Are debt-for-nature swaps scalable: Which nature, how much debt, and who pays?

Abstract

With the ongoing sovereign debt and biodiversity crises in many emerging economies, applications of debt-for-nature swaps as a dual solution for sovereign debt and nature conservation have been re-emerging. We analyze how debt-for-nature swaps (DNS) can be scaled to protect biodiversity priority areas and reduce debt burden. We build a dataset for biodiversity conservation and debt restructuring in 67 countries at risk of sovereign debt distress and show that they hold over 22% of global biodiversity priority areas, 82.96% of which are unprotected. Furthermore, we show that for 35 of the 67 countries, using conservative cost estimates, 100% of unprotected biodiversity priority areas could be protected for a fraction of debt; for the remaining countries, applying DNS would allow the protection of 11–13% of currently unprotected biodiversity priority areas. By applying interdisciplinary research combining fundamental biodiversity and economic data and methods merging, the research contributes methodologically and practically to the understanding of debt-for-nature swaps for emerging economies.

Analyzing global utilization and missed opportunities in debt-for-nature swaps with generative AI

“…Nonetheless, debt-for-nature agreements can be complex to negotiate as they often involve multiple stakeholders, including governments, financial institutions, and NGOs. And while impactful when success is achieved, the scale of funds for biodiversity protection generated through DNS can be relatively modest as compared to other instruments like carbon trading and payments for ecosystem services (PES) (Lachman, 1988 ; Bedarff et al, 1989 ; Model, 1990 ; Moltke and DeLong, 1990 ; Potier, 1991 ; Klinger, 1994 ; Wee, 1994 ; Chambers et al, 1996 ; Macekura, 2016 ; Nedopil et al, 2024 ).…”