Nature is one of Latin America and the Caribbean’s greatest assets. To help countries foster investment in biodiversity and natural capital, the IDB Group is expanding its toolkit with innovative financial instruments and technical expertise that align conservation goals with market incentives.
For example, IDB Invest is pioneering the issuance of blue bonds, which catalyze sustainability-seeking investors towards financing ocean conservation, sustainable marine industries, and coastal ecosystem restoration. Blue bonds offer investors greater transparency and traceability, ensuring that funds support projects that positively impact marine ecosystems. A first for Ecuador, IDB Invest supported Banco Bolivariano with the issuance of an $80 million blue bond, which was subscribed half by IDB Invest and half by FinDev Canada. The proceeds are financing sustainable projects related to seafood products, water management, wastewater, solid waste, and circular economy initiatives. As of year-end 2023, the bank’s blue portfolio was growing faster than expected. This mostly includes financing for sustainable seafood companies with international certifications such as this shrimp producer.
Scaling innovations in biodiversity finance
IDB Lab is promoting other innovations in biodiversity finance such as habitat banking and the digital tokenization of biodiversity credits. Banco de Hábitat Orinoquía, launched by Terrasos S.A.S. with support from IDB Lab, is the first biodiversity habitat bank in Latin America. Located in the department of Meta in Colombia, the initiative was created to address the growing demand for biodiversity offsets in compliance with national environmental regulations. Through a trust-based financial structure and a technical cooperation program, the project channels private investment into the restoration and long-term conservation of degraded ecosystems, while offering a scalable and financially viable model for environmental compensation.
As of 2023, Terrasos exceeded expectations. It restored over 1,100 hectares of land, nearly double its target, and sold 947 biodiversity credits, well above the initial goal of 350. In addition, five companies were actively using the habitat bank as a compliance mechanism. The project also achieved positive net income for the year, marking a key milestone in the maturation of the model. These outcomes validate habitat banking not only as an effective conservation instrument, but also as a viable investment vehicle.
Building on this success, Terrasos has expanded to 12 registered habitat banks across seven departments in Colombia, managing over 7,000 hectares and structuring an additional 31,000 hectares for compensation. It is also spearheading regional expansion into Brazil, Peru, Mexico, the Dominican Republic, Argentina, and Paraguay — positioning itself as a leading biodiversity investment platform in Latin America. In parallel, it is advancing regulatory frameworks, strengthening contractual and financial instruments, and developing traceability and monitoring systems to ensure transparency and accountability. These scaling efforts aim to protect over 100,000 hectares by 2030, catalyzing private capital flows while advancing regional policy innovation.
To address transparency gaps in conservation markets, Terrasos launched a second-generation project integrating blockchain technology and integrity protocols to issue digital biodiversity tokens. IDB Lab is piloting this model in Colombia’s Andean cloud forest with XM, a leader in environmental asset registration platforms. This model enables the registration, verification, and sale of conservation projects through blockchain, ensuring accountability while unlocking private capital for previously excluded areas. Over 14 million hectares in Colombia could qualify, with expansion potential across the Amazon basin, creating employment and benefit-sharing opportunities for Indigenous and rural communities. If successful, the model could generate economic returns of approximately 20 percent, while significantly reducing transaction costs and intermediaries.
Together, these two initiatives place Terrasos at the forefront of biodiversity finance in Latin America. They demonstrate that with the right incentives and tools, private markets can drive conservation at scale, while aligning environmental and economic value.
Debt-for-nature and debt-for-climate swaps
On the public side, the IDB’s Policy-based Guarantees (PBGs) have facilitated countries in conducting debt-for-nature and debt-for-climate swaps, which allow access to international financing on more favorable terms, enabling the repurchase of higher-cost debt and the allocation of fiscal savings specifically to projects that enhance environmental resilience and protect biodiversity.
In 2022, the IDB approved the first-ever sustainability-linked bond framework related to nature conservation in Barbados through a Policy-based Guarantee (BA-U0001) from IDB of up to $100 million and a $25 million co-guarantee from The Nature Conservancy to Barbados, to enhance the country’s institutional natural resource management framework and improve debt management capacity. In 2024, Barbados also pioneered the world’s first debt-for-climate-resilience operation (BA-U0002) to protect its water supply, through $300 million in guarantees —$150 million from each the IDB and the European Investment Bank (EIB). The resulting fiscal space of $125 million will be used to upgrade the South Coast sewage treatment plant into a modern water reclamation facility, one of the first in the Caribbean. The facility will reduce water losses, improve the sewer system, and produce water with suitable quality for use in agricultural irrigation and groundwater recharge. The project is also supported through a combined $110 million in financing from the IDB and Green Climate Fund (GCF), including a $40 million grant from the latter. The fiscal savings generated in this operation will be used to pay off this front-loaded financing.
In The Bahamas, the government launched a debt conversion project (BH-U0002) in 2024 with support from IDB and The Nature Conservancy and other partners, which is expected to generate $124 million in savings for marine conservation over the next 15 years. The package included a $200 million credit guarantee from IDB, a co-guarantee of $70 million from Builders Vision, and $30 million credit insurance from AXA XL. IDB’s support is also complemented by support to strengthen The Bahamas’ institutional framework for environmental and public debt management.
For more information, see the project pages for 14183-01, BA-U0001, BA-U0002, BH-U0002, CO-Q0014, CO-T1436, CO-T1638, CO-T1730, CO-G1048, BR-T1637.
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