Loss of nature is pushing nations toward sovereign credit downgrades and ‘bankruptcy’– report    

The world’s first biodiversity-adjusted sovereign credit ratings show how ecological destruction affects public finances – driving downgrades, debt crises and soaring borrowing costs, according to a team of economists led by the Bennett Institute for Public Policy, University of Cambridge.  

Loss of plant and animal species may already be set to cause major sovereign downgrades, with China and Indonesia on course to drop two notches as early as 2030 under a business-as-usual scenario.

If parts of the world see a “partial ecosystems collapse” of fisheries, tropical timber production and wild pollination – as simulated by the World Bank – then more than half the 26 nations studied would face downgrades, with India falling four notches and China plummeting by six on the 20-notch scale.   

Across the 26 countries, these downgrades would increase the annual interest payment on debt by up to US$53 billion a year, leaving many developing nations at significant risk of sovereign debt default – in effect, bankruptcy.

Leave a Comment