Debt-for-nature swaps can therefore be useful financial mechanisms for helping countries reduce debt without destroying their most valuable natural resources.
Yasuni National Forest is not a traditional
debt-for-nature swap.
These initiatives, called
debt-for-nature swaps, typically involved restructuring, reducing, or buying a portion of a developing country's outstanding debt, with a percentage of proceeds (in local currency) being used to support conservation programs within the debtor country.
(37) Allowing NGOs to establish dollar-funded endowments increases the stability and value of trusts as a financing alternative to
debt-for-nature swaps.
Debt-for-nature swaps are the best known of a family of deals that exchange debt in "hard" currency for local currency and or equity in local enterprises.
One of the tools used by these partnerships is the
debt-for-nature swap, which reduces the debt of the LDC at the same time that it delays development of tropical forests.
Sundaram, 'Swapping Debt for Debt in Less-Developed Countries--A Case Study of a
Debt-for-Nature Swap in Ecuador', International Environmental Affairs 2 / 1 (Winter 1990): 67-79.
One popular solution is a twist on the "
debt-for-nature swaps" now employed in the Third World.
CEPAL analyzed nine cases of
debt-for-nature swaps in Latin America (CEPAL, 1991: 116).(1) The foreign institutions bought a nominal total of $90 million on the parallel market for a sum of $14 million.
Yet Gore, along with many mainstream environmental groups, pushes market-based solutions, such as emissions trading and
debt-for-nature swaps, that increase environmental inequities.
Although debt-debt and debt-equity swaps were discussed in several papers, there was no mention of
debt-for-nature swaps in which debtor nations that are rich in biological resources are allowed to reduce debt in return for preventing wilderness areas.