The Debt-for-Nature Swap

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The Debt-for-Nature Swap

In recent decades, the issue of biodiversity loss in developing nations has captured the attention of many environmental groups in the global North. Since the vast majority of the Earth's plant and animal life lies within the borders of developing nations, efforts to protect global biodiversity through the promotion of environmental conservation have largely been focused in the global South. Because of this regional focus, financial mechanisms have been seen as an effective way for groups in the industrialized North to promote their environmental interests in the developing world. Debt-for-nature swaps, which became popular in the early 1990's, are one such mechanism in which an indebted developing nation agrees to invest in conservation projects or environmentally friendly actions in exchange for the cancellation of a portion of its foreign debt by a creditor.

(Patterson, 4) "The location of much of the world's most diverse biota often forces agreements to trade-off conservation and conventional development goals." (Moran, 63) Debt-for-nature swaps take this into account and attempt to balance out the economic costs that an LDC (less developed nation) incurs when investing in environmental conservation. Debt-for-nature swaps can be implemented through either bilateral or commercial swap mechanisms. A bilateral debt swap may be assisted by an NGO but is primarily an agreement made between a creditor government and a debtor government. The creditor government forgives the debt owed to it, and in exchange the debtor government agrees to set aside a pre-determined amount of money to fund conservation programs within its borders. A commercial debt swap occurs when a transnational NGO purchases debt at ...

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