Can Private Finance Save the World's Forests and Oceans?

As development banks and donor countries fail to provide consistent public financing for sovereign debt and environmental challenges, debtor nations are increasingly turning to private-sector solutions like debt-for-nature swaps, instruments that multilateral assemblies such as the Group of 20 (G20) and United Nations Climate Change Conference (COP30) are now seeking to scale up.

Despite progress, as shown by a case study from Belize, the blended finance approach has not adequately addressed key shortcomings of earlier debt-for-nature swaps, such as small debt reduction relative to high transaction costs, risks to debtor country credit ratings, inadequate conservation metrics, and sovereignty and transparency concerns.

To scale debt-for-nature swaps and related financial instruments, the G20 and COP30 must expand opportunities for credit enhancement, reform sovereign credit rating systems, employ conservation performance metrics, and improve stakeholder participation.