Challenges when designing blue bond financing for Small Island Developing States

Abstract

The paper presents the blue economy development in The Bahamas with an analysis of the conditions for using blue bonds as a financing mechanism. As part of the activities to be pursued for the issuance of a blue bond, the paper provides an identification of investment projects that could be financed through blue bonds. In addition to its blue economy activities, the government seeks to enhance the coastal ecosystems' resilience and their capacity to reduce the effects of strong climatic events following the Dorian Hurricane in September 2019. In this context, investments in the protection and restoration of ecosystems that increase public goods are therefore needed, especially in the context of the 30 × 30 target. The paper furthermore highlights the key challenges The Bahamas is facing for the development of suitable blue financial mechanisms, including the need for a robust institutional framework to ensure an efficient implementation of a blue financing scheme. By explicitly reflecting on the challenges for a country like the Bahamas, the paper seeks to provide a realistic account of the role and potential of bonds for financing sustainable development in marine environments.