Ecuador made waves in both the environmental and financial sectors last month with the largest to date "debt-for-nature" exchange. 🔀
The innovative maneuver involved selling $1.6B in bonds to Credit Suisse, which subsequently released funds for the protection of the biodiverse treasure trove that is the Galapagos Islands. 🐢🏝️🐟
Debt-for-nature transactions have been going on since the 80s with more than a dozen countries having participated in similar deals (akin to refinancing a mortgage).
Reuters Graphics
They present a win-win proposition — struggling countries get to restructure their debt while simultaneously freeing up resources to safeguard precious ecosystems.
The US Department of Agriculture offers a national variation of the deal known as the Debt Cancellation Conservation Contract Program, allowing eligible landowners to cancel a portion of their loans in exchange for entering into a conservation contract. 🇺🇸
With loan repayments going to nature preservation instead of creditors, countries and people in debt not only improve their own financial futures, they improve the environment’s future for us all. 🌏