ReGDP: integrating natural capital into sovereign balance sheets

Emerging Markets and Developing Economies (EMDEs) hit a record in 2025 borrowing $4 trillion. Finance fees on total serviced debt are estimated at approximately $900 billion per year and growing.

A recent study by the Paulson Institute found that nature underwrites 55% of global GDP (worth roughly $58 trillion). Ecosystems act as essential "infrastructure" for economies, providing a myriad of services – from climate stabilization and storm mitigation to water provisioning and food security. But despite their enormous contributions to society, they remain almost wholly unfunded. Governments and the private sector only invest ~$200 billion per year in nature, while it's estimated that approximately $1.1 trillion is needed to maintain the ecosystem services upon which we all rely.

This is a relatively small amount compared to other forms of infrastructure, for example roads and bridges, which attracted approximately $3 trillion in investments in 2025. When emerging markets and developing economies (EMDEs) seek capital to grow, it is a relatively simple matter to acquire debt to build hard infrastructure like roads and bridges, but seeking capital to protect and restore ecosystem services is a far more difficult undertaking. That's because a country can deplete its forests, degrade its fisheries, and exhaust its soil – reducing its prospects for longterm economic stability – yet its GDP can still rise. GDP as it turns out, is no longer a reliable metric in a world with ecological constraints.

A top-level taxonomy of 45 ecosystem services from land and sea across four major types – Supporting, Regulating, Provisioning, and Cultural – by NatureScot, 2024.

The UN recently released a report from the 'Beyond GDP' High-Level Expert Group documenting the significant problems with the GDP metric, concluding that it is no longer "fit for purpose". Numerous proposals have either recommend supplementing GDP with a set of parallel metrics (e.g. Human Development Index, Global Ecosystem Product, Nature Relationship Index, etc.) or replacing the GDP metric altogether. These approaches are likely to encounter resistance, as they would require a major overhaul of the global financial system and the fundamental accounting methods used by central banks and major financial institutions.

A group of economists has proposed an alternative approach, coined ReGDP (or 'Regenerative GDP'), which would preserve the GDP metric but inject the value of ecosystems as assets, factoring in future revenues from enhanced ecosystem services into sovereign balance sheets and debt level calculations. This approach could substantially influence the macroeconomic outlook of EMDE countries by establishing a direct linkage between fiscal and ecological sustainability, affecting their debt trajectories and thereby expanding fiscal space.

With EMDEs continuing to seek more and more debt capital for economic development ($4 trillion in sovereign bonds were issued just in 2025), the ReGDP approach could incentivize sustainable development and increased investment in nature conservation and restoration. Two countries with a similar GDP per capita would now be competing to increase the "supply" of ecosystem services, enhancing estimated future income and reducing the overall risk profile of high-performing countries as perceived by lenders. This would translate into direct savings on interest payments over time. With an estimated $900 billion paid annually by EMDEs to service their debt, these savings could be substantial, as much as $50 billion per year in reduced interest payments for the upper third of countries ranked by ReGDP.

The ReGDP project includes the publication of several peer-reviewed papers, case studies, and thought leadership initiatives to demonstrate the effectiveness of ReGDP as a new approach to building nature-positive economies.

Lead researcher: Dr. Ralph Chami. Blue Green Future
Contributing authors: Thomas Cosimano, Connel Fullenkamp, Jorge Chan Lau, Adolfo Barajas, Carlos Duarte, Dinah Nieburg