Accelerating Blue Finance: Instruments, Case Studies, Accelerating Blue Finance: Pathways to and Instruments, Scale Case Studies, and Pathways to Scale May 22, 2025 DISCLAIMER The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy, completeness, or currency of the data included in this work and does not assume responsibility for any errors, omissions, or discrepancies in the information or liability with respect to the use of or failure to use the information, methods, processes, or conclusions set forth. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. 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This report presents a stocktaking of blue finance mechanisms, examining their financial structures, implementation requirements, and performance across categories such as sovereign blue bonds, debt-for-nature swaps, insurance products, and impact funds. It explores enabling conditions, key challenges, and success factors while assessing the role of different actors in structuring and scaling these mechanisms. The analysis also examines how these instruments are applied across different sectors, their effectiveness in mobilizing capital, and the frameworks used to monitor and evaluate outcomes. The findings aim to inform policy makers, financial institutions, and investors, offering practical recommendations to enhance the effectiveness and reach of blue finance solutions and replicate and scale them up in supporting the blue economy development. I Contents Acronyms and Abbreviations III III Foreword IV Acknowledgments V Executive Summary 1 1 Introduction 8 1.1 Context and Rationale 8 1.2 Objectives and Scope of the Report 8 2 Stocktaking of Blue Finance Instruments 10 2.1 Thematic Bonds 11 2.2 Outcome-Based Finance 14 2.3 Risk Mitigation Tools 17 2.4 Fiscal and Economic Instruments 22 2.5 Dedicated Funds and Facilities 27 3 Challenges and Success Factors 34 3.1 Challenges and Barriers 34 3.2 Success Factors and Enablers 38 4 Recommendations and Conclusions 42 4.1 Strengthen Investment Readiness through Enabling Policies and Regulatory Frameworks 43 4.2 Build Robust Data, Metrics, and Methodologies to Enhance Credibility and Performance 44 4.3 Mainstream Blue Finance into National Policy, Planning and Strategies 45 4.4 Strengthen Stakeholder Coordination to Scale Inclusive and Locally Grounded Models 47 4.5 A Collective Call to Action for Scaling Blue Finance 48 Appendix A. Instruments and Mechanisms Studied 50 Appendix B. Stocktaking of Blue Finance Tools 51 II ACCELERATING BLUE FINANCE: INSTRUMENTS, CASE STUDIES, AND PATHWAYS TO SCALE Acronyms and Abbreviations ADB Asian Development Bank ASEAN Association of Southeast Asian Nations cat bond catastrophe bond CO2 carbon dioxide COAST Caribbean Ocean and Aquaculture Sustainability Facility DFC United States International Development Finance Corporation DFI development finance institution DNS debt-for-nature swap ESG environmental, social, and governance EU European Union FI financial institution GFCR Global Fund for Coral Reefs ICMA International Capital Market Association IDA International Development Association IFC International Finance Corporation IUCN International Union for Conservation of Nature MAR Mesoamerican Reef MDB multilateral development bank MIGA Multilateral Investment Guarantee Agency NGO nongovernmental organization PPP public-private partnership SDG Sustainable Development Goal SIDS small island developing states SWEN SWEN Capital Partners TCFD Taskforce on Climate-related Financial Disclosures TNC The Nature Conservancy TNFD Taskforce on Nature-related Financial Disclosures UNDP United Nations Development Programme UNEP United Nations Environment Programme WTW Willis Towers Watson All dollar amounts are US dollars unless otherwise indicated. III Foreword THE OCEAN IS OUR PLANET’S LIFELINE—YET IT FACES MOUNTING, UNPRECEDENTED THREATS. Rising temperatures, declining fish stocks, and escalating pollution are pushing marine ecosystems to the brink. For billions of people—particularly those in coastal communities—this crisis threatens food security, livelihoods, and cultural heritage. BLUE FINANCE OFFERS A POWERFUL OPPORTUNITY TO REVERSE THESE TRENDS —if it is mobilized urgently, at scale, and with a commitment to equity. PUBLIC RESOURCES ALONE CANNOT MEET THE SCALE OF INVESTMENT NEEDED TO PROTECT AND RESTORE THE OCEAN. Bridging the gap requires unlocking private capital to support marine conservation, sustainable fisheries, resilient coastal infrastructure, and nature-based solutions. But capital will only flow where risks are managed, returns are viable, and governance is robust. THIS REPORT PROVIDES A TIMELY AND PRACTICAL ROADMAP FOR SCALING BLUE FINANCE. It surveys a range of financial instruments, draws lessons from real-world initiatives, and presents actionable recommendations. The future of blue finance must be defined by ambition, accountability, and inclusion. That means aligning blue finance with broader climate, biodiversity, and development agendas; using public funds strategically to crowd in private investment; and applying transparent metrics to track progress and outcomes. Just as important is ensuring that blue finance delivers tangible benefits: decent jobs, gender- responsive outcomes, and equitable development. THIS REPORT IS A CALL TO ACTION—ROOTED IN EVIDENCE, GROUNDED IN EXPERIENCE. It offers governments, investors, and development partners a practical guide to instruments, examples, and strategies for scaling-up blue finance. The stakes could not be higher. The health of our ocean—and the wellbeing of communities that depend on it—hangs in the balance. WE REMAIN COMMITTED TO SUPPORTING COUNTRIES IN SECURING FINANCIAL SOLUTIONS that protect ocean health and help the blue economy to thrive. That is the only way to build a more resilient and sustainable future for generations to come. We all win if the ocean wins. Genevieve Connors Acting Global Director Global Environment Department The World Bank IV ACCELERATING BLUE FINANCE: INSTRUMENTS, CASE STUDIES, AND PATHWAYS TO SCALE Acknowledgments This report was prepared by Tao Wang and Raghu Dharmapuri Tirumala, under strategic guidance of Genevieve Connors and Tuukka Castren. The report benefited from contributions and advice from Kara Martinez Toral and Martin Koehring (both from UNEP Finance Initiative); Jose Gamito Pires and Kaushi Liyanage (both from International Finance Corporation); Amy Swift (World Resources Institute); Vineil Narayan (United Nations Development Programme). Valuable insights and comments were provided by reviewers: Gregory Watson (Inter- American Development Bank), Pushkala Lakshmi Ratan (IFC), Samantha Cook, Michele Diez, Junu Shrestha, Charlotte De Fontaubert, and Diego Rivetti (World Bank). Additional support was received from Julien Million, Gabriela Romero, GianLeo Frisari, Sabrina Sidhu, Isabel Saldarriaga, Melissa Bryant, and Mariaan van Zyl. The report was funded by the World Bank PROBLUE Trust Fund. V Introduction Executive THE OCEAN DRIVES ECONOMIC PROSPERITY AND ENVIRONMENTAL STABILITY, YET FINANCING FOR Summary ITS PROTECTION REMAINS INSUFFICIENT. Marine ecosystems support industries, provide livelihoods for more than 3 billion people, and play a crucial role in climate mitigation and resilience. However, growing pressures from overfishing, pollution, and climate change are causing severe damage, resulting in financial losses and escalating economic risks. Estimates suggest that addressing these challenges will require at least $1 trillion by 2030, highlighting an urgent need to scale up investment. Traditional funding sources—public finance and philanthropy—are insufficient, making it necessary to mobilize private capital through structured financial mechanisms. BLUE FINANCE REFERS TO FINANCIAL INSTRUMENTS THAT CHANNEL CAPITAL TOWARD THE SUSTAINABLE USE AND PROTECTION OF MARINE ECOSYSTEMS. It supports the transition to a sustainable blue economy—defined by the World Bank as the use of ocean resources for economic growth, improved livelihoods, and jobs while preserving ocean health. This approach emphasizes integrated ocean planning, stronger sectoral governance, and recognition of marine ecosystems as both development assets and environmental commons. While blue finance builds on green finance and has similar structures, impact verification systems, and performance-linked terms, it is distinct in its application. Blue finance instruments are adapted to address ocean and water resource-specific challenges and support targeted activities that protect and sustainably manage the ocean, seas, lakes, and rivers, contributing to the UN Sustainable Development Goal 14 (Life Below Water) and SDG 6 (Clean Water and Sanitation). They expand the set of tools available to governments and private actors to align investments with ocean sustainability goals and broader climate and development strategies. ASSESSING THE CURRENT LANDSCAPE OF BLUE FINANCE INSTRUMENTS IS CRITICAL TO UNDERSTANDING HOW THESE TOOLS ARE BEING APPLIED, WHERE GAPS REMAIN, AND WHAT CONDITIONS ENABLE THEIR SUCCESS. Understanding the landscape of financial instruments and mechanisms is essential to identifying which tools are best suited to meet specific policy objectives in the blue economy. As countries seek to finance marine protection, climate 1 ACCELERATING BLUE FINANCE: INSTRUMENTS, CASE STUDIES, AND PATHWAYS TO SCALE adaptation and mitigation, and sustainable ocean THE LANDSCAPE HAS EXPANDED IN SCALE, development, they face a rapidly expanding but SOPHISTICATION, AND GEOGRAPHIC REACH, uneven field of instruments—each with differing REFLECTING GROWING MARKET CONFIDENCE objectives, structures, and operational requirements. AND MULTILATERAL SUPPORT. A systematic stocktaking helps match the right Since the early models like the Seychelles Blue instrument to the right policy challenge—whether Bond and debt-for-nature swaps in The Bahamas, managing sovereign debt, reducing risks, attracting Barbados, Belize, and Ecuador, blue finance has private capital, or creating jobs. It also identifies the matured by adopting more complex financial enabling environments that allow these instruments structures and expanding into new geographies. to scale. Understanding this landscape is essential Instruments have evolved from single-country for governments, development institutions, and applications to regional collaborations, integrating investors to design effective, context-sensitive hybrid models such as blended finance with dual- financing strategies that can deliver long-term window structures and parametric insurance linked environmental, social, and economic outcomes. to environmental triggers. These tools now target a range of sectors, including marine conservation, Stocktaking of blue finance fisheries, and coastal resilience, and have been applied across the Caribbean, Pacific, Asia, and instruments Africa, helping to catalyze investment for ocean sustainability. BLUE FINANCE SOLUTIONS CAN BE CATEGORIZED INTO FIVE PRIMARY TYPES, EACH BLUE FINANCE INSTRUMENTS ARE INCREASINGLY MOBILIZING FINANCE IN A DIFFERENT WAY. STRUCTURED TO DELIVER ENVIRONMENTAL, SOCIAL, AND ECONOMIC OUTCOMES THROUGH (1) Thematic bonds, including sovereign and FINANCIAL INNOVATION. corporate blue bonds, mobilize capital through Thematic bonds now extend beyond sovereign- fixed-income markets. backed issuances to include corporate and development bank–backed instruments, channeling (2) Outcome-based finance mechanisms, such as capital into sustainable marine projects. Outcome- blue carbon credits and sustainability-linked loans, based tools are supported by stronger verification tie financial incentives to measurable environmental standards, enhancing investor confidence and outcomes, aligning capital flows with verified aligning with lessons from green finance. Risk ecological impact. management instruments increasingly integrate parametric triggers and pooled regional (3) Risk management tools, including parametric facilities, improving financial resilience in climate- insurance and resilience bonds, provide financial vulnerable areas. Dedicated funds and facilities protection against climate-related disasters affecting blend public, private, and philanthropic capital, coastal and marine ecosystems. financing conservation, fisheries, and other sectors transitioning to a sustainable blue economy. (4) Fiscal and economic instruments, including Fiscal and economic instruments are more often debt-for-nature swaps and targeted subsidies, embedded in national financing strategies, aligning integrate conservation financing into broader fiscal conservation goals with macroeconomic planning. and economic measures. Some initiatives, such as COAST and Mikoko Pamoja, have incorporated gender-responsive or community (5) Dedicated funds and facilities, including benefit-sharing mechanisms; however, broader revolving funds and public-private partnerships, inclusion—particularly for women in fisheries— structure long-term financing to support sustainable remains limited, underscoring the need for stronger blue economy. Together, these instruments represent integration of social equity in blue finance design. a diverse and evolving suite of tools for mobilizing capital toward Sustainable Development Goal 14 DESPITE THESE ADVANCES, BLUE FINANCE (Life Below Water) and ocean resilience. These FACES PERSISTENT MARKET, INSTITUTIONAL, newer instruments sit within a broader landscape AND POLICY BARRIERS THAT LIMIT SCALE AND of traditional and customized blue finance tools, EQUITY. which together offer governments a flexible menu High transaction costs, complex structuring of options based on their policy priorities and requirements, and limited access to concessional institutional capacity. capital hinder uptake, particularly in small island 2 developing states and emerging markets. The readiness, technical capacity, and policy priorities. absence of widely adopted metrics and verification Their effectiveness has depended on the presence of frameworks undermines investor confidence, enabling factors that support implementation. This especially for outcome-based finance. Data gaps in reinforces the importance of viewing blue finance marine ecosystems impede risk assessment, pricing, not as a fixed model, but as a menu of context- and policy design, slowing the rollout of tools like specific options that must be strategically aligned insurance and sustainability-linked instruments. with the problem being addressed, the financial tool Institutional and governance challenges—such selected, and the systems in place to deliver results. as fragmented responsibilities across ministries and lack of inter-agency coordination—delay 2. EFFECTIVE BLUE FINANCE INITIATIVES ARE implementation and reduce financial efficiency. UNDERPINNED BY CONDUCIVE POLICY AND Financial risks including currency volatility, REGULATORY FRAMEWORKS THAT ALIGN PUBLIC regulatory uncertainty, and the lack of credit POLICY WITH CAPITAL FLOWS. enhancement mechanisms deter private sector Across diverse contexts, mechanisms that mobilized engagement. Verification and reporting mechanisms or de-risked capital — such as blue bonds, blended are often siloed in environmental agencies structures, and sovereign-linked instruments—were rather than integrated with ministries of finance, supported by aligned national policies and fiscal weakening their utility for structured finance. These systems. Drawing from green finance experience, the barriers contribute to a geographic and sectoral development of taxonomies, sustainability principles, concentration of funding, with regions such as Africa and performance-linked terms has proven effective and South Asia, and emerging blue economy sectors in lowering transaction costs and improving investor like aquaculture and waste management, remaining confidence. Instruments such as guarantees, and underfunded. insurance have been valuable in small island and credit-constrained markets. These foundations Main Findings provided credible entry points for governments, MDBs, and technical partners to structure investable 1. BLUE FINANCE INSTRUMENTS HAVE BEEN programs aligned with ocean sustainability DEPLOYED TO MEET DIVERSE GOVERNMENT objectives. OBJECTIVES—FROM MANAGING SOVEREIGN DEBT, CREATING FISCAL SPACE, DERISKING BLUE 3. TECHNICAL FOUNDATIONS, SUCH AS INVESTMENTS, TO MOBILIZING PRIVATE CAPITAL. ROBUST DATA, MEASUREMENT METHODS, AND In contexts of sovereign debt stress, debt-for- VERIFICATION PROTOCOLS HAVE PLAYED A nature swaps have been used to swap debt for PIVOTAL ROLE IN ENHANCING THE CREDIBILITY conservation, reducing debt servicing obligations AND ADAPTABILITY OF BLUE FINANCE while committing fiscal savings to long-term marine INSTRUMENTS. protection—as seen in Belize’s swap supporting coral Building robust data systems, metrics, and reef conservation. To overcome underinvestment methodologies is essential to enhance the in marine sectors, blue bonds have helped mobilize credibility, transparency, and performance of capital—often with development partner support— blue finance initiatives. Across the stocktaking, for priorities such as sustainable fisheries and credibility was closely tied to the availability of marine spatial planning, as demonstrated by the robust environmental baselines, verifiable impact Seychelles issuance. Faced with rising climate and metrics, and third-party monitoring. Collaborations disaster risks, particularly in small island states, with scientific institutions and the application of governments have adopted parametric insurance standardized methodologies—for blue carbon to provide rapid, rules-based payouts after extreme accounting, plastic reductions, or insurance events, improving financial resilience and response triggers—enabled performance-based structuring capability—as illustrated by the Caribbean’s risk and adaptive management. These technical pooling mechanisms. Where governments aim foundations not only supported transparency but to align financing with environmental results, also helped de-risk capital and build confidence in outcome-based mechanisms—such as blue carbon long-term financing models. credits and sustainability-linked loans—have been introduced to channel funding toward coastal restoration and climate mitigation in carbon-rich ecosystems. Instrument uptake has varied across countries, reflecting differences in institutional 3 ACCELERATING BLUE FINANCE: INSTRUMENTS, CASE STUDIES, AND PATHWAYS TO SCALE 4. SOCIAL INCLUSION AND STAKEHOLDER financial intermediaries, and private stakeholders COORDINATION IS CRITICAL TO SCALING within a transparent regulatory ecosystem can INCLUSIVE AND LOCALLY GROUNDED BLUE enhance project bankability and diversify capital FINANCE MODELS. sources. These measures will complement traditional Locally grounded models—such as co-managed financing instruments—such as sovereign loans and fisheries and community benefit-sharing structures— grants—while attracting concessional and private generated greater social legitimacy and delivered capital to scale sustainable ocean investments. co-benefits, including job creation, gender inclusion, and enhanced local governance. In B. BUILD ROBUST DATA, METRICS, AND multi-jurisdictional contexts, regional coordination METHODOLOGIES TO ENHANCE CREDIBILITY AND platforms have helped align standards, aggregate PERFORMANCE funding, and facilitate shared marine resource Reliable, standardized data and science-based management. Despite select examples like COAST’s metrics are essential for informed decision-making, gender-responsive structure, gender and social effective risk assessment, and performance inclusion remain under-addressed in many blue monitoring in blue finance. Governments, in finance transactions—highlighting a key area for collaboration with development partners, scientific improvement in future design. institutions, and think tanks, should work to establish robust databases and consistent methodologies for The Way Forward tracking the environmental, social, and economic impacts of blue finance projects. Embedding TO ACCELERATE AND SCALE UP BLUE FINANCE, transparent reporting frameworks and independent THE FOLLOWING RECOMMENDATIONS verification mechanisms into financial transactions ARE PROPOSED FOR GOVERNMENTS AND will build investor confidence, attract capital, and DEVELOPMENT PARTNERS. ensure projects are held accountable for their stated Drawing from lessons learned across diverse outcomes. Additionally, targeted technical assistance case studies, these recommendations offer a and capacity-building efforts by the development coherent pathway to embed blue finance within partners can strengthen local and institutional national systems, enhance institutional and market capabilities to collect, manage, and apply data to readiness, and secure enduring environmental support evidence-based investments. and social benefits. By focusing on strengthening investment readiness, building robust data and C. MAINSTREAM BLUE FINANCE INTO NATIONAL metrics, mainstreaming blue finance into national POLICY, PLANNING, AND STRATEGIES policies and development strategies, and fostering Integrating blue finance into national policy inclusive stakeholder coordination, governments frameworks and climate and development priorities and development partners can create the enabling is essential to align investments with broader conditions necessary to mobilize capital at scale, sustainable development and climate mitigation drive sustainable ocean-based economic growth, and adaptation goals. Governments should embed and ensure that blue finance delivers tangible and blue economy objectives into Nationally Determined lasting impacts for both people and the planet. Contributions (NDCs), National Adaptation Plans (NAPs), Long-term Low-emission Development A. STRENGTHEN INVESTMENT READINESS Strategies (LTS), and sustainable finance THROUGH ENABLING POLICIES AND REGULATORY taxonomies. Ministries of finance and planning FRAMEWORKS should collaborate with environmental, maritime, Governments can boost investment readiness by and other sectoral agencies to incorporate blue establishing clear, stable, and investor-friendly economy considerations into national budgets and policies and regulatory environments. Such investment frameworks. Developing clear investment frameworks should promote the sustainable use of roadmaps and guidance for blue sectors will help ocean resources, incorporate robust environmental identify priority areas for capital mobilization, while and social safeguards, and provide incentives to integrating blue finance instruments into broader attract private sector participation. Streamlining fiscal and financial tools can create fiscal space, permitting processes, defining standards for reduce investment risks, and attract private capital sustainable blue economy activities, and integrating to accelerate the transition toward sustainable risk mitigation tools can reduce uncertainty and ocean-based economies. lower entry barriers for blue finance. Moreover, fostering collaboration between public agencies, 4 D. STRENGTHEN STAKEHOLDER COORDINATION TO SCALE INCLUSIVE AND LOCALLY GROUNDED MODELS Strong, inclusive stakeholder coordination is essential to ensure that blue finance delivers tangible benefits at the local level while supporting national development goals. Governments and development partners should establish multi-stakeholder coordination platforms or task forces that enable ongoing dialogue among local communities, private investors, civil society, and scientific institutions. These mechanisms can help co-create investment pipelines that reflect local priorities, integrate traditional knowledge, and embed benefit-sharing, local tenure, and gender-responsive approaches. Empowering local actors through targeted capacity building will strengthen their participation in project design, implementation, and monitoring. Embedding transparent grievance mechanisms and benefit- sharing arrangements into blue finance projects will further enhance community ownership, social license to operate, and long-term sustainability. Over time, these inclusive and well-coordinated models can be institutionalized within national systems, making blue finance more impactful, resilient, and adaptive to local socio-economic and environmental realities. IN CONCLUSION, ACCELERATING AND SCALING THE EFFECTIVE USE OF BLUE FINANCE REQUIRES A SHIFT FROM FRAGMENTED PILOT PROJECTS TO COORDINATED, SYSTEM-WIDE ACTION. Blue finance instruments—such as blue bonds, debt- for-nature swaps, and parametric insurance—have already demonstrated their potential to address fiscal pressures, enhance climate resilience, and support ecosystem restoration across diverse contexts. These successes were not isolated; they were underpinned by conductive policy frameworks, robust data systems, inclusive governance structures, and the strategic alignment of financial instruments with policy objectives. To build on this momentum, governments must embed blue finance into national development plans, budgets, and regulatory systems, while strengthening performance metrics and transparency standards. Development institutions and multilateral banks should reinforce these efforts through tailored technical assistance, concessional capital, and de- risking mechanisms. Mobilizing private capital at scale and creating jobs can be boosted through co-designed investment pipelines, blended finance platforms, and partnerships that align incentives and share risks. The next phase of blue finance will not be defined by stand-alone initiatives, but by the ability to mainstream solutions, replicate inclusive models, and deliver integrated action at national, regional, and global levels. 5 ACCELERATING BLUE FINANCE: INSTRUMENTS, CASE STUDIES, AND PATHWAYS TO SCALE 1. Introduction Blue finance has emerged as a key mechanism The ocean economy is central to global prosperity, for directing both public and private capital with its value estimated between $3 and $6 trillion into sustainable ocean investments1 leveraging annually.3 instruments such as sovereign blue bonds, debt- Covering over 70 percent of the Earth’s surface,4 for-nature swaps, and impact funds. By embedding the ocean regulate the global climate, support measurable environmental and social outcomes biodiversity, and provide direct livelihoods for into financing structures, these tools help align more than 3 billion people.5 Coastal habitats such investor returns with broader ecosystem health as mangroves and coral reefs play a pivotal role in and resilience. Blue finance is conceptually and protecting communities from storms and flooding, operationally linked to green finance but places saving substantial sums in avoided damages.6 the ocean at its center—extending the principles Beyond ecological services, sectors such as shipping, of sustainability, transparency, and impact into offshore wind energy, and coastal tourism contribute marine and coastal contexts. Growing interest from significantly to national economies, underscoring the governments, international institutions, and private ocean’s role as an economic driver. actors demonstrates the potential of blue finance— particularly when combined with risk-mitigation Despite their ecological and economic importance, strategies, blended financing arrangements, and the ocean faces increasing threats from human inclusive and resilient frameworks. activities and climate change. Overfishing has depleted more than 37.7 percent of global fish stocks (increased from 35.4% two years 1.1 Context and Rationale back),7 while plastic pollution continues to escalate,8 threatening marine life and human health. Ocean The transition from an “ocean economy” to a “blue acidification and warming waters, driven by rising economy” marks an important conceptual shift carbon dioxide (CO2) emissions, pose existential toward recognizing the ocean as a critical asset risks to coral reefs, with them likely to disappear by whose ecological health underpins long-term 2100 unless CO2 emissions are drastically reduced.9 economic resilience and social well-being. The economic consequences are substantial— The blue economy, as framed by the World Bank, declining fish stocks impact food security, coastal emphasizes the sustainable use of ocean resources tourism revenue shrinks, and critical blue economy for economic growth, improved livelihoods, and sectors face growing risks. the preservation of ocean ecosystem health and resilience. This framing moves beyond traditional In response to these challenges, global extractive models of ocean use toward an integrated commitments have sought to safeguard ocean approach that aligns conservation, climate action, health and foster sustainable use. and development objectives. The World Bank’s The Kunming-Montreal Global Biodiversity “Riding the Blue Wave” report2 elaborates on this Framework’s “30x30” target aims to conserve evolution and highlights how financial mechanisms at least 30 percent of marine areas by 2030, can support such transitions in practice. reflecting broad consensus on the urgency of reversing biodiversity loss. Meanwhile, Sustainable Development Goal 14—Life Below Water—provides a road map for restoring fish stocks, reducing marine pollution, and implementing ecosystem-based management approaches. The High Seas Treaty (the Agreement on Marine Biodiversity of Areas Beyond 1. For the purposes of this report, the term “blue finance” refers to finance that supports a sustainable blue economy, distinct from business-as-usual ocean economy activities that may not align with environmental or social sustainability goals. It builds on the broader principles of green finance—including environmental risk assessment, outcome-based reporting, and alignment with climate and biodiversity goals—but is tailored specifically to marine and coastal ecosystems. 2. World Bank. “Riding the Blue Wave”. https://documents1.worldbank.org/curated/en/099655003182224941/pdf/P16729802d9ba60170940500fc7f7d02655.pdf 3. UN Trade & Development (UNCTAD), Trade and Environment Review 2023 (New York: UN Publications, 2023), https://unctad.org/publication/trade-and-environment-review-2023. 4. M. Fava, “How Does the Ocean Affect the Climate?” Ocean Literacy Portal, Intergovernmental Oceanographic Commission, June 7, 2022, https://oceanliteracy.unesco.org/ocean-and-climate. 5. S. Basnayake, L. K. Dashora, and C. Ganepola, “The Ocean: Life and Livelihoods,” News, ADPC, June 8, 2021, https://www.adpc.net/igo/contents/Media/media-news.asp?pid=1704. 6. M. W. Beck et al., “The Global Flood Protection Savings Provided by Coral Reefs,” Nature Communications 9 (2018): 2186, https://www.nature.com/articles/s41467-018-04568-z. 7. The State of World’s Fisheries and Aquaculture Report (SOFIA) 2024, https://openknowledge.fao.org/items/22b0e37f-1785-4404-8743-5a44bc276674; https://www.msc.org/what-we-are-doing/science-and-research/six-takeaways-state-of-worlds-fisheries 8. “The Problem of Marine Plastic Pollution,” Clean Water Action, n.d., https://cleanwater.org/problem-marine-plastic-pollution. 9. “Assessment: World Heritage Coral Reefs Likely to Disappear by 2100 Unless CO2 Emissions Drastically Reduce,” News, World Heritage Convention, June 23, 2017, https://whc.unesco.org/en/news/1676. 1 8 National Jurisdiction, also known as the BBNJ 1.2 Objectives and Scope of the Agreement), adopted in 2023, is also expected to play a critical role in strengthening marine protection Report in areas beyond national jurisdiction once it enters With the ocean’s future at a critical juncture, into force. Global efforts are further reinforced by it is essential to accelerate the transition from the WTO Agreement on Fisheries Subsidies, which commitments to concrete action. aims to curtail harmful subsidies contributing to A variety of financial instruments have demonstrated overfishing, the Paris Agreement’s provisions on their potential in supporting marine sustainability, ocean-based climate action, and the ongoing provided they are accompanied by the right Intergovernmental Negotiating Committee (INC) partnerships, policies, and governance frameworks. process to establish a legally binding instrument This report aims to document and analyze these on plastic pollution. Together, these frameworks instruments, offering insights into their effectiveness, underscore the ocean’s pivotal role not only in challenges, and pathways for scaling. Specifically, climate mitigation and adaptation but also in the report covers the following:13 securing food supplies, preserving livelihoods, and maintaining critical ecosystem services. • A stocktaking of innovative financial Meeting global ocean conservation targets requires instruments and mechanisms for the sustainable significant funding, yet financial commitments blue economy, including blue bonds, debt- remain far below estimated needs. for-nature swaps, and other emerging tools, Studies suggest that at least $1 trillion is needed indicating their structure, implementation by 2030 to finance ready-to-implement ocean- process, and key stakeholders involved based climate solutions in areas such as offshore • renewable energy, sustainable fisheries, and nature- • Case studies on successful applications of based coastal infrastructure.10 This could assist with these financial solutions in diverse contexts, closing the emissions gap by 35 percent on a 1.5°C highlighting best practices, enabling conditions pathway. Official development assistance (ODA) for success, challenges, and key lessons for ocean sustainability reached only $2.4 billion in • 202011—only a fraction of what is needed to address • An assessment of scalability and practical escalating threats. Private capital, which constitutes implementation requirements, including less than 1 percent of total ocean-related financing,12 institutional, regulatory, and financial has barely begun to flow into the sustainable ocean prerequisites, alongside the respective roles sector, underscoring the need for more robust and of governments, investors, and development innovative mechanisms. partners • New financial instruments have emerged to bridge • A set of recommendations, intended to the ocean funding gap, attracting both public and inform policy makers, financial institutions, private investors. and private sector entities, offering practical Governments, development banks, and private recommendations to enhance the effectiveness investors have begun exploring blue finance and reach of blue finance solutions and replicate instruments, which channel capital into sustainable and scale them up in supporting the blue marine and coastal projects. They seek to align economy development. economic incentives with conservation objectives — for example, by providing lower-cost credit in return for legally binding commitments to designate marine protected areas. In doing so, they offer promising pathways to scale up private sector investment, particularly in regions where public resources alone are insufficient. 10. O. Hoegh-Guldberg and E. Northrop,  The Ocean as a Solution to Climate Change: Updated Opportunities for Action (Washington, DC: World Resources Institute, 2023), https://oceanpanel.org/publication/ocean-solutions-to-climate-change. 11. “Ocean Finance,” Progress Against the Five Transformations Pillars, High Level Panel for a Sustainable Ocean Economy, n.d., https://oceanpanel.org/progress-report/the-journey/progress-against-the-five-transformations-pillars/ocean-finance. 12. Global Ocean Accounts Partnership (GOAP), “Utilising Ocean Accounts to Mobilise Private Sector Investment in the Sustainable Ocean Economy” (GOAP Policy Brief, February 2025), https://www.oceanaccounts.org/content/files/2025/02/Ocean-Accounts-for-Mobilising-Private-Sector-Investment-in-the-Sustainable-Blue-Economy.pdf. 13. This report provides a representative overview of blue finance mechanisms but does not cover all existing or emerging instruments in this rapidly evolving landscape. 9 2 ACCELERATING BLUE FINANCE: INSTRUMENTS, CASE STUDIES, AND PATHWAYS TO SCALE 2. Stocktaking of Blue Finance Instruments The blue finance landscape has expanded rapidly in recent years, with a diverse set of financial instruments supporting marine conservation, sustainable fisheries, coastal resilience, and the broader blue economy. This chapter provides an overview of these instruments, their financial structures, geographic reach, and sectoral focus. While not exhaustive, the selected instruments represent the key categories used in practice, including thematic bonds, outcome-based finance, risk management instruments, dedicated funds and facilities, and fiscal and economic instruments. A detailed inventory of these instruments is provided in appendix A. Blue finance instruments can be categorized into five main groups—thematic bonds, outcome-based finance, risk mitigation tools, fiscal and economic instruments, and dedicated funds and facilities. Each category has distinct financial structures, objectives, and stakeholder involvement. These instruments are often used in combination, rather than isolation, to enhance effectiveness and adapt to different policy and market contexts. They can also complement a range of traditional financial tools such as concessional loans, ODA, impact investing, expanding their reach and relevance. These instruments are built on green finance tools —such as sustainability-linked bonds and blended finance facilities—but adapt them to the specific risks, data needs, and policy environments of the blue economy. This section provides an overview of the categories, outlining their key characteristics and illustrating how they mobilize capital for ocean- related priorities through real-world applications. Figure 1 sets out the categories and examples of blue finance instruments. Figure 1: Categories of Blue Finance Instruments Thematic Outcome- Risk Dedicated Fiscal & Bonds Based Finance Mitigation Funds & Economic Tools Facilities Instruments • Green, • Blue Carbon Social Bonds Credits • Guarantee • Blended • Taxes, Fees, • Blue Bonds • Sustainability- • Insurance Finance Subsidies (Sovereign, Linked • Catastrophe • PPPs • Debt Swaps DFIs & Loans/Bonds Bond • Revolving Fund Corporates) • Outcome Bonds • Payments for Ecosystem Services EXAMPLES: EXAMPLES: EXAMPLES: EXAMPLES: EXAMPLES: Seychelles Blue Mikoko Pamoja Seychelles Debt Bond Mesoamerican Reef Global Fund for (Kenya) Insurance Coral Reefs Swap Fiji Sovereign Blue Tahiry Honko Belize Debt Swap Bond Pacific Ocean Blue Natural Capital (Madagascar) Finance Program Financing Facility Bank of China, ADB Coral Bond Blue Bonds, IFC Althelia Sustainable Supported Bonds Ocean Fund Ørsted Blue Bond 3 10 2.1 Thematic Bonds ocean-related projects, blue bonds help mitigate environmental degradation while offering investors an opportunity to support sustainable economic Thematic bonds are debt instruments designed growth. The bond structure ensures that financing to raise capital for projects with specific is ring-fenced for eligible projects, with issuers environmental or social objectives. committing to regular reporting on fund allocation They follow frameworks such as the International and environmental impact. Blue bonds can be issued Capital Market Association (ICMA) Green Bond by sovereign governments, development banks, Principles, ensuring transparency in project financial institutions, or corporations, each serving selection, use of proceeds, and reporting. Thematic distinct financing needs and stakeholder interests. bonds include the following:14 • Green bonds: Finance environmental projects Blue bonds can be broadly categorized into such as renewable energy, biodiversity three subcategories: i) sovereign blue bonds, ii) conservation, and clean transportation (examples development bank and financial institution–issued include the government of Canada’s Can $2 blue bonds, and iii) corporate blue bonds. billion green bond, the Asian Development While all these instruments share the common Bank’s [ADB] $200 million green bond, and objective of directing capital toward ocean the New York State Environmental Facilities sustainability, they differ in their issuance structures, Corporation’s multiple issuances).15 risk profiles, and stakeholder engagement. • Social bonds: Support initiatives improving Sovereign blue bonds are issued by national social well-being, including affordable housing, governments to finance large-scale marine health care, and education (examples include the conservation and climate resilience projects. International Finance Corporation’s [IFC] social A blue bond is a debt instrument that national bond16 and Hong Kong Mortgage Corporation’s governments, development banks, and corporations triple currency multiple tranche social bond17). use to raise finance for marine and ocean-based Blue bonds are a subset of thematic bonds projects that have long-term sustainability objectives specifically dedicated to financing ocean and and benefits22.The idea behind blue bonds is to marine sustainability initiatives. leverage capital markets to mobilize large-scale These fixed-income securities direct proceeds funding for ocean sustainability. Investors purchase exclusively toward marine conservation, sustainable the bonds, providing up-front capital to the issuer, fisheries, and coastal resilience projects. The rapid which then allocates the proceeds to pre-identified growth of the green bond market, now valued at blue projects. Investors receive periodic interest over $2 trillion, has provided a blueprint for the payments (coupon) and are repaid with the principal emergence of blue bonds, which apply similar at maturity. These bonds leverage sovereign standards and investor expectations to marine credit ratings to access capital markets, often with and coastal investments. Just as green bonds are concessional terms supported by development governed by principles such as those developed institutions or blended finance arrangements. They by ICMA, blue bonds align with international enable governments to invest in marine protected sustainability principles and guidance documents areas, sustainable fisheries, and coastal adaptation such as the ICMA’s Practitioner’s Guide,18 ICMA Green programs while maintaining fiscal flexibility. Notable Bond Principles,19 IFC Blue Finance Guidelines,20 and examples include the Seychelles Blue Bond (2018; IDB Invest and UN Global Compact21 and provide a see Box 1) and the Fiji Sovereign Blue Bond (2022).23 structured mechanism for channeling institutional The Seychelles Blue Bond was issued to finance and private investment into the blue economy. By the expansion of marine protected areas, enhance providing a transparent mechanism for financing sustainable fisheries, and support the country’s 14. Thematic bonds also include sustainability bonds; however, sustainability-linked bonds tie financial terms to sustainability performance, so they are categorized under outcome-based finance in this report. 15. “Labelled Green Bonds Data,” Climate Bonds Initiative, n.d., https://www.climatebonds.net/cbi/pub/data/bonds. 16. International Finance Corporation (IFC), IFC Social Bond Framework (Washington, DC: IFC, 2025), https://www.ifc.org/content/dam/ifc/doc/2025/IFC-Social-Bond-Framework-Jan-2025.pdf. 17. “HKMC’s Social Bond Issuance,” Hong Kong Monetary Authority, October 17, 2014, https://www.hkma.gov.hk/eng/news-and-media/press-releases/2024/10/20241017-3. 18. Asian Development Bank (ADB) and International Finance Corporation, Bonds to Finance the Sustainable Blue Economy: A Practitioner’s Guide (Manila: ADB and IFC, 2023), https://www.icmagroup.org/assets/documents/Sustainable-finance/Bonds-to-Finance-the-Sustainable-Blue-Economy-a-Practitioners-Guide-September-2023.pdf. 19. “The Principles & Related Guidance,” International Capital Market Association (ICMA), n.d., https://www.icmagroup.org/sustainable-finance/the-principles-guidelines-and-handbooks/. 20. International Finance Corporation (IFC), Guidelines for Blue Finance (Washington, DC: IFC, 2022), https://www.ifc.org/en/insights-reports/2022/guidelines-for-blue-finance. 21. IDB Invest, Accelerating Blue Bonds Issuances in Latin America and the Caribbean (Washington, DC: IDB Invest, 2021), https://idbinvest.org/en/publications/accelerating-blue-bonds-issuances-latin-america-and-caribbean. 22. “Blue Bond,” Mission Ocean and Waters Service Portal, European Commission, n.d., https://projects.research-and-innovation.ec.europa.eu/en/funding/funding- opportunities/funding-programmes-and-open-calls/horizon-europe/eu-missions-horizon-europe/restore-our-ocean-and-waters/blue-bond. 23. “Fiji Sovereign Blue Bonds – November 2023,” Reserve Bank of Fiji, https://www.rbf.gov.fj/fiji-sovereign-blue-bonds. 11 4 ACCELERATING BLUE FINANCE: INSTRUMENTS, CASE STUDIES, AND PATHWAYS TO SCALE transition to a blue economy. The bond’s proceeds are managed through an independent trust, the Seychelles Conservation and Climate Adaptation Trust (SeyCCAT),24 ensuring transparent fund allocation. The Fiji Sovereign Blue Bond focuses on coastal resilience, including mangrove restoration, wastewater management, and sustainable aquaculture, aligning with Fiji’s broader urban planning and climate adaptation initiatives. Costa Rica’s inaugural blue bond, launched by Banco Nacional with support from IDB Invest,25 further illustrates the growing interest in financing coastal resilience, marine resource management, and sustainable water systems in Central America. Box 1: Seychelles Blue Bond Overview The Seychelles issued the world’s first sovereign blue bond in 2018a, raising $15 million to support marine conservation and sustainable fisheries. Developed with technical assistance from the World Bank, the transaction combined a debt-for-nature swap and a thematic blue bond, showcasing how innovative blended finance can simultaneously reduce debt stress and catalyze ocean sustainability. Blueness and Development Focus The instrument directly contributed to the expansion of marine protected areas, improved fisheries governance, and supported biodiversity conservation. It also integrated social and gender outcomes, supporting community education and stakeholder engagement. The project aligned closely with blue economy principles by financing sustainable fisheries, enhancing marine ecosystem resilience, and embedding conservation targets into national policy. Financial Structuring The bond raised $15 million from investors including Calvert Impact Capital, Nuveen, and Prudential Investments. It had a 10-year maturity, with coupon payments made over the period. The World Bank provided a $5 million partial credit guarantee to reduce investor risk, while the Global Environment Facility (GEF) contributed $5 million in concessional finance to further reduce borrowing costs. The GEF loan also covered transaction expenses and enabled a discounted coupon. Additionally, the Rockefeller Foundation granted $425,000 to support transaction structuring. The bond’s issuance was backed by extensive technical assistance from the World Bankb. Implementation and Use of Proceeds Funds were ring-fenced and distributed through two vehicles: (1) the Blue Grants Fund (managed by SeyCCAT), which provided $3 million in grants to 48 projects related to marine protection and biodiversity; and (2) the Blue Investment Fund (managed by the Development Bank of Seychelles), which received $12 million for concessional loans to support sustainable fisheries and blue economy SMEs. As of 2024, $9 million had been approved across three loans, though uptake by small-scale fishers remained limited due to application complexity and collateral requirements. Impacts and Outcomes The bond helped Seychelles designate 30% of its exclusive economic zones as MPAs (over 410,000 2 km -as marine protected areas, exceeding the project’s target by over fourfold), and supported five fisheries management plans, a national fleet management plan, and a new licensing system, contributing to the rebuilding of key demersal fish stocks and improved fisheries value chains. The economic internal rate of return (EIRR) reached 7.1% with a net present value of $1 million. 24. Seychelles Conservation and Climate Adaptation Trust: https://seyccat.org. 25. “IDB Invest Champions Costa Rica’s Inaugural Blue Bond,” IDB Invest, July 15, 2024, https://idbinvest.org/en/news-media/idb-invest-champions-costa-ricas-inaugural-blue-bond. 5 12 Box 1: Seychelles Blue Bond (Continued) Processed fish prices rose 156% (vs. 130% target), and local by-catch sales rose from 10% to 64% between 2018 and 2023. A 2022 survey found a 70% satisfaction rate with MPA and fisheries management, with similar results for women and youth. Gender analysis revealed persistent male predominance among grant applicants (58%), but the project funded gender-focused studies and training. Lessons and Limitations The Seychelles Blue Bond set a precedent for sovereign blue financing globally, proving that carefully structured, blended instruments can support conservation outcomes. Its legacy is most meaningful not only in raising capital, but in mainstreaming blue economy principles into national policy, enabling long-term value chain reform, and inspiring broader innovations in ocean finance. The Seychelles Blue Bond’s success depended on strong political commitment, robust legal frameworks, and significant technical and financial support from the World Bank, GEF, and other partners. Replication in other contexts may require streamlined structures, lower transaction costs, and simpler application processes for local beneficiaries. While the Blue Grants Fund has been effective in supporting conservation and community projects, the Blue Investment Fund’s impact on small-scale fishers has been limited by access barriers and risk aversion. The Seychelles experience has inspired similar blue finance initiatives in Belize, Fiji, and Barbados, but highlights the need for tailored approaches and realistic expectations regarding cost and complexity. a. World Bank Treasury, “Seychelles: Introducing the World’s First Sovereign Blue Bond” (Thematic Bond Advisory, World Bank, Washington, DC, 2019), https://thedocs. worldbank.org/en/doc/242151559930961454-0340022019/original/CasestudyBlueBondSeychellesfinal6.7.2019.pdf; https://seyccat.org/seychelles-debt-for-nature-swap- case-study/ b. Implementation Completion and Results Report. Seychelles Blue Bond and SWIOFish3, The World Bank https://documents1.worldbank.org/curated/ en/099122324124015943/pdf/BOSIB-6896b0f8-c334-4569-b36a-3848d798b5b6.pdf Development bank and FI-issued blue bonds are to BDO Unibank’s blue bond in the Philippines backed by multilateral development banks (MDBs) to address marine plastic pollution and a $300 or national financial institutions, often designed million blue loan to Indorama Ventures in Thailand to de-risk private investments in blue economy to expand PET recycling capacity. IFC has also projects. supported the first blue bond issued in Thailand by Some MDBs, such as the Nordic Investment Bank TMBThanachart Bank Public Company Limited and (NIB),26 ADB,27 and Export-Import Bank of Korea launched a blue bond strategy with T. Rowe Price to (KEXIM),28 have directly issued blue bonds to raise mobilize capital for the sustainable blue economy capital for marine sustainability programs. The across emerging markets. Nordic Investment Bank’s Baltic Sea Blue Bond was issued to fund wastewater treatment and nutrient Corporate blue bonds are issued by private reduction programs, reducing eutrophication in the sector entities to finance commercially viable Baltic Sea. The ADB issued a blue bond to support projects that contribute to ocean sustainability, coastal and ocean resilience projects in Asia-Pacific, such as offshore renewable energy, sustainable including investments in sustainable fisheries, marine aquaculture, and marine biodiversity conservation. pollution control, and climate adaptation measures. Unlike sovereign or development bank–issued bonds, IFC is both an issuer and investor in blue bonds. IFC these instruments are driven by market conditions has actively supported blue finance by subscribing and investor confidence in a company’s financial to blue bonds and structuring blue loans.29 Notable strength and environmental, social, and governance examples include its $100 million subscription (ESG) commitments. Corporate blue bonds can 26. Nordic Investment Bank, “NIB Issues First Nordic–Baltic Blue Bond,” news release, January 24, 2019, https://www.nib.int/releases/nib-issues-first-nordic-baltic-blue-bond. 27. Asian Development Bank, “ADB Issues First Blue Bond for Ocean Investments,” news release, September 10, 2021, https://www.adb.org/news/adb-issues-first-blue-bond-ocean-investments. 28. I.-H. Lee, “KEXIM Bank Issues $3.5 Billion in Foreign Currency Bonds,” The Korea Economic Daily, January 6, 2023, https://www.kedglobal.com/banking-finance/newsView/ked202301060002. 29. “Blue Finance,” International Finance Corporation, n.d., https://www.ifc.org/en/what-we-do/sector-expertise/financial-institutions/climate-finance/blue-finance. 13 6 ACCELERATING BLUE FINANCE: INSTRUMENTS, CASE STUDIES, AND PATHWAYS TO SCALE also be structured as private placements, where These tools work by setting predefined targets, select investors participate based on customized establishing independent verification systems, and terms. The Ørsted Blue Bond is a prominent example making payments based on performance. of corporate blue bond,30 financing offshore Funding can be disbursed in tranches or as lump- wind farm development and marine biodiversity sum payouts, contingent upon meeting agreed- restoration projects, which are in line with the IFC upon outcomes. Third-party auditors validate Blue Guidelines. Unlike traditional blue bonds tied results through tools such as satellite imaging, to public sector initiatives, Ørsted’s bond aligns with biodiversity monitoring, fish stock assessments, or the company’s corporate strategy of transitioning carbon sequestration verification. This approach toward renewable energy while addressing marine is particularly valuable for financing ocean environmental risks. The proceeds are used to conservation, fisheries management, and climate fund projects that enhance the resilience of marine adaptation, ensuring that funds are directed toward ecosystems, including the deployment of artificial activities that generate real and sustained impact. reefs and habitat restoration efforts around offshore wind farms. Blue carbon, plastic, and biodiversity credits provide a market-based mechanism for monetizing The fundamental differences among the three ecosystem services, allowing conservation actions categories of blue bonds lie in their issuer type, to generate financial value through tradable credit backing, and risk-sharing mechanisms. credits. Sovereign blue bonds rely on government These credits, often tied to carbon sequestration guarantees and fiscal policy support; development or biodiversity protection, generate revenue by bank and FI–issued blue bonds leverage MDB credit selling verified credits to companies or governments ratings to attract private capital; and corporate blue seeking to offset their environmental footprint. bonds depend on private sector engagement and Many of these mechanisms operate under payment market-driven financial strategies. These distinctions for ecosystem services (PES) frameworks, ensuring shape their suitability for different financing needs, that financial incentives are directly tied to investor preferences, and policy environments, verified conservation outcomes. Plastic credits, in reinforcing the need for tailored approaches in particular, hold significant potential for addressing expanding the blue finance market. marine plastic pollution, a critical threat to ocean ecosystems, by incentivizing the collection and 2.2 Outcome-Based Finance recycling of plastic waste—each credit typically represents 1 ton of plastic removed from the Outcome-based finance ties funds to clear environment, as seen in initiatives like the World environmental or social results. Bank’s Plastic Waste Reduction-Linked Bond.32 These tools include blue carbon, plastic, and The Mikoko Pamoja project in Kenya (see Box 2) biodiversity credits; Programs-for-Results financing; and the Tahiry Honko project in Madagascar33 thematic outcome bonds; sustainability-linked show how mangrove conservation generates blue bonds;31 and sustainability-linked loans. Unlike carbon credits, which are then sold on the Plan traditional financing, which provides up-front Vivo platform to fund reforestation and community disbursements based on projected impacts, these development. The Ghana Blue Carbon Program mechanisms incentivize stakeholders to deliver expands this approach at a national level,34 tangible results. By aligning financial incentives integrating coastal wetland conservation into carbon with conservation performance, outcome-based markets. These credits ensure a direct link between finance ensures greater accountability, reduces the conservation actions and financial incentives, risk of ineffective resource allocation, and enhances promoting long-term environmental preservation. investor confidence. The approach is becoming increasingly critical for financing ocean and coastal sustainability, providing structured pathways for integrating measurable ecological and social benefits into financial transactions. 30. M. Segal, “Ørsted Issues Inaugural €100 Million blue Bonds to Finance Biodiversity, Sustainable Shipping Projects,” ESG Today, June 8, 2023, https://www.esgtoday.com/orsted-issues-inaugural-e100-million-blue-bonds-to-finance-biodiversity-sustainable-shipping/. 31. ICMA’s Sustainability-Linked Bond Principles provides a reference for issuers, including a taxonomy of eligible activities, key performance indicators, and reporting practices: https://www.icmagroup.org/sustainable-finance/the-principles-guidelines-and-handbooks/sustainability-linked-bond-principles-slbp. 32. World Bank, “World Bank Plastic Waste Reduction-Linked Bond: Questions & Answers” (World Bank, Washington, DC, n.d.), https://thedocs.worldbank.org/en/doc/9023980502c1d67d40f969364b3063bd-0340022024/original/World-Bank-Plastic-Collective-Bond-FAQs-FINAL.pdf. 33. Blue Ventures Conservation, Tahiry Honko: Community Mangrove Carbon Project, Southwest Madagascar, Project Idea Note (London: Blue Ventures Conservation, 2014), https://gefblueforests.org/wp-content/uploads/2020/09/PIN_Tahiry_Honko_Project__PUBLISHED.pdf. 34. World Bank, Ghana: A Blue Carbon Readiness Assessment (Washington, DC: World Bank, 2024), https://documents1.worldbank.org/curated/en/099092624201586363/pdf/P50097510b23060b119ddb12485bef0dcfc.pdf. 7 14 Box 2: Mikoko Pamoja Mangrove Conservation Overview Mikoko Pamoja is a community-led blue carbon project,a leveraging carbon credit sales to finance mangrove conservation and local development in Gazi Bay, Kenya. Established in 2013 and accredited by the Plan Vivo Foundation,b the project spans 615 hectares of mangrove forest and operates under a 20-year implementation period, running until 2033. It provides a model for integrating climate mitigation with coastal community benefits by monetizing carbon sequestration through a payment for ecosystem services framework. Blueness and Development Focus Mikoko Pamoja contributes directly to blue carbon sequestration and the protection of coastal ecosystems. Its design prioritizes local ownership and channels revenues from verified carbon credits into community priorities—such as clean water, education, and livelihoods—thereby integrating social inclusion into marine conservation. The project aligns with blue economy goals by enhancing ecosystem resilience while supporting poverty reduction and community empowerment. Financial Structuring Mikoko Pamoja generates Plan Vivo Certificates, where each certificate represents 1 metric ton of CO2- equivalent sequestered by the mangrove ecosystem. The project follows a rigorous carbon accounting methodology, with independent verification ensuring that the carbon credits reflect genuine emissions reductions. These credits are then sold to buyers—including corporations, institutions, and individuals— through the Markit Environmental Registry. Proceeds from credit sales are directly allocated to the local community through a structured payment framework, where payments are tied to verified carbon sequestration outcomes. On average, the project verifies a minimum of 3,000 metric tons of CO2-equivalent annually, with total Plan Vivo Certificates issued to date exceeding 18,000. Between 2014 and 2023, the project generated $176,081 in payments for ecosystem services, with a portion reinvested into community development initiatives. Implementation and Use of Proceeds Mikoko Pamoja is managed by the Mikoko Pamoja Community Organization, with technical oversight provided by the Kenya Marine and Fisheries Research Institute. The Association for Coastal Ecosystem Services (ACES) plays a critical role in facilitating international fund transfers, ensuring transparency and efficiency in financial flows. The project undergoes independent verification under the Plan Vivo system, maintaining strict compliance with international carbon credit frameworks. Impacts and Outcomes The project provides direct financial benefits to 1,081 participating households, with revenue reinvested in essential community services. Funds have supported the installation of water infrastructure, provision of educational resources, and creation of sustainable livelihoods. These initiatives enhance climate resilience while promoting socioeconomic well-being. Lessons and Limitations While Mikoko Pamoja has been recognized globally as a pioneering community-led blue carbon project, its small-scale limits overall carbon revenue, with payments averaging around $17,000 per year between 2014 and 2023. The voluntary carbon market’s price variability and limited demand for Plan Vivo credits constrain long-term financial predictability. Additionally, replication requires strong community institutions, transparent governance, and technical support, which may not be readily available in all coastal settings. a. Mikoko Pamoja: https://mikokopamoja.org/. b. “Mikoko Pamoja – Documents,” Plan Vivo, n.d., https://www.planvivo.org/mikoko-pamoja-documents. b. “Mikoko Pamoja – Documents,” Plan Vivo, n.d., https://www.planvivo.org/mikoko-pamoja-documents. 15 8 ACCELERATING BLUE FINANCE: INSTRUMENTS, CASE STUDIES, AND PATHWAYS TO SCALE Sustainability-linked loans tie loan terms to the achievement of predefined environmental outcomes, alongside sustainability-linked bonds, which similarly link bond terms to sustainability performance. Unlike traditional concessional loans, which provide favorable financial terms irrespective of performance, sustainability-linked loans embed key performance indicators (KPIs) into their structure, creating financial rewards for meeting conservation targets or penalties for underperformance. IFC has supported the structuring and issuance of blue-related sustainability-linked instruments to advance the blue economy, including a landmark €100 million loan to Banca Transilvania in Romania in 2022—the first blue financing loan in Central and Eastern Europe—targeted at sustainable water management, agriculture, and tourism.35 Programs-for-Results (PforR) financing ties funding to policy and sectoral program performance. Unlike standalone project-based loans, these mechanisms provide financing to national governments based on progress in implementing policy reforms or achieving sectoral sustainability outcomes. The Morocco Blue Economy Program-for-Results Project illustrates this model,36 linking funding tranches to specific milestones in marine protection, fisheries sustainability, and climate resilience. Under this program, disbursements are conditioned on meeting verified targets, such as the expansion of marine protected areas, improvements in fisheries governance, and strengthened coastal adaptation measures. This model enables systemic, large- scale policy transformation, integrating financial incentives into national sustainability strategies. Thematic outcome bonds link financial returns to sector-specific environmental performance, such as reducing plastic waste or restoring coral reefs. Unlike standard blue bonds, which allocate proceeds to predefined projects, these instruments tie financial returns directly to environmental performance. The World Bank’s Plastic Waste Reduction-Linked Bond funds plastic collection and recycling initiatives,37 with investor payouts linked to the number of plastic credits generated —each credit representing 1 ton of plastic removed from the ocean. In a similar structure, the proposed Indonesia Coral Bond raises capital for coral reef conservation,38 with investor returns tied to improvements in coral cover and marine biodiversity. Independent verification (for example, Verra for plastic credits,39 IUCN for coral health40) ensures that payouts are aligned with verified ecological gains. These bonds demonstrate the increasing sophistication of outcome-based finance, where multiple financial instruments—such as parametric insurance, sustainability-linked debt, and impact-linked funds—are blended to maximize conservation outcomes. Outcome-based finance shifts blue tools to focus on results. By linking financial incentives to independently verified results, this approach enhances accountability, strengthens investor confidence, and ensures that conservation financing delivers measurable benefits. The model is particularly effective in high-risk, underfunded sectors such as fisheries management, marine conservation, and plastic pollution reduction, where traditional financing mechanisms have struggled to ensure impact. As investors and policy makers increasingly prioritize performance-driven financial models, outcome-based finance is expected to play an expanding role in the blue economy’s transition toward sustainability. 35. G. Thorpe, “Romania’s Bold Blue Future,” News, International Finance Corporation, November 2024, https://www.ifc.org/en/stories/2024/romania-s-bold-blue-future. 36. World Bank, Morocco: Blue Economy Program-for-Results Project (Washington, DC: World Bank, 2022), https://documents.worldbank.org/en/publication/documents-reports/documentdetail/393421653398904225/morocco-blue-economy-program-for-results-project. 37. World Bank, “World Bank Plastic Waste Reduction-Linked Bond: Questions & Answers.” 38. World Bank, Indonesia Coral Bond: An Innovative Ocean Financing Instrument (Washington, DC: World Bank, 2024), https://documents1.worldbank.org/curated/en/099559205302415507/pdf/IDU1e1f53542193e0148a718e8518d3594da3e94.pdf. 39. Verra, Plastic Waste Reduction Standard: https://verra.org/programs/plastic-waste-reduction-standard. 40. L. Kaufman et al., Coral Health Index: Measuring Coral Community Health (Arlington, VA: Conservation International, 2011), https://portals.iucn.org/library/node/28851. 9 16 2.3 Risk Mitigation Tools transfer risk to capital market investors, offering a financial buffer for extreme weather events. Risk mitigation tools are designed to shield blue This distinction influences how risk is allocated, investments from financial losses caused by how transactions are structured, and the types of environmental shocks, climate risks, and natural investors involved. disasters. These instruments help de-risk investments in the Parametric insurance offers fast, predefined blue economy by providing financial protection that payouts based on specific environmental ensures rapid recovery and resilience. These tools triggers rather than actual damage assessments. transfer financial risks to insurers, markets, or public Unlike traditional indemnity-based insurance, sector entities, reducing uncertainty for investors which requires extensive post-event evaluations, and improving access to capital for ocean-based parametric insurance provides rapid disbursements activities. when measurable thresholds—such as wind speed, sea surface temperature anomalies, or rainfall The insurance industry plays a dual role in blue levels—are met. This approach is particularly useful finance—as a source of capital and as a risk in marine and coastal environments where speed manager. and predictability are critical for disaster recovery Insurers hold the second-largest pool of investable and ecosystem restoration. The Mesoamerican assets globally, after pension funds, making them a Reef Insurance Program is a prime example of how crucial source of capital for blue investments. Their parametric insurance supports marine conservation long-term investment horizons align well with the (see Box 3). Developed under the InsuResilience time frames needed for marine conservation and Global Partnership, this instrument aims to provide sustainable blue economy projects. When insurers immediate payouts for reef restoration following are involved not just as underwriters but also as hurricane damage. The COAST Insurance Program in investors, they can amplify the scale of capital the Caribbean (Box 4) demonstrates the application available for blue finance. Risk mitigation tools in of parametric insurance for fisheries-dependent blue finance primarily involve parametric insurance, communities.41 This program aims to provide quick typically backed by insurers or public reinsurance financial support for fishers and coastal enterprises pools. Cat bonds represent a specific type of when extreme weather disrupts livelihoods. By tying parametric instrument, with the key distinction payouts to storm conditions rather than damage being the capital source; cat bonds being supported assessments, the program eliminates lengthy claims by capital market investors. Parametric insurance processes and provides immediate liquidity for provides rapid payouts based on predefined rebuilding efforts. These models represent a shift environmental triggers (e.g., wind speed, sea surface toward using insurance mechanisms for proactive temperature anomalies), while catastrophe bonds environmental protection rather than merely post- disaster compensation. Parametric insurance products typically rely on reinsurance markets. 41. Caribbean Ocean and Aquaculture Sustainability Facility, Caribbean Catastrophe Risk Insurance Facility: https://www.ccrif.org/projects/coast/caribbean-ocean-and-aquaculture-sustainability-facility?language_content_entity=en. 17 10 ACCELERATING BLUE FINANCE: INSTRUMENTS, CASE STUDIES, AND PATHWAYS TO SCALE Box 3: Mesoamerican Reef Insurance Overview The Mesoamerican Reef (MAR), spanning Belize, Guatemala, Honduras, and Mexico, is the largest barrier reef in the Atlantic Ocean. It supports critical marine biodiversity, sustains coastal fisheries, and provides natural storm protection for millions of people. However, frequent hurricanes pose a severe threat to the reef’s health, with extreme weather events causing widespread coral degradation. In response, an innovative parametric insurance mechanism – underpinned by tropical cyclone modeling approach- was designed to provide immediate financial resources for post-storm reef restoration efforts. The Mesoamerican Reef Insurance Program was developed to provide rapid financial support for reef rehabilitation efforts following hurricanes.a The goal was to create a dedicated funding mechanism that could be deployed without delays, allowing for immediate response actions such as coral reattachment, debris removal, and stabilization of damaged reef structures. Blueness and Development Focus The MAR Insurance Program directly supports marine ecosystem resilience by ensuring rapid deployment of funds for coral reattachment, debris removal, and stabilization of reef structures after hurricane events. It addresses a key financing gap in post-disaster reef recovery and strengthens coastal protection in climate-vulnerable areas. The instrument integrates environmental restoration, community engagement, and climate adaptation, advancing regional blue economy and conservation goals. Financial Structuring The MAR Fund, a regional environmental trust fund, leads the initiative and is responsible for purchasing the parametric insurance policy. The program was developed in partnership with Willis Towers Watson (WTW)b Climate and Resilience Hub and is co-funded by the InsuResilience Solutions Fund (ISF).c The program was preceded by IDB-funded studies to assess the economic value of reef ecosystem services and estimate stakeholders’ willingness to pay, which informed the policy design and premium structuredd. The program includes the following: • Policyholder: MAR Fund, which coordinates premium payments. • Insurance underwriters: AXA Climate and Munich Re, responsible for providing insurance coverage. • Insurance Broker: WTW Alternative Risk Transfer Team, which structured the policy, and facilitated its placement with underwriters, and supported the development of the trigger mechanism. • Premium financing support: ISF covers premium costs for the initial years. • Local implementers: Pre-trained reef response brigades—comprised of local nongovernmental organizations (NGOs) and conservation organizations. • Beneficiaries: Governments, coastal communities, marine-dependent businesses, and conservation organizations. 11 18 Box 3: Mesoamerican Reef Insurance (Continued) Implementation and Use of Proceeds The parametric insurance policy covers key reef sites across participating countries and is structured around a transparent, model-based payout mechanism. The parametric insurance is structured as follows: 1. Premium payment: The MAR Fund purchases the parametric insurance policy to cover key reef sites across the participating countries. 2. Trigger mechanism: A pre-agreed hurricane wind speed threshold activates payouts for reef restoration, based on outputs from a tropical cyclone model. This model estimates wind speed intensities and associated storm surge exposure at reef locations, using event-specific data. Wind speed data are sourced from independent meteorological agencies (for example, NOAAe) to ensure transparency. Uses a “cat in nested circles” approach, in which payout amounts increase based on wind speed and proximity to reef. 3. Fund disbursement: Once the trigger is met, funds are automatically released to the MAR Fund’s Emergency Fund. No site-specific damage assessment is required, accelerating the restoration response. The Emergency Fund, managed by the MAR Fund, releases payments to local NGOs and reef restoration teams. 4. Implementation of reef restoration activities: Response brigades remove debris, stabilize coral structures, and reattach coral fragments. Impact and Outcomes The program was activated following Hurricane Lisa (2022), which caused extensive reef damage in Belize.f The payout supported swift restoration activities, highlighting the model’s effectiveness in reducing delays. While the model enables rapid response financing, it does not capture all reef damage drivers—such as coral bleaching, sedimentation, or anthropogenic impacts—highlighting opportunities for further innovation in future product development. Lessons and Limitations The MAR Insurance Program demonstrates the feasibility and effectiveness of ecosystem-specific parametric insurance. However, its focus on cyclone-related events means other ecological threats remain uncovered. Expanding coverage parameters and exploring hybrid models could strengthen its applicability. Coordination among insurers, scientific experts, and local actors is essential to ensure timely execution and adaptive management. a. MAR Fund and Willis Towers Watson, Mesoamerican Reef Insurance Programme: Building the Climate Resilience of Our Critical Natural Infrastructure (MAR Fund and Willis Towers Watson, n.d.), https://marfund.org/en/wp-content/uploads/2020/04/Mesoamerican-Reef-Insurance-Programme.pdf. b. “Climate Risk,” Solutions, WTW, n.d., https://www.wtwco.com/en-au/solutions/climate-risk. c. “Transforming Strategies into Insurance Products: Improving Resilience to Climate Change,” InsuResilience Solutions Fund, n.d., https://insuresilience-solutions-fund.org. d. I. Ruiz de Gauna et al., Economic Valuation of the Ecosystem Services of the Mesoamerican Reef, and the Allocation and Distribution of These Values (Washington, DC: Inter-American Development Bank, 2021), https://publications.iadb.org/en/economic-valuation-ecosystem-services-mesoamerican-reef-and-allocation-and-distribution- these. e. National Oceanic and Atmospheric Administration: https://www.noaa.gov. f. MAR Fund, “Hurricane Lisa Triggers First Pay-out of Mesoamerican Insurance Programme to Finance Immediate Reef Response in Belize,” news release, November 11, 2022, https://marfund.org/en/hurricane-lisa-triggers-first-pay-out-of-mesoamerican-reef-insurance-programme-to-finance-immediate-reef-response-in-belize. 19 12 ACCELERATING BLUE FINANCE: INSTRUMENTS, CASE STUDIES, AND PATHWAYS TO SCALE Box 4 COAST Fisheries Insurance Overview Launched in July 2019, the Caribbean Oceans and Aquaculture Sustainability Facility (COAST) is the world’s first parametric climate risk insurance product for the fisheries sector. Developed by CCRIF SPC and the World Bank, with support from the U.S. Department of State, COAST provides rapid financial protection to small-scale fishers and fisheries value chain actors in Grenada and Saint Lucia, covering both tropical cyclones and adverse weather events such as high waves and heavy rainfall. Blueness and Development Focus COAST supports the resilience of coastal fisheries by covering the full value chain—from fishers to processors—and linking climate risk protection with sustainable fisheries management. It strengthens food security, enables faster recovery from climate shocks, and ensures that traditionally underserved groups such as women vendors and processors are formally included in insurance schemes. It is the first insurance product globally to track payouts down to individual beneficiaries in the fisheries sector. Financial Structuring The program is led by CCRIF SPC and implemented with technical assistance and funding from the World Bank (under the PROBLUE initiative) and the U.S. Department of State. Policyholders are the Ministries of Finance in Grenada and Saint Lucia, while fisheries departments manage registration and outreach. Coverage Scope: Includes registered fishers, crew members, boat owners, fish vendors, and processors—the latter two groups being predominantly women. · Parametric Triggers and Payouts: o Tier 1 (Adverse Weather): Activated when modelled annual losses from rainfall and waves exceed US$700,000 in Grenada; typical payout is US$175,000. o Tiers 2 and 3 (Tropical Cyclones): Triggered at modelled loss levels of US$250,000 and US$2 million, with maximum payouts of US$225,000 and US$650,000 respectively in Grenada. o Maximum Annual Coverage: US$800,000 in Grenada and US$833,333 in Saint Lucia. o Per-Beneficiary Payouts: Up to US$857 in Saint Lucia. · Disbursement Timeline: CCRIF SPC transfers payouts to national governments within 14 days of a qualifying event; funds are then distributed to pre-registered beneficiaries. · Microinsurance Component: COAST operates as a microinsurance scheme by directly supporting vulnerable households, enhancing recovery speed and ensuring livelihood protection. Implementation and Use of Proceeds Funds are disbursed through the Ministries of Finance to individual beneficiaries who are pre-identified during the policy design phase. Ministries of Fisheries lead beneficiary registration. Payouts support immediate recovery needs such as replacing lost income or damaged gear. COAST also incentivizes governments to adopt climate-smart fisheries management reforms and protect coastal ecosystems. 13 20 Box 4 COAST Fisheries Insurance (Continued) Impacts and Outcomes · Resilience: COAST has strengthened post-disaster recovery in the fisheries sector by ensuring quick payouts. · Gender and Social Impact: o Inclusion of women vendors and processors through formal registration. o A 32% increase in new beneficiary registrations in Saint Lucia—many of them women. o Financial protection has enabled women’s roles in the value chain to be formally recognized and safeguarded. · Policy Innovation: First parametric fisheries insurance globally to ensure beneficiary-level payout tracking and transparency. Lessons and Limitations COAST demonstrates how climate insurance can be tailored to support vulnerable livelihoods while advancing inclusive and climate-smart fisheries policy. However, the model’s sustainability beyond donor- funded premium support remains to be tested. Ensuring widespread uptake among small-scale actors also requires continued outreach and institutional support. a. Caribbean Ocean and Aquaculture Sustainability Facility. https://www.ccrif.org/projects/coast/caribbean-ocean-and-aquaculture-sustainability-facility?language_content_ entity=en b. PROBLUE Impact Stories. https://thedocs.worldbank.org/en/doc/01b509f1a67a1edc725e35b146044ee0-0320072024/original/PROBLUE-Impact-Story-COAST.pdf Parametric insurance has been combined with trajectory—to determine payouts, ensuring funds other financial instruments to enhance protection are disbursed swiftly after a qualifying event. against climate-related shocks while supporting Jamaica’s catastrophe bond is a notable example conservation outcomes. of this approach.42 The bond provided Jamaica with For example, in the 2021 Belize Debt-for-Nature $185 million in financial coverage against tropical Swap, parametric insurance was integrated into the cyclone events over three hurricane seasons. The transaction to address hurricane risks to marine instrument was structured using parametric triggers, conservation funding. The swap restructured meaning that payouts were determined based on Belize’s debt, channeling savings into a conservation storm parameters rather than post-disaster damage endowment, while the parametric insurance assessments. Independent verification of storm provided payouts based on predefined triggers, intensity and trajectory was carried out by the ensuring that conservation funds remained available calculation agent, AIR Worldwide.43 This structure and were not diverted for disaster recovery. This ensured that in the event of a qualifying storm, funds example illustrates how risk mitigation tools can could be disbursed within weeks, offering timely be paired with fiscal instruments to support the financial relief. The development and issuance of continuity of blue economy investments. Jamaica’s cat bond involved multiple stakeholders, highlighting the collaborative nature of such Catastrophe bonds (cat bonds) transfer financial financial instruments. The World Bank managed risk from governments to capital markets, ensuring the preparation, structuring, and execution of the quick access to funds after extreme weather events. bond, with Swiss Re and Aon Securities serving as These instruments are useful for countries highly lead managers. The transaction was supported by exposed to frequent hurricanes and tropical storms. financial contributions from Germany and the United While cat bonds provide rapid liquidity, they can Kingdom through the Global Risk Financing Facility, be expensive, which has limited their adoption in along with additional backing from the United States smaller economies. Unlike traditional insurance, Agency for International Development (USAID). cat bonds rely on predefined parametric triggers— These contributions helped finance the bond’s such as wind speed, barometric pressure, or storm premium and transaction costs, highlighting that 42. World Bank, World Bank Catastrophe Bond Provides Jamaica with Financial Protection against Tropical Cyclones (Washington, DC: World Bank, 2021), https://thedocs.worldbank.org/en/doc/43a111757d3b1ff1cabde80ee7eb0535-0340012021/original/Case-Study-Jamaica-Cat-Bond.pdf. 43. AIR Worldwide is now known as Verisk. “Extreme Event and Catastrophe Risk,” Solutions, Verisk, n.d., https://www.verisk.com/solutions/extreme-event-risk. 21 14 ACCELERATING BLUE FINANCE: INSTRUMENTS, CASE STUDIES, AND PATHWAYS TO SCALE when costs are a concern, external support can play private partnerships in advancing accessible climate a crucial role in making cat bonds more viable and risk solutions. In parallel, several MDBs, including accessible. the World Bank, Inter-American Development Bank (IDB), and Caribbean Development Bank, are Cat bonds are an emerging tool in blue incorporating “hurricane clauses” into their loan finance, with potential applications for broader agreements with climate-vulnerable countries, environmental risks, such as coral bleaching and allowing temporary suspension of debt repayments fisheries collapse. following a major disaster. These clauses offer built- By providing a predictable financial buffer, cat in financial flexibility, complementing insurance- bonds enable governments to fund disaster based instruments like cat bonds and contributing response and recovery efforts rapidly, minimizing to broader sovereign resilience. As cat bonds draw disruptions to marine and coastal ecosystems. Their their capital from the capital markets, they can be application could be expanded to cover additional expensive. Together, these developments illustrate environmental risks, such as coral bleaching or how blended risk mitigation strategies—spanning fisheries collapse, as data-driven parametric triggers insurance markets, sovereign debt tools, and continue to evolve. conservation finance—can strengthen the resilience of blue economy investments. Regional risk pools such as the Pacific Catastrophe Risk Insurance Company (PCRIC) are also emerging as valuable vehicles for placing reef-related risks on the market. PCRIC launched a coral reef insurance product for Fiji in 2024, which was renewed in 2025, and a similar product is under consideration for Niue. These pooled, donor-supported structures help lower premium costs and reinforce the role of public- 2.4 Fiscal and Economic Instruments Fiscal and economic instruments shape financial incentives to promote sustainable ocean management. These tools include taxes, fees, and subsidies that influence economic behavior while generating revenue for marine conservation, sustainable fisheries, and coastal resilience. When effectively designed, these instruments align financial policies with blue economy priorities and Sustainable Development Goal 14. · Taxes: Levies on environmentally harmful activities can discourage overexploitation and generate funds for conservation. The Seychelles’ 1 percent environmental levy on tourism directly supports marine protection efforts.44 · Fees: User-based charges create revenue streams for ocean sustainability. The Great Barrier Reef Marine Park Authority in Australia applies commercial fishing permit fees to fund reef conservation.45 · Subsidies: Financial support helps transition industries toward sustainable practices. The European Union’s Common Fisheries Policy provides subsidies for responsible fishing methods.46 · Incentives: Mechanisms such as tax breaks and concessional finance encourage investment in marine restoration. The Indonesia WWF Blue Finance initiative highlights usage of incentives for mangrove rehabilitation.47 · · 44. “Seychelles Introduced a Tourism Environmental Sustainability Levy,” BIOFIN News and Media, BIOFIN, August 2, 2023, https://www.biofin.org/news-and-media/seychelles-introduced-tourism-environmental-sustainability-levy#:~:text=The%20newly%20introduced%20levy%20is,air line%20companies%20and%20Seychellois%20citizens. 45. M. Vanderklift et al., Blue Forest Finance: Financing the Protection and Restoration of Blue Forests and Meadows (Canberra, Australia: Commonwealth Scientific and Industrial Research Organisation, 2022), https://research.csiro.au/iora-blue-carbon-hub/wp-content/uploads/sites/321/2022/11/Blue-forest-finance-guide-FINAL.pdf. 46. “Common Fisheries Policy,” Oceans and Fisheries, European Commission, n.d., https://oceans-and-fisheries.ec.europa.eu/policy/common-fisheries-policy-cfp_en. 47. C. D. Pratama et al., Indonesia: Blue Finance Policy Note (Jakarta: Indonesia Climate Change Trust Fund, 2022), https://www.icctf.or.id/wp-content/uploads/2022/12/Blue-Finance-Policy-Note_Publish.pdf. 15 22 These instruments serve three critical functions in blue finance: 1. Internalizing externalities: By pricing negative environmental impacts, they encourage sustainable practices. 2. Mobilizing revenue for conservation: Taxes and fees create long-term funding streams for marine protection. 3. Scaling sustainable investments: Subsidies and incentives reduce financial barriers to ocean-friendly economic activities. Debt-for-nature swaps (DNS) are financial maintaining strong transparency, governance, and mechanisms that link sovereign debt transactions accountability measures.49 to environmental outcomes, particularly in ocean conservation.48 The evolution of debt-for-nature swaps has While early swaps—such as Belize’s (see box 5)— been accompanied by increasing involvement focused on reducing a country’s external debt from multilateral development banks (MDBs), burden, recent transactions (Bahamas – see box 6) which have played a catalytic role in designing are being designed primarily to create dedicated enhanced governance frameworks, mobilizing fiscal space for long-term environmental investments credit guarantees, and facilitating policy-based and climate goals, rather than short-term debt relief. conservation commitments. These deals restructure a portion of sovereign debt, The Seychelles was the first country to complete often with concessional support, in exchange for a marine-focused debt-for-nature swap (a hybrid commitments to finance conservation objectives. By transaction, also combining a sovereign blue bond), unlocking targeted funding rather than broad debt setting a precedent for similar transactions in the relief, DNS align financial planning with sustainability blue economy. In 2015, the Seychelles bought goals, enabling governments to support marine back $21.6 million of its debt with support from protected areas, coastal resilience, and biodiversity The Nature Conservancy and several donors. The efforts without diverting core public resources. agreement facilitated the expansion of marine protected areas to cover 30 percent of the Debt-for-nature swaps can be structured through Seychelles’ exclusive economic zone (EEZ) while bilateral agreements or commercial transactions, directing funds toward sustainable marine resource each involving different stakeholders and financial management. This model has inspired other nations mechanisms. to pursue similar debt conversions, though its Bilateral swaps typically involve an official creditor, replicability depends on access to concessional such as a government, agreeing to forgive or finance, sovereign creditworthiness and institutional restructure debt in exchange for a country’s readiness. Belize (Box 5) issued a large-scale debt- commitment to conservation spending. Commercial for-nature swap, using a special purpose vehicle swaps, on the other hand, often require a third- (SPV) backed by credit enhancements to buy party intermediary—such as a multilateral institution, back external debt at a discount. Structurally, this conservation nongovernmental organization, or approach is similar to more recent transactions private financial entity—to facilitate the purchase in The Bahamas (Box 6), Barbados, Gabon, and of sovereign debt, usually at discount. These Ecuador, which also combine concessional and mechanisms must be carefully designed to ensure commercial capital to refinance existing obligations. fiscal sustainability, efficient allocation of resources, Although similar in financial structure, newer and alignment with national priorities. The financial transactions increasingly prioritize securing stable savings generated through the transaction are resources for conservation, rather than being redirected into conservation activities, often motivated by fiscal considerations, particularly in through dedicated trust funds or endowments, contexts where public funding is limited. MDBs supporting initiatives such as marine protected have facilitated these transactions by anchoring areas, sustainable fisheries management, and guarantees, supporting trust fund governance, coastal ecosystem restoration. A well-structured and aligning conservation outcomes with national swap balances environmental funding with long- biodiversity targets. term environmental and economic impact while 48. K. A. Briceño and J. Morris, “The Debt-for-Nature Lifeline,” Perspectives, The Nature Conservancy, June 22, 2023, https://www.nature.org/en-us/what-we-do/our-insights/perspectives/debt-for-nature-lifeline. 49. World Bank, Debt-for-Development Swaps and the Potential Role of the World Bank, technical note (Washington, DC: World Bank, 2024), https://documents.worldbank.org/pt/publication/documents-reports/documentdetail/099080524122527783. 23 16 Box 5: Belize Debt-for-Nature Swap Overview The Belize Blue Bond and Debt Conversion transaction was an innovative transaction that enabled the country to reduce its external debt burden while generating long-term conservation funding.a It was structured as a debt-for-nature swap combined with the issuance of a blue bond, making it the largest transaction of its kind for ocean conservation. Blueness and Development Focus The transaction aligned fiscal sustainability with ocean conservation by embedding binding commitments to marine protection and sustainable use. Belize pledged to expand marine protected areas, develop a national marine spatial plan, and establish a permanent conservation fund. These measures were designed to enhance marine biodiversity, improve ecosystem services, and support coastal livelihoods—firmly anchoring the transaction within the blue economy framework. Financial Structuring Belize had $553 million in external commercial debt, known as the “Superbond,” which represented a quarter of its total national debt, and has been restructured four times since its issuance in 2000 . The bond was trading at a deep discount owing to concerns over Belize’s ability to repay. The Nature Conservancy (TNC), through its subsidiary Belize Blue Investment Company (BBIC), arranged a blue loan to finance the repurchase of Belize’s Superbond at 55 cents on the dollar, reducing the country’s total debt burden. Of the total $364 million raised, approximately $304 million was used to repurchase the Superbond, while the remaining proceeds were allocated to pre-fund the conservation endowment ($23.5 million) and cover part of guarantee fees and transaction costs. To fund the blue loan, Credit Suisse underwrote and syndicated a $364 million blue bond, rated Aa2 by Moody’s, benefiting from a political risk insurance guarantee provided by the United States International Development Finance Corporation (DFC). A separate insurance policy (catastrophe wrapper), designed by Willis Towers Watson and underwritten by Munich Re, protects Belize’s ability to meet debt payments in case of extreme weather events, such as hurricanes. This feature added a crucial layer of climate risk protection and enhanced investor confidence by reducing the probability of payment disruption following natural disasters. The blue loan featured a step-up interest structure, starting at 3 percent and increasing to 6.04 percent by 2026, with a 19-year maturity and a 10-year grace period on principal repayments. In total, the deal generated approximately $200 million in debt service savings over 20 yearsa. Estimates of debt service savings are usually based on nominal cash flows; incorporating the time value of money could provide a more complete picture of the transaction’s financial impact. Implementation and Use of Proceeds A Conservation Funding Agreement between Belize and TNC committed the government to channel a portion of the fiscal savings into marine conservation. The mechanism included both annual conservation payments and the establishment of an endowment fund. Belize committed to contributing an average of $4.2 million annually over 20 years, with an initial endowment of $23.5 million from blue loan proceeds expected to grow to $92 million by 2041. These funds are distributed via grants to government agencies, NGOs, and local stakeholders engaged in marine conservation and sustainable fisheries. The allocation is overseen by the Belize Fund for a Sustainable Future (BFSF), an independent, Belizean non-profit conservation trust fund and governed by a multi-stakeholder board comprising representatives from the Government of Belize, civil society, academia, and The Nature Conservancy.  24 Box 5: Belize Debt-for-Nature Swap (Continued) Impacts and Outcomes The transaction lowered Belize’s debt by 12 percent of GDP and secured approximately $180 million for long-term marine conservationa. It also formalized policy commitments, such as expanding marine protected areas to 30 percent of Belize’s ocean territory by 2026 and developing a national marine spatial plan. The establishment of a legally binding conservation fund has ensured transparent and accountable financing for ocean sustainability over the long term. Lessons and Limitations This transaction illustrates how blended finance, backed by credit enhancements and sound policy frameworks, can align fiscal objectives with conservation goals. While the deal’s complexity, reliance on concessional guarantees, and need for strong investor confidence may limit its replicability in countries with less developed financial markets, it has nonetheless catalyzed similar efforts in other countries and remains a flagship example of innovative blue finance. One of the defining features that bolstered investor confidence was the inclusion of remedy provisions in case Belize failed to meet its conservation commitments—an approach that helped reinforce the ESG integrity of the transaction. Additionally, while metrics such as total nominal debt service savings have been cited to highlight financial benefits, a more complete assessment would also consider the time value of money to ensure consistency and comparability across similar instruments. While the governance model is designed to promote transparency and accountability in grantmaking, conservation trust funds—including the BFSF—can face challenges such as relatively high administrative costs and limited direct national control over spending priorities. Ongoing debate highlights the importance of balancing robust fiduciary oversight with strong domestic participation and local stakeholder engagement to maximize the legitimacy, efficiency, and long-term impact of conservation investments. a. The Nature Conservancy, Case Study: Belize Blue Bonds for Ocean Conservation (Arlington, VA: The Nature Conservancy, 2022), https://www.nature.org/content/dam/ tnc/nature/en/documents/TNC-Belize-Debt-Conversion-Case-Study.pdf. Box 6: Bahamas Debt Conversion Project for Marine Conservation Overview Launched in November 2024, the Bahamas Debt Conversion Project for Marine Conservation is a second-generation debt-for-nature swap that refinanced $300 million of the country’s external commercial debta. While similar in structure to earlier DNS transactions—including the use of a credit- enhanced loan to retire existing debt—this project places increased emphasis on channeling resources toward long-term conservation financing. The deal unlocks $124 million for marine conservation over 15 years, with an additional $8 million expected from endowment returnsb. This model supports biodiversity protection, climate resilience, and local livelihoods across one of the largest Marine Protected Area (MPA) systems in the Caribbean. Blueness and Development Focus This transaction embeds legally binding commitments to improve ocean governance, implement climate-smart marine spatial planning, and manage 6.8 million hectares of MPAs. By linking refinancing to measurable ocean and climate outcomes, it advances national conservation targets while supporting the blue economy through improved fisheries management, mangrove protection, and sustainable coastal development. 25 18 Box 6: Bahamas Debt Conversion Project for Marine Conservation (Continued) Financial Structuring The government of The Bahamas, seeking to redirect debt service flows toward marine conservation, repurchased $300 million in high-interest commercial debt through a new $300 million loan arranged by Standard Charteredb. This loan was backed by a comprehensive credit enhancement package including a $200 million partial credit guarantee from the Inter-American Development Bank (IDB). In addition, Builders Vision, a private impact investor, provided a $70 million guarantee collateralized by its own assets, along with $30 million in private credit insurance from AXA XL. This structure enabled a fixed interest rate of 4.7% over a 15-year maturity period. The IDB played a pivotal role—not only by providing the core credit guarantee for this transaction but also by facilitating policy dialogue between economic and environmental ministries, supporting the design of conservation trust fund governance, and aligning the financial architecture with national biodiversity strategies. This engagement reflects the broader evolution of debt-for-nature swaps into more complex, credit-enhanced, market-based transactions involving multilateral and private sector participation, building on IDB’s extensive experience in deals in Barbados, Ecuador, and elsewhere. Implementation and Use of Proceeds Conservation funding will be managed by the Bahamas Protected Areas Fund (BPAF) and disbursed to eligible government agencies, the Bahamas National Trust, and local community organizations. Activities include MPA enforcement, capacity building, ecosystem restoration, and support for climate- smart marine spatial planning. The loan proceeds also capitalized an endowment fund expected to reach $20 million by 2039, ensuring long-term conservation finance beyond the 15-year term. Impacts and Outcomes The transaction secured $124 million in dedicated annual conservation funding, complemented by $8 million in investment returns from the endowment, totaling $132 million. It represents the largest financial commitment to MPA management in the Caribbean to date and supports The Bahamas’ commitments under the Global Biodiversity Framework, particularly in managing its 6.8 million hectares of MPAs. The project sets a global precedent by incorporating a private guarantor and insurer alongside an MDB—offering a replicable model for blended finance in conservation. Lessons and Limitations The Bahamas transaction underscores how credit-enhanced refinancing can further demonstrate the potential of debt-for-nature swaps to structure long-term, purpose-built conservation finance. Reported financial savings from debt-for-nature swaps often depend on specific assumptions regarding costs, interest rates, and timeframes. When evaluating such transactions, it is useful to clarify the metrics and methodologies used, as recalculations incorporating full transaction costs and discounting may produce different estimates. MDB involvement was essential to achieving favorable terms and aligning stakeholders around conservation goals. However, the structuring complexity and reliance on investor-grade trust fund governance may pose replication challenges for lower-capacity countries. Nonetheless, the deal offers a promising blueprint for SIDS and coastal nations seeking to leverage capital markets for sustainable development. a. https://opm.gov.bs/bahamas-debt-conversion-project-marine-conservation-esg-deal-of-the-year/; b. https://www.nature.org/en-us/newsroom/tnc-announces-new-nature-bonds-project-bahamas/; https://www.iadb.org/en/news/bahamas-launches-debt-ocean-conserva tion-swap-idb-support#:~:text=November%2022%2C%202024&text=The%20Bahamas%20Debt%20Conversion%20Project,over%20the%20next%2015%20years.; https:// www.omfif.org/journal_autumn23_iiadb/ 26 2.5 Dedicated Funds and Facilities Dedicated funds and facilities provide financing These models highlight how PPPs help bridge solutions for ocean sustainability by leveraging a financing gaps, de-risk investments, and create mix of public, private, and philanthropic capital. sustainable revenue streams for ocean conservation These mechanisms are designed to mobilize efforts. funding for marine conservation, climate resilience, and sustainable blue economy initiatives while Blended finance structures often incorporate addressing investment risks and financial gaps. elements of revolving funds and PPPs to de-risk Dedicated funds operate through various financial investments and attract private capital into ocean models, including revolving funds, public-private sustainability projects. partnerships, and blended finance structures, These mechanisms combine public funding, ensuring continuous capital availability for marine concessional finance, and commercial capital to projects. enhance the bankability of high-impact projects. These mechanisms address key barriers such as Revolving funds are financial mechanisms that uncertain revenue streams, long project horizons, ensure continuous reinvestment of capital into new and perceived risks associated with ocean-based projects, making them highly effective for marine investments, making marine sustainability projects conservation financing. more commercially viable. These funds typically provide low-interest loans, credit guarantees, or results-based financing, with Blended finance works by strategically layering repayments used to fund additional initiatives. concessional capital from governments, MDBs, or An example of revolving funds in blue finance is philanthropic organizations alongside commercial the Blue Forest Finance Guide (CSIRO), which investments to de-risk projects and crowd in uses concessional finance to support mangrove private sector participation. restoration through a revolving Blue Grants Fund The structuring of these facilities varies, but and Blue Endowment Fund.50 Revolving funds are commonly used instruments include concessional particularly useful in developing economies, where loans with below-market interest rates, risk-sharing sustained financial support is needed for marine mechanisms such as guarantees, technical assistance protection efforts but where traditional funding grants to improve project viability, and first-loss sources remain limited. capital to absorb initial investment risks. These facilities allow financial institutions, investors, and Public-private partnerships (PPPs) are structured development organizations to collaborate, ensuring collaborations between governments and private that ocean conservation and sustainable economic sector entities to finance, develop, and manage activities receive adequate financing. ocean sustainability projects. These partnerships balance public oversight with Dedicated funds and facilities in the blue economy private sector efficiency, mobilizing capital while broadly fall into two categories: government or ensuring long-term project viability. In the blue MDB-led initiatives and private sector–led impact finance space, Blue Finance’s Co-Management investment funds. Model in the Dominican Republic demonstrates Government and MDB-led facilities typically focus how PPPs can enhance marine conservation while on de-risking high-priority projects with strong supporting local livelihoods,51 involving government, environmental and social benefits, such as marine nongovernmental organizations, and investors in conservation, coastal resilience, and sustainable managing a major marine reserve. Similarly, Blue fisheries. In contrast, private sector–led funds seek Finance’s Marine Protected Areas Framework commercially scalable opportunities, investing in seeks to scale PPPs for conservation,52 with a goal blue economy enterprises that balance financial of managing 20 marine protected areas by 2030 returns with measurable environmental impact. through blended finance, integrating conservation funding with community economic resilience. 50. Vanderklift et al., Blue Forest Finance: Financing the Protection and Restoration of Blue Forests and Meadows. 51. H. Avery, “Blue Finance: Why Marine PPPs Could Be a Win-Win-Win,” Euromoney, June 5, 2018, https://www.euromoney.com/article/b18hg7vjwmy9hn/blue-finance-why-marine-ppps-could-be-a-win-win-win. 52. Blue Finance, CPIC Conservation Investment Blueprint: Public-Private Partnership for Marine Protected Areas (Blue Finance, 2019), https://www.cpicfinance.com/ wp-content/uploads/2021/11/UPDATE-CPIC-Blueprint-Public-Private-Partnership-for-Marine-Protected-Areas-by-Blue-Finance-08-2019.pdf. 27 20 ACCELERATING BLUE FINANCE: INSTRUMENTS, CASE STUDIES, AND PATHWAYS TO SCALE Government and MDB-led blended finance facilities serve as catalytic funding mechanisms to support large-scale ocean sustainability initiatives. These facilities mobilize concessional capital, often combined with technical assistance, to fund conservation efforts and policy interventions while attracting private sector co-investment. The PROBLUE Multi-Donor Trust Fund,53 managed by the World Bank (Box 7), illustrates how international financial institutions facilitate policy reforms and direct investments in marine pollution reduction, sustainable fisheries, and marine conservation. Similarly, the Global Fund for Coral Reefs (GFCR) employs a blended finance model that combines grants and concessional capital to mobilize private investment for coral reef restoration and resilience projects across multiple developing nations (see Box 8). Box 7: PROBLUE Overview Launched in 2018, PROBLUEabc is the World Bank’s multi-donor trust fund focused exclusively on supporting the sustainable and integrated development of marine and coastal resources. It is the world’s largest blue economy-dedicated trust fund, providing countries with financial and technical support for upstream policy reform, investment preparation, and piloting of blue finance mechanisms. Blueness and Development Focus PROBLUE directly supports Sustainable Development Goal 14 (Life Below Water), the Global Biodiversity Framework, and the Paris Agreement. The fund prioritizes nature-positive ocean development, coastal resilience, and climate-smart marine investments. Its scope includes improving fisheries governance, addressing marine pollution, supporting innovation in traditional ocean sectors, and promoting integrated seascape management through nature-based solutions. Financial Structuring and Fund Management As of November 2024, PROBLUE had supported 247 activities in over 100 countries, with an approved portfolio of $182 million and 64 new proposals under review. Activities are aligned across four thematic pillars: (1) sustainable fisheries and aquaculture, (2) marine pollution and plastic waste reduction, (3) blue innovation in traditional sectors such as shipping and tourism, and (4) integrated seascape management. Funding is provided as grants, typically ranging from $100,000 to $3 million per activity. The fund is administered by the World Bank’s Environment, Natural Resources and Blue Economy Global Practice and overseen by a Donor Committee comprising 13 development partners, including Australia, Canada, the EU, France, Germany, Iceland, Ireland, Norway, Sweden, the UK, and the United States. In June 2024, the fund was extended to 2030. Implementation and Use of Proceeds Funding supports project preparation, technical assistance, policy reform, capacity building, and innovation. Eligible applicants include World Bank regional teams, national governments, regional institutions, and select NGOs. Applications are submitted through designated World Bank funding rounds and evaluated based on alignment with blue economy goals, innovation, and climate co- benefits. Key initiatives supported by PROBLUE include the COAST fisheries insurance in the Caribbean, the WACA Resilience Program in West Africa, and plastic waste reduction efforts in Indonesia. In the Caribbean, the $90 million UBEC project co-financed by PROBLUE promotes nature-positive job creation and female entrepreneurship across six island nations. 53. PROBLUE: https://www.worldbank.org/en/programs/problue. 21 28 Box 7: PROBLUE (Continued) Impacts and Outcomes PROBLUE-supported activities have generated tangible environmental and social outcomes. A $10 million project in Indonesia is projected to prevent 50,000 tons of marine plastic leakage annually. In the Caribbean, the COAST insurance program covered over 3,600 fishers, including female vendors and processors. In West Africa, coastal diagnostics and planning tools funded by PROBLUE have helped strengthen coastal zone management in countries like Ghana and Senegal. Lessons and Limitations PROBLUE’s success lies in its ability to bridge policy reform and on-the-ground implementation, enabling client countries to de-risk investments and strengthen institutions. However, project scale is limited by grant size and the need for complementary investment financing. Ensuring country ownership and local capacity remains key to sustained impact. a. PROBLUE: Healthy Ocean, Healthy Economies, Healthy Communities. https://www.worldbank.org/en/programs/problue/overview b. PROBLUE: an uplift to the World Bank’s multi-donor marine trust fund. https://devflow.northeurope.cloudapp.azure.com/files/documents/PROBLUE_CCN_DevTracker_ PDF-20240325010353.pdf c. PROBLUE. Supporting integrated and sustainable economic development in a healthy ocean. https://www.linkedin.com/company/problueworldbank/ Box 8: Global Fund for Coral Reefs Overview The Global Fund for Coral Reefs (GFCR) is a dedicated blended finance facility designed to mobilize and deploy capital for coral reef conservation and resilience.a It combines grant-based funding with investment capital to support projects that integrate ecological preservation with sustainable economic activities. The fund operates across 23 coral nations, aiming to conserve 3 million hectares of coral reefs globally and mobilize $515 million by June 2025, leveraging this to attract up to $3 billion in total finance. Blueness and Development Focus GFCR focuses exclusively on coral reef ecosystems, targeting interventions that protect biodiversity while enabling sustainable blue economy growth. It channels capital toward sectors such as marine protected areas, sustainable fisheries, blue infrastructure, ecotourism, wastewater management, and coral restoration—ensuring conservation outcomes are embedded within viable economic activities. Financial Structuring The GFCR is structured with a dual window financing model, comprising a $90 million Grant Fund and a $135 million Investment Fund. The Grant Fund is used to provide technical assistance, project preparation support, and early-stage funding to de-risk conservation initiatives and build a pipeline of investable projects. The Investment Fund, managed by Pegasus Capital Advisors, directs private capital into commercially viable projects that contribute to coral reef sustainability. A first-loss tranche of $125 million from the Green Climate Fund (GCF) serves as a risk-mitigation mechanism, increasing the attractiveness of investments by protecting private sector contributions against potential losses. The GFCR is supported by a broad coalition of public, philanthropic, and private sector partners, including the governments of Canada, France, Germany, and the United Kingdom, along with organizations such as the Paul G. Allen Family Foundation, Prince Albert II of Monaco Foundation, International Coral Reef Initiative (ICRI), United Nations Development Programme (UNDP), United Nations Environment Programme (UNEP), United Nations Capital Development Fund, and Pegasus Capital Advisors. Additional funding has been secured from donors such as the Minderoo Foundation and ICONIQ Impact Ocean Co-Lab, contributing to the fund’s expansion. 29 22 Box 8: Global Fund for Coral Reefs (Continued) Implementation and Use of Proceeds The Grant Fund builds a pipeline of investable projects by funding feasibility studies, local capacity development, and stakeholder engagement. These de-risked projects are then eligible for Investment Fund support, which seeks financially sustainable models that deliver tangible reef resilience outcomes. GFCR’s investments span sectors such as ecotourism, aquaculture, solid waste and wastewater management, microfinance/SMEs, and blue carbon—chosen for their dual potential to generate economic value and support reef ecosystems. Impacts and Outcomes The GFCR aims to scale sustainable finance for coral reefs by combining concessional capital, outcome-based financing, and private investment. Its investment principles and sector focus are designed to ensure that projects deliver both measurable environmental impact and financial returns. As of 2024, it has helped align coral reef conservation with market-based approaches, promoting long-term resilience in vulnerable marine areas. Lessons and Limitations The GFCR illustrates the potential of blended finance to unlock private capital for conservation. Its dual-window model ensures that early-stage risk is absorbed by grants and concessional capital, but success depends on developing a robust pipeline of investable, reef-positive projects. Continued coordination across donors, MDBs, and conservation organizations is essential to maintain alignment and ensure scale. a. Global Fund for Coral Reefs: https://globalfundcoralreefs.org. Regional funds and facilities have emerged as targeted solutions for marine conservation, biodiversity protection, and sustainable coastal economies. The Caribbean Biodiversity Fund54 and the MedFund (Mediterranean Fund)55 exemplify regional conservation funds that sustain long-term biodiversity conservation through blended financing models. These funds use a mix of endowment, sinking, and revolving structures to provide stable, long-term funding for marine protected areas. The One Ocean Finance Facility, an EU-led initiative, represents a more recent effort to finance sustainable blue economy projects in the Mediterranean region, leveraging public-private co-investments.56 Private sector–led impact investment funds focus on commercially viable blue economy ventures, prioritizing financial returns alongside environmental and social benefits. These funds provide capital to businesses engaged in sustainable aquaculture, marine technology, ocean-based carbon markets, and circular economy solutions. The SWEN Blue Ocean Fund, for example, specializes in financing sustainable aquaculture enterprises, promoting investments that generate both financial and ecological benefits (see box 9). Similarly, the Ocean 14 Capital Fund focuses on scaling marine technology startups and innovations in ocean waste management and blue biotechnology.57 Additionally, the Indico Blue Fund, a €50 million climate action fund managed by Indico Capital Partners, invests in early-stage and growth-stage blue economy companies with innovative sustainable solutions across various sectors, including coastal tourism, sustainable aquaculture, fisheries, blue biotech, ocean renewable energy, maritime operations, ocean security, waste management, circular economy, and green shipping.58 54. Caribbean Biodiversity Fund: https://caribbeanbiodiversityfund.org/project 55. The MedFund: https://themedfund.org/en/about-us 56. Global Environment Facility, Ocean Partnerships for Sustainable Fisheries and Biodiversity Conservation: Models for Innovation and Reform (P128437), n.d., https://www.thegef.org/projects-operations/projects/4856. 57. Ocean 14 Capital: https://ocean14capital.com. 58. Indico Blue Fund, Indico Capital Partners: https://www.indicocapital.com/our-funds. 30 Box 9: SWEN Blue Ocean Fund Overview The SWEN Blue Ocean Fund is a €170 million private impact investment fund launched by SWEN Capital Partners in 2021 to mobilize private capital for ocean sustainability.a Structured as a French limited partnership (SLP) with a 10-year duration (extendable twice for one year), the fund operates under a five-year investment period to deploy capital into early-stage and growth-stage companies that develop scalable solutions for marine conservation and sustainable ocean industries. Blueness and Development Focus The fund targets market-based innovations that contribute to marine ecosystem health and support the transition to a sustainable blue economy. Investment areas include sustainable aquaculture, plant- and cell-based seafood alternatives, ocean monitoring, plastic alternatives, renewable marine energy, and decarbonization of maritime transport. All investees must demonstrate measurable benefits to ocean health, biodiversity, or climate resilience. Financial Structuring The SWEN Blue Ocean Fund follows a traditional venture capital structure with an innovative impact- linked incentive mechanism. It charges a 2% management fee and a 20% carried interest, of which 50% is contingent on achieving defined environmental impact targets. A hurdle rate of 1.2x ensures minimum return expectations before profit-sharing begins. At least 20% of carried interest is allocated to ecosystem beneficiaries—ensuring that financial upside supports conservation outcomes directly. The fund’s capital comes from a diverse group of institutional investors, who provide long-term patient capital. Notable contributors include Abeille Assurances, Prince Albert II of Monaco Foundation, MACIF, MAIF, Crédit Mutuel Arkéa, Bpifrance, Builders Vision, Ferd, and the Planet Ocean Fund. Implementation and Use of Proceeds The fund aims to invest in 20–25 high-potential companies. It adopts a rigorous selection and due diligence process, incorporating both scientific and financial evaluations. Screening includes environmental impact assessments and market scalability analysis. Investments are structured to support commercialization and growth, with capital used for R&D, expansion, and operational scaling of ocean-positive innovations. Impacts and Outcomes All investees must report key performance indicators (KPIs) related to environmental impact — such as reductions in ocean plastic waste, sustainable resource use, and biodiversity protection. The fund maintains a scientific partnership with Ifremer, France’s national marine research institute, to validate impact claims and ensure technological viability. The performance-linked carried interest structure directly ties investor rewards to the achievement of ecological outcomes, embedding accountability into financial returns. Lessons and Limitations The SWEN Blue Ocean Fund demonstrates how impact-linked venture capital can align financial and conservation goals. Its blended incentive model has attracted leading institutional investors to the blue finance space. The model’s replicability depends on a robust pipeline of investable businesses, reliable impact measurement, and investor willingness to accept performance-based incentives. Ongoing scientific validation and transparent reporting remain essential to maintaining credibility and scale. a. SWEN Blue Ocean Fund, SWEN Capital Partners: https://www.swen-cp.fr/en/expertise/blue-ocean-en. 31 24 ACCELERATING BLUE FINANCE: INSTRUMENTS, CASE STUDIES, AND PATHWAYS TO SCALE Financing structures in private funds vary but often integrate market-driven investment models with conservation-oriented objectives. The ReOcean Fund specializes in financing blue carbon and coastal resilience initiatives, directing capital toward projects that restore marine ecosystems while generating returns through carbon credit markets.59 Funds such as Katapult Ocean Fund60 and Aqua-Spark61 prioritize early-stage investments in ocean sustainability start-ups and commercial aquaculture ventures, providing patient capital to drive long-term environmental impact. Key distinctions exist between public and private funds and facilities in terms of investment mandate, capital deployment, and risk tolerance. Government and MDB-backed facilities prioritize conservation, policy reform, and ecosystem restoration, whereas private funds emphasize scalable, commercially sustainable investments. Public facilities typically provide grants, concessional loans, and guarantees to encourage private investment in non-commercial marine projects, while private funds employ equity investments and market-rate loans to support investable businesses in the blue economy. Dedicated funds and facilities play a critical role in aligning commercial capital with ocean sustainability by bridging the gap between conservation finance and commercial investment. Public sector–led initiatives de-risk investments and create enabling conditions for capital deployment, while private sector impact investment funds demonstrate the viability of profitable, sustainability-driven models. As the blue finance landscape evolves, these hybrid financial mechanisms will continue to expand, ensuring that marine conservation and economic growth advance together through well-structured, risk-mitigated investments. A detailed analysis of blue finance instruments—including their investment sizes, structures, regional distribution, sectoral applications, and stakeholder roles—is provided in appendix B. 59. ReOcean Fund: https://www.reoceanfund.com. 60. Katapult Ocean Fund: https://katapult.vc/ocean. 61. Aqua-Spark: https://aqua-spark.nl. 32 25 ACCELERATING BLUE FINANCE: INSTRUMENTS, CASE STUDIES, AND PATHWAYS TO SCALE 3. Challenges & Success Factors Blue finance is expanding, but persistent barriers concessional capital remains a significant barrier, continue to limit its scale and impact. particularly for small island developing states and High transaction costs, fragmented data systems, emerging markets where such resources are scarce. and regulatory complexities hinder private sector Similarly, guarantees and insurance instruments— participation and slow investment flows, while the especially parametric products—are increasingly lack of standardized impact measurement constrains deployed to manage climate-related risks, but accurate attribution of environmental, social, and they are not yet mainstreamed owing to technical economic outcomes. At the same time, successful complexity and implementation costs. The lack of implementation depends on a strong enabling widely available credit enhancement mechanisms environment, including clear policy frameworks, further deters private sector engagement, as institutional capacity, and efficient financial investors seek greater risk mitigation to participate infrastructure. Innovations in financing models, risk in blue finance markets. These risk management mitigation tools, and cross-sector collaboration are tools are typically structured as capital market emerging as critical drivers for scaling investment, instruments, with insurers and reinsurers ensuring that blue finance can effectively mobilize underwriting disaster-related exposure in the blue capital and deliver measurable impact. economy. High transaction costs deter institutional investors, 3.1 Challenges and Barriers particularly in resource constrained and capacity limited contexts.63 Blue finance faces multiple challenges that Structuring innovative instruments requires affect implementation, scalability, and investor extensive technical assistance, feasibility studies, and confidence. legal frameworks, all of which increase costs. The These challenges span market development, Seychelles Blue Bond incurred preparation expenses technical execution, institutional capacity, and policy of up to 20 percent of its issuance value, while the frameworks, reflecting the complexity of structuring, Fiji Sovereign Blue Bond had transaction costs of verifying, and sustaining blue finance instruments.62 10–15 percent, making both of them less financially While some barriers are universal—such as high attractive for replication in similar settings.64 transaction costs and policy fragmentation—others Similar challenges are evident in insurance-linked are instrument specific, requiring targeted solutions. instruments; for instance, Jamaica’s catastrophe bond also incurred substantial transaction costs as 3.1.1 Market and Investment Barriers a share of the coverage amount. This underscores the particular difficulty SIDS face in accessing such Investor confidence in blue finance remains instruments without concessional support or pooling constrained by structural, informational, and risk- mechanisms to absorb design and issuance costs. related market barriers. Participation levels vary significantly based on Currency risk affects sovereign issuers and limits risk-return expectations, financing structures, and investor confidence in blue bonds. the availability of credit enhancements. Sovereign Fluctuations in foreign exchange rates create blue bonds and debt-for-nature swaps tend to uncertainty for debt servicing, as seen in Fiji attract institutional investors—such as pension funds and the Seychelles, where depreciation risks and sovereign wealth funds—when supported by influenced investor appetite and debt sustainability multilateral development bank (MDB) guarantees considerations. or aligned policy frameworks. However, debt swaps, in particular, require complex negotiations Investor confidence remains fragile in emerging involving governments, creditors, and conservation markets for corporate blue bonds and blended organizations. Blended finance facilities aim to finance facilities. optimize the risk-return profile through layered The limited track record of successful issuances capital, leveraging concessional finance to attract combined with the perceived ambiguity around private investors. However, limited access to what qualifies as blue investment creates hesitation 62. “UN Delivering as One to Harness Blue Finance in the Caribbean,” Joint SDG Fund, July 12, 2023, https://www.jointsdgfund.org/article/un-delivering-one-harness-blue-finance-caribbean-0; 63. P. Bosmans and F. de Mariz, “The Blue Bond Market: A Catalyst for Ocean and Water Financing,” Journal of Risk and Financial Management 16 (March 2023): 184, https://www.mdpi.com/1911-8074/16/3/184. 64. D. Labonte, “Blue Bond: The Seychelles Experience” (presentation at CABRI Virtual Policy Dialogue on Raising and Managing Debt for post-COVID recovery, July 6-7, 2021.), https://www.cabri-sbo.org/uploads/files/Documents/Session-3-Presentation-of-Dick-Labonte-Seychelles.pdf. 27 34 among investors. Ørsted’s corporate blue bond such as the Seychelles Blue Bond required the and the Bank of China’s blue finance initiative both development of custom indicators to track encountered concerns regarding verification and the fisheries management effectiveness that balanced credibility of ocean-positive investment claims. conservation and economic goals. Similarly, Persistent cost and standardization challenges Belize’s debt-for-nature swap relied on site-specific inhibit broader adoption of blue finance marine protected area monitoring protocols tailored instruments. to local ecological conditions and governance Although financial innovation has broadened the structures. Verification approaches—ranging from toolkit of blue finance instruments, inconsistent environmental DNA to acoustic monitoring—require standards across jurisdictions add to the investors’ technical expertise that is not easily standardized hesitancy and the complexity of transactions. across regions, particularly for biodiversity and Effective mainstreaming will depend on regulatory social co-benefits. harmonization and further cost reductions to support scalability. This fragmentation in metrics and methods undermines comparability, increases transaction costs, and limits investor confidence in blue finance 3.1.2 Technical Barriers instruments. The Taskforce on Nature-related Financial Technical barriers undermine the scaling of blue Disclosures (TNFD), for example, acknowledges this finance, affecting the ability to measure, model, challenge in its beta framework, noting the difficulty verify, and attribute environmental and social of designing disclosure metrics suitable for complex outcomes across diverse marine investments. and variable marine ecosystems. Without common The dynamic nature of ocean ecosystems, combined benchmarks and interoperable tools, replicating and with the heterogeneity of project types, makes it aggregating marine investments remains difficult— difficult to establish standardized metrics, baseline especially for biodiversity-focused instruments. conditions, and monitoring protocols that are both scientifically robust and operationally feasible. Attribution of outcomes to specific blue finance While frameworks such as the IFC Blue Finance interventions is methodologically complex. Guidelines and voluntary carbon methodologies Ocean ecosystems are inherently dynamic, offer foundational guidance, their application often and conservation outcomes often result from requires significant adaptation to local ecological, a combination of policies, donor efforts, and institutional, and data contexts. These issues are multistakeholder engagements. For instance, in particularly acute for outcome-based finance and the Seychelles’ marine protected areas, where risk-transfer instruments—such as blue carbon improved biodiversity outcomes are linked to the credits, resilience bonds, and parametric insurance— issuance of sovereign blue bonds that facilitated which depend on accurate, context-specific metrics marine spatial planning and sustainable fisheries and scientific modeling to ensure credibility and management, the results are also supported by investor confidence. broader national efforts. This overlap makes it difficult to isolate the specific impacts of finance The absence of consistently adopted and mechanisms, complicating the use of impact-based standardized metrics and measurement frameworks incentives. More advanced methodologies—such as remains a critical constraint to scaling blue finance. counterfactual analysis and longitudinal studies—are While global frameworks and voluntary carbon needed to assess causality and track effectiveness methodologies (for example, Verra, Plan Vivo) over time. provide direction, their application across diverse jurisdictions and marine contexts is still evolving. Verification processes are often costly, complex, Metrics for mangrove restoration often focus on and difficult to replicate. carbon sequestration and coastal protection, Additionally, verification and reporting mechanisms whereas coral reef projects emphasize ecological are frequently siloed in environmental agencies indicators such as coral cover and fish biomass— rather than integrated with ministries of finance, metrics that are difficult to harmonize. The Global weakening their utility for structured finance and Fund for Coral Reefs highlights the difficulty investor confidence. Mechanisms for certifying of developing uniform metrics across marine carbon credits or triggering parametric insurance ecosystems remains considerable.65 Instruments 65. Global Fund for Coral Reefs (GFCF), Annual Report 2022 (GFCR, 2022), https://mptf.undp.org/sites/default/files/documents/2023-05/2022_gfcr_mptf_consolidated_annual_report.pdf. 35 28 ACCELERATING BLUE FINANCE: INSTRUMENTS, CASE STUDIES, AND PATHWAYS TO SCALE demand robust data, technical expertise, and facilities, which require alignment of conservation third-party validation. The complexity of verifying goals across jurisdictions. conservation and social outcomes limits the use of performance-based finance models in settings A key institutional constraint relates to the without adequate technical or institutional dependence on development finance institutions infrastructure. This is particularly challenging for (DFIs) to structure and operationalize blue finance instruments targeting biodiversity or social co- instruments. benefits, where verification must address context- DFIs play a catalytic role in the Global South by specific baselines and evolving environmental promoting blended finance structures, co-investment conditions. models, and technical assistance to accelerate capital flows. While this support enhances investor Risk-transfer instruments face additional challenges confidence, it also highlights limitations in domestic because of their reliance on sophisticated institutional capacity to independently design and environmental modeling and data-intensive scale instruments. Without sustained local ownership actuarial triggers. and capability, these models risk becoming donor Parametric insurance mechanisms—such as those dependent and difficult to replicate at scale. used in the Mesoamerican Reef Insurance Program— depend on predefined environmental triggers, which Limited institutional capacity remains a widely must be backed by robust actuarial models and recognized barrier to the effective deployment of scientific validation. Developing these models is large-scale blue finance. resource intensive and often relies on baseline data Weak regulatory frameworks, coordination gaps, that may not exist in many developing countries. The and limited technical expertise continue to constrain SWEN Blue Ocean Fund’s partnership with Ifremer the ability of countries to access and absorb capital highlights the scientific rigor needed to ensure the for sustainable ocean initiatives.66 This contributes credibility of such structures. to uneven regional impact, as seen in PROBLUE’s implementation, where some regions benefit more Data limitations significantly affect instrument than others due to varying institutional capacities. design and implementation. The Global Fund for Coral Reefs, which operates Limited access to historical and real-time marine through a multi-stakeholder coalition, revealed data weakens risk modeling and slows disbursement challenges in coordinating diverse partners, processes. Instruments reliant on parametric triggers from development banks to local communities. require high-quality, granular environmental data— Additionally, balancing commercial returns with gaps in data availability can hinder broader adoption conservation impacts creates tension between or lead to market hesitancy, especially in data- stakeholders, particularly in debt-for-nature swaps, scarce contexts. Even when triggers are activated, in which political risk and lengthy negotiation cycles identifying eligible beneficiaries and managing complicate implementation. The Ecuador Galápagos payouts often prove more time-consuming than swap faced macroeconomic volatility, requiring anticipated, revealing significant operational gaps strong political will and robust legal frameworks to and capacity constraints. overcome institutional capacity constraints. 3.1.3 Institutional Barriers Underdeveloped institutional governance systems further limit the credibility and scalability of blue Institutional barriers affect the effectiveness, finance instruments. scalability, and coordination of blue finance Insurance-based solutions require robust actuarial instruments across jurisdictions. data and risk-sharing frameworks, yet many Cross-border coordination remains a challenge for jurisdictions lack the institutional infrastructure to large-scale blue finance initiatives. The Caribbean generate or manage such inputs. Similarly, market- Biodiversity Fund’s experience across multiple driven instruments depend on transparent and countries illustrates coordination challenges in verifiable impact frameworks, which are often absent marine conservation efforts caused by varying or inconsistently applied. These gaps point to deeper legal and institutional frameworks. Similarly, the institutional challenges in regulatory alignment, MedFund’s operations in the Mediterranean highlight interagency coordination, and stakeholder the need for robust cross-border governance engagement—barriers that undermine investor mechanisms. These governance complexities are confidence and slow implementation. particularly challenging for dedicated funds and 66. “UN Delivering as One to Harness Blue Finance in the Caribbean,” Joint SDG Fund, July 12, 2023, 29 36 https://www.jointsdgfund.org/article/un-delivering-one-harness-blue-finance-caribbean-0; . 3.1.4 Policy and Regulatory Barriers Verification and transparency gaps can lead to Weak or inconsistent policy frameworks slow the delays and resistance. adoption of blue finance instruments. Parametric insurance instruments—such as reef Weak regulatory predictability and foreign exchange insurance and catastrophe bonds—can face public exposure compound policy misalignment challenges, resistance when payout mechanisms are unclear. deterring long-term private investment. Debt-for- Delays in identifying eligible beneficiaries and nature swaps require comprehensive marine spatial assessing disaster impacts, particularly in the planning and long-term political commitment, yet absence of transparent governance frameworks, can many regions lack such enabling frameworks. The reduce effectiveness and legitimacy of these tools Seychelles Blue Bond benefited from the country’s during post-disaster recovery. marine spatial plan, whereas other small island developing states face delays because of incomplete 3.2 Success Factors and Enablers policy structures. Similarly, Belize’s debt-for- nature swap leveraged national marine protection Effective blue finance requires strategic commitments, showcasing the necessity of policy design, robust governance, and adaptive alignment for successful implementation. implementation models to achieve scale and long-term impact. The absence of widely adopted blue finance Blue finance builds on the frameworks, standards, taxonomies creates uncertainty for investors. and market experience of green finance. For While guidance such as the IFC Blue Finance example, the IFC Blue Finance Guidelines Guidelines has begun defining eligible use-of- require that blue bonds and loans align with proceeds and reporting frameworks, further these established green finance frameworks, alignment with national regulations and investor with additional criteria for marine and coastal disclosure systems is needed to ensure clarity and sustainability. Over the past decade, blue finance consistency across markets. Corporate blue bonds, has evolved from early sovereign-backed models for example, struggle with market perception to hybrid structures integrating blended finance, because of a lack of globally accepted definitions regional scaling, and cross-sector innovation. While and standards. Additionally, inconsistent regulatory these mechanisms have demonstrated measurable treatment of cross-border flows amplifies currency environmental, social, and economic impacts, their risk and creates uncertainty around financial effectiveness is contingent on key success factors sustainability. that mitigate risks, enhance governance, and ensure long-term viability. 3.1.5 Stakeholder Engagement and Implementation Challenges 3.2.1 Strategic Financial Design and Risk Mitigation Engaging local communities is essential but often difficult to operationalize. Investor participation deepens when financial Outcome-based finance instruments, such as transactions are de-risked through strategic biodiversity credits, require transparent benefit- structuring and credit enhancements. sharing mechanisms to secure legitimacy and Blue bonds have successfully leveraged sovereign community participation. Mikoko Pamoja in Kenya guarantees, MDB support, and blended finance to and Tahiry Honko in Madagascar underscore the improve credit ratings and reduce risk premiums. challenge of aligning community interests with For example, the World Bank guarantee provided to conservation goals, necessitating participatory the Seychelles’ Blue Bond and the United Nations approaches and culturally sensitive engagement Development Programme (UNDP)’s support to the strategies. However, in Madagascar, legal frameworks Fiji’s engagement significantly enhanced the credit currently do not allow local communities to directly profile of these transactions, reduced the costs, and issue or benefit from blue carbon credits, limiting boosted investors’ confidence. the potential for sustainable, equitable revenue generation despite successful ecological restoration. Layered capital structures de-risk investments Gender gaps in implementation—such as male and mobilize private capital. dominance among grant applicants—also reduce Dedicated funds such as the Global Fund for Coral equitable benefit-sharing unless addressed through Reefs (GFCR) and Caribbean Biodiversity Fund have inclusive design. demonstrated high leverage ratios by combining concessional finance, grants, and equity investments, 30 38 37 reducing entry risks for private investors. Insurance- and standardized methodologies are used to track backed risk transfer tools, including parametric conservation outcomes. insurance and liability protection instruments, can further enhance investor security and diversify Community engagement enhances both risk absorption across markets. The catastrophe legitimacy and long-term viability. wrapper in Belize’s debt-for-nature swap (DNS) Community-led conservation projects such demonstrates how parametric insurance can protect as Mikoko Pamoja (Kenya) and Tahiry Honko debt service capacity against climate shocks, (Madagascar) have demonstrated that early enhancing the resilience and creditworthiness of stakeholder involvement ensures local buy-in, blue finance structures. The GFCR demonstrated improving compliance and long-term conservation how strategic grant layering achieved a leverage success. However, in the case of Tahiry Honko, ratio of 1:4, significantly increasing private capital legal constraints on community access to carbon mobilization. The provision of technical assistance, credit revenues present an ongoing limitation to as seen in PROBLUE, enhances local capacity and fully realizing these benefits. Gender-responsive project bankability, ensuring sustainability. This mechanisms, such as the COAST fisheries insurance layered approach also facilitates the alignment supported by PROBLUE, demonstrate how inclusive of conservation objectives with financial returns, design can enhance resilience, promote social equity, proving effective in mobilizing capital for high-risk and enable equitable recovery. marine and coastal projects. MDBs, including the World Bank and IDB, have played a catalytic role 3.2.3 Scaling through Innovation in these instruments by offering guarantees, credit and Technological Integration enhancements, and convening policy dialogues that underpin investor confidence. Innovation and technology are expanding the reach and efficiency of blue finance. Legally binding commitments ensure that Flexible payout structures allow financial models to conservation financing remains protected from adapt to diverse ecosystems. Performance-based political cycles. finance mechanisms, such as the Plastic Waste Debt-for-nature swaps such as Belize’s Conservation Reduction-Linked Bond (Indonesia, Ghana), have Fund Act have created legal safeguards that successfully linked payouts to verified conservation guarantee sustained marine protection funding, outcomes, reducing investment risks. while Ecuador’s DNS was expedited through high- level political commitment. Regional cooperation supports financial access and strengthens resilience. 3.2.2 Robust Governance and Risk pooling models such as the Mesoamerican Reef Institutional Coordination Insurance Program distribute climate risks across multiple jurisdictions, increasing affordability and Strong governance frameworks and enabling scalability. coordinated institutions enable credibility and policy coherence in blue finance. Technology-driven solutions improve financial Multi-stakeholder platforms such as the MedFund transparency and reduce costs. and PROBLUE have helped align financial Innovations such as parametric insurance and blue mechanisms with national conservation priorities. carbon credits have integrated digital solutions to Voluntary principles and guidance documents —like reduce transaction costs and improve transparency. the IFC Blue Finance Guidelines and Sustainable Blockchain-based traceability systems can enhance Blue Economy Finance Principles—further harmonize supply chain accountability,67 while AI-driven expectations across public and private actors. parametric insurance models have improved disaster risk financing.68 Insurers are also developing Independent verification and transparent innovative coverage products tied to biodiversity impact metrics build credibility and performance and ecosystem outcomes, which can accountability. be bundled with climate and nature-linked bonds to Outcome-based finance instruments, such as improve scalability. These digital innovations reduce biodiversity credits and blue carbon projects, have monitoring costs and improve scalability, especially succeeded when rigorous third-party verification when aligned with standardized methodologies 67. S. Ismail et al., “Toward an Intelligent Blockchain IoT-Enabled Fish Supply Chain: A Review and Conceptual Framework,” Sensors 23 (May 2023): 5136, https://pmc.ncbi.nlm.nih.gov/articles/PMC10255790/#:~:text=TraSEAble%20is%20a%20Blockchain%2Dbased,IoT%20to%20ease%20stakeholders’%20collaboration. 39 32 68. P. Ladva, “Benefits and Use Cases of AI in Insurance,” Swiss Re Group, April 17, 2023, https://www.swissre.com/risk-knowledge/advancing-societal-benefits-digitalisation/opportunities-ai-insurance.html. ACCELERATING BLUE FINANCE: INSTRUMENTS, CASE STUDIES, AND PATHWAYS TO SCALE developed through MDB partnerships and scientific pricing, and local verification—which require networks (e.g., TNFD, Ifremer). strong institutional coordination to overcome. The distinction between insurance-backed parametric Instrument-level innovation is expanding the products and capital market instruments (like scope and appeal of blue finance. catastrophe bonds) also affects accessibility, with Blue bonds increasingly integrate marine spatial each serving different market segments and risk planning with credit enhancements, while outcome- appetites. based finance links investor returns to measurable ecological indicators. These models offer replicable Debt-for-nature swaps are most effective templates that align risk-sharing with conservation when supported by legal commitments and targets, making them more attractive to institutional sovereign alignment. investors. Belize’s Conservation Fund Act and Ecuador’s agreement for the Galápagos Marine Reserve 3.2.4 Lessons from Implementation both highlight the importance of legal safeguards and sovereign alignment. However, these Experience instruments are still vulnerable to delays because of lengthy negotiation cycles and macroeconomic Blue bonds require both credit enhancement volatility. International coordination mechanisms, and policy alignment to lower borrowing costs. including International Monetary Fund (IMF) debt Instruments such as the Seychelles and Fiji blue sustainability frameworks, can reduce these risks and bonds benefited from support by the World Bank accelerate implementation timelines. and UNDP, which enhanced their creditworthiness and signaled policy coherence. This underscores Funds and facilities are scaled more efficiently the value of context-specific options tailored to when concessional finance absorbs early-stage technical capacity and policy alignment, leveraging risk. green finance lessons like sustainability principles Mechanisms such as the GFCR and the Caribbean to enhance scalability. However, without sovereign Biodiversity Fund have achieved high leverage guarantees or MDB involvement, smaller economies ratios through blended structures combining grants, struggle with high coupon rates, limiting market equity, and first-loss capital. Nonetheless, multi- appetite and long-term scalability. This demonstrates stakeholder governance arrangements often slow that policy and credit backing are essential disbursement, especially in contexts with weak ingredients in catalyzing uptake. institutional capacity or unclear project pipelines. Targeted technical assistance—like that offered Outcome-based finance succeeds when under PROBLUE—has proven effective in addressing accountability frameworks are cost-effective these limitations by improving bankability and and rigorous. coordination. These models are particularly attractive to impact investors, but their success hinges on the quality Each category of blue finance instruments and efficiency of monitoring frameworks. Projects presents a distinct value proposition, set such as Mikoko Pamoja and Tahiry Honko have of challenges, enabling conditions, and managed verification costs through community-led prerequisites that shape its applicability and data collection and partnerships with independent potential for scale. certification bodies. However, balancing cost Thematic bonds, such as blue bonds, can mobilize efficiency with rigor remains a key determinant of large-scale capital and boost sovereign ESG profiles, long-term viability. but require strong credit enhancement, robust reporting to avoid misrepresenting environmental Risk mitigation tools work best when tied to impact, and MDB support to succeed. Outcome- objective environmental triggers. based finance mechanisms, like an outcome bond, Instruments like the Mesoamerican Reef Insurance link disbursements to measurable impact, fostering Program and Jamaica’s catastrophe bond have innovation and accountability, though they often illustrated the value of structured disbursement face high verification costs, limited scalability models tied to objective environmental indicators in nascent markets, and require standardized (for example, wind speed, coral cover). Participation methodologies for impact tracking. Risk mitigation by reinsurers and capital market investors has helped tools—including parametric insurance and scale these instruments. Yet operational challenges catastrophe bonds—offer rapid liquidity in disaster- persist—particularly in payout logistics, actuarial prone regions but depend on actuarial data, accurate 33 40 modeling, MDB-backed premium subsidies, and are Blue finance should not be viewed as a fixed particularly viable for SIDS and low-income contexts. model, but as a menu of context-specific Debt-for-nature swaps align fiscal and conservation options. goals and can unlock concessional finance, but they The choice of instrument-whether a blue bond, demand complex negotiations, legal safeguards to outcome bond, parametric insurance, DNS, or ensure transparency and impact, and effective policy blended fund-should be strategically aligned with coordination across ministries. the specific policy challenge, institutional readiness, Dedicated funds and facilities, including blended and systems in place to deliver results. Table finance facilities, offer flexible, long-term financing 1 provides a comparison of the key blue finance for diverse projects and geographies, leveraging instruments, including their value propositions, blended capital, yet often encounter coordination challenges, enabling conditions, and prerequisites— and disbursement bottlenecks without strong helping stakeholders identify tools that best fit their governance and capacity-building support. policy goals, institutional capabilities, and financing needs. Table 1: Comparison of Select Instruments INSTRUMENT PROS CONS / CHALLENGES ENABLING PREREQUISITES ENVIRONMENT Blue Bonds Mobilizes large-scale High issuance and Standardized frameworks Enabling legal (Thematic Bonds) private capital; transaction costs; and aggregation frameworks for Enhances sovereign ESG Requires strong credit platforms; Harmonized sovereign/ corporate profile; Scalable with rating or guarantees; permitting and legal bond issuance; investor interest; can Risk of blue washing frameworks; Robust data Investor-ready project finance diverse blue without robust metrics; systems and scientific pipelines; sustainability economy sectors. Limited to countries partnerships; MDB/DFI reporting infrastructure; with capital market support for structuring. access to guarantees for access. risk mitigation. Links financing to High transaction and Robust data systems Reliable baseline measurable impact; verification costs; (including outcome environmental data; Outcome Bond Encourages innovation Complex structuring; metrics) and scientific Standardized outcome (Outcome-Based and accountability; Market volatility and partnerships; Third-party verification protocols; Finance) Supports conservation pricing risks; Limited monitoring and Legal clarity for and climate goals; scale and liquidity in standardized carbon/o set markets; Attracts private capital nascent markets. methodologies; MDB/DFI Technical capacity for via results-based support for market monitoring. payments. development. Accurate environmental Provides rapid payouts High premiums for Risk-sharing instruments; and risk data; Legal Parametric post-disaster; Reduces low-income countries; Robust data systems and frameworks for Insurance (Risk financial risks in Basis risk (payout vs. scientific partnerships; insurance contracts; Mitigation Tools) vulnerable regions; actual loss); Requires Harmonized legal Financial capacity or Attracts private capital accurate risk modeling; frameworks; MDB/DFI subsidies for premiums; via risk transfer; Scalable Limited coverage for support for premium Actuarial expertise for for SIDS and coastal non-climate risks. subsidies. modeling. areas. Policy coordination High debt levels suitable Reduces sovereign debt Complex, long across ministries; for restructuring; Clear Debt-for-Nature burden; Aligns fiscal and negotiations; High Integration into NDCs and conservation priorities; Swaps (Fiscal and environmental priorities; structuring costs; macroeconomic planning; Inter-ministerial Economic Funds conservation and Limited to debt-stressed MDB/DFI support for coordination; MDB/DFI Instruments) resilience goals; Attracts countries; Risk of weak negotiations; facilitation for creditor concessional finance. conservation Standardized impact agreements. implementation. tracking frameworks. Provides long-term Complex governance Clear rules for fund Anchor donor or funding for arrangements; Slow access and transparent concessional funder; Blended Finance conservation; Leverages disbursement in governance; Project pipeline with Facility blended finance for high low-capacity settings; Capacity-building support measurable (Dedicated Funds impact; Enables Risk of fragmented for fund managers and sustainability outcomes; and Facilities) multi-country and pipelines without investees; Alignment with multi-stakeholder aggregated programs; coordination; May face SDGs, national priorities, agreements; Institutional Supports early-stage, limited private investor and NDCs; MDB/DFI host with governance high-risk, and innovative appetite without anchor support for structuring and fiduciary expertise. blue economy initiatives. or catalytic capital. and coordination 41 34 ACCELERATING BLUE FINANCE: INSTRUMENTS, CASE STUDIES, AND PATHWAYS TO SCALE 4. Recommendations & Conclusions Blue finance is well positioned to play a catalytic role in advancing ocean sustainability, job creation and economic resilience. Instruments deployed to date have demonstrated measurable impact—from conserving marine ecosystems and protecting coastlines to improving livelihoods and mobilizing private capital. Yet critical barriers continue to hinder broader uptake and replication. Market challenges—such as high transaction costs, limited aggregation mechanisms, and underdeveloped pipelines—have restricted investor participation. Technical constraints in data availability, metrics standardization, and verification frameworks reduce the comparability of blue finance instruments. At the same time, fragmented policy environments, weak institutional coordination, and uneven stakeholder engagement continue to limit the scale, efficiency, and local impact. Encouragingly, experience across sovereign, private and community-led initiatives shows that these constraints can be overcome through well-structured financial solutions and strategic partnerships. Where blue finance instruments are backed by enabling policy frameworks, transparent data systems, outcome-based mechanisms, and inclusive governance, they have attracted capital, delivered conservation benefits, and supported local development. Blended finance platforms, parametric insurance products, and legal safeguards have proven replicable across geographies, especially when reinforced by technical assistance and institutional alignment. Transforming blue finance from a fragmented set of tools into a scalable, resilient system requires coordinated interventions across policy, markets, and institutions. This requires (i) strengthening investment readiness through enabling policies and regulatory frameworks; (ii) building robust data, metrics, and methodologies to enhance credibility and performance; (iii) mainstreaming blue finance into national policy, planning, and strategies; and (iv) fostering stakeholder coordination to scale inclusive and locally grounded models. Together, these four priorities respond directly to the constraints and enabling factors identified in practice, offering a clear strategy to expand capital flow, reduce risk, and amplify long-term environmental, social, and economic returns. 35 42 4.1 Strengthen Investment Well-structured investment pipelines are essential to convert blue finance into tangible Readiness through Enabling outcomes. Policies and Regulatory Development partners, working with finance, Frameworks environment, and planning ministries, can support the early identification, technical preparation, and financial structuring of bankable projects. Examples Investment readiness depends on clear, stable, include Ghana’s mangrove rehabilitation program and investor-friendly policy and regulatory environments. and Madagascar’s Tahiry Honko initiative, both A cohesive blue finance ecosystem must be built of which illustrate how localized conservation on coordinated market infrastructure, investible investments can generate measurable returns, pipelines, and sound technical systems. Fragmented including job creation across nursery management, capital flows, inconsistent standards, and weak planting, monitoring and ecotourism. Focusing institutional capacity continue to deter private on sectors with strong employment potential— investment and limit scalability. Addressing these such as sustainable fisheries, coastal tourism, constraints requires targeted interventions that and offshore renewables—can further amplify streamline permitting processes, define standards development impacts and livelihood generation. for sustainable blue economy activities, and Targeted technical assistance, financed through integrate risk mitigation tools to lower transaction the International Development Association (IDA) costs, improve project bankability, and establish or other concessional windows, is vital to support reliable systems for monitoring and verification. project design, impact modeling, and pipeline Moreover, fostering collaboration between public readiness. agencies, financial intermediaries, and private stakeholders within a transparent regulatory Private capital is more likely to flow when financial risks are de-risked through ecosystem can enhance project bankability and instruments such as guarantees, insurance, or diversify capital sources. Strengthening these concessional finance. regulatory and institutional foundations is essential Tools such as sovereign guarantees, political risk to unlock larger capital flows and deliver long-term insurance, partial credit guarantees, and concessional environmental outcomes and generate sustainable capital remain essential to lower perceived risks employment in coastal and marine economies. and improve bankability, enabling capital to flow into high-impact job creating investments. Reducing high transaction costs requires The Multilateral Investment Guarantee Agency’s scalable models—such as aggregation, (MIGA) political risk insurance can support investor blended facilities, and pre-structured investment pipelines—that improve efficiency confidence in high-risk jurisdictions, particularly and attract capital. small island developing states. Development finance Regional hubs and pooled investment structures— institutions (DFIs), pension funds, and sovereign such as the Caribbean Ocean and Aquaculture wealth funds can provide structured guarantees, Sustainability Facility (COAST)—demonstrate how while governments offer fiscal incentives and policy small-scale projects can be bundled into investable backing to support credit enhancement. Leveraging portfolios. Blended finance platforms, digital tools, the World Bank’s suite of tools—including IDA grants, and cooperative investment vehicles can further International Finance Corporation (IFC) guarantees, streamline due diligence and risk assessment. and MIGA insurance—can crowd in institutional Initiatives like the Global Fund for Coral Reefs capital for blue finance projects. For instance, the (GFCR) have developed project pipeline models GFCR mobilized private investment at a 1:4 ratio that consolidate thousands of square kilometers by using IDA concessional finance to absorb early- of reef conservation into scalable portfolios. These stage risk. Multilateral development banks (MDBs) mechanisms are particularly effective in contexts and DFIs can provide layered guarantees, while where high project preparation costs deter private national governments supply fiscal incentives and capital and where bundled portfolios can generate policy backing. Institutional investors and pension both ecological and employment co-benefits. funds can leverage these structures to diversify their portfolios into blue assets. 43 36 ACCELERATING BLUE FINANCE: INSTRUMENTS, CASE STUDIES, AND PATHWAYS TO SCALE Investment pipelines aligned with national 4.2 Build Robust Data, Metrics, strategies are essential for capital deployment and delivery of co-benefits. and Methodologies to Enhance Development partners, working with finance, Credibility and Performance environment, and planning ministries, can support the identification, structuring, and sequencing Reliable, standardized data and science- of bankable projects. Examples include Ghana’s based metrics are essential for informed mangrove rehabilitation program and Madagascar’s decision-making, effective risk assessment, Tahiry Honko initiative, both aligned with broader and performance monitoring in blue finance. blue economy goals. Prioritizing high-employment Governments, in collaboration with development sectors—such as sustainable fisheries, coastal partners, scientific institutions, and think tanks, tourism, and offshore renewables—can amplify should work to establish robust databases socioeconomic impacts and generate job and consistent methodologies for tracking the opportunities across coastal communities. Targeted environmental, social, and economic impacts of blue technical assistance, financed through IDA or other finance projects, including job creation potential. concessional windows, is vital to support local Embedding transparent reporting frameworks and project design and impact assessment. independent verification mechanisms into financial transactions will build investor confidence, attract Consistent frameworks and impact metrics capital, and ensure projects are held accountable are essential to build market credibility and for their stated outcomes. Additionally, targeted reduce investor uncertainty. technical assistance and capacity-building efforts Development partners, in coordination with ICMA by development partners can strengthen local and and initiatives such as the Task Force on Climate- institutional capabilities to collect, manage, and related Financial Disclosures and Task Force Nature- apply data to support evidence-based investments. related Financial Disclosures, should promote adoption of globally recognized blue finance related Clear and predictable data systems are guidance and align it with national regulatory foundational to attracting institutional capital frameworks. Voluntary alignment tools such as into blue finance. Uncertainty in baseline metrics—ranging from the IFC Blue Finance Guidelines69 and Sustainable eligibility criteria to disclosure methodologies—can Blue Economy Finance Principles can help financial deter private investment, particularly in emerging institutions and governments clarify expectations blue economy sectors. National governments should and build consistent approaches across sectors, embed blue finance in climate, ocean, and economic easing coordination challenges and supporting long- policy while harmonizing data standards across term policy coherence.70 Countries can integrate jurisdictions to support cross-border capital flows. these standards into taxonomies, stock exchange The COAST facility, for example, demonstrates listing rules, and regulatory practices to support how regional cooperation in the Caribbean has local issuance. National alignment with voluntary helped align insurance, fisheries, and monitoring tools helps clarify investor expectations and ensure standards across multiple countries, enabling pooled policy coherence. Standardized impact metrics investments and shared data platforms. Embedding and verification protocols are critical for enabling scientific validation into frameworks like the TCFD consistent measurement across jurisdictions, and the TNFD can strengthen risk disclosure, helping improving comparability, and mitigating investor institutional investors account for ocean-linked risk. These measures will complement traditional liabilities. financing instruments-such as sovereign loans and grants-while attracting concessional and private Embedding transparent reporting frameworks capital to scale sustainable ocean investments. and independent verification mechanisms into financial instruments is central to credibility and performance. Adopting voluntary frameworks such as the IFC Blue Finance Guidelines and Sustainable Blue Economy Finance Principles can support consistent methodologies for tracking impacts across sectors. 69. Guidelines for Blue Finance. https://www.ifc.org/en/insights-reports/2022/guidelines-for-blue-finance. 70. Sustainable Blue Economy Finance Principles: https://www.unepfi.org/blue-finance/the-principles. These principles, developed by UNEP FI and partners, provide a voluntary framework for aligning financial decision-making with sustainable ocean-based economic activities. Implementation guidance—such as Turning the Tide and Diving Deep—offers sector-specific criteria for applying these principles across seven sectors. 37 44 The 2018 Seychelles Blue Bond successfully long-term capacity building, strengthening public mobilized $15 million by integrating robust data institutions’ ability to oversee and communicate and verification mechanisms into its national results to both donors and investors. development strategy, enhancing accountability and investor confidence. Development finance Fragmented frameworks and inconsistent institutions can support governments by providing standards undermine blue finance credibility targeted technical assistance to translate these and reduce bankability. principles into practice, helping to ensure data By establishing robust data systems and harmonized reliability for public and private investors alike. methodologies, governments can embed scientific metrics and verification tools into national and Reliable data also supports evidence-based regional plans. Platforms such as the GFCR illustrate investments. how science-based reporting and public-private Instruments such as the Global Fund for Coral Reefs collaboration can improve investor confidence, while (GFCR)’s dual-window model—using grants for regional knowledge hubs and disclosure mandates early-stage project preparation—demonstrate how can institutionalize good practice. Embedding these robust data frameworks can strengthen project practices will help blue finance evolve into a credible, assessment, unlock concessional capital, and scalable asset class that supports sustainable ocean- crowd in institutional interest. The GFCR achieved based economic development. a leverage ratio of 1:4, in part by implementing consistent monitoring protocols across project 4.3 Mainstream Blue Finance into sites. DFIs and national development banks can expand these approaches by strengthening data National Policy, Planning and management capacity at local levels and improving Strategies performance measurement tools for long-term investments. Integrating blue finance into national policy frameworks and climate and development Science-based metrics are also critical for risk priorities is essential to align investments assessment in climate-exposed regions. with broader sustainable development and climate mitigation and adaptation goals. The Mesoamerican Reef Insurance Program—backed Governments should embed blue economy by MAR Insurance—used consistent environmental objectives into Nationally Determined Contributions data such as storm surge thresholds to trigger (NDCs), National Adaptation Plans (NAPs), Long- payouts for reef restoration following hurricanes, term Low-emission Development Strategies (LTS), demonstrating how standardized metrics support and sustainable finance taxonomies. Ministries rapid and credible disbursements. Jamaica’s of finance and planning should collaborate with catastrophe bond, supported by the World Bank, environmental, maritime, and other sectoral agencies similarly relied on standardized indicators to to incorporate blue economy considerations into maintain investor trust. Technical assistance and national budgets and investment frameworks. shared learning platforms can help extend these Developing clear investment roadmaps and guidance capabilities to small island developing states, for blue sectors will help identify priority areas for improving the accessibility and affordability of data- capital mobilization, while integrating blue finance driven risk transfer instruments. instruments into broader fiscal and financial tools can create fiscal space, reduce investment risks, and Transparent reporting and impact verification are equally important in sovereign-linked attract private capital to accelerate the transition toward sustainable ocean-based economies. The structures such as debt-for-nature swaps. Seychelles, for instance, has included mangrove The Belize debt conversion in 2021—facilitated and seagrass restoration in its revised NDC, by The Nature Conservancy and Credit Suisse— explicitly linking blue ecosystems to its mitigation generated $180 million for marine protection, targets.71 Such integration can position countries backed by the Belize Conservation Fund Act. The to access climate finance from multilateral sources. transaction incorporated independent verification Development partners can assist governments and robust reporting systems, ensuring that in mapping ocean-climate linkages and applying conservation targets were transparently tracked frameworks such as the TNFD to improve risk over time. Development partners can support such disclosure and guide private capital toward nature- initiatives through technical assistance and positive investments. 71. Seychelles, Climate Change and Energy Department, Ministry of Agriculture, Climate Change and Environment, Seychelle’s Updated Nationally Determined Contribution (Victoria, 2021), https://unfccc.int/sites/default/files/NDC/2022-06/Seychelles%20-%20NDC_Jul30th%202021%20_Final.pdf. 45 38 ACCELERATING BLUE FINANCE: INSTRUMENTS, CASE STUDIES, AND PATHWAYS TO SCALE Blue carbon markets offer a scalable pathway coastal defense—can reduce public expenditure on to combine conservation finance with coastal gray infrastructure while delivering co-benefits like development. job creation and food security. Ghana’s mangrove Projects that conserve and restore mangroves, rehabilitation program, for example, has combined seagrasses, and salt marshes can generate certified restoration with local employment in nursery carbon credits under methodologies such as Verra’s management and planting activities.73 The ocean VM0033, enabling communities to access long-term policies, like Fiji’s, can embed these linkages into revenue streams.72 Mikoko Pamoja in Kenya remains national budgets and investment frameworks, a globally recognized example, where carbon credit ensuring alignment with both climate resilience and proceeds have funded local priorities, including clean development planning.74 water infrastructure and education. Expanding these models will require technical assistance to ensure Scaling impact requires policy coherence integrity in carbon measurement and verification, as and cross-sectoral coordination, driven well as collaboration between ministries of finance, by ministries of finance and planning planning, and environmental agencies to incorporate collaborating with environmental, maritime, blue carbon into national budgets and investment and other sectoral agencies. frameworks. Indonesia, for instance, included blue Mechanisms such as the GFCR demonstrate carbon ecosystems in its NDC and established how aligning grant funding for early-stage the Peat and Mangrove Restoration Agency to project development with repayable capital for coordinate large-scale restoration. implementation can attract diverse investors. The GFCR’s structure — supported by the United Linking blue finance with development Nations, UNEP FI, and the Paul G. Allen Family strategies can accelerate job creation and Foundation—has mobilized blended finance to economic transformation, supported by clear protect coral reef ecosystems across multiple investment roadmaps and guidance for blue countries. Embedding blue finance into development sectors to identify priority areas for capital strategies will require inter-ministerial alignment, mobilization. harmonized disclosure requirements, and incentives The Tahiry Honko project in Madagascar that reflect both conservation and socioeconomic demonstrates how community-based mangrove outcomes, including job creation. restoration has generated employment while delivering verified carbon credits under the Plan Strategically embedded blue finance can Vivo standard. In parallel, sustainable fisheries, deliver inclusive growth and systemic coastal ecotourism, and offshore renewables offer transformation. high employment potential, enabling governments The Seychelles’ sovereign blue bond—structured to create significant job opportunities in coastal with a partial guarantee from the World Bank and communities. Governments can prioritize investment a concessional loan from the Global Environment in these sectors through integrated marine spatial Facility—has financed sustainable fisheries planning and climate-aligned infrastructure management and supported community-led programs. While detailed cross-country data are marine initiatives. Such instruments illustrate how limited, initiatives such as the Seychelles Blue aligning conservation with development can unlock Bond have shown that structured investments in international finance, strengthen natural capital, fisheries governance can support both ecological and support long-term economic resilience, while sustainability and local livelihoods. fostering sustainable employment. Aligning ocean conservation with climate resilience strengthens fiscal and economic stability, supported by integrating blue finance instruments into broader fiscal and financial tools to create fiscal space and reduce investment risks. Investments in natural infrastructure—such as mangroves for flood protection or coral reefs for 72. “VM0033 Methodology for Tidal Wetland and Seagrass Restoration, v2.1 (active September 4, 2023),” Methodologies, Verra, https://verra.org/methodologies/vm0033-methodology-for-tidal-wetland-and-seagrass-restoration-v2-1. 73. R. Hall and N. Rivers, “Mangroves in Ghana: Why We Need to Protect Them,” News and Blogs, One Ocean Hub, May 15, 2024, https://oneoceanhub.org/mangroves-in-ghana-why-we-need-to-protect-them. 74. Fiji, Ministry of Economy, National Ocean Policy 2020–2030 (Suva, n.d.), https://library.sprep.org/sites/default/files/2021-05/Fiji-National-Ocean-policy-2020-2030.pdf. 39 46 4.4 Strengthen Stakeholder Community-led conservation models drive job creation and social equity in coastal regions, Coordination to Scale Inclusive particularly when designed with equitable and Locally Grounded Models benefit-sharing and gender-responsive governance. Strong, inclusive stakeholder coordination is Projects like Mikoko Pamoja in Kenya, Ghana’s essential to ensure that blue finance delivers mangrove rehabilitation program, and the Caribbean tangible benefits at the local level while Biodiversity Fund have linked ecosystem restoration supporting national development goals. to carbon markets, generating local revenue for Governments and development partners should schools, water access, and livelihoods. In these establish multi-stakeholder coordination platforms settings, women often lead in resource stewardship, or task forces that enable ongoing dialogue among processing, and community mobilization—making local communities, private investors, civil society, their inclusion in benefit-sharing schemes essential and scientific institutions. These mechanisms can for both equity and effectiveness. These models help co-create investment pipelines that reflect integrate local knowledge, co-design financial local priorities, integrate traditional knowledge, and mechanisms, and ensure equitable benefit-sharing. embed benefit-sharing, local tenure, and gender- Governments and DFIs should improve access to responsive approaches. Empowering local actors finance for small-scale initiatives, making community through targeted capacity building will strengthen participation a cornerstone of national blue finance their participation in project design, implementation, strategies. and monitoring. Embedding transparent grievance mechanisms and benefit-sharing arrangements Regional collaboration amplifies impact into blue finance projects will further enhance by pooling resources and harmonizing community ownership, social license to operate, and implementation approaches across long-term sustainability. Over time, these inclusive jurisdictions. and well-coordinated models can be institutionalized Initiatives like the COAST program and the within national systems, making blue finance more Mesoamerican Reef Insurance Program demonstrate impactful, resilient, and adaptive to local socio- how shared platforms can support joint monitoring, economic and environmental realities. risk pooling and timely payouts for restoration activities, creating jobs in local communities. Empowering local institutions through Development partners should facilitate regional targeted training and mentorship enhances platforms for bundled investment—such as the community engagement and project ASEAN Blue SEA Finance Hub75—to co-create sustainability. investment pipelines and unlock private capital Equipping institutions with skills in financial for scalable blue finance initiatives. Regional structuring, project management, and impact development organizations and private sector assessment strengthens local ownership, integrates networks must work together to harmonize traditional knowledge, and supports gender- approaches and avoid duplication. responsive approaches. Technical assistance programs should build local capacity in project Knowledge-sharing platforms and design and financial structuring while private communities of practice accelerate blue sector actors, including financial institutions, co- finance adoption and support long-term design projects to ensure long-term sustainability. institutionalization. Development partners can support tailored training Workshops, mentorship programs, and global programs and mentorship initiatives, enabling local platforms—such as the proposed Global Blue stakeholders to lead initiatives like Tahiry Honko in Finance Academy—can support cross-country Madagascar. Such efforts ensure fair benefit-sharing learning and enable regional replication. and align ecological outcomes with local priorities, Development finance institutions should establish fostering sustainable economic development. regional knowledge hubs, promote public-private exchanges, and ensure successful models like the COAST facility for fisheries insurance inform future implementation. The international sustainability frameworks such as IFC Blue Finance Guidelines and Sustainable Blue Economy Finance Principles can also serve as a reference point for training financial 75. “Blue SEA Finance Hub,” What We Do, ASEAN, n.d., https://www.adb.org/what-we-do/themes/environment/bluesea. 47 40 ACCELERATING BLUE FINANCE: INSTRUMENTS, CASE STUDIES, AND PATHWAYS TO SCALE institutions, helping to standardize due diligence, disclosure, and impact measurement. Public-private partnerships and regional coalitions should embed these resources into ongoing capacity-building efforts. Translating blue finance into impact requires targeted responses to institutional, financial, and operational barriers. The recommendations presented in this report respond to various implementation challenges and draw on enabling conditions identified across diverse case studies. They reflect the need for coherent policy and regulatory environments, credible data and performance metrics, integration with national planning and fiscal systems, and inclusive stakeholder coordination. The table below summarizes how each recommendation addresses specific challenges, leverages key enablers, and sets out indicative pathways for action by governments, development partners, and other stakeholders. Table 2: Advancing Blue Finance: Challenges, Enablers and Implementation Pathways RECOMMENDATION CHALLENGES ENABLING FACTORS IMPLEMENTING PATHWAY ADDRESSED LEVERAGED Strengthen Investment • Clear, investor-friendly Establish stable, transparent Readiness through Enabling • High transaction costs policy and regulatory regulatory environments; Policies and Regulatory • Limited private sector frameworks streamline permitting; define Frameworks engagement • Streamlined permitting standards; and integrate • Financial and regulatory and risk mitigation tools de-risking instruments. risks (e.g., guarantees, Mobilize concessional finance • Inadequate enabling insurance) and enable collaboration environment • Aggregation platforms between governments, DFIs, • Weak job creation in blue and pipeline development and private sector to build sectors • MDB/DFI support and bankable pipelines and technical assistance create jobs. Build Robust Data, Metrics, Governments and partners and Methodologies to • Data and verification • Robust databases and should develop standardized Enhance Credibility and gaps science-based metrics methodologies and Performance • Limited accountability • Transparent reporting and databases, embed reporting and investor confidence independent verification and verification into • Weak local capacity for • Technical assistance and transactions, and build local impact tracking partnerships with capacity for impact scientific institutions monitoring, including socioeconomic outcomes like job creation. Mainstream Blue Finance • Poor integration in • Integration of blue finance Embed blue economy in into National Policy, Planning national policy in NDCs, NAPs, LTS, and climate and development and Strategies • Siloed governance and taxonomies strategies; align policies limited fiscal space • Cross-ministerial across ministries; develop • Underfunding of blue coordination roadmaps for priority sectors sectors • Investment roadmaps and (e.g., fisheries, ecotourism); • Limited job generation in fiscal tools and integrate fiscal and ocean economies • MDB/DFI support for financial tools to attract strategic alignment concessional and private capital. Strengthen Stakeholder • Low community • Multi-stakeholder Institutionalize inclusive Coordination to Scale participation platforms models through stakeholder Inclusive and Locally • Gender inequity and • Community-led, task forces; co-create Grounded Models social exclusion gender-responsive models pipelines with local actors; • Weak local capacity • Traditional knowledge and embed grievance and • Limited regional benefit-sharing benefit-sharing mechanisms; coordination and • Regional hubs and and build regional platforms replication technical assistance for replication and capacity development. 4.5 Collective Call to Action for Scaling Blue Finance The next decade presents an unprecedented opportunity to transform blue finance into a global force for ocean health, job creation, and economic resilience. A structured approach—strengthening enabling policies and regulatory frameworks, building robust data credibility, mainstreaming into national strategies, and scaling inclusive models—is vital to address the complex challenges facing the ocean-climate nexus and ensure that blue finance delivers tangible and lasting impacts for both people and the planet. 41 48 Blue finance must evolve beyond fragmented interventions and function as an integrated system. This means embedding blue finance within national systems, enhancing institutional and market readiness, and securing enduring environmental and social benefits. Governments must accelerate policy alignment with global standards, while financial institutions and development partners must design instruments that reduce risk and crowd in private capital. Regional platforms must foster cross-border collaboration, harmonize regulations, and drive efficient deployment of funds. Proven models can be scaled now to deliver measurable impact. Blended finance structures such as the GFCR’s dual-window structure, parametric insurance products, and community-led conservation initiatives have demonstrated replicability across geographies. Replicating these instruments can balance grant-based preparation with repayable finance to mobilize private investment at scale—particularly in coastal economies most at risk. Quick wins can build momentum and signal commitment. Standardizing impact metrics across jurisdictions, embedding transparent reporting frameworks and independent verification mechanisms, and strengthening local data systems can be implemented rapidly, enhancing investor confidence and transparency. Bundling small-scale blue carbon and marine protected area projects into aggregated investment portfolios can lower transaction costs. Embedding blue finance commitments into NDCs, NAPs, LTS allows governments to unlock finance without new policy frameworks. A phased strategy ensures sustained progress. In the near term, stakeholders should pilot aggregation platforms in small island states, initiate regional knowledge hubs, and expand technical assistance for local institutions to boost job creation. Medium-term priorities include replication of successful pipelines, such as GFCR and COAST, across Africa and Asia. Over time, blue finance principles must be embedded in national development strategies, with clear metrics for job creation, biodiversity, and climate resilience. Inclusion, resilience, and collaboration must define the next era of blue finance. Strengthening institutional capacity, integrating science-based data systems, and scaling community-led action will improve long-term viability. Public and private actors must co-create financing solutions that align with local priorities and deliver lasting social and environmental returns —including sustainable employment—and ensure that blue finance becomes a scalable, resilient, and adaptive asset class for global capital markets. To conclude, the next decade offers a critical opportunity to elevate blue finance into a powerful driver of ocean health, economic resilience, and job creation. To achieve this, a coordinated and scalable approach is needed—one that strengthens policy and regulatory frameworks, enhances data systems, and integrates blue finance into national development strategies. Blue finance must shift from fragmented efforts to a systemic, inclusive model that embeds environmental and social outcomes into financial decision-making. Collaboration, inclusion, and resilience must guide the evolution of blue finance into a credible and scalable asset class that delivers measurable benefits for people and a livable planet. 49 42 ACCELERATING BLUE FINANCE: INSTRUMENTS, CASE STUDIES, AND PATHWAYS TO SCALE Appendix A. Instruments and Mechanisms Studied CATEGORY SUBCATEGORY EXAMPLES I. Thematic bonds Sovereign blue bonds Seychelles Blue Bond, Fiji Sovereign Blue Bond Development bank and FI-issued blue Nordic Investment Bank Blue Bond, ADB Blue bonds Bond, Bank of China Blue Bond, China Industrial Bank Blue Bond, IFC issued and supported bonds Corporate blue bonds Ørsted Blue Bond Mikoko Pamoja Community Mangrove Project II. Outcome-based finance Biodiversity credits (including payments (Kenya), Tahiry Honko Mangrove Conservation & for ecosystem services) Restoration Project (Madagascar), Blue Carbon–Ghana Blue Carbon Mangrove Program Program-for-results (PfoR) Morocco Blue Economy Program-for-Results Project Thematic outcome bonds Plastic Bond (Indonesia, Ghana), Coral Bond (Indonesia) II. Risk mitigation tools Parametric insurance Caribbean Ocean & Aquaculture Sustainability Facility (COAST), Pacific Ocean Finance Program, Mesoamerican Reef Insurance Program Catastrophe bonds Jamaica cat bond IV. Fiscal and economic Sovereign debt swaps Seychelles Debt-for-Nature Swap, Belize instruments Debt-for-Nature Swap, Barbados DNS Blue Bond for Ocean Conservation, Gabon Debt-for-Nature Swap, Ecuador Galápagos Debt-for-Nature Swap, Bahamas Debt Conversion Project for Marine Conservation Multilateral and development bank funds PROBLUE Multidonor Trust Fund, Caribbean V. Dedicated funds and Biodiversity Fund, Global Fund for Coral Reefs facilities (GFCR), Blue SEA (Southeast Asia) Finance Hub, Pacific Islands Regional Oceanscape Program (PROP), Blue Fund Costa Rica, Blue Natural Capital Financing Facility, Mangrove Breakthrough Partnership Private investment funds Conservation International's Blue Nature Alliance, Great Blue Wall Initiative, The MedFund, Blue Action Fund, Althelia Sustainable Ocean Fund, SWEN Blue Ocean Fund, Ocean 14 Capital Fund, ReOcean Fund, Katapult Ocean Deep Blue Fund, Aqua-Spark, S2G Ventures (Builders Vision), Blue Forward Fund, 30X30 Ocean Fund, Outrigger Ocean Impact Fund Note: ADB = Asian Development Bank; DNS = debt-for-nature swap; FI = financial institution; IFC = International Finance Corporation. 43 50 Appendix B. Stocktaking of Blue Finance Tools This appendix presents a mapping of blue finance instruments across five core categories: thematic bonds, outcome-based finance, risk mitigation tools, fiscal and economic instruments, and dedicated funds and facilities. It synthesizes data on investment size ranges, financial structures, geographic patterns, sectoral applications, and stakeholder participation. I. Size Range and Financial Structures INSTRUMENT CATEGORY SIZE RANGE (US$) FINANCIAL STRUCTURE I. Thematic bonds Government- or MDB-issued bonds with proceeds $15M–$100M (sovereign) ring-fenced for defined investments. Often supported Up to $1B (MDB issuances) by credit enhancements (e.g., partial guarantees, concessional cofinancing). Tenors typically range 5–15 years, with interest rates lowered via risk mitigation tools. II. Outcome-based finance $2M–$300M Performance-linked financing contingent on verified environmental outcomes (e.g., carbon sequestration, plastic waste reduction). Funds are often channeled through special-purpose vehicles with third-party verification frameworks. III. Risk mitigation tools $185M–$500M Parametric insurance and catastrophe bonds with pre-agreed environmental triggers (e.g., hurricane wind speed, storm surge). Capital market investors receive coupons in exchange for underwriting climate/disaster risk, typically over 3–5-year tenors. Rapid payouts occur once triggers are met. IV. Fiscal and economic instruments $21.6M–$1.6B Sovereign debt restructuring at a discount, with contractual allocation of fiscal savings to conservation. Agreements often create endowment or sinking funds for long-term financing, overseen by trust entities or NGOs V. Dedicated funds and facilities $50M–$500M Layered capital structures combining public, philanthropic, and private investments. Concessional loans, grants, and first-loss tranches reduce risk for commercial investors. Dual-window approaches (grant + investment capital) are frequently used. Source: Authors compilation. Note: MDB = multilateral development bank. Blue finance instruments vary widely in size, from $2 million for project-level initiatives to $1.6 billion for large-scale sovereign and multilateral issuances. Investment size depends on the instrument type, issuer (sovereign, private, or development institution), and geographic context, with larger transactions often reflecting multi-country applications or strong credit backing. · Thematic bonds range from $15 million to $1 billion, with sovereign and multilateral development bank (MDB)–backed issuances at the higher end due to larger market depth. These bonds use credit enhancements and long tenors (5–15 years) to lower borrowing costs. · Outcome-based finance ranges from $2 million to $300 million, primarily at the smaller end because of project-level implementation. · Risk mitigation tools range from $185 million to $500 million, typically structured as multiyear capital market instruments providing rapid payouts based on predefined climate and disaster risk triggers. · Dedicated funds and facilities range from $50 million to $500 million, scaling based on blended finance structures and target geographies. · 51 44 ACCELERATING BLUE FINANCE: INSTRUMENTS, CASE STUDIES, AND PATHWAYS TO SCALE II. Geographical Distribution and Sectoral Applications CATEGORY GEOGRAPHIC SECTORAL OBSERVATIONS DISTRIBUTION APPLICATIONS I. Primarily issued by SIDS for marine protection Thematic bonds Caribbean (Fiji, Seychelles), Marine conservation, and climate resilience. Advanced capital Asia-Pacific (ADB, China), sustainable fisheries, markets in Asia and Europe support larger Nordic/Europe pollution reduction, issuances. Increasing use of credit renewable energy, enhancements (e.g., World Bank guarantees). maritime transport Nordic issuances are largely linked to Baltic Sea decarbonization protection and renewable energy. Emerging interest in Southeast Asia for coral reef conservation and maritime decarbonization. II. Africa (Ghana, Kenya, Marine conservation, Concentrated in regions with high biodiversity Outcome-based Madagascar), Southeast blue carbon, plastic value and community-led conservation. East finance Asia (Indonesia), Latin waste recovery, coral Africa focuses on mangrove restoration. America (Belize) reef health Southeast Asia and Latin America explore reef health and plastic recovery. Supports job creation in coastal communities III. Caribbean (Grenada, Coastal resilience, Parametric insurance and catastrophe bonds Risk mitigation Jamaica, St. Lucia), Pacific fisheries, disaster risk are used in hurricane-prone Caribbean and tools Islands, Mesoamerica reduction Pacific SIDS. Coral Reef Insurance in Mesoamerica links payouts to environmental parameters. High premiums for SIDS owing to climate vulnerability. Basis risk remains a challenge. IV. Caribbean (Barbados, Marine protected Predominantly used by debt-burdened, Fiscal and Belize, Bahamas), Latin areas, biodiversity biodiversity-rich nations, debt-for-nature swaps economic America (Ecuador), Indian conservation, climate are structured to channel fiscal savings from instruments Ocean (Seychelles), Africa adaptation debt restructuring into long-term endowments (Gabon) and conservation trust funds dedicated to environmental conservation funding. V. Global (GFCR), Caribbean, Marine biodiversity, Broad geographic reach as a result of flexible Dedicated funds Pacific Islands, Southeast sustainable fisheries, investment structures. Support a diverse array and facilities Asia, Mediterranean, coastal resilience, of blue economy sectors, including ecosystem Nordic/Europe blue economy restoration, coral reef conservation, sustainable innovation fisheries, and blue infrastructure. Strong technology focused on private investment funds (e.g., SWEN Blue Ocean targeting aquaculture tech). Increasing emphasis on maritime transport innovation, alternative proteins, and cell-based seafood for sustainable food systems. Source: Authors compilation. Note: ADB = Asian Development Bank; GFCR = Global Fund for Coral Reefs; SIDS= small island developing states. · The Caribbean and Pacific Islands have the highest concentration of blue finance instruments, particularly in sovereign blue bonds, risk management tools, and debt-for-nature swaps (DNS). These instruments support marine protected areas, fisheries sustainability, and coastal resilience. · Latin America has seen significant adoption of blue finance, with Barbados, Belize, Costa Rica, and Ecuador issuing blue bonds, DNS, and payment for ecosystem services programs. These instruments focus on biodiversity conservation, climate adaptation, and sustainable fisheries. · Africa (Kenya, Madagascar, Ghana) is a key region for outcome-based finance, particularly in blue carbon credits, biodiversity credits, and community-led conservation models. Financing mechanisms support mangrove restoration, ecosystem services, and marine conservation initiatives. · Europe leads private investment and institutional blue finance, with Nordic and Mediterranean countries issuing thematic bonds and supporting dedicated conservation funds. These funds target Baltic Sea protection, marine pollution reduction, and sustainable aquaculture. · 52 45 · Asia-Pacific has a growing number of blue finance initiatives, including blue bonds issued in China, the Philippines, and Thailand, and by the Asian Development Bank. These instruments finance marine pollution control, renewable energy, and sustainable coastal infrastructure. · Southeast Asia (Indonesia, Philippines) has seen innovation in plastic waste bonds and coral reef finance mechanisms, targeting plastic waste recovery, coral reef health, and ecosystem resilience. · The Indian Ocean region, including the Seychelles has implemented sovereign blue finance mechanisms, particularly through DNS and blended finance models. These funds are directed toward marine protected areas, sustainable fisheries, and climate adaptation. · Mesoamerica has pioneered coral reef insurance mechanisms, with the Mesoamerican Reef Insurance Program linking financial payouts to environmental triggers. This supports coral reef restoration and coastal disaster resilience. · Dedicated funds and facilities operate globally, with initiatives such as the Global Fund for Coral Reefs, Caribbean Biodiversity Fund, and MedFund supporting marine biodiversity, sustainable fisheries, coastal resilience, and blue economy innovation. ACCELERATING BLUE FINANCE: INSTRUMENTS, CASE STUDIES, AND PATHWAYS TO SCALE III. Isuers and Other Stakeholders CATEGORY ISSUERS KEY STAKEHOLDERS OBSERVATIONS (TYPE & EXAMPLES) I. Thematic Governments (Fiji, Development banks: World Bank, IFC Governments lead issuance bonds Seychelles) (credit enhancement, guarantees) but require credit a. Institutional investors: Pension funds, ESG enhancement from MDBs Sovereign blue (environmental, social, governance) and participation from ESG bonds investors investors. NGO oversight NGOs: The Nature Conservancy ensures fund utilization. (structuring, oversight) Local communities: Coastal stakeholders benefiting from project financing b. Corporates, FIs (Ørsted, Institutional investors: Sovereign wealth Growing participation of DFI/ corporate Bank of China), DFIs (ADB, funds, pension funds corporate issuers. Requires blue bonds Nordic Investment Bank) Credit rating agencies: Moody’s, S&P robust investor reporting on (rating of bonds) ESG outcomes. Governments: Policy support (e.g., EU ocean mandates) Private ESG funds: Responsible for capital mobilization II. NGOs, project developers Investors: Impact funds, DFIs (Mirova, Requires third-party Outcome-based (Mikoko Pamoja) Natixis) verification for impact finance Verification bodies: Plan Vivo, Verra metrics. Success depends (carbon credit validation) on investor confidence in Local communities: Implementers of measurable outcomes. Local ecosystem restoration communities have a direct Government agencies: Policy enablers role in implementation. I. Governments (Jamaica Insurance firms and reinsurers: Swiss Re, Requires actuarial risk Risk mitigation catastrophe bond, COAST Aon, Willis Towers Watson modeling. Strong tools facility), Insurers Development banks: World Bank government involvement (structuring, donor grants) needed for premium Local governments: Implement payout financing. Payouts must be mechanisms structured for rapid Fisheries and coastal communities: Direct disbursement. beneficiaries of payouts IV. Governments (Belize, Creditors: Commercial banks (Credit Requires creditor Fiscal & Ecuador, Gabon, Suisse, Bank of America) coordination and IMF debt economic Seychelles) Conservation organizations: The Nature sustainability approval. High instruments Conservancy (structuring), WWF dependence on NGO a. Investors: Institutional investors, DFIs (e.g., structuring. Local Debt-for-nature IDB) communities benefit swaps Local beneficiaries: Conservation funds through conservation-linked financing marine protected areas, fisher funding. communities. V. Mix of public and private Dedicated funds Multilateral funds (GFCR, Multilateral and philanthropic funders: capital. High reliance on and facilities Caribbean Biodiversity UNDP, UNEP, Bezos Earth Fund, Gordon & philanthropy and a. Fund), private investors Betty Moore Foundation concessional finance to Multilateral/ DFIs Project developers: Conservation de-risk investments. Slow organizations (IUCN, Blue Finance) disbursement owing to Local communities: Co-management of multi-stakeholder conservation e orts governance. b. Fund managers: SWEN, Ocean 14 Capital Focused on commercially Private, Private investment firms (capital allocation) viable projects. High-risk commercial, and (SWEN, Ocean 14 Capital, Family o ces and venture capital firms: tolerance but requires institutional Aqua Spark) Provide patient capital long-term return horizons. funds Local entrepreneurs: Implement Strong demand for ocean sustainable blue economy ventures tech, aquaculture, and circular-economy solutions. Source: Authors compilation. Note: ADB = Asian Development Bank; COAST = Caribbean Ocean & Aquaculture Sustainability Facility; DFI = development finance institution; FI = financial institution; GFCR = Global Fund for Coral Reefs; IFC = International Finance Corporation; IMF = International Monetary Fund; IUCN = International Union for Conservation of Nature; MDB = multilateral development bank; NGO = nongovernmental organization; SWEN = SWEN Capital Partners UNDP = United Nations Development Programme; UNEP = United Nations Environment Programme. · Thematic bonds involve governments, institutional investors, and development banks, often requiring credit support (for example, guarantees) and clear regulatory frameworks. · Outcome-based finance engages nongovernmental organizations (NGOs), local communities, and impact investors, relying on robust third-party verification and predefined environmental or social targets. · 47 54 · Risk mitigation tools include insurers, governments, and coastal stakeholders, structured around actuarial modeling, predefined triggers, and rapid disbursement mechanisms. · Dedicated funds and facilities integrate multilateral donors, philanthropic foundations, and private investors, requiring strong governance and coordination across sectors. · Fiscal and economic instruments, such as debt-for-nature swaps, require active participation from governments, creditors, and conservation organizations, with legally binding commitments and approval processes. · Multi-stakeholder engagement: Blue finance instruments depend on collaboration among diverse stakeholders, including governments, development banks, private investors, NGOs, and local communities, often through multi-stakeholder platforms or task forces. · Local community involvement: Ensuring that local communities are active participants—not just beneficiaries—improves project legitimacy, impact, and long-term sustainability, supporting job creation and inclusive delivery. IMAGE? Accelerating Blue Finance: Instruments, Case Studies, and Pathways to Scale May 22, 2025