WASHINGTON, CMC – The United States Under Secretary of State for Economic Growth, Energy and the Environment, Jose W. Fernandez, has signed a letter of intent (LOI) with the Inter-American Development Bank (IDB) to launch the Americas Partnership Fund for Nature in Latin America and the Caribbean.
Fernandez signed the LOI with IDB President Ilan Goldfajn to create the fund that will support Americas Partnership for Economic Prosperity (Americas Partnership) partners with technical cooperation to mainstream climate, biodiversity, natural capital, and nature-based solutions (NBS) into economic development plans and investments.
US President Joe Biden announced the Americas Partnership Fund for Nature at the recent Leaders’ Summit of the Americas Partnership for Economic Prosperity (Americas Partnership).
The State Department said the fund aims to “catalyze investment in the Western Hemisphere’s vast natural capital and unlock nature-based solutions (NBS).”
Under this initiative, it said the ultimate goal is to “reduce greenhouse gas emissions, protect ecosystems, boost job creation and prosperity, and safeguard lives and livelihoods from the impacts of climate change.”
Washington said the Americas Partnership Fund for Nature will support partner countries in Latin America and the Caribbean with technical cooperation to mainstream climate, biodiversity, natural capital, and NBS into economic development plans and investments.
“Investor demand and interest in nature-based solutions has grown steadily in recent years. However, many innovative projects and transactions do not materialize due to a shortage of early-stage grant funding,” the State Department said.
“To address this critical bottleneck, the Fund for Nature will provide grant financing for technical cooperation, including analytics, project design, capacity building, and natural capital valuation.
“The outcomes of these grant projects will support the financing of nature-based solutions through innovative transactions and instruments, including debt-for-nature, debt-for-climate swaps, and sustainability-linked bonds,” it added, noting that the fund is a partnership with the IDB, which will house the new initiative.
The State Department said the IDB has displayed “bold leadership in nature-positive finance by spearheading the development of the Joint Statement by multilateral development banks on Nature, People, and Planet, as well as co-leading the banks’ Working Group on Nature.”
It said the IDB established a Natural Capital Lab Programme and demonstrated its capacity to innovate in nature-based solution financing.
“The Fund for Nature will build on existing and ongoing IDB efforts in partner countries in Latin America and the Caribbean to value ecosystems, adopt supportive policies and regulations, and launch pilot projects. We expect the Fund for Nature will mobilize significant capital from public and private investors.”
According to the United Nations, current finance flows to nature-based solutions amounted to US$154 billion in 2022.
“Yet, these investments need to double to meet key climate and biodiversity objectives quickly,” the State Department said, adding in this context, the Americas Partnership Fund for Nature will test “new, private sector-focused approaches to natural capital finance and enable projects to achieve scale by linking them to IDB finance, other international funding sources, and private investors and financial institutions.”
For example, the State Department said this new initiative could support innovative NBS projects similar to the recently launched Galápagos Marine Bond, which will generate an estimated US$323 million for marine conservation in Ecuador, or the Belize Blue Bond debt conversion, which unlocked US$180 million for ecosystem conservation in that Caribbean Community (CARICOM) member-state.
Washington said it will work with other donor governments to join and contribute to this effort, with Canada agreeing to coordinate financing from its recently established Nature Based Solutions Programme at the IDB to complement and magnify support from the Americas Partnership Fund for Nature.
Canada’s program focuses on strengthening the policy environment and enabling conditions to encourage the adoption of nature-based solutions in Latin American and Caribbean countries, including Americas Partnership members, to “mitigate the impacts of climate change, promote resilience and safeguard biodiversity.
“The Fund for Nature embodies the Americas Partnership’s ongoing commitment to advance climate action, protect biodiversity, create jobs, and mobilize sustainable investment in the hemisphere,” the State Department said.
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