Nicholas Institute for Environmental Policy Solutions
May 2024

Tackling Debt, Biodiversity Loss, and Climate Change

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