michael Kremer and a research team to further optimize the ACL model. In this policy pilot, researchers will build on that ongoing work by partnering with additional cooperatives to roll out ACLs, build their administrative capacity to manage them, and measure productivity and climate-adaptation outcomes, including milk production, family time use, water use, herd size, and cattle health. Measuring these outcomes is particularly important for attracting investment from philanthropic, public, and impact investors. This pilot will explore the viability of ACLs for water tanks as a climate adaptation solution for smallholder farmers that is scalable across contexts. We will use this evidence to seek investment and additional partners to scale ACLs widely within Kenya and beyond.

RFP Cycle:
Spring 2021
  • Path-to-scale project
  • Policy pilot