- While development aid is falling globally, many megadiverse countries are juggling debt stress that pushes conservation to the margins.
- Numerous financial instruments have arisen to fund conservation, with an equally diverse set of outcomes and an array of opaque metrics. Meanwhile, biodiversity bonds are clear about what success looks like, and how it will be proven.
- “Done right, these instruments can fund conservation at meaningful scale; done wrong, they financialize nature and entrench inequity,” a new op-ed argues.
- This post is a commentary. The views expressed are those of the author, not necessarily of Mongabay.
The interlinked crises of climate change and biodiversity loss are slipping down political agendas just as geopolitical instability and fiscal pressures rise. Overseas development aid is falling in real terms, and many megadiverse countries are juggling debt stress that pushes conservation to the margins.
Meanwhile, the global biodiversity finance gap remains vast, estimated at roughly $700 billion a year by The Nature Conservancy’s 2025 analysis. This shortfall has invited a new family of instruments that promise to pay for measurable results. Beyond classic green bonds, we’re seeing biodiversity-linked bonds (BLBs), outcome bonds, and debt-for-nature swaps.
However, this shift is controversial. Critics argue that such tools cannot work because nature is too complex to be commodified. Furthermore, a new perspective published in Nature Ecology & Evolution warns that without rigorous design, nature markets risk providing “cheap” talk instead of real conservation, potentially rewarding countries for outcomes that would have happened anyway.
Social and political safeguards — not just clever finance — will decide whether these financial instruments can really help people and nature. Unfortunately, we don’t have the luxury of waiting for perfect instruments while ecosystems unravel, but we can insist on better, more integral ones. Biodiversity-linked bonds and debt-for-nature swaps should scale only when they follow the five essential fixes below.
Why the hype and the caution?
Three selling points explain the momentum for biodiversity bonds. First is scale: the cumulative labeled sustainable bond market reached $6.2 trillion in value in 2025. While more than 60% of this capital currently flows toward renewable energy and low-carbon transport, even a small slice of this market could help conservation projects exponentially. Second is accountability: outcome-linked designs promise to pay for results, not promises. Third is resilience: better-funded mangrove, reef and forest conservation programs reduce disaster risks. World Bank data show that nature-based solutions can halve the costs of disaster recovery by protecting infrastructure from flooding and erosion.
The most innovative area is potentially blended finance, which combines public and private funds. Debt-for-nature swaps enable countries to restructure debt in exchange for ecosystem restoration, but moving living ecosystems into term sheets is risky. Communities carry the consequences when targets are missed, and the temptation to overclaim is strong.
Nature credits and biodiversity bonds are both key tools in the accelerating “nature market,” and while we more often hear about credits — and although they share many of the same implementation challenges and risks — they operate through fundamentally different financial mechanisms. Nature credits are assets that are quantifiable and tradeable units representing verified positive biodiversity outcomes (such as a restored hectare or a measurable increase in a species population) that can be bought by entities to meet voluntary or regulatory commitments. Biodiversity bonds are debt-based financial instruments where the issuer (often a government) borrows capital to fund conservation, with repayment terms — such as interest rate adjustments — linked to the achievement of specific biodiversity targets.
Five flaws needing fixing
1. Lack of verified ecological outcomes
Counting rhinos is hard but doable. Proving that mangrove health improved demands robust baselines and transparent data. Without this, outcomes collapse into marketing. Currently, fragmented and inconsistent data remain a primary barrier. As the World Economic Forum warned in 2025, investors often rely on proxy data such as satellite imagery, which can mistake a sterile timber plantation for a biodiverse native forest.
To avoid this greenwashing, we need clear impact measurement, ideally through the use of independent third-party verification, like the protocols developed by Zoological Society of London and Conservation Alpha. In successful models like the World Bank’s “Rhino Bond,” the issuer does not decide if the goal was met; an independent ecological auditor must certify a species population growth before a single dollar is paid out to investors.
2. “Inclusive rhetoric” is not community partnership
Conservation has a violent history of fenced parks and evictions. If the only metric is “hectares protected,” it’s possible to hit targets by drawing a line on a map and pushing people out. This is unethical and self-defeating, and despite the rhetoric of “inclusive conservation,” only 15-20% of current national plans include formal mechanisms for Indigenous peoples and local communities (IPLCs) to participate in decision-making.
To fix this, we must adopt the new 2025 Global Biodiversity Framework Fund (GBFF) guidelines, which mandate that funds go directly to Indigenous-led organizations. This was further reinforced by the 2025 Belém Principles, which mandate a minimum 20% direct allocation of funds to local forest guardians, ensuring that nature protection doesn’t become a new form of land grabbing, and that primary guardians of the forest are compensated as sovereign economic actors, not just passive participants.
3. Conditionality and the debt-nature paradox
Some nature-linked bonds are designed so that if a country misses its target, its interest rate goes up. The April 2025 Expert Review on Debt, Nature & Climate warns that this creates a “vicious circle” where a country could be punished for a “climate act of God,” such as a wildfire, by being forced to pay more interest.
Critics at COP30 in Belém pointed out a deeper paradox in this financial logic: many of these facilities, including the newly launched Tropical Forests Forever Facility (TFFF), make money by investing their capital in the public and corporate bonds of developing nations. This creates a scenario where forest countries are effectively paying interest to the fund, which then pays back “rewards” for conservation. If markets become volatile, tropical nations could find themselves underwriting their own forest protection through debt servicing to international investors.
To fix this, we must cap penalties and load rewards on the upside. We should also use “first-loss” capital, where a philanthropy or development bank takes the first hit if the project fails, keeping borrowing costs stable for the country.
4. Additionality needs rigorous scientific baselines and leakage offsets
A bond is only effective if it drives change that wouldn’t have happened otherwise. Recent research highlights a major flaw in current market logic: some bonds use a predicted decline as a baseline. This means a country could be rewarded simply for nature dying more slowly than a pessimistic forecast. The same research — which points to five similar yet more general rules for nature markets — stresses the importance of verifying that a restoration project doesn’t export negative effects elsewhere that would undermine its outcome, meaning that it doesn’t create leakages or negative spillover effects. If displacement triggers new land clearing for agriculture, the project’s net ecological benefits may drop to near zero. However, if activity shifts to already cleared land through sustainable intensification, the resulting costs to nature remain negligible. Ultimately, the project’s success hinges on whether leakage causes further deforestation or drives low-carbon farming on existing plots.
We must move away from “less-bad” targets toward nature-positive goals that require measurable ecosystem restoration rather than just unverified, slower destruction. If the targets are too easy to hit, the bond becomes a subsidy for the status quo rather than a tool for transformation.
5. Securing a permanent future for nature
A significant risk in bond design is the “cliff edge” — the vulnerability that arises when a short-term bond reaches maturity — but nature does not operate on a five-year financial cycle. Once private investors are paid out, the dedicated stream of funding that supported park rangers, monitoring and community stewardship can suddenly dissipate. Without a transition plan, ecological gains achieved during the bond’s life may lack the necessary support to persist.
Under this aspect, the TFFF addresses a structural gap by providing a long-term bridge that standard biodiversity bonds lack. While a bond provides the upfront capital to launch restoration, the TFFF secures the recurring operational funding needed to sustain those gains. In practice, it acts as an annual stewardship payment for standing forests, ensuring that essential costs — like ranger salaries and community dividends — are funded in perpetuity.
From slogans to stewardship
Done right, these instruments can fund conservation at meaningful scale; done wrong, they financialize nature and entrench inequity. A credible biodiversity bond is clear about what success looks like and how it will be proven. It hardwires social guardrails such as free, prior and informed consent (FPIC) of local communities and shares risk honestly. It distinguishes itself from nature credits by being a tool for capital (funding the work) rather than a claim (offsetting damage elsewhere).
Because we don’t have the luxury of waiting for perfect instruments while ecosystems unravel, we must insist on better ones: deals that pay strictly for verified outcomes and center Indigenous leadership. Done that way, finance can move from slogans to stewardship; done badly, it will simply teach markets to say “mangrove restoration” while the bulldozers keep moving, and the difference will be decided in details the public can’t actually see.
Anna Comacchio is a graduate of the conservation science and practice program at Imperial College London, with previous EU policy background and five years’ experience in EU regional cooperation, sustainable development and stakeholder engagement.
Banner image: A black and rufous elephant shrew (Rhynchocyon petersi). Image by Joey Makalintal via Wikimedia Commons (CC BY 2.0).
Related audio from Mongabay’s podcast: A discussion of the Tropical Forest Forever Facility’s strengths and weaknesses, listen here:
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Citation:
zu Ermgassen, S.O., Swinfield, T., Bull, J. W., Duffus, N., Macintosh, A., Maron, M., … Evans, M. C. (2025). Five rules for scientifically credible nature markets. Nature Ecology & Evolution. doi:10.1038/s41559-025-02932-z
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