Despite global benefits, the burden of preserving natural capital often falls on low- and middle- income countries (LMICs). Mobilising greater flows of funds for these LMICs is critical, given the fiscal and financial market constraints they face. To add to their problems, the fiscal resources of developed countries have shrunk due to the fiscal pressures from COVID-19 and the slowing of growth. The developed countries, therefore, have been constrained in providing large-scale intergovernmental transfers to these LMICs. Alternative sources of low-cost funds are urgently required by these LMICs, but access to low- cost funds is limited due to their high credit risk. This Policy Brief suggests creating innovative financial tools that will leverage the preservation of natural capital for low-cost financing to LMICs while advocating a better integration of nature into the financial system through standardised accounting systems.
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