1. Debt for Nature Swap

2. Debt Crisis  During the 1980’s Latin America experience debt crisis  International Monetary Fund and World Bank came in and put major constraints –Decrease government spending –Less imports/more exports –Eliminate subsides –Baker and Brady Plan in late eighties –Etc.

3. Debt Crisis  So then there is not surprise that there is a positive correlation between the debt crisis and environmental desegregation in developing countries. –Wood exported to generate revenue as well as the lands were used to cultivate crops –Hurting tropical forest to generate revenue

4. Idea  Thomas Lovejoy of the World Wildlife Fund proposed swapping debt for nature  Conservation organization could take some of this devalued debt by buying or donating and trade it for tropical rainforest protection  Agencies such as World Wildlife Fund, Conservation International, Nature Conservatory

5. Three party debt- for- nature swap  Conservation group purchases hard currency debt owned to commercial banks on the secondary market  Then renegotiates the debt obligation with the debtor country  Debt then generally sold back to the debtor county for more than it was purchased for by the NGO (non- governmental org) yet less than what it was on the secondary market

6. Three party debt-for-nature swap  Proceeds generated from the renegotiated debt to be repaid in local currency  Then put into a fund that allocates grants to local environmental groups, and debtor government

8.  A mechanism of exchange in which a certain amount of the debtor’s foreign debt is canceled or forgiven in return for local currency from the debtor government to invest in a domestic environmental protection project.  More that $40 million has been invested in these programs  First swap was between Bolivia and Conservation International which was a cancellation of $650,00 Bolivian debt in exchange for $100,000 in local currency

10. Contributions  World Wildlife fund: $370,000  The Nature Conservancy: $370,000  Conservation International: $370,000  U.S. Government under the Tropical Forest Conservation Act: $5.5 million Amount of debt cancelled: $14.3 million over 16years

11. Downfalls  Not many banks and organizations that want to or can take on this type of responsibility  Dictators can exploit forest as a tool to gain money  Not a real option to alleviating debt for Latin America. Costa Rica most successful country only managed to eliminate about 5% of all debt  Wont stop all tropical deforestation

13. Upside Upside  Saving rainforest will help stop global warming, dramatic changes in the local climate, rise in temperature, decrease in rainfall  Save forest that which is home to 50% of all plant and animal species  Brings environmental awareness

14. The end