Green infrastructure in developing economies: a unique target for risk reduction and financial investment
Year: 2024
Type: article
Abstract: Financing green infrastructure provides a unique opportunity for long-term investment with multiple benefits, including financial returns, reduced income inequality, and addressing high-impact areas. However, a dearth of suitable financial instruments in developing economies hampers the realization of these advantages due to high risks and costs for investors. We propose the Floating Green Carbon Credit Infrastructure (FGCCI) bond to catalyze green infrastructure investment in developing countries. The theoretical structure of the FGCCI bond leverages green bonds with floating rates, carbon credits, and other risk mitigation tools to bridge the investment gap. By aligning investor returns with sustainability outcomes, generating new revenue streams, and reducing risk exposures, FGCCI bonds have the potential to unlock significant private capital for green infrastructure projects that advance climate goals and sustainable development. Through analysis of funding challenges in developing economies and comparative assessment of financial instruments, this study elucidates the FGCCI bond’s potential to mitigate investment risks, enhance returns, and achieve sustainability and conservation goals. The FGCCI bond could significantly reshape sustainable finance in developing economies, offering a robust model for innovative green investments.
Source: Climate Policy
Authors: Tate Lavitt, Holli Sargeant
Institution: University of Cambridge
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: hybrid
OpenAlex ID: W4403399476