Words by Tess Becker
As the climate crisis becomes more real with every passing day, solutions are becoming increasingly creative, as is the case with the growing number of “debt-for-nature” deals around the world.
“Debt-for-nature” swaps are deals that reduce a developing country's debt burden in exchange for guaranteed finance for nature, and the largest one in the world recently happened in Ecuador. The country sold a new “blue bond” that will channel at least $18 million a year into the conservation of the Galapagos Islands, one of the world's most precious ecosystems.
Elsewhere, Ecuador bought back roughly $1.6 billion of the country's debt at a near 60% discount.
Debt-for-nature deals began in the 1980s and may serve as a way to incentivize countries to protect the natural world. In Ecuador's case, the deal will save the South American country more than $1 billion, both in interest and principal payments, while previous bondholders avoid potentially bigger financial losses. This comes while the country is amid political and economical turmoil.
“I think this transaction in particular, which is unprecedented in many ways - in size, in funding and in terms of the environmental commitments - has got people saying, ok this is now a real thing,” Credit Suisse banker Ramzi Issa said.
Charity check-in
At Smiley Movement, we like to elevate the work of charities across the world. Here are three charities whose causes align with the themes in this article.
Beacon Food Forest. This is one of the largest food forests in the country. Find out more and support them here.
Step Up for Students. They help provide funding to students in Florida trying to attend secondary education. Check them out.
Galapagos Conservancy. They are the only U.S.-based nonprofit dedicated exclusively to the protection and restoration of the Galápagos Islands. Find out more.
