Forest Bonds
A key area of our work has involved researching and analysing
alternative methods of financing sustainable development on behalf of
organisations such as the International Finance Corporation (IFC) and
the UK Department for International Development (DfID). We have been engaged on research into the use of securitisation as a means of financing sustainable natural resource projects as part of the DfID/IFC sponsored EcoSecuritisation Project together with Forum for the Future.
Key Features of Forest-Backed
Bonds:-
- Securitisation of different forest and forest-related assets and revenue streams
- Asset-liability matching - natural growth of forests matched to future liabilities
- Portfolio diversification
- Incorporation of new value sets such as ecosystem services, carbon sequestration and biodiversity
- Use of third party insurance for both timber and payments for ecosystem services (PES)
- Delivery of up-front capital to secure long term sustainable forest management
- Reduce the economic bias towards unsustainable extraction
Media coverage:-
- The New-Eco Warriors (The Banker) (PDF)
- ‘Eco-securitisation’ mulled to protect forests (Environmental
Finance News) (PDF)
- UNEP-FI Green Financial Products and Services (p.29)
- Can money grow on trees? (CNBC European Business, Jan'09)