The World Bank said the degradation of the environment in the Philippines could result in $12.2 billion worth of lost output by 2030 in industries that depend on nature, making it among the world’s most vulnerable.

In a report, The Economic Case for Nature, the bank forecast that the collapse of selected ecosystem processes, such as wild pollination, marine fisheries, and timber growth in native forests will reduce output of industries that depend on such services provided by nature by 18% over the decade.

The industries deemed to be highly dependent on nature services include agriculture, livestock, forestry, and fisheries.

The other vulnerable countries were Angola and the Democratic Republic of Congo (output declines of 26% or $17.3 billion each) and Madagascar (23% or $1.6 billion). Vulnerable countries in Asia were Bangladesh (17% or $14 billion) and Vietnam (16% or $10.9 billion).

Philippines fisheries output is expected to decline 22% or $3.5 billion by 2030.

“Environmental degradation can push an ecosystem to a ‘tipping point’ beyond which it will shift to a new state or collapse entirely. Such a collapse would lead to a large-scale, abrupt decline in ecosystem services,” the World Bank said.

“Low-income and lower-middle-income countries stand to lose the most in relative terms if ecosystem services collapse,” it added.

The report noted that nature is a “critical asset” for these economies since it accounts for a significant share of their national wealth, while many low-income households rely on agriculture for income and as their safety net.

The World Bank estimated that biodiversity and ecosystem services degradation could slash global economic output by $2.7 trillion, equivalent to 2.3% of gross domestic product (GDP) each year, by 2030.

It said traditional economic models do not account for the worsening trend in ecosystem services, which produce “overly optimistic” estimates of economic growth.

The World Bank urged policymakers to adopt a coordinated policy response to prevent ecosystem services from degrading further and address biodiversity loss. The response needs to have elements like incentives for conservation, such as carbon payment schemes, in which landowners are compensated for maintaining forests.

It said sustainable agriculture can also help preserve nature, as can increased public investment in agricultural research to allow farmers to boost their output on land already being cultivated without encroaching into forested areas.

“Preserving nature and maintaining its services are critical for economic growth. Nature-smart policies and reforms, including agricultural subsidy reform and investments in agricultural innovation, enhance biodiversity and economic outcomes,” World Bank Group President David Malpass said in a statement. – Beatrice M. Laforga

The Asian Development Bank (ADB) said developing countries in Southeast Asia need to explore the possibility of tapping Sustainable Development Goals (SDG) Accelerator Bonds to make their recovering economies more resilient.

In a report Friday, the ADB said such bond issues can broaden financing options for projects aimed at meeting the SDG targets. The new bonds offer reduced issuer risk in projects with no track record of bond funding via exit guarantees alongside other credit enhancement structures combined with incentives.

Southeast Asian economies issued a record $12 billion in green, social, and sustainability bonds in 2020, but the bank said funding needs will continue to rise because of the pandemic.

“The SDG Accelerator Bond builds on global best practices in project finance and aims to standardize the risk–return structure to ensure investor appetite and help local governments and new state-owned entities access funds,” it said.

Ephyro Luis B. Amatong, a commissioner with the Securities Exchange Commission, said the bonds are a “critical” addition to the current pool of financial instruments, saying that they blend “the concessional aspects of limited public funds with the vastly greater amounts of market-rate private investments—and allocating the risks accordingly.”

“(It) will enable ASEAN countries to transition their economies toward a more sustainable, inclusive and, ultimately resilient, future,” he added.

“The pandemic has slowed down the momentum for sustainable and equitable growth in most of developing Asia and many countries are at risk of not meeting their SDG targets in climate resilience, gender equality, and human development,” ADB Vice-President Ahmed M. Saeed said in a statement.

“For countries looking to fund sustainable projects and programs on a large scale, capital markets represent an underused but viable mechanism to bring in SDG investments.”

Among the Philippine companies that issued SDG bonds in the past were the Bank of the Philippine Islands (BPI), the Development Bank of the Philippines, Manila Water Co. Inc., and Rizal Commercial Banking Corp.

The United Nations estimated global investment worth $5 trillion to $7 trillion is required each year to meet the 17 SDGs by 2030.

“Southeast Asia has made significant progress in the recent years toward achieving the SDGs, with increasing access to diverse channels of public and private, domestic and international financial options. This trajectory presents a potential opportunity if the funds can be judiciously raised and directed toward SDG projects,” the ADB said. – Beatrice M. Laforga