The G20 should act to catalyse funding for the blue economy transition through targeted financial instruments like debt-for-nature swaps, blue bonds, and outcome-based payments, according to an engagement group set up under India’s G20 presidency.
The world is facing an annual finance gap of $27.7 billion if it is to meet the Global Biodiversity Framework (GBF) target of protecting 30% of inland water, coastal, and marine areas by 2030, according to a so-called Think20 (T20) engagement group established by India to address how the sustainable development goals (SDGs) can be met.
Given that 45% of the world’s coastlines are in G20 territories, it should be considered vital for them to help drive funding to make sure oceans contribute to these goals, the T20 group said in a report released this week.
But securing funding for a sustainable blue economy is challenging, according to the report, which was penned by academics and consultants from a number of institutions and organisations, including the UN.
The blue economy lacks a well-established framework and regulatory mechanisms, which leads to an absence of consistency, transparency, and accountability that undermines the credibility of blue investments, it said.
Further, vast harmful subsidies – such as $35 billion in 2018 in global fishing subsidies that contributed to significant overfishing and illegal fishing – drives away potential private sector investors, as does the fact that many ocean-based projects lack bankability.
G20 governments must therefore step up their own efforts, the report urged.
“The G20 can catalyse transition finance for investing in sustainable fisheries, integrated coastal zone management, improved waste management facilities on land, sustainable marine and coastal tourism, clean maritime transport, and offshore renewable energy projects,” it said.
The report went on to list a number of emerging financing mechanisms G20 governments should explore, including debt-for-nature swaps similar to the agreement Ecuador recently signed to free up over $1 billion in domestic debt against setting up a conservation mechanism for the Galapagos Islands.
Blue bonds and loans were also listed as potentially effective ways to back sustainable marine development, along with conservation outcome-based financing, such as sustainability-linked loans and bonds.
“The Wildlife Conservation Bond for the protection of rhinos in South Africa can be considered to achieve outcomes such as the protection of a specific marine species, conservation of small-scale fisheries, or prevention of marine biodiversity loss,” it said.
Furthermore, G20 nations should also consider parametric insurance products that are triggered by individual events, it added.
As an example it mentioned the Mesoamerican Reef Insurance Programme, which covers hurricane risk and provides support for reef restoration and the recovery of local economies and communities.
Incentivising private finance through policy, legislation, and regulatory mechanisms that can protect natural capital while at the same time generating a return were also on T20’s list.
“Proactively engaging with all economic actors, including those that negatively affect ocean health, and focusing on areas most in need of adaptation, provides the opportunity to overcome hurdles and jointly deliver rapid transition pathways for blue economy financing,” it said.
“Such public-private partnerships need to be supported by G20 governments as well as international financial mechanisms, drawing on recent experiences in innovation.”
The G20 has similar T20 groups working across a range of issues ahead of this year’s G20 summit, which will be held in New Delhi on Sep. 9-10.
By Stian Reklev – stian@carbon-pulse.com
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