New Financing for Sustainable Development: The Case for NNP- or Inclusive Wealth–Linked Bonds

Rintaro Yamaguchi, Shunsuke Managi

Research output: Contribution to journalArticle

8 Citations (Scopus)

Abstract

We propose that national governments could issue bonds whose interest payments are linked to green net national product (gNNP) or, almost equivalently, to inclusive wealth. The main intention of this new financial instrument is to entice investors and the national government to invest in human and natural capital for which the corresponding financial assets currently do not exist. As the concept of wealth expands to include human and natural capital, so should the corresponding assets side in the balance sheet of nations. While the argument for gross national product (GNP)–linked bonds focuses on trimming public debt toward fiscal sustainability, the proposed bonds aim to ensure long-term sustainability. The theoretical link associated with welfare economics is also more plausible. Moreover, it could lead to the virtuous cycle of increased government expenditure directed toward inclusive wealth, expanding tax revenue, increased coupon payment to investors, and increased social well-being.

Original languageEnglish
Pages (from-to)214-239
Number of pages26
JournalJournal of Environment and Development
Volume26
Issue number2
DOIs
Publication statusPublished - Jun 1 2017

All Science Journal Classification (ASJC) codes

  • Geography, Planning and Development
  • Development
  • Management, Monitoring, Policy and Law

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