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Commodities, Volume 4, Issue 2 (June 2025) – 4 articles

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20 pages, 1195 KiB  
Article
Attracting More Capital for Biodiversity Finance: The Case of Debt-for-Nature Instruments
by Lauren Olsen and Frederic de Mariz
Commodities 2025, 4(2), 7; https://doi.org/10.3390/commodities4020007 - 16 May 2025
Viewed by 107
Abstract
Debt-for-nature instruments are financial transactions that allow countries to restructure and reduce foreign debt in exchange for investments in environmental conservation measures. Can debt-for-nature instruments attract more capital for biodiversity finance? Debt-for-nature instruments first appeared in the market in the 1980s; however, they [...] Read more.
Debt-for-nature instruments are financial transactions that allow countries to restructure and reduce foreign debt in exchange for investments in environmental conservation measures. Can debt-for-nature instruments attract more capital for biodiversity finance? Debt-for-nature instruments first appeared in the market in the 1980s; however, they have seen a recent surge in popularity, with transactions predominantly focused on marine conservation. These transactions have gained attention for their size, innovative nature, and conservation focus. However, they have also faced criticism surrounding sovereignty, effectiveness, and transaction costs. The descriptive qualitative analysis of a comprehensive and global sample of the eight tripartite type debt-for-nature instruments brought to market since 2015, with a detailed case study of the Belize transaction, indicates that such deals may be costly to negotiate, the use of blue bond labeling can be misleading, conservation benefits are limited, and they have limited replicability. On the positive side, these deals have introduced innovative structures to unlock additional funds for conservation. The best examples are structured with a larger financial commitment to nature and strong enforcement mechanisms. In some cases, the transaction laid the groundwork for future marine conservation funding and commitments. Debt-for-nature instruments are not a silver bullet for either environmental impact or debt refinancing; however, the benefits of recent transactions indicate a role for such innovative instruments in conservation finance. Full article
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15 pages, 1080 KiB  
Article
The Impact of Fossil Fuel Market Fluctuations on the Japanese Electricity Market During the COVID-19 Era
by Kentaka Aruga, Md. Monirul Islam and Arifa Jannat
Commodities 2025, 4(2), 6; https://doi.org/10.3390/commodities4020006 - 15 May 2025
Viewed by 498
Abstract
The COVID-19 pandemic and the Russia–Ukraine war have struck the world’s energy markets. This study analyzed how the recent unstable fossil fuel markets impacted the Japanese electricity contracts, classified as extra-high-, high-, and low-voltage contracts. Multiple structural break tests were conducted to endogenously [...] Read more.
The COVID-19 pandemic and the Russia–Ukraine war have struck the world’s energy markets. This study analyzed how the recent unstable fossil fuel markets impacted the Japanese electricity contracts, classified as extra-high-, high-, and low-voltage contracts. Multiple structural break tests were conducted to endogenously determine breaks affecting electricity prices during January 2019 to November 2022. By incorporating the effects of these breaks in the autoregressive distributed lag (ARDL) model, the study analyzed the effects of natural gas, coal, and crude oil prices on the types of electricity contract prices. The results of the analyses indicated a surge in electricity prices for low- and high-voltage contracts driven by an increase in natural gas. The results imply the importance of providing proper financial support to mitigate the effects of soaring electricity prices and implementing policies to diversify the electricity generation mix in Japan. Full article
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19 pages, 3442 KiB  
Article
Commodity Spillovers and Risk Hedging: The Evolving Role of Gold and Oil in the Indian Stock Market
by Narayana Maharana, Ashok Kumar Panigrahi and Suman Kalyan Chaudhury
Commodities 2025, 4(2), 5; https://doi.org/10.3390/commodities4020005 - 8 Apr 2025
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Abstract
This study examines the volatility and hedging effectiveness of commodities, specifically gold and oil, on the Indian stock market, focusing on both aggregate and sectoral indices. Data have been collected from 1 January 2021 to 31 December 2024 to cover the post-COVID-19 period. [...] Read more.
This study examines the volatility and hedging effectiveness of commodities, specifically gold and oil, on the Indian stock market, focusing on both aggregate and sectoral indices. Data have been collected from 1 January 2021 to 31 December 2024 to cover the post-COVID-19 period. Utilizing the Asymmetric Dynamic Conditional Correlation Generalized Autoregressive Conditional Heteroskedasticity (ADCC-GARCH) model, we analyze the volatility spillovers and time-varying correlations between commodity and stock market returns. The analysis of spillover connectedness reveals that both commodities exhibit limited and inconsistent hedging potential. Gold demonstrates low and stable spillovers in most sectors, indicating its diminished role as a reliable safe-haven asset in Indian markets. Oil shows relatively higher but volatile spillover effects, particularly with sectors closely tied to energy and industrial activities, reflecting its dependence on external economic and geopolitical factors. This study contributes to the literature by providing a sector-specific perspective on commodity–stock market interactions, challenging conventional assumptions of hedging efficiency of gold and oil. It also emphasizes the need to explore alternative hedging mechanisms for risk management in the post-crisis phase. Full article
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10 pages, 459 KiB  
Communication
Wavelet Entropy for Efficiency Assessment of Price, Return, and Volatility of Brent and WTI During Extreme Events
by Salim Lahmiri
Commodities 2025, 4(2), 4; https://doi.org/10.3390/commodities4020004 - 21 Mar 2025
Viewed by 286
Abstract
This study analyzes the market efficiency of crude oil markets, namely Brent and West Texas Intermediate (WTI), during three different periods: pre-COVID-19, during the COVID-19 pandemic, and during the ongoing Russia–Ukraine military conflict. To evaluate the efficiency of crude oil markets, wavelet entropy [...] Read more.
This study analyzes the market efficiency of crude oil markets, namely Brent and West Texas Intermediate (WTI), during three different periods: pre-COVID-19, during the COVID-19 pandemic, and during the ongoing Russia–Ukraine military conflict. To evaluate the efficiency of crude oil markets, wavelet entropy is computed from price, return, and volatility series. Our empirical results show that WTI prices are predictable during the Russia–Ukraine military conflict, but Brent prices are difficult to predict during the same period. The prices of Brent and WTI were difficult to predict during the COVID-19 pandemic. Returns in Brent and WTI are more difficult to predict during the military conflict than they were during the pandemic. Finally, volatility in Brent and WTI carried more information during the pandemic compared to the military conflict. Also, volatility series for Brent and WTI are difficult to predict during the military conflict. These findings offer insightful information for investors, traders, and policy makers in relation to crude oil energy under various extreme market conditions. Full article
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