New idea proposed for wildlife

Debt swaps may free funds to tame climate, biodiversity

In Kenya, the coronavirus pandemic has dried up ecotourism, cutting off sources of funding that help protect wildlife and pay an income to communities working to preserve nature.

But forgiving a share of Kenya’s hefty foreign debt, in exchange for the government devoting those resources to fighting climate change threats and biodiversity loss, could tackle several big problems at once, researchers said on Tuesday.

“As part of pandemic economic rescue packages, governments have an opportunity to address simultaneously the crises of debt, climate and biodiversity destruction,” researchers from the London-based International Institute for Environment

and Development wrote in a report.

It ranks countries that would benefit most from such “debt swaps” based on their vulnerability to climate change, richness of biodiversity, indebtedness and creditworthiness.

At the top of the list are Cape Verde – an island nation off the coast of West Africa – Vietnam, Honduras, Kenya, Nicaragua and Papua New Guinea.

In Vietnam, for example, swapping debt for nature and climate protection could help farmers in the Mekong Delta – a major food-growing area at high risk of sea level rise – switch to salt-tolerant crop varieties, said report coauthor Paul Steele.

Opening up budget space could also expand a government effort that pays farmers, particularly in the poorest indigenous communities, to plant trees and conserve forests, he said.

Most of the $8 trillion in debt owed by developing nations in 2019 – before the virus crisis – is held by wealthy countries in the Organisation for Economic Co-operation and Development and large asset managers, Steele said. All might have good reason to consider such swaps, he told Reuters.

Asset managers facing debt write-offs as a result of the coronavirus-linked downturn might opt to put them to productive use – which could both support ailing economies and reduce the need for more debt relief in the future, Steele said. Some investors that have made commitments to net-zero emissions by 2050 could also consider debt swaps as part of their broader mission, he added.

Debt-for-nature and debt-forclimate swaps are a relatively new idea. The Seychelles in 2018 signed a $27 million deal brokered through The Nature Conservancy, with the freedup cash going to set up a big marine reserve. Similar agreements might particularly suit other small island developing states in the Caribbean or Pacific with large debt, high climate vulnerability and rich biodiversity, he said.

Money would be made available for climate and nature protection under a “results-based” payment system, Steele said.