Are debt-for-nature swaps the way forward for conservation?
Agreements to reduce developing countries’ debt burden in exchange for spending on nature will be on the agenda at a finance summit in Paris this week
After decades in the wilderness, and familiar to only those in the know, “debt-for-nature swaps” are becoming one of the hottest things in conservation finance. Last month, Ecuador struck the biggest deal of its kind: refinancing $1.6bn (£1.3bn) of its commercial debt at a discount in exchange for a consistent revenue stream for conservation around the Galápagos Islands.
Other nature-rich countries that are struggling to pay their debts have taken notice and deals are rumoured in Gabon and Sri Lanka. The market for debt-for-nature swaps is poised to exceed $800bn, according to Bloomberg, prompting fierce competition between banks as demand for green investments increases.
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