Environmental Protection and Sovereign Debt Restructuring

19 Pages Posted: 25 Feb 2022 Last revised: 26 May 2022

See all articles by Patrick Bolton

Patrick Bolton

Imperial College London; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

Lee C. Buchheit

Center for Contract and Economic Organization

Ugo Panizza

Graduate Institute of International and Development Studies (IHEID) - Department of Economics; CEPR

Beatrice Weder di Mauro

Graduate Institute Geneva, IHEID; Graduate Institute Geneva, IHEID

Mitu Gulati

University of Virginia School of Law

Date Written: May 8, 2022

Abstract

Contributions to solving the globe’s environmental crisis are properly expected to come from every country to a greater or lesser degree depending on their share of responsibility for environmental pollution and their financial resources. But countries in financial distress and already unable to pay their debts may have a compelling argument for why they should not be expected to join the planetary effort to fight climate change. Incongruous as it may sound, however, it is precisely the subset of countries undergoing a debt restructuring that may have an alternative avenue for funding these projects. An example is Belize’s 2021 debt restructuring which resulted in both substantial debt relief and a credible long-term source of conservation funding. Building on insights from the Belize transaction, we describe a restructuring technique that could be used in a wide range of circumstances.

Keywords: ESG, sovereign debt, restructuring, green

JEL Classification: F34, H63, K12

Suggested Citation

Bolton, Patrick and Buchheit, Lee C. and Panizza, Ugo and Weder di Mauro, Beatrice and Weder di Mauro, Beatrice and Gulati, Mitu, Environmental Protection and Sovereign Debt Restructuring (May 8, 2022). Capital Markets Law Journal (forthcoming 2022), Virginia Public Law and Legal Theory Research Paper No. 2022-35, Virginia Law and Economics Research Paper No. 2022-07, Available at SSRN: https://ssrn.com/abstract=4040395 or http://dx.doi.org/10.2139/ssrn.4040395

Patrick Bolton

Imperial College London ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Lee C. Buchheit

Center for Contract and Economic Organization ( email )

New York, NY

Ugo Panizza

Graduate Institute of International and Development Studies (IHEID) - Department of Economics ( email )

Geneva Avenue de la Paix 11A
Geneva, 1202
Switzerland

CEPR

London
United Kingdom

Beatrice Weder di Mauro

Graduate Institute Geneva, IHEID ( email )

Geneva Avenue de la Paix 11A
Geneva, 1202
Switzerland
1211 (Fax)

Graduate Institute Geneva, IHEID ( email )

Chemin Eugene Rigot 2
Geneva, 1211
Switzerland

Mitu Gulati (Contact Author)

University of Virginia School of Law ( email )

580 Massie Road
Charlottesville, VA 22903
United States

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