The growing material risks of nature loss are also affecting sovereign credit ratings, which reduces investor confidence and thereby increases borrowing costs. Despite this, much of climate and biodiversity finance channeled to the Global South continues to be delivered in the form of loans, which risks exacerbating debt crises. In this way, growing sovereign debt burdens and biodiversity loss risks creating a vicious cycle.
In this session we bring a macro-financial lens to the biodiversity finance conversation, exploring how debt and fiscal vulnerability affects the extent to which biodiversity loss in the Global South can be addressed in alignment with wider social justice objectives.
We invite discussion on questions such as:
- How can debt justice considerations be integrated in biodiversity finance commitments?
- How can sovereign debt relief mechanisms be designed to expand fiscal space for conservation without reinforcing new forms of dependency?
- What role can credit rating agencies, development banks, and international financial institutions play in aligning debt sustainability with biodiversity protection?
Safeguarding biodiversity and achieving long-term climate change targets such as net-zero emissions are expensive. For instance, stopping global biodiversity loss is estimated to require an additional US$ 600-800 billion per year. Against this background, it is hardly surprising that international financial institutions (IFIs) like the International Monetary Fund (IMF), the World Bank, and regional development banks are increasingly expected to support environmental sustainability. Yet while IFIs have been upgrading their toolkits to better support their member-states in achieving national climate goals, the ecological consequences of their operations remain poorly understood. This paper investigates the implications of lending programs by the IMF, the intergovernmental organization that provides short-term loans to member-states facing a balance-of-payments crisis, for global deforestation. We first show that the IMF rarely targets forest management; in a quantitative text analysis of 35,915 conditions administered to low- and middle-income countries in the last four decades, only 34 pertain explicitly to forest management. Second, we investigate the impacts of IMF programs on annual tree cover loss between 2000 and 2020. Estimates from two-way fixed effects models show that IMF programs are, on average, associated with an increase in annual deforestation by 9.2%. What can explain the association between IMF programs and increased deforestation? For one, evaluations of IMF programs show that these interventions rarely increase economic growth, which in turn can lead governments to exploit their natural resources, including forests. Further, and extending work on the political economy of deforestation, we suggest that if countries face a balance-of-payments crisis and negotiate financial assistance with the Fund, their forest transition may be interrupted or delayed. Consistent with this, additional analyses indicate that our baseline effects are driven by fiscal policy and external sector reforms, suggesting IMF borrowers seek to consolidate fiscal spending, potentially on environmental protection, and extract economic value from natural resources. Taken together, our study thereby demonstrates that understanding national-level environment-related outcomes requires greater attention to international-level determinants.
How to cite: Forster, T., Bhandary, R. R., and Gallagher, K. P.: Cutting trees to balance budgets: the IMF’s role in deforestation, World Biodiversity Forum 2026, Davos, Switzerland, 14–19 Jun 2026, WBF2026-546, https://doi.org/10.5194/wbf2026-546, 2026.
As the pressures of global debt distress mount, the incorporation of nature-related financial risk into sovereign debt assessments has become a key policy lever for environmental organizations. Proponents suggest that incorporating nature into financial risk management will transform market incentives to exploit natural resources, including for sovereigns. Others raise concern that the incorporation of risk will simply raise costs of capital for jurisdictions that are the most vulnerable to climate and nature impacts, compounding the pressures that drive extractive land use change. Yet the incorporation of nature-related financial risk into sovereign debt assessments remains underexplored across political, financial, and techno-scientific dimensions. The result is that what kinds of “nature risks” are made visible—and what kind of risk management is made actionable—within the international financial and monetary system remains undefined and untested. This research explores how financial sector representatives, civil society organizations, and scientists hope to use “nature risk” to challenge the dynamics of dual economic and ecological crises. It seeks to understand the implications of the risk approach to sovereign debt from the perspective of global social and environmental inequality, as well as international debates about responsibility, vulnerability, and justice in global environmental policy.
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How to cite: Irvine-Broque, A.: Rising oceans, dying reefs, sustainable loan sharks? Managing the impact of sovereign debt on the environment, World Biodiversity Forum 2026, Davos, Switzerland, 14–19 Jun 2026, WBF2026-929, https://doi.org/10.5194/wbf2026-929, 2026.
We introduce the concept of ecological odious debt to describe sovereign liabilities whose origin, use, or enforcement is inseparable from unjust socio-ecological harm. Our core question is: under what conditions should sovereign debts be deemed illegitimate on ecological justice grounds, given ecological debts owed to the same countries and communities?
Building on the doctrine of odious debt, we shift attention from political oppression to the destruction of ecosystems and the externalisation of environmental costs onto communities and future generations. We articulate criteria under which environment-related debts become ecologically odious: obligations that do not serve the borrowing population’s legitimate interests, that finance or lock in the degradation of natural and cultural commons, or whose enforcement crowds out fiscal space needed for restoration and adaptation, in contexts where creditors can reasonably be expected to know these consequences.
We then ask whether existing biodiversity finance instruments can address such debts and argue that they cannot. Debt-for-nature swaps operate at limited scale and often come with conditionalities that raise sovereignty and distributive justice concerns. International pledges under the Kunming–Montreal Global Biodiversity Framework remain far short of estimated conservation needs, leaving a financing gap. For many countries in the Global South, policy space is further constrained by debt-sustainability assessments that ignore the scale of required green investment, global currency hierarchies and balance-of-payments pressures that narrow policy autonomy, and climate disasters and ecological losses that exacerbate debt distress.
We ground the ontology and ethics of ecological debt, clarify relevant scales and actors beyond the state, critique pricing-nature framings, and motivate a pragmatic turn to restoration and adaptation costs as a defensible basis for claims. Finally, we outline a measurement agenda combining ecological unequal exchange metrics; ecosystem national accounts (SEEA) and genuine-savings indicators; CO2 debt measures; in natura restoration and adaptation pathways; and integrated assessment or multicriteria frameworks integrating fiscal, biophysical, distributive, and sovereignty metrics with uncertainty.
The contribution is both conceptual and operational, informing targeted, country-led cancellation or deep restructuring of specific claims to expand fiscal space for climate and nature. It also supports debt audits that connect cancellation decisions to restoration, adaptation, and distributive outcomes.
How to cite: Bordenave, M.: Ecological Odious Debt: Turning Ecological Debt into Criteria for Sovereign Debt Cancellation, World Biodiversity Forum 2026, Davos, Switzerland, 14–19 Jun 2026, WBF2026-997, https://doi.org/10.5194/wbf2026-997, 2026.
Low and middle income countries (LMICs) face several macroeconomic and financial constraints in accessing global capital markets, which hinder their capacity to pursue long-term sustainable development and adaptation strategies. Comprehensive solutions for debt management are increasingly recognised as essential to enable developing countries to free fiscal space for environmental investments. Despite this recognition, a gap remains in the literature regarding the design and implementation of various debt relief mechanisms, as well as their ecological and macroeconomic implications.
To fill this gap, this paper explores the fiscal and macrofinancial impacts of combinations of four debt relief levers in Colombia: (1) greenium (concessional borrowing), (2) foreign investment in local currency-denominated bonds, (3) interest renegotiation, and (4) principal adjustment. We adapt the GEMMES macroeconomic framework—a dynamic Stock-Flow Consistent model—to simulate these levers and their combinations within comprehensive debt management strategies under a multi-objective robust decision-making approach.
We find marked heterogeneity across mechanisms. Concessional (1,2) and reprofiling (3,4) levers vary in their potential for financing environmental protection and mitigating macro-financial vulnerabilities associated with a climate and nature transition. Principal adjustment is a consistent feature of best-performing debt strategies, while a high share of local currency bonds increases the robustness of green debt strategies under deep uncertainty. Interest-rate-based instruments need to be aligned with the timing of investment. The levers’ effects are importantly driven by their influence on foreign reserves and currency outflows, highlighting the need to consider exchange rate variation when designing debt management strategies.
From the 632 robust Pareto-optimal green debt strategies that were identified, two distinct clusters emerged, reflecting contrasted uses of external financing for future borrowing. No single mechanism is sufficient to close the green investment gap in Colombia. Ultimately, while debt relief can offer temporary relief for trade imbalances, achieving lasting macroeconomic stability will necessitate structural changes in production and exports. Linking future solvability and green investment raises questions about the conditionality of these mechanisms and the type of investment they should support.
How to cite: Gonon, M., Godin, A., Daumas, L., Althouse, J., and Svartzman, R.: Sovereign Debt Management with Environmental Conditionality and Macroeconomic Stability - Evidence from Colombia, World Biodiversity Forum 2026, Davos, Switzerland, 14–19 Jun 2026, WBF2026-8, https://doi.org/10.5194/wbf2026-8, 2026.
Climate change adaptation readiness—the capacity of states to anticipate, prepare for, and manage climate risks—depends not only on economic resources but also on the nature and quality of political institutions. While democracies are often assumed to be better equipped for effective adaptation, many of the countries most vulnerable to climate change are governed by authoritarian regimes whose institutional structures differ substantially. This study challenges the conventional view that all autocracies operate similarly in shaping climate adaptation outcomes. Instead, it argues that internal institutional diversity among authoritarian regimes creates varying policy incentives and administrative capacities for adaptation. Specifically, it examines how distinct subtypes of authoritarian rule—single‑party, military, monarchical, and personalist—affect national adaptation readiness, focusing on the socio‑economic dimensions measured by the ND‑GAIN framework.
Employing a cross‑national time‑series design with a two‑way fixed‑effects baseline, the analysis covers 95 countries between 1995 and 2010, spanning both authoritarian and democratic systems. Using democracies as the reference group, it evaluates whether institutional configurations within authoritarian regimes hinder or facilitate socio‑economic adaptation readiness relative to democratic counterparts. The results reveal a consistent pattern: only personalist regimes exhibit significantly lower levels of socio‑economic climate adaptation readiness. These findings remain robust across alternative model specifications, including different dependent variables, additional control variables—such as colonial history and settler mortality—and alternative estimation approaches (Naïve Fixed Effects, Panel‑Corrected Standard Errors, Feasible Generalized Least Squares, and System‑GMM), mitigating concerns about heteroskedasticity, serial correlation, and endogeneity.
The analysis suggests that personalist regimes are uniquely constrained by their political structure, wherein power is highly concentrated in a single ruler and governance is shaped primarily by loyalty and regime survival rather than institutional performance. This personalized form of rule weakens bureaucratic capacity and undermines the continuity of long‑term policy commitments, leaving such regimes poorly positioned to sustain coordinated, forward‑looking investments essential for climate adaptation. As a result, personalist systems lag behind both democracies and more institutionalized authoritarian regimes—such as single‑party, military, and monarchical systems—in building resilience to the escalating risks of climate change.
How to cite: Ko, J.: Party Leaders, Kings, Generals, and Dictators Are Not Equal: The Varied Influence of Authoritarian Institutional Regime Subtypes on Climate Change Adaptation Readiness, World Biodiversity Forum 2026, Davos, Switzerland, 14–19 Jun 2026, WBF2026-817, https://doi.org/10.5194/wbf2026-817, 2026.
To address the limitations of traditional debt-for-nature swap models in scale, checks and balances, and sustainability, this paper proposes a full-chain risk-sharing debt-for-nature swap network mechanism centered on value equivalence, risk sharing, multi-stakeholder collaboration, transparency, and standardization. The emerging trilateral model in recent years, which introduces third-party stakeholders such as environmental organizations, investment banks, and impact capital, has significantly expanded transaction volumes by leveraging market-based mechanisms to mobilize social capital. However, it still faces challenges and shortcomings, including opacity risks and potential distortion of conservation objectives due to profit-driven motives in investment bank-led cases, uneven depth of impact capital participation, insufficient multi-stakeholder checks and balances in some instances, and inadequate alignment of local community needs with international oversight standards, which may compromise project sustainability. The new mechanism is grounded in the principle of "equivalence between the scale of debt reduction and the potential value of ecological conservation", adopting a phased disbursement model that links the debt reduction process to specific conservation milestones such as the designation of protected areas and the achievement of ecological restoration targets. Credit rating agencies adjust their rating models to incorporate environmental performance as a positive factor, thereby alleviating rating constraints on debt-for-nature initiatives. Development banks assume a fair share of the debt reduction costs, providing technical transfer and specialized fund support. International financial institutions establish the rule-based framework and supervision platform, prohibit the imposition of unreasonable conditionalities, and promote the diversification of funding sources. Impact capital assumes pilot risks through blended finance structures, catalyzing market dynamism. Investment banks focus on compliant intermediary services, with their fees linked to ecological outcomes to reinforce accountability. Local communities and international oversight bodies jointly participate in decision-making and verification, ensuring transparent implementation. This mechanism uses ecological insurance, multilateral guarantees, and a multi-stakeholder accountability system to mitigate risk and ensure stability. It achieves a win-win by providing debt relief and revenue for debtors, risk control for creditors, and impact for environmental groups, all without creating new dependencies—integrating debt sustainability with ecological conservation and collaborative development.
How to cite: Chang, C.-P., Gui, L., and Yin, Z.: Construction of a Full-Chain Risk Sharing Debt for Nature Swap Network, World Biodiversity Forum 2026, Davos, Switzerland, 14–19 Jun 2026, WBF2026-67, https://doi.org/10.5194/wbf2026-67, 2026.
Indonesia, one of the world’s megadiverse countries—holds unique potential to pioneer high-integrity biodiversity credits as a mechanism for integrating ecological value into financial decision-making. As biodiversity loss increasingly generates physical, transition, and systemic risks to financial markets, Indonesia’s vast natural capital—spanning tropical forests, peatlands, mangroves, and coral reefs—offers a strategic foundation for nature-positive investment models. This paper examines how biodiversity credits can function as an innovative instrument to internalize ecological value, mobilize sustainable finance, and align financial flows with conservation and equitable development outcomes. Drawing on emerging initiatives under the Indonesian Environment Fund (BPDLH/IEF), the Indonesia Biodiversity Fund, and national biodiversity strategies, the study assesses Indonesia’s readiness to position biodiversity credits within evolving domestic and global biodiversity-finance architecture. The potential is significant: biodiversity credits can complement existing nature-based financing including carbon markets, PES, ecological restoration programs, and blended finance while enabling measurable, verifiable conservation outcomes demanded by financial institutions responding to ESG and global biodiversity frameworks.
However, the analysis highlights several structural barriers. Integrity risks persist due to the absence of standardized methodologies, baseline data gaps, and limited monitoring capabilities. Policy and institutional fragmentation across sectors impede coherent governance. Market readiness remains low, with insufficient investor awareness and no compliance-driven demand to ensure a predictable and scalable credit market. Social risks, including inequitable benefit-sharing and weak tenure rights, threaten legitimacy and ethical credibility. These challenges underscore tensions between financial logics and ecological realities. Despite these constraints, emerging opportunities are substantial: alignment with the Kunming–Montreal Global Biodiversity Framework, integration of biodiversity considerations into financial services authority sustainability reporting, technological innovation (AI, blockchain, satellite monitoring), and the development of a national biodiversity credit registry. Operationalizing biodiversity-related risks, dependencies, and opportunities requires multi-stakeholder collaboration, strong safeguards, and governance innovations that embed biodiversity into financial institutions’ investment and risk-assessment frameworks. This paper argues that high-integrity biodiversity credits can serve as Indonesia’s new frontier—linking conservation, financial markets, and community empowerment. When embedded within credible governance and ethical safeguards, biodiversity credits can help redirect capital flows toward ecologically viable, socially just, and economically sound futures.
How to cite: Nurfatriani, F. and Wibowo, A.: Biodiversity Credits in Indonesia: Opportunities and Challenges for Embedding Ecological Value into Financial Systems, World Biodiversity Forum 2026, Davos, Switzerland, 14–19 Jun 2026, WBF2026-266, https://doi.org/10.5194/wbf2026-266, 2026.
Constructing a biodiversity risk management system constitutes a crucial pathway for China’s insurance industry to fulfill its environmental responsibilities and participate in national ecological governance, with its establishment adhering to three core criteria: policy coordination, market feasibility, and industry empowerment. Based on the degree of correlation between insured objects and ecological protection, the system can be categorized into core insurance directly safeguarding ecosystems, basic insurance indirectly preventing environmental damage, and quasi-green insurance with positive ecological spillover effects. Although China has initiated explorations in biodiversity-related green insurance, its overall development remains in an early cultivation stage. This field currently faces multiple constraints. Firstly, insufficient policy impetus and the lack of mandatory insurance requirements hinder the formation of scale effects and dampen market participants' enthusiasm. Secondly, the supporting legal framework is underdeveloped, lacking clear definitions for critical aspects such as insurance liability scope, loss assessment standards, and claims settlement mechanisms. Furthermore, the challenges in quantifying ecological value and the scarcity of historical data lead to higher product pricing. Additionally, the application of technologies like big data in ecological risk assessment is limited by constrained scenarios and immature techniques, further impeding the precise development of related products. Simultaneously, public awareness and demand for biodiversity insurance need to be awakened and stimulated. To address these challenges, this paper proposes a systematic development pathway. The immediate priority is to establish a sound legal and policy foundation, clarifying insurance liabilities and strengthening mandatory coverage requirements through legislation. Concurrently, vigorous promotion of product innovation is essential, developing new insurance types and investment-financing models linked to ecological restoration performance. On the technical front, accelerating the development of comprehensive capabilities covering data collection, analysis, and application is crucial to empower risk quantification and product pricing through technology. Ultimately, by enhancing corporate awareness of insurance participation and guiding the insurance industry to integrate more deeply into the national ecological governance system, this approach aims to provide solid financial support for strengthening ecological security barriers and achieving biodiversity conservation goals.
How to cite: Gui, L., Chang, C.-P., and Yin, Z.: Development of a Biodiversity Risk Management System by Chinese Insurance Companies: Standards, Classification, and Implementation Pathways , World Biodiversity Forum 2026, Davos, Switzerland, 14–19 Jun 2026, WBF2026-66, https://doi.org/10.5194/wbf2026-66, 2026.
Governments, corporates, and financial institutions are waking up to a hard truth: biodiversity loss and nature tipping points are no longer distant ecological concerns, they are immediate macroeconomic and financial risks. Over half of global GDP is moderately or highly dependent on nature and ecosystem services
Living nature is the infrastructure that underpins productivity, resilience, and social stability. Yet conventional accounting privileges extracted or “dead” nature and near-term output, while overlooking the living assets that make growth possible and sustainable: functioning watersheds, intact forests and coastlines, pollination networks, healthy soils and grasslands, and productive oceans. By treating depletion as income, today’s models can inflate measured wealth and obscure the value of ecosystem services that stabilize economies, especially nature’s regulating functions.
The first step in correcting this omission is recognizing living nature as national wealth on sovereign balance sheets. This reframes ecosystems as maintainable assets rather than expendable inputs. But the real multiplier effect begins the morning after when governments move from recognition to monetization and embed natural capital into fiscal and debt strategy.
This session focuses on the macroeconomic impacts of valuing ecosystems not only for provisioning (food, fiber, timber), but for regulating services such as carbon sequestration, water filtration, rainfall regulation, pollination, coastal protection, erosion control, and ocean primary production. Capturing these benefits can create durable revenue streams through mechanisms such as payments for ecosystem services, resilience dividends, and high-integrity carbon and nature credit markets. As nature-related cash flows become measurable and investable, countries can expand their asset base, attract long-term investment, and strengthen creditworthiness.
Putting nature on the balance sheet also changes debt dynamics. A stronger national balance sheet can improve macroeconomic credibility, while verified, performance-linked revenues can reduce debt burdens, expand fiscal space for social priorities, and support sustainable growth. In this framework, conservation is no longer a recurring cost: it becomes a source of revenue generation, job creation, exportable environmental services, and investable resilience.
The session will showcase country examples and practical pathways to convert nature into a bankable asset that funds protection and restoration, reduces poverty, and supports a just transition to nature-positive development.
How to cite: Chami, R.: Putting Nature on the Balance Sheet: The Morning After, World Biodiversity Forum 2026, Davos, Switzerland, 14–19 Jun 2026, WBF2026-780, https://doi.org/10.5194/wbf2026-780, 2026.
