Nicholas Institute for Environmental Policy Solutions
May 2024

Tackling Debt, Biodiversity Loss, and Climate Change

Tackling debt, biodiversity loss, and climate change cover image of island village

Debt distress, biodiversity loss and climate change are interconnected crises for developing countries. A task force of multilateral development banks and environmental institutions is convening a task force to establish a framework to ameliorate these crises by reforming debt-for-nature swaps—voluntary transactions in which creditors reduce or cancel debt in exchange for debtor-country commitments to fund specific environmental activities.

The authors of this Policy Forum identify four reforms that should underpin the new framework: (i) Offer debt relief at a nationally consequential scale; (ii) defer to debtors on implementation to reduce transaction costs and raise debtors’ benefits; (iii) employ performance-linked instruments based on reliable metrics to ensure global gains; and (iv) integrate all of those metrics across biodiversity conservation, emissions reduction, and climate adaptation to allocate funds most efficiently.