Debt for nature swaps
What is debt for nature swaps?
A developing nation often faces huge amounts of debt. The nations creditors, who may either, be the governments of developed nations or big financial institutions agree to forgive the debts of the less privileged nation in return for a promise of protecting the environment and conservation of resources in the developing nation. Large areas of land that require environmental conservation include tropical rainforests and forest areas in smaller countries.
Countries participating in debt for nature swaps
Debt for nature swaps began in the 1980s when institutions like the World Wildlife Fund decided to take up the cause of environment protection and conservation. Further to this, Bolivia became one of the first nations to get a debt for nature swap in the year 1987. The conservation group that took up the cause of the rainforests in Bolivia agreed to pay some of the nations debts asking for the creation of a rainforest preserve in return. Other countries that have participated in debt for nature swaps include Costa Rica, Ecuador, Philippines, Guatemala, Panama, El Salvador and Bangladesh. These countries are known for their cultural heritage as well as breathtaking natural landscapes. Preservation of the forest areas in these countries has lent an impetus to environment protection and is being encouraged in other countries too.
Benefits of debt for nature swaps
A developing nation finds it difficult to pay back the debts it owes to other large and developed nations. Also the debt burden may have a negative effect on the countrys economy. One solution for such countries is to take up debt for nature swaps. This remedy benefits the developing nation in two ways. Firstly, the negative effects of debts are minimized. Secondly, the environment is preserved and saved from destruction in these countries. A commercial debt for nature swap is a situation where an international non-government organization may purchase the debt titles from banks or governments and then transfers them to the debtor country. The debtor country can now utilize the funds for nature preservation by establishing environment conservation programs.
Achievements of debt for nature swaps till date
A large rainforest preserve in Bolivia, preservation of tropical forests in Guatemala and forest conservation in Costa Rica are some of the major achievements that have come about due to debt for nature swaps. The United States government has reportedly forgiven about 24 million dollars of debt to Guatemala which will be used by this country for its forest preservation program over a period of 15 years. Mayan culture and forests that have always been the pride of this small nation can now be assured of being preserved for the future generations. Also, the U.S. government is reportedly wiping away about $26 million dollars of debt for Costa Rica for its tropical forest conservation program. Thanks to such programs, smaller nations can now breathe easy in terms of debt minimization and also look forward to environment conservation on a large scale.
Overview
A developing nation often finds debts as stumbling blocks in its economic development. Debt for nature swaps are a welcome remedy for such nations as the twin objectives of debt minimization and environment conservation are achieved with one agreement.
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