Mexico City issues forest bond to finance climate change actions

The government of Mexico City, through the city's environment ministry Sedema, issued US$47,000 in forest bonds Wednesday on the Mexican stock exchange (BMV) to fund actions to tackle the effects of climate change.

The issue is the first of its kind to be made by a government in Latin America, city authorities said in a release.

The proceeds from the issue will serve to fund conservation projects on communal land in the San Nicolás Totoloapan area of the Magdalena Contreras district, which cover 2,274ha of forested land.

The securities were sold at US$12 each, with firms such as food processing firm Grupo Herdez, petrochemical firm Mexichem, Unilever, and banks HSBC and Banco Ve Por Más, being some of the investors, local daily El Economista reported.

In response to the 1997 Kyoto protocol, forest bonds put a price on the carbon present in forests and allow forest custodians to sell carbon credits in participating markets, giving investors the option of being repaid in carbon credits rather than in cash.

Pictured: City authorities attend a ceremony for the bond issue. CREDIT: CDMX.