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Welcome to World Ocean Radio…
I’m Peter Neill, Director of the World Ocean Observatory.
If we are to create a new financial context and process for R.E.S.C.U.E. from our indifference to the asset value of Nature; and if we are to transcend the inertia of bankrupt processes and procedures; and if we are to create a new ethos for the investment of natural capital as a strategy for the future, then we must apply our energy and imagination to innovation, to the development of new financial instruments that will enable the transformation expeditiously, responsibly, and ethically—indeed, in the moment—we must invent a new context, and new process, and a new resolve to enable transition and success.
We have discussed on past editions of World Ocean Radio the concept of ecosystem service accounting, as a new tool by which to monetize the collective application of a new financial approach. And, indeed, there is some hopeful progress to report. In 2021, the United Nations, in cooperation with the Basque Center for Climate Change, proposed a new international standard for natural capital accounting, intended “to track the extent, condition, and services provided by Nature’s ecosystem, such as forests and wetlands, in the form of physical and monetary accounts and indicators.” That such an initiative exists is encouraging, that some 34 nations are purported to be implementing such accounts is more so, as progress beyond tentative application.
But, as always, it may fall to private enterprise to apply and catalyze a principle to scale. For example, in 2023, Ecuador, in cooperation with the Pew Bertarelli Ocean Legacy Project, in partnership with the Oceans Finance Company and Aqua Blue Investments, enabled a massive Debt for Nature swap—US$1.6 billion in existing commercial debt converted into a $656 million loan financed by a Galapagos Marine Bond issued by Credit Suisse, with risk insurance and loan guarantees provided by the US International Development Finance Corporation and the Inter-American Bank, to include a $17 million annual government contribution for conservation activity and endowment investment designed to underwrite future support for the protection of the Galapagos Marine Reserve—over 50,000 square miles of the most vital marine biodiversity on Earth.
The project saves Ecuador more than $1 billion in borrowing costs, resulting from a combination of forgiven debt, write-offs, and reduced interest. The Debt-for-Nature concept for environmental conservation has been in play since 1987—over 50 projects in 16 countries, but this project represents impact far beyond that is monumental, inspirational, and exemplary for application elsewhere.
Such financial instruments demand comparable invention. Other ideas have been promoted to comparable end, such as the creation of a new Natural Capital Bank specifically to direct funds toward long-term sustainability and value creation using natural capital accounting for alternative private and public investment and outcome. Other suggestions include new “green” incentives and taxes that reward alternatives and penalize externalities, or new sustainability guidelines and programs for the World Bank, the Global Environment Facility (GEF), sovereign and pension funds, and other investment providers. But the regressive forces of politics, inertia, challenge to institutional convention, and past standards for analyses of estimated returns continue to impede such change, sadly to stasis or regression. We don’t want for ideas; but we want for courage and commitment from among them to choose.
Here is the quandary: we are on a boat on the ocean in the night when a crew member falls overboard and choice is starkly presented: 1) to jump into the cold water after, and save, or 2) to toss the life preserver, and search, or 3) to do nothing as the conditions would seem to offer no chance for survival. What to do? What decision to take? How to choose? We confront an existential calculation of risk. We must apply the courage of a transformative ethos. We must choose a demonstration of the spirit of our time. Choice is our opportunity for RESCUE: R for renewal, E for environment, S for society, C for collaboration, U for understanding, and E for engagement.
We will discuss these issues, and more, in future editions of World Ocean Radio.
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