Through debt restructuring agreements, governments are able to write off a proportion of their foreign held debt. The savings accrued will be channelled into domestic conservation initiatives and climate adaptation programmes. This often entails the establishment of a Conservation Trust Fund to channel the funds. Debt-for-nature swaps can target both official and commercial lending, with the former being the most common scheme.
As recently as 2016, the Nature Conservancy, through its NatureVest division and Africa program announced the closing of the first debt-for-nature restructuring with the Government of Seychelles and its Paris Club creditors, designed to help the Government re-direct a portion of its debt payments towards marine conservation and climate adaptation. This is the first ever climate adaptation debt restructuring that also includes a strong marine conservation component, using a combination of $15.2 million of impact capital and $5 million of grants to buy back $22 M worth of debt that the Seychelles owed to Paris Club members Belgium, the United Kingdom, France and Italy.
To learn more about the debt ‘conversion’ of the Seychelles, and the public-private trust fund SeyCCAT that manages the restructured debt, visit here.
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