Global S&T Development Trend Analysis Platform of Resources and Environment
| DOI | 10.1126/science.abf4049 |
| China can help solve the debt and environmental crises | |
| B. Alexander Simmons; Rebecca Ray; Hongbo Yang; Kevin P. Gallagher | |
| 2021-01-29 | |
| 发表期刊 | Science
 |
| 出版年 | 2021 |
| 英文摘要 | Many developing countries are experiencing mounting external debt distress owing to the economic consequences of COVID-19. G20 Finance Ministers were swift to adopt the Debt Service Suspension Initiative (DSSI) in 2020, suspending bilateral debt payments through July 2021 for 73 low-income countries. Globally, Chinese government–sponsored banks have emerged as the largest bilateral creditors ([ 1 ][1]). For the 46 participating DSSI countries thus far, payments due to China constitute 68% ($8.4 billion) of all official bilateral payments originally due by the end of 2020 ([ 2 ][2]). G20 countries have now come to realize that they will need to go beyond debt suspension to include the cancellation of some portion of debt. Without substantial debt relief, developing countries will face pressure to exploit natural capital to pay short-term debt, placing conservation and climate change ambitions aside. It is therefore of paramount importance to align debt restructuring efforts with climate, biodiversity, and development goals. Although China has only recently become a major creditor, it has already built a strong record of bilateral debt relief and has begun to advocate for linking biodiversity, climate change, and international finance ([ 3 ][3]). Here, we conduct an exploratory analysis of opportunities for China to alleviate debt burdens in exchange for debtor nation commitments to climate change mitigation and/or adaptation and environmental protection through “debt-for-climate” and “debt-for-nature” swaps.
China's two “policy banks” that operate abroad—the China Development Bank and the Export-Import Bank of China—have committed $464 billion in finance to governments around the world since 2008, only $3 billion of which has gone to high-income countries ([ 4 ][4]). Many countries with substantial debt exposure to China are increasingly vulnerable to tension between the priorities of economic recovery, public health, and environmental protection. Without immediate action to tackle this debt crisis, developing countries will have to service external debt payments at the expense of fighting the virus, protecting vulnerable communities, and honoring sustainability commitments. These low- and lower-middle-income countries are more vulnerable to the impacts of climate change ([ 5 ][5]) and have lost two to five times more intact landscapes since 2000 compared with upper-middle- and high-income countries ([ 6 ][6]). Unsustainable long-term recovery strategies further jeopardize climate change mitigation and biodiversity conservation in these countries.
Debt swaps are quickly becoming part of the international dialogue surrounding innovative approaches to achieving climate change mitigation and biodiversity conservation targets amid the COVID-19 economic crisis ([ 7 ][7], [ 8 ][8]). Early debt-for-nature efforts, where organizations and/or government creditors negotiated with government debtors to cancel or reduce debts in return for binding commitments to achieve conservation targets ([ 9 ][9]), focused on low-hanging fruit, where debt was cheap on the secondary markets and enforcement was limited. Contemporary debt-for-nature swaps establish funds to ensure investment over longer periods of time, greater involvement of numerous stakeholders, and sufficient enforcement. New frontiers of debt restructuring continue to emerge that envision debt swaps for “nature performance bonds” or “green recovery bonds” that link economic activity to environmental performance. Incentive-based climate mitigation and adaptation strategies—like the emerging debt-for-climate swaps—will also be necessary for reducing countries' contributions and vulnerability to climate change. Given that the mantra for the response to the COVID-19 economic crisis has been to do “whatever it takes,” serious consideration of debt-for-nature or climate swaps is warranted as part of the COVID-19 global economic toolkit.
With China's emergence as the world's largest source of bilateral credit, it has come under scrutiny in some quarters for creating “debt traps” in developing countries, supposedly seeking to saddle borrowers with massive debt to increase political leverage. Yet this perception is in contrast to empirical evidence of China's history in lending and debt relief ([ 10 ][10]). Across Africa—where China has a long history with sovereign lending—China has frequently engaged with various forms of bilateral debt relief ([ 11 ][11]), including additional promises during the 2020 Extraordinary China-Africa Summit on Solidarity Against COVID-19. China also joined the DSSI in 2020, marking its first participation in any multilateral debt relief effort, and it is currently the largest single contributor to the DSSI. To date, China has not engaged in debt-for-nature or debt-for-climate swaps, but as a pioneer of green bonds, the country is now considering including these swaps in their policy toolkit ([ 8 ][8]).
To maximize return on investment, countries participating in debt swaps could jointly target debt relief, conservation, and climate mitigation and/or adaptation ([ 7 ][7], [ 12 ][12]). Of 87 low- to middle-income countries that received more than $25 million in development finance commitments from China's two policy banks since 2008 ([ 4 ][4]), we identify 25 countries under the greatest possible Chinese debt stress; we define these as countries whose Chinese development finance commitments constitute more than 4.80% (median) of their most recent gross domestic product (GDP) ([ 4 ][4]) and whose total outstanding external debts constitute more than 38.47% (median) of their GDP. We also considered payments due for 62 DSSI countries and identify the 27 countries at greatest risk of defaulting on China payments due in 2020, defined as countries whose China payments constitute more than 51.30% (median) of all bilateral payments due in 2020 and more than 13.17% (median) of all external (bilateral and multilateral) payments due in 2020 ([ 2 ][2]). In total, Chinese debts were considered for 102 countries, and 41 low- and middle-income countries met one or both indicators of substantial Chinese debt concern (fig. S1), representing up to $179 billion in maximum Chinese debt and $9.7 billion in payments originally due by the end of 2020 [see supplementary materials (SM) for country-level data].
Traditionally, debt-for-nature swaps target reducing deforestation and protecting threatened species ([ 9 ][9]), and debt-for-climate swaps can target climate change mitigation and/or adaptation strategies ([ 7 ][7]). To gauge the prominence of these respective threats for debt-stressed countries, we score the 41 countries on two climate threat metrics (average annual carbon emissions and climate vulnerability) and two biodiversity threat metrics (threatened species density and annual tree cover loss) (fig. S2). Scores for each metric are distinguished as relatively “high threat” (1 point) or “low threat” (0 points) based on the median of all 102 low- and middle-income countries considered in this analysis (see SM for data sources and calculations).
Recent studies have considered countries' “creditworthiness” ([ 7 ][7]) and implementation or management costs ([ 12 ][12]) as barriers in debt swap opportunities. Here, we take a more direct and globally comparative approach to estimate opportunities for success, based on climate commitments and natural capital. Under the Paris Climate Agreement, several countries have proposed ambitious nationally determined contributions (NDCs) for renewable energy ([ 13 ][13]), and high debt stress may jeopardize these commitments. We consider countries whose renewable energy investment costs (associated with their existing NDC commitments) are more than 5.50% (median) of their GDP to have greater opportunity for success in meeting the terms of debt-for-climate swaps, because they may have stronger political will for climate action. Given the rapid decline of intact landscapes in developing countries and the frequency with which protected areas have been key features of traditional debt-for-nature swaps, we consider countries with more than 78.39% (median) of remaining intact lands currently unprotected to have greater opportunity for implementing traditional debt-for-nature swaps. We add an additional point to countries' climate and/or biodiversity threat scores if they have greater debt swap opportunity, for a total score ranging from 0 to 3 for debt-for-climate and debt-for-nature potential (see the figure and SM).
![Figure][14]
A promising avenue for debt-stressed countries
An assessment of the potential for debt-for-nature and debt-for-climate swaps in countries under greatest China debt stress is shown. The relative potential for debt-for-nature and debt-for-climate swaps based on threats and opportunity for implementation, with maximum (max.) total China debts and China payments due in 2020, is highlighted for select countries (see supplementary materials for data and calculations). Countries under lower China debt stress (light gray) are excluded.
GRAPHIC: ADAPTED FROM B. A. SIMMONS ET AL. BY N. DESAI/ SCIENCE
Several countries under greatest China debt stress show great promise for debt-for-nature and debt-for-climate swaps. Angola, Cambodia, Myanmar, and the Solomon Islands score highest across simultaneous climate and biodiversity threats and opportunities (see the figure). Angola—where China has extended a total of $29.6 billion (31% of GDP) in finance commitments—could greatly benefit from debt-for-climate swaps incorporating both climate mitigation and adaptation initiatives, freeing up capital for their $15.7 billion commitment to renewable energy investments. In addition, nearly 91% of Angola's remaining intact areas are unprotected, providing an opportunity for debt-for-nature swaps to protect these landscapes and reduce relatively high rates of tree cover loss. Cambodia ($5 billion in China finance commitments) faces similar potential benefits, but the majority of its intact landscapes (84%) are already under protection, limiting the opportunity to find suitable locations to efficiently and ethically implement traditional debt-for-nature swaps.
For countries like Senegal, Sudan, and Zimbabwe, where carbon emissions and climate vulnerability are high and renewable energy commitments span 15 to 39% of their GDP, debt-for-climate swaps could be prioritized to simultaneously reduce carbon emissions and facilitate investment in building climate-resilient communities. By contrast, debt-for-nature swaps show greater promise for smaller countries like Fiji and Togo. These nations with a smaller carbon footprint have some of the highest concentrations of threatened species and minimal existing protection of their remaining intact landscapes. Together, these two countries owed China $58 million by the end of 2020—a relatively small figure compared with most other debt-stressed countries; such small debt-for-nature investments could serve as lower-risk pilot programs and lead to positive biodiversity outcomes.
Debt swaps provide both practical and reputational incentives for China. Many of China's debtors will not be able to repay the full amount of their debt, which could leave China with stranded assets across the globe. Restructuring would simultaneously help countries recover from the pandemic and increase the likelihood that the remainder of the debt will be repaid. Furthermore, the implementation of debt swaps could allow China to still receive something in return in terms of reputation (e.g., favorable political scores, evidence of investing in the public good). As China is set to host the Conference of the Parties (COP) to the Convention on Biological Diversity (CBD) in 2021, opportunities abound to advance debt swap mechanisms and lead by example in the post-2020 era of conservation. China has also pledged to be carbon neutral by 2060; as the “Rule Book” for Article 6 of the Paris Climate Agreement becomes clearer, China and other creditors may even be able to obtain “credits” for such swaps moving forward.
Because biodiversity and climate change are intrinsically linked, debt swaps should be designed to maximize dual benefits to biodiversity and climate mitigation, such as preserving carbon sinks by reducing deforestation. This would provide an additional tool for China to deliver on its own policy priorities, such as the Beijing Call for Biodiversity and Climate Change ([ 3 ][3]) and a “green” Belt and Road ([ 8 ][8]).
China and its borrowers can work bilaterally and multilaterally to make these swaps part of their toolkit. As China considers creating a new biodiversity fund ahead of the CBD COP in 2021, some of those funds could be earmarked for debt-for-nature or debt-for-climate swaps, enhancing the environmental performance of new or replaced financing from China. On a bilateral level, numerous countries are engaged in debt relief negotiations. China could signal that it is willing to expand those discussions to include possible debt swaps, and borrowers could propose swaps as well. More ambitiously, China could expand multilateral debt relief options. There is an increasing recognition that the DSSI does not include all the countries that will need debt relief, including several climate-vulnerable countries. China should join these calls to expand the DSSI to include climate-vulnerable countries and to use debt swaps as a tool for reducing these countries' debt burdens.
As China develops debt swaps as part of its toolkit, it should be mindful to avoid pitfalls of such swaps in the past, such as inadequate provision of resources, misalignment with the debtor country's policies, and offering too little debt restructuring to sufficiently reduce debt stress ([ 14 ][15]). However, there is compelling evidence that debt-for-nature swaps can lead to positive biodiversity outcomes if designed and implemented to avoid these pitfalls ([ 15 ][16]), and these successful examples can guide the design of debt-for-climate swaps and other emerging nature and climate performance-linked finance instruments that have yet to gain widespread adoption.
This global outlook is just the first step in propelling proenvironmental debt restructuring into the next decade. We have used new data on Chinese overseas lending to highlight debt-distressed countries and just a few overarching indicators of climate and biodiversity threat to highlight heterogeneities and synergies between two types of debt swaps. Going forward, debt swaps will need to be designed according to the specific threats and priorities for biodiversity and climate change in the debtor countries, and a greater suite of indicators will be necessary for identifying global debt swap priorities. For example, countries considered to have relatively low biodiversity threat from tree-cover loss in this analysis may still face considerable challenges with pollution, coastal development, endemic species decline, or marine habitat loss. Prioritizations will also benefit from more explicit considerations of the direct costs and feasibility of debt swaps and the relationship between threats and opportunity for success ([ 12 ][12]), which was not possible in this global comparison (see SM for additional considerations for future research). These priorities must be guided by climate and conservation scientists in collaboration with policy experts and community stakeholders to maximize environmental benefits while stimulating economic growth and increasing human well-being. Implementing a strategic, effective, and socially responsible framework for debt-for-nature and debt-for-climate swaps could ultimately allow China to lead on global financial stability, a recovery from the COVID-19 pandemic, and simultaneous reductions of climate and biodiversity risks.
[science.sciencemag.org/content/371/6528/468/suppl/DC1][17]
1. [↵][18]1. S. Horn,
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2. [↵][20]World Bank, “COVID-19 debt service suspension initiative” (2021); [www.worldbank.org/en/topic/debt/brief/covid-19-debt-service-suspension-initiative][21].
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4. [↵][24]1. R. Ray,
2. K. P. Gallagher,
3. W. Kring,
4. J. Pitts,
5. B. A. Simmons
, Geolocated dataset of Chinese overseas development finance, OSF (2020); |
| 领域 | 气候变化 ; 资源环境 |
| URL | 查看原文 |
| 引用统计 | |
| 文献类型 | 期刊论文 |
| 条目标识符 | http://119.78.100.173/C666/handle/2XK7JSWQ/313998 |
| 专题 | 气候变化 资源环境科学 |
| 推荐引用方式 GB/T 7714 | B. Alexander Simmons,Rebecca Ray,Hongbo Yang,et al. China can help solve the debt and environmental crises[J]. Science,2021. |
| APA | B. Alexander Simmons,Rebecca Ray,Hongbo Yang,&Kevin P. Gallagher.(2021).China can help solve the debt and environmental crises.Science. |
| MLA | B. Alexander Simmons,et al."China can help solve the debt and environmental crises".Science (2021). |
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