Economic Value of Grameen Bank’s Micro Credit for Alleviating Poverty andEnvironmental Perspective in Bangladesh
Shamsunnahar Khanam*
Ph.D. Student at Graduate School of Environmental & Life Engineering, Toyohashi University of Technology
andYuzuru Miyata
Graduate School of Architecture and Civil Engineering, Toyohashi University of Technology
1. Introduction
Bangladesh is in south Asia and is a developing country. As a general illustration of all the developing countries,
majority of the total population is living in the rural areas and is below the “poverty” line. Before the middle of thenineteenth century, lack access of capital and income were found as the prime reasons of poverty in the rural
Bangladesh. Thus, to alleviate poverty, income generation and access of credit were seen the main concern to boththe national development plans and policies, and the non-governmental organizations, like Grameen Bank.
Grameen Bank (literally, village bank) has first introduced the concept of “Micro-credit” system to meet the needsof capital and to generate income in the rural poor of Bangladesh. Since its establishment in 1976 until recently,
Grameen Bank’s micro-credit was considered one of the best solutions to alleviate poverty from rural Bangladesh.
However, in the middle of the nineteenth century a new problem called “Global Warming” alarmed thedevelopment practitioners to rethink on poverty reduction strategy. Global warming is the increase in the earthtemperature that is caused by increasing concentration of greenhouse gases (GHG) resulting from human activities
such as fossil fuel burning and deforestation. A large gap is seen in the emissions of GHGs between the developed
and the developing countries. The industrialized countries are emitting more GHGs causing more wasteful
consumption pattern that leads to a reckless lifestyle. The per capita GHG emission by industrialized countries isabout 6 times of the world average emissions. However, developing countries like Bangladesh is not a big GHG
emitter (According to the 2009 Global Climate Risk Index).
Recently, a ranking of 170 countries most vulnerable to climate change complied by Germanwatch, aninternational nongovernmental organization that works on environment and development issues. The study showsthat the country is particularly at a very high risk because it is a vast delta plain with 230 rivers, many of which
unstably swell during the monsoon rains. This geology, combined with river water from the melting Himalayan
glaciers in the north and an encroaching Bay of Bengal in the south, makes the region prone to severe flooding.
This situation is made worse by the prevalence of intense storms, a marker of climate stresses. Thus, it is predictedthat the changes of climate due to global warming will severely affect the economy as well as human welfare andwill further increase the number of poor in Bangladesh.
Geographically Bangladesh is a vulnerable country of natural calamity. Natural disasters are destroying thecrops, capital as well as work of the people from over centuries. Therefore, to alleviate poverty from the rural
Bangladesh with distributing credit, both government and non-governmental organizations should pay attention toprotect the people from natural disasters and future climate change by global warming. Thus, one of the main
goals of this work is to focus on how Grameen Bank’s micro-credit system works to alleviate poverty during thenatural disasters in Bangladesh and how it could be made more efficiently. It is to be noted that during theestablishment in 1976, the only focus of GB was micro-credit. However, gradually it has elaborated its work forenvironmental protection since the last half of the 1996. As part of it, Grameen Shakti (energy), one of the-1 -environmental friendly family projects of Grameen Bank has started to provide green energy technologies to therural people, thus giving them further opportunity to develop their lives without damaging the environment. Thus,
this paper also aims to show how Grameen Bank is working to reduce CO2 (the main green house gases)
emissions to safeguard Bangladesh. We also propose some strategies to mitigate CO2 that will enhance its work to
the country.
2. The causes and the types of natural disasters occurred in Bangladesh
Geographically, Bangladesh is a vulnerable country of natural disasters. Every year floods, cyclones are very
common in Bangladesh that destroy the crops, capitals, and the productivity of the people of Bangladesh. The
types of natural disasters occurred in Bangladesh are as follows:
2.1 Flood
Flood water is mainly generated from outside Bangladesh due to rainfall in the catchments areas of the Ganges,
the Brahmaputra, and the Meghna. And also due to the melting snow in the Himalayas. Simultaneous rainfall over
the above three basins may cause abnormally high flood in Bangladesh. Excessive rainfall within Bangladesh may
aggravate and contribute to devastating flood in Bangladesh.
Though there are many categories floods, two types of floods, such as normal abnormal floods are often
occurring in Bangladesh. Normal flood inundates from 20% to 25 % of the total area of Bangladesh. Abnormal
floods can be called high floods that inundate more than 30% of the total area of Bangladesh. Abnormal floods
have seen very severe that damages crops and development infrastructures, snapping road and railway
transportations, hampering economic activities, and creating untold miseries and inconvenience to general people.
Such abnormal flood occurred in 1954, 1955, 1962, 1974, 1982, 1987, 1988, 1998, 2004, and 2008, where in1988 affected about 61 per cent of the country’s total areas.
2.2 Tidal Surge/Tsunami
Tsunami due to earthquake: Tidal surge is generated due to earthquake in the sea/ocean and may travel
hundreds and thousands kilometers. In 1998 during flood in Bangladesh a moderate earthquake occurred near
Andaman Island in the Bay of Bengal.
2.3 Cyclone
 In 2007, cyclone SIDR hit the country’s southern and southwestern costal areas. Around 5,500 people
had died and total damaged came close to US$ 450 million by SIDR.
 1991 Cyclone: in April 1991, had a surge height in places of over 7 meters and winds of up to 235 km
per hour. It killed an estimated 138, 868 people and destroyed about 840,000 rural houses in 16
districts in Bangladesh (Talukder and Ahmad, 1992).
 1970 Cyclone: In 1970 was even more severe with estimated loss of life ranging from 220, 000 to
400,000. Some 280, 000 cattle were lost, mostly draft animals, along with about Bangladesh also lost
60% of marine fishing boats with fishing nets and fishermen. Yet this was not the most severe
recorded cyclone. That occurred in 1876 (Ericksen et. al. 1997).
2.4 Drought
From November to April there is very little rainfall in the Ganges, Brahmaputra and, Meghna rivers basins.
Most of the small rivers and water bodies dry up and there is very little flow even in the three big rivers and causes
severe drought of 1978/79 to 1979/80. This event directly affected about 42 per cent of the cultivated land andsome 44 percent of the population.

-2 -3. Natural Disaster Healting the Poverty Reduction Goal of Grameen Bank’s Evidence from Empirical
Studies
Table 2: The data of the empirical studies conducted in different villages of two districts in Bangladesh.
No. and Duration No. of Gender
Age
Name of theNo.of Sample inof Study
Sampl
Study region
Area
e
12-21
6
Kakchira, Barguna
8
Dec,2007
97
Female 22-31
35
North Damodya,
20
1st
and
Shariatpur
January
32-41
40Char Ramra Kandi,
31
2008
Shariatpur
42-abo14
Ikor Kandi,
36
ve
Shariatpur
Aug12-21
3
North Damodya,
20
2nd
Sep,2008
20
FemaleShariatpur

3.1 Empirical Studies in Barguna and Shariatpur Districts
We have conducted our first empirical study between December, 2007 and January 2008 in two districtsBarguna and Shariatpur, just after the cyclone SIDR hit these areas. In the survey, we have found that in Barguna
districts, all of the participants were affected by the cyclone SIDR. Whereas in Shariatpur district, 80 percent of thetotal participants were affected by SIDR. During our study in these regions, all of the participants who wereaffected became unemployed, lost their crops, working capital, etc.
In the survey we have also noticed that the Grameen Bank has played a very crucial role in rebuilding the SIDR
affected people. It has donated each of the affected members 500TK. (One Thousand Yen) and wearing cloths. It
has suspended all its old loan repayments till 30th June 2008 (i.e., for a 6 months of period). In addition, severely
affected families received 10,000TK (Twenty Thousand Yen) for house repair, buying house hold goods,
sanitation, etc. purposes.
3.2 Empirical Studies in Shariatpur Districts
The second study is conducted between August, 2008 and September, 2008. During our study we have foundthat the area was full of flood water and 80 percent of the participants were unemployed.
Both of the studies have given us the evidence that though Grameen Bank was playing a crucial role to alleviate
poverty, without ensuring the vulnerability of natural disasters, poverty reduction is not achievable in rural
Bangladesh.
4. The Major Impact of Global Environmental Change in Bangladesh
The Intergovernmental Panel on Climate Change (IPCC) – the global watchdog on climate change has
identified that Bangladesh is one of the top vulnerable of climate change. Three major impact of global warmingon Bangladesh may be categorised as: climate change, sea level change, and changes in the pattern of distribution
and density of population are as follows:-3 -4.1 Climate Change-Bangladesh may experience 10 to 15 percent more rainfall by 2030 (Ericksen et. al, 1997). Bangladesh is
visited by devastating floods quite frequently. An increase in rainfall will only worsen the situation.
-Scientists also predict that global warming will increase the frequency and intensity of tropical storms.
-A warmer climate, by increasing the frequency of natural hazards such as floods and cyclones, will further
aggravate such situations and negate the development efforts of the country (Ericksen et. al, 1997).
4.2 Sea Level Change-A rise in temperature will also melt the polar and alpine ice sheets. Since Bangladesh is deltaic, vast areas of thecountry will be submerged with the rise of the sea level. A Taskforce report predicts that for one metre rise in thesea level will lead to loss of about 22,889 sq km of land, which is about 15.8% of the total area of Bangladesh.
4.3 Other Problems-Being a low-lying and densely populated country Bangladesh would be worst hit by any rise in the sea level.
-Coastal areas will experience erosion and inundation due to intensification of tidal action.
-Destruction of agricultural land and loss of sweet water fauna and flora could also occur.
-The shoreline will retreat inland, causing changes in the coastal boundary and coastal configuration.
-Climatic disasters such as hurricanes, cyclones and droughts could become more frequent and severe.
To sum up, for Bangladesh, the climate changes caused by global warming may lead to more rainfall, massive
floods, great cyclones and droughts. However, conservation of the environment and sustainable development
strategies will definitely protect the earth and its environment and will particularly save countries like Bangladesh
from the catastrophe which can be induced by global warming.
Though natural disasters occurred in Bangladesh over centuries and destroy the economy, it is predicted that thechange of climate will be severely affects on the local economy and human welfare by enlarging the problems.
Thus, the essence of mitigation both natural disasters and global warming have come the first priority to alleviate
poverty from rural Bangladesh.
5. Basic Operations of Grameen Shakti (GS) to Reduce Global Warming and Economic Development of
Rural People of Bangladesh
It is to be noted that during the establishment in 1976, the only focus of GB was micro-credit. However,gradually it has elaborated its work for environmental protection since the last half of the 1996. As part of it,
Grameen Shakti (energy), one of the environmental friendly family projects of Grameen Bank has started toprovide green energy technologies to the rural people, thus giving them further opportunity to develop their lives
without damaging the environment. Though energy is essential for improving livelihood and facilitating economic
development, around 70 percent of rural people of Bangladeshi still do not have access of electricity. GS has usedmicro credit imaginatively to develop one of the first successful market based models to take renewable energy
technology to the rural people. Currently GS has five projects, such as Grameen Solar Power Projects, Wind
Power Projects, Biogas project, Improved Cocked Stoves (ICS), Technology Development Projects. Solar homesystems are replacing kerosene lamps, avoiding the fumes and fire-risk of such lamps. Each solar home systemsaves about 375kg CO2 per year. Owners of a solar home system also save about TK 400 to 500 per month on
kerosene. So, the economic benefit of owning a solar home system will also continue to increase.
6. Comprehensive Natural Disasters and Global Warming Mitigation Strategies
For mitigating environmental problems or natural disasters it is required two things, one environmental
education, and two, implement of those knowledge. The following Disaster Management Plan is proposed for
Bangladesh at 4 fronts.

-4 -6.1 Global front
As Bangladesh is a most vulnerable country due to global climate change. It is predicted that because of global
warming the intensity and severity of flood and other disasters will increase. There it is required to take initiativefrom all other countries in the world to help Bangladesh. IPCC, Kyoto Protocol will be effective.
6.2 Outside_Bangladesh/Himalayan Front
As Bangladesh flood water is mainly generated in the Himalayan region there should be regional cooperation
between all riparian countries namely China, Nepal, Bhutan, India, and Bangladesh. Good offices of SAARC
countries and UN may be helpful.
6.3 Inside Bangladesh/Domestic Front• Integrated flood Drainage Channel• Protection of major Cities and Vital Facilities• Nation-wide Environmental Education, Media, NGOs, Academic institution, and campaign could be
helpful.
• Protection of Rural Areas
6.4 Grameen Bank Environmental Protection Front• Environmental Education• Tree Plantation• CO2 emission reduction by Grameen Shakti
7. Concluding Remarks
Through the empirical studies we have shown that though Grameen Bank’s micro credit has been playing a
crucial role to poverty alleviation in Bangladesh, natural calamity has seen one of the most vital reasons that
increase poverty or hindered development goal of Grameen Bank in Bangladesh. Historically, Bangladesh suffersfrom a number of chronic natural calamities that have doomed all hopes of its development. Though the natural
disasters have been occurring over centuries, the change of climate due to global warming will increase thefrequencies of these problems. Thus, our studies have pointed out that without proper environmental protection
micro credit will be unable to help to alleviate poverty or achieve sustainability in Bangladesh. Therefore, acomprehensive Disasters and Global Warming management plan, and as imagined, this plan, if implemented, will
give a long term and permanent solution of those disasters and their related problems. This ultimately can ensure
effective use of all existing natural resources and other physical facilities, which then can ensure alleviating
poverty.
References
Journal article
Khondaker Mizanur Rahman, Md. Shoaib Bhuiyan, Runa Lisa, Shamsunnahar Khanam, Kamrun Nahar, Ashraf
Hossain, Qudrate Khoda, (March, 2007), “Micro Credit, Grameen Bank, and Development
Perspectives and Issues in Bangladesh”, Nanzan Management Review, Japan, Vol. 21, Number 3, pp.
209-236.
Khondaker M. R; S. I. Khan; Shamsunnahar Khanam; A. K. M. Muzahidul Islam (October, 2008), Sectoral
Development Planning and Strategies in Bangladesh, Nanzan Management Review, Vol. 23 No. 1.2, PP:
135-155.

-5 -Khanam Shamsunnahar (March, 2008), Grameen Bank’s Micro-credit’s Role in Rebuilding after Natural Disasterin Bangladesh, Yearly Newsletter, Department of Geography, Graduate School of Environmental
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Ericsen, et. al, (1997), Socio-Economic Implications of Climate Change for Bangladesh, Briefing Document
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World Bank, The (2000):The World Bank Report –Empowering the poor through micro credit,
The Bangladesh Poverty Alleviation Project, January.
ThesisShamsunnahar. K (2009), Grameen Bank, Human Development and, Human Security: Findings
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