Swapping Debt for Nature

By David Sassoon.If you imagine this planet to be a single organism with a body of its own, then tropical forests would rank as one of its most vital organs of circulation and respiration. They capture, store and recycle rain, control floods, drought and erosion, regulate the global climate and play a major role in the earth´s life support system. But if present trends continue, most of these forests will be stripped bare in 20 years, and the planet will suffocate..One major factor contributing to the wholesale murder of this planetary organism is the debt crisis, with developing countries now owing close to a trillion dollars of borrowed currency. To pay back this debt, or in many cases, just to pay back the interest, nations deplete their natural resources in a mad rush to meet payments. Forests are cut down, the earth is ripped open by mines, and the natural bounty is consumed like fast-food to generate exports and cash. .The debt crisis, in short, is blocking development and promoting the torture of the planet and its people. Last year, an innovative approach to easing national debt problems and saving the natural environment was tried out in three Latin American countries, Bolivia, Ecuador and Costa Rica. In these deals, one US dollar can effectively "buy" multiple dollars of local currency, which is then spent on conservation and environmental protection. In Bolivia, where the swap was first tried, Conservation International, an American organization, purchased $650,000 of Bolivia´s debt at the discounted price of $100,000 from a bank holding the debt notes. With the collapse of tin prices and high inflation in Bolivia, the bank had little hope of recovering the loan and so was willing to get what it could by selling at a discounted price..In turn, Conservation international swapped those deht certificates with the Bolivian Government in exchange for its agreement to protect 3.7 million acres of Amazonian forest and grassland by expanding the Beni Biosphere Reserve. The reserve is home to the indigenous Chimane Indians and 13 species of endangered plants and animals. In addition, the Government set up a $250,000 fund in local currency for the administration, management and protection of Beni reserve..These debt-for-nature exchanges will not, by themselves, cure the debt crisis or halt deforestation. Such swaps may be able to absorb several billion dollars worth of debt in the long run, but will hardly put a dent in the trillion dollars that is owed. But these swaps are bringing the attention of decisipn- makers to the role of natural resources in promoting development. As one commentator observed, "conservationists never had the attention of bankers, now they do."