This Technical Paper sets out the compelling opportunity to develop a new sovereign debt instrument that links the cost of sovereign debt with success in protecting or enhancing a country’s natural capital, as part of debt restructuring.
“Nature Performance Bonds” (NPBs) would offer the issuer reductions in coupon payments and principal adjustment in return for the achievement of nature-based outcomes, such as restoring wetlands, protecting forests from encroachment, and reducing threats to wildlife and plant species. There would be no restriction on use of proceeds.
This paper sets out the concepts and benefits of NBPs, how they would work, how performance would be defined and monitored, and how they could be developed.
F4B invites creditors, debtors and other interested partners to engage to help shape its NPB proposition to develop and refine this approach, and to forge country-specific deal packages.
A shorter policy briefing is also available.
Finance for Biodiversity (2020) Recapitalising Sovereign Debt Technical paper. Finance for Biodiversity Initiative