Global challenges are putting our planet at risk. The intensifying effects of climate change, the spread of pandemics, volatile migration patterns, and food and water crises are serious threats to sustainable development. Left unaddressed, these trends will have long-term consequences for economic and social stability for all countries. This underlines the need for urgent action.
Middle-income countries are well placed to catalyze collective action with innovative and scalable solutions. These countries are home to 75 percent of the world population and 62 percent of the absolute poor. Many of these countries wish to expand their role in tackling global challenges, but given limited financial resources instead prioritize national development.
The Livable Planet Fund (LPF) is a special partnership to incentivize middle-income countries to address critical global challenges. Based on a World Bank-managed multi-donor trust fund, the partnership provides price incentives to middle-income countries to deliver on global public goods through additional International Bank for Reconstruction and Development (IBRD) operations. It does so in a manner that minimizes the level of subsidy and supports countries’ national priorities as well as the interests of the planet.
The LPF supports direct financing at scale and promotes innovation. Projects are eligible for grants if they address one of the World Bank’s eight global challenges and have positive cross-border effects—for example, where a project can result in more efficient water use by countries that share rivers and water tables. The eight global challenges include enabling digitalization, energy access, food and nutrition security, fragility and conflict, climate change adaptation and mitigation, pandemic prevention and preparedness, biodiversity and nature protection, and water security and access.
As part of the Bank’s Framework for Financial Incentives, the LPF offers support in the form of cofinancing grants, interest rate buydowns for results, and project preparation grants based on client preference and need, thereby filling a “viability gap” needed to move an investment forward. LPF grants will be the source of last resort for concessional funding, after assessing opportunities to tap into existing trust funds and financial intermediary funds.
The LPF is part of the World Bank’s innovative approach to creating a world free of poverty on a livable planet. The grants and concessional resources provided by trust funds help reduce borrowing costs for countries, de-risk investments to open the door for private-sector participation, encourage innovation, and stimulate investment in global public goods.
