A US-headquartered NGO has urged the International Monetary Fund (IMF) to instantly make significant funds available for biodiversity purposes and undertake institutional reforms to put nature loss at the heart of global financial reform.
Avaaz released a policy paper asking for the reforms on Wednesday, just as the IMF’s week-long Spring meetings had begun.
“The loss of biodiversity is a direct and major risk for the economies of numerous countries, with direct connections and implications with their debt levels and structure. To renew its role and restore its relevance in the 21st century, the IMF must put biodiversity at the heart of all of its policies,” Avaaz said.
It identified four actions the fund could take immediately to ramp up funding for nature issues, including reallocating existing and issuing new Special Drawing Rights (SDRs) to the tune of $650 billion.
“These SDRs should be used to support countries in the development of policies and investments to maintain and improve natural capital that provide additional macroeconomic and financial stability, as well as to support the inclusion of biodiversity criteria in debt sustainability assessment,” the report said.
It noted that several others, including the V20 Group, the UNDP, the Center for Economic and Policy Research, and Banco de Espana had come to the same conclusion, and pointed out that such a decision could easily be made by the IMF’s board of directors.
Further Avaaz said assurance of functional ecosystems and other biodiversity-sensitive criteria and actions should be added as a new qualifying challenge under the IMF’s Resilience and Sustainability Trust (RST), a mechanism helping low-income and vulnerable nations become resistant to economic shocks.
“This would act as a domino effect, unleashing funds to address the issue of biodiversity loss and ecosystem functionality at the intersection of public finance and macroeconomic stability,” Avaaz argued.
“The inclusion of biodiversity criteria in the RST would provide a step-wise and cost-effective approach to mainstreaming biodiversity within the IMF,” the report said.
DEBT
Similar to a recent report by non-profit NatureFinance, Avaaz also called on the IMF to implement an ambitious programme for debt-for-nature and debt-for-climate swaps.
While there have been some successful national examples of debt-for-nature swaps and Ecuador is in the process of finalising a similar deal focussed on coastal and marine environment, the Avaaz report said country-by-country negotiations are insufficient, and that the tool must be scaled up.
By working together with the Paris Club of official creditors, an initial universe of swaps for $13 bln in low-income countries could be mobilised for achieving the sustainable development goals alone, according to the report.
Lastly, the IMF should back the inclusion of long-term biodiversity and climate change targets in its policy support programmes, the report said, arguing this “would trigger action by other institutions and could provide a platform for closer cooperation between international financial institutions and the Rio conventions”.
Once those immediate actions have been undertaken, the fund should proceed with institutional reform, including developing natural capital criteria, which can be included in debt sustainability analysis.
The IMF should also seek to work with other large multi- and international financial institutions to reform the global financial architecture in a way that puts the nature crisis front and centre, according to the report.
“[C]ountries [are] being encouraged to destroy more of their biodiversity for debt servicing, creating even more mid to long term vulnerability for their economies. In the current efforts for reforming global financial cooperation, and end must be put to this vicious cycle,” said Oscar Soria, a campaign director at Avaaz.
By Stian Reklev – stian@carbon-pulse.com
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