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Attracting More Capital for Biodiversity Finance: The Case of Debt-for-Nature Instruments

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  • Lauren Olsen

    (School of International and Public Affairs, Columbia University, New York, NY 10027, USA)

  • Frederic de Mariz

    (School of International and Public Affairs, Columbia University, New York, NY 10027, USA)

Abstract

Debt-for-nature instruments are financial transactions that allow countries to restructure and reduce foreign debt in exchange for investments in environmental conservation measures. Can debt-for-nature instruments attract more capital for biodiversity finance? Debt-for-nature instruments first appeared in the market in the 1980s; however, they have seen a recent surge in popularity, with transactions predominantly focused on marine conservation. These transactions have gained attention for their size, innovative nature, and conservation focus. However, they have also faced criticism surrounding sovereignty, effectiveness, and transaction costs. The descriptive qualitative analysis of a comprehensive and global sample of the eight tripartite type debt-for-nature instruments brought to market since 2015, with a detailed case study of the Belize transaction, indicates that such deals may be costly to negotiate, the use of blue bond labeling can be misleading, conservation benefits are limited, and they have limited replicability. On the positive side, these deals have introduced innovative structures to unlock additional funds for conservation. The best examples are structured with a larger financial commitment to nature and strong enforcement mechanisms. In some cases, the transaction laid the groundwork for future marine conservation funding and commitments. Debt-for-nature instruments are not a silver bullet for either environmental impact or debt refinancing; however, the benefits of recent transactions indicate a role for such innovative instruments in conservation finance.

Suggested Citation

  • Lauren Olsen & Frederic de Mariz, 2025. "Attracting More Capital for Biodiversity Finance: The Case of Debt-for-Nature Instruments," Commodities, MDPI, vol. 4(2), pages 1-20, May.
    • Handle: RePEc:gam:jcommo:v:4:y:2025:i:2:p:7-:d:1657170
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    References listed on IDEAS

    as
    1. Mr. Marcos d Chamon & Erik Klok & Mr. Vimal V Thakoor & Mr. Jeromin Zettelmeyer, 2022. "Debt-for-Climate Swaps: Analysis, Design, and Implementation," IMF Working Papers 2022/162, International Monetary Fund.
    2. Edna Aparecida Greggio Possebon & Felippe Aparecido Cippiciani & José Roberto Ferreira Savoia & Frédéric de Mariz, 2024. "ESG Scores and Performance in Brazilian Public Companies," Sustainability, MDPI, vol. 16(13), pages 1-18, July.
    3. Pieter Bosmans & Frederic de Mariz, 2023. "The Blue Bond Market: A Catalyst for Ocean and Water Financing," JRFM, MDPI, vol. 16(3), pages 1-48, March.
    4. Rocío Redondo Alamillos & Frédéric de Mariz, 2022. "How Can European Regulation on ESG Impact Business Globally?," JRFM, MDPI, vol. 15(7), pages 1-19, June.
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