Lemur Bond and biodiversity finance in Madagascar: pricing, impact dynamics and stochastic resilience

Hoby Nirina Rasoloarimanana and Ambinintsoa Ramanambonona

Journal of Economics and Development, 2026, vol. 28, issue 4, 345-373

Abstract: PurposeThis study develops an evaluation framework for the Lemur Bond, an outcome-based biodiversity finance instrument under preparation in Madagascar. It examines how sovereign pricing, ecological performance, ecosystem-service valuation and evidence governance interact under uncertainty.Design/methodology/approachThe paper combines three analytical blocks: a bond-pricing module incorporating greenium, compliance costs and default risk, an ecological production function linking mobilized resources to a composite biodiversity index and a discounted valuation of ecosystem services. Monte Carlo simulations propagate uncertainty in key parameters, while stochastic impulse response analysis evaluates resilience to shocks such as cyclones, wildfires and institutional disruptions.FindingsThe results show that the expected environmental value of the instrument is highly sensitive to ecological depreciation, allocation efficiency and the credibility-driven greenium. They also indicate that financial viability depends not only on coupon design but also on monitoring quality, independent verification and the capacity to maintain conservation outcomes after shocks.Research limitations/implicationsThe analysis relies on illustrative calibration rather than fully estimated empirical parameters. It therefore provides a simulation-based framework that can be updated as official monitoring and financial data become available.Originality/valueThe paper contributes to sustainable finance, biodiversity economics and sovereign debt literature by linking pricing, ecological production, KPI governance and resilience within a single framework adapted to Madagascar.

Keywords: Biodiversity finance; Sovereign bond; Greenium; Ecosystem services; Stochastic resilience; Madagascar (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jedpps:jed-04-2026-0453

DOI: 10.1108/JED-04-2026-0453

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