A graph $G$ is called an edge intersection graph of paths on a grid if there is a grid and there is a set of paths on this grid, such that the vertices of $G$ correspond to the paths and two vertices of $G$ are adjacent if and only if the corresponding paths share a grid edge. Such a representation is called an EPG representation of $G$. $B_{k}$ is the class of graphs for which there exists an EPG representation where every path has at most $k$ bends. The bend number $b(G)$ of a graph $G$ is the smallest natural number $k$ for which $G$ belongs to $B_k$. $B_{k}^{m}$ is the subclass of $B_k$ containing all graphs for which there exists an EPG representation where every path has at most $k$ bends and is monotonic, i.e. it is ascending in both columns and rows. The monotonic bend number $b^m(G)$ of a graph $G$ is the smallest natural number $k$ for which $G$ belongs to $B_k^m$. Edge intersection graphs of paths on a grid were introduced by Golumbic, Lipshteyn and Stern in 2009 and a lot of research has been done on them since then. In this paper we deal with the monotonic bend number of outerplanar graphs. We show that $b^m(G)\leqslant 2$ holds for every outerplanar graph $G$. Moreover, we characterize in terms of forbidden subgraphs the maximal outerplanar graphs and the cacti with (monotonic) bend number equal to $0$, $1$ and $2$. As a consequence we show that for any maximal outerplanar graph and any cactus a (monotonic) EPG representation with the smallest possible number of bends can be constructed in a time which is polynomial in the number of vertices of the graph.