Financing resource efficiency and cleaner production in Central America

Resource efficiency, including cleaner production and energy efficiency (CP/EE), is an important strategy for developing countries to grow their economies in a sustainable manner. However, informational, technical and economic barriers often limit the implementation of such strategies in the private sector, particularly among smaller enterprises. Since the 1990s, international aid agencies, governments, banks and non-governmental organizations have supplied financial incentives to encourage enterprises to adopt resource efficient practices in Latin America. “Pathways to Cleaner Production in the Americas” (PCPA) was a 3-year multinational project focused on promoting cleaner production practices in micro, small and medium size enterprises (MSMEs) through collaboration with academia. In this paper, we examine the availability and utilization of different types of financing instruments for CP/EE in MSMEs in Central America. We survey nineteen programs across five countries to examine how effectively these instruments are utilized, barriers that hinder their adoption, and best practices for increasing their uptake. We also incorporate the experience of 39 MSMEs that participated in PCPA, with respect to their demand for CP/EE and external financing options. We find a mismatch between MSMEs’ demands and expectations with the supply and interest of financing programs, leading to the underutilization of the funds.