A country like Guatemala is caught in a double bind. It needs money to protect its precious tropical rain forests but is burdened by significant debts. Fortunately, there is a simple but elegant solution: the United States government is willing to forgive debt if the money is instead spent on the protection of tropical forests.
The Largest Swap Yet
On September 8, Conservation International (CI) entered into an agreement with The Nature Conservancy (TNC) and the governments of the United States and Guatemala to conduct the largest debt-for-nature swap ever.
Under the terms of the agreement, the U.S. Treasury will cancel Guatemala's $24 million debt, which the Guatemalan government will instead channel into a fund for conservation grant making. This swap, conducted under the U.S. Tropical Forest Conservation Act, represents a dramatic increase in the amount of debt that can be written off in exchange for tropical forest conservation.
"Crushing debt can lock poor countries into a cycle of poverty they can't escape from by themselves," explains Carlos Manuel Rodriguez, CI's executive director of the Mexico and Mesoamerica Center for Biodiversity Conservation. "Debt-for-nature swaps give nations some financial relief so they can restore their natural resources and their future."
Yielding Multiple Benefits
The debt swap allows Guatemala to do more than scale up conservation efforts in its tropical forests. Although the debt remains a dollar amount on paper, it is paid in local currency, effectively injecting money back into the national economy.
The Guatemalan government will place the money in a locally administered fund that will issue grants for organizations and projects that protect four geographic regions that are important for their tropical forests, their biodiversity, and for the benefits that their natural resources provide local communities.
The four regions targeted for protection are unique examples of Guatemala's rich biodiversity. The forests of the Maya Biosphere Reserve are a critical habitat for countless species, and are integral to the cultural heritage and well-being of communities that rely on the forest. The volcanic chain in the western highlands of Guatemala, also known as the "islands of evolution," is a critical migratory bird route and home to numerous plant and animal species unique to the central American nation. The Motagua-Polochic and Caribbean Coast System is also an area of high endemism, and the Cuchumatanes region supports several of the Alliance for Zero Extinction's priority amphibian species.
In It For the Long Term
CI's $1 million contribution to the debt swap included $700,000 from the Global Conservation Fund (GCF), which played an integral role in bringing all the parties together and making the debt-for-nature swap a reality. Previously, GCF has been instrumental in creating similar multilateral swaps in Peru and Colombia.
"This swap truly embodies GCF's mission of securing the long-term management and financial sustainability of protected areas in places of high biodiversity," says Jennifer Morris, a vice president at Conservation International and managing director of the Global Conservation Fund.
CI and its NGO partners are key to debt-for-nature swaps, bringing knowledge, technical capacity, and an awareness of which local projects deserve grants. CI's participation will ensure that the debt-for-nature swap is a successful conservation tool and the grant-making fund effectively supports conservation efforts on the ground.