dc.description.abstract |
Debt -for-nature swaps (DFNS) involve an exchange or cancellation of a foreign
country's debt in return for the debtor country's commitment to use a given amount
of local currency funds to protect national parks, establish environmental education
programs or train people in natural resource conservation and management.
DFNS have been used worldwide since the 80´s and the first record we have dates
back to Bolivia in 1987. During those years, many commercial banks and
multinational corporations found this to be a cheap way of financing new
investment and reducing debt at the same time.
However, although in the market for 26 years now, DFNS are not as common as
one could expect. Their practical application can be a quite complicated process
involving as many as twelve steps. It starts with a common interest from the
creditor and the debtor, followed up by serious negotiations, the draft of a formal
debt conversion agreement and finally executes the conservation program.
On the other hand, nature is starting to be scarce resource and more valuable
every day. Therefore, I believe DFNS have a lot of potential and can become more
widely utilized if properly structured and understood by all parties. |
ca |