The village of Nalma in Nepal. Most of the land is used for rice fields, gardens and housing. CIFOR/Mokhamad Edliadi

Historic Dutch dike financing a model for green landscape bonds, expert says

Sustainable growth initiatives

BONN, Germany (Landscape News) — The first green bond was issued in the Netherlands in 1648 to repair a dike, according to a financial expert.

The historic bond, which still pays interest more than 350 years later, offers a viable template for issuing landscape bonds to finance “green” projects with environmental benefits, said Gerhard Mulder, senior advisor of green finance at the International Union for the Conservation of Nature.

The bond was issued by Stichtse Rijnlanden, a Dutch water board organized to coordinate the interests of multiple stakeholders, including farmers, businesses and civic groups, to prevent the country from being submerged by the sea, Mulder said.

In the Netherlands, because a large part of the country is below sea level, democratically elected water boards operate at the local level to maintain dikes that prevent flooding. The water boards have the power to raise taxes to pay off debt if a project fails, Mulder said.

“Water boards have raised billions of euros through green bonds, including for climate adaptation,” he said.

In 2017, the issuance of green bonds to finance sustainable environmental projects exceeded more than $130 billion worldwide. However, most green bonds target technology, solar or wind energy projects, and only about 3 percent support landscape or agroforestry projects, Mulder said.

Mulder, who advises companies and governments on financing green infrastructure, sustainable development, and climate mitigation and adaptation, was speaking at the Global Landscapes Forum in Bonn, Germany on the feasibility of issuing landscape bonds. The bonds would fund projects involving multiple stakeholders operating within a defined geographical area.

Bonds are debt instruments allowing banks to trade loans. As fixed income investments, they allow businesses and governments to raise money for projects by borrowing from investors who receive interest in exchange. Like stocks, they are typically traded on exchanges, although they can also be purchased on an over-the-counter basis.


For green bonds, government support is key because taxes can cover the cost if a project fails, Mulder said.

“The key to issuing a green bond for landscapes is to involve the right stakeholders,” Mulder said. “In particular, an investment grade — or public — financial institution should be involved.”

A potential hindrance to landscape bonds is that investment platforms are not formalized in the landscapes sector, and until they are, they will not attract capital investors, Mulder said.

Use of the term “landscapes” in the context of environmental activities is new to some investors. Although investor risk may be reduced if many stakeholders are involved in a project in a specific area, it is impossible to lend money to a landscape.

To find investors willing to finance landscape initiatives it is best to wait until projects are past the proof of concept or early investment stages, Mulder said. The project must be well organized, large enough or bundled with other projects due to high transaction costs and minimum investment thresholds.

Mulder recommends working with private sector partners that not only already understand or are open to learning about the potential landscape business opportunity under consideration, but those with the technical skills to be partners who are open to improving them.

Green growth initiatives, including green bonds, could pave the way to meeting the U.N. anti-poverty Sustainable Development Goals (SDGs).

For example, SDG 8, aims to promote sustained, inclusive, and sustainable economic growth, full and productive employment and decent work for all, while SDG 8.4 aims to ensure global resource efficiency in consumption and production, endeavoring to decouple economic growth from environmental degradation.

Watch Gerhard Mulder speak about landscape bonds here.


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