This technical paper is part of a series looking at climate change and biodiversity considerations in economic responses to COVID-19. Other notes look at bailout measures, a green stimulus index, and labour market reforms.
key considerations suggested by this report are:
- To achieve growth, support market resilience and achieve biodiversity goals, mechanisms must be enabled that support the issuance of biodiversity-linked debt by developing countries with the buying down of biodiversity externalities, reducing the cost of capital and ensuring the protection of natural assets.
- Specifically, we argue for the implementation of performance-based debt instruments like bonds tied in part to environmental outcomes. This approach is not only timely given the crisis, but in light of the weakness of international agreements and the lack of enforcement mechanisms, will advance natural capital in financial markets without requiring a new regulatory regime.
- This will require collective action from a subset of sovereigns who buy-in to the hypothesis of integrating nature into new debt agreements.