By Donella Meadows
–April 14, 1988–
It is a tragedy, but not an accident, that the world’s most threatened tropical forests are in some of the world’s poorest and most indebted countries. The very poverty of those countries destroys the forests. Governments, to pay at least the interest on their debts, encourage logging companies to take timber. Forests are turned into pasture for beef exports. Along the logging roads and into the overgrazed pastures spread settlers, desperate for land, any land from which they might scratch a living. The forests don’t stand a chance.
The World Wildlife Fund says that at the present rate of loss the tropical forests may be gone in thirty years and with them at least 40 percent of earth’s species of life.
The fact that tropical forests are priceless biological treasures does not thrill impoverished people or debt-burdened governments. Biologist Edward O. Wilson recently announced that he found 43 species of ants (as many as there are in all of Great Britain) on a single tree in Peru. But exotic ants don’t provide jobs or pay off the billions of dollars owed to foreign banks. So the forests go down. An inexorable economic logic sacrifices nature for debt.
It was Thomas Lovejoy of the World Wildlife Fund who first saw a way to turn that logic around. In a 1984 New York Times editorial he proposed swapping debt for nature. Now several such swaps are underway. To understand how a debt-for-nature swap works, you have to begin by understanding that Third World debt is bought and sold on the world market much like wheat or oil.
Say a bank loans a country a million dollars in exchange for a note promising repayment over a certain period at a certain rate of interest. The country starts missing interest payments or asks to stretch out the due date. There is an increased risk that the loan won’t be repaid. Rather than run that risk, the bank may decide to sell the note for certain cash, though that cash will be less than a million dollars, sometimes very much less. A million dollars of Costa Rican debt goes these days for about $170,000. If you want to hold a million dollars worth of Sudanese debt, you can get it for about $5000, which is, of course, roughly what it’s worth.
Lovejoy’s idea was that conservation organizations could obtain some of this devalued debt, by purchase or donation, and trade it for tropical forest protection.
For example, last year the World Wildlife Fund bought a $1 million Ecuadorian IOU, due to be paid off in eight years. The price to WWF was $354,000 (which it raised partly from a private philanthropist and partly from its own program money for Ecuador). WWF arranged with the government of Ecuador to exchange that note for a bond worth a million dollars in Ecuadorian sucres.
The sucre bond was given to Fundacion Natura, an Ecuadorian conservation organization, which will use the interest and eventually the principal for national parks — not to acquire parks, because many exist in Ecuador, but to train and pay park staff, guard perimeters, build research stations, set up nature education programs.
Last year Conservation International bought $650,000 worth of Bolivian debt for $100,000. They exchanged it for an agreement by the Bolivian government to protect 4 million acres of forest and grassland adjoining the existing 334,000 acre Beni Biosphere Reserve in the Amazonian basin.
World Wildlife Fund has just announced the largest debt-for-nature deal yet, worth $3 million. The equivalent in Costa Rican colones will go to the Cost Rican National Parks Foundation. It will endow the Monteverde Cloud Forest Reserve and complete the purchase of land for Guanacaste National Park. To put that deal in perspective, it mobilizes in one stroke more money than WWF has been able to raise for Costa Rica over the past 25 years.
Third World governments willing to exchange debt for nature are not only ecological good guys, they are getting a good deal. They exchange foreign-currency obligations, which they must pay through export earnings, for domestic obligations to their own people, for some of their own priorities. Monteverde is not only a diverse and beautiful cloud forest, it is also the watershed above Costa Rica’s largest hydroelectric plant. Restoration of Guanacaste is employing many local workers and also bringing in a stream of international researchers eager to study one of the last remaining patches of American tropical dry forest.
Gatherings of conservationists these days are almost unrecognizable, because the language is that of international banking and the sums are in the millions of dollars. But everyone knows that the nuts-and-bolts economic talk is actually about something beyond price. A Nature Conservancy brochure lays out what the real deal is. Just $300 for each hectare (2.5 acres) of Guanacaste “buys you all of (forever): .001 jaguar, 200 orchids, 0.5 parrot, 20 toads, 25 spiny pocket mice, 0.04 anteater, 100 vines, 0.03 spider monkey, 400 dung beetles, 0.01 muscovy duck, 0.00029 volcano. All purchases will be held for your on-site inspection by the Costa Rican National Park Service.”
Copyright Sustainability Institute 1988