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Maximizing debt-for-nature effectiveness

Alex Pfaff co-wrote an analysis for Science, detailing the balance needed to maintain a healthy climate while also maintaining a healthy economic approach.

Alex Pfaff, professor of public policy, economics and environment in the Sanford School of Public Policy; Elizabeth Losos, executive-in-residence at the Nicholas Institute for Energy, Environment & Sustainability; and Stuart Pimm, Doris Duke Professor of Conservation Ecology in the Nicholas School for the Environment; co-authored the Science article, “Tackling debt, biodiversity loss, and climate change.”

In looking at funding mechanisms that support developing countries to address the interconnected crises of debt, climate, and biodiversity, the authors drew on lessons learned propose reforming future debt-for-nature swaps – voluntary transactions in which creditors reduce or cancel debt in exchange for debtor-country commitments to fund specific environmental activities.

“We 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,” the authors wrote.

The authors also joined the Nicholas Institute for Energy, Environment & Sustainability for a Q&A about their findings.