Natural Capital and Sovereign Bonds
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World Bank, Washington, DC
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Natural capital is related to government
bonds through the macroeconomy and credit risks. This paper
estimates this relationship from the long-term,
between-country view and the short-term, within-country
view. The paper cautions against the former, as it is
dominated by income differences. These are de facto
ingrained, as they cannot be overcome by short-term policy
efforts. The within-country view is unaffected by the
ingrained income bias and leaves room for recent natural
capital changes to affect bond yields. The paper finds that
non-renewables (fossil fuels and mineral assets) raise bond
yields, possibly due to the resource curse. Renewables
(forests and agricultural wealth) lower borrowing costs
because they are economically worthwhile investments.
Protected areas are more likely to be luxury investments.
Palabras clave
NATURAL CAPITAL, NATURAL RESOURCE MANAGEMENT, SOVEREIGN BOND YIELD, INGRAINED INCOME BIAS, INTERACTIVE FIXED EFFECT, LATENT COMMON BOND FACTORS, GREENHOUSE GAS EMISSIONS, RENEWABLE RESOURCES