Analysis: How Blue Bonds Promise To Boost Latin America’s Economy
The recent issuance of Latin America’s first blue bond could be a major milestone. The region stands to benefit from this nascent financial mechanism aimed at protecting water sources and creating opportunities for populations living near them.
Announced during the UN climate summit in Glasgow, the fixed-rate bond issued by the Inter-American Development Bank (IDB) will generate $37 million to help fund projects to increase access to clean water in Goal 6 — “Ensure access to water and sanitation for all” — one of 17 interlinked goals established to promote a more sustainable future worldwide.. That is intended to help the region meet UN Sustainable Development
According to the IDB, around a quarter of Latin America’s population lives near the region’s 40,000 kilometers of coastline. This means that a scheme designed to raise funds to protect water sources while generating investment and opportunities in those areas stands to have a transformative impact.
While it was not made clear exactly where the funds raised are destined to go, numerous Latin American and Caribbean nations could benefit substantially from the expansion of blue bonds — of which the first one in the world was only issued in 2018. They also promise to be a significant source of funds for investors doing business in Latin America or interested in entering the region.
Photo courtesy of Manuel Darío Fuentes Hernández.