Topic Area: Funding Mechanisms
Geographic Area: Belize
Focal Question: What were the dynamics of the Debt for Nature Swap with Belize in 2001?
(1) Post, Jakarta, Swapping
Debt for Nature,
(2) Spergel, Barry, Raising Revenues for Protected Areas World Wildlife Fund-Center for Conservation Finance http://biodiversityeconomics.org/pdf/topics-226-00.pdf 3/19/02
(3) The Nature Conservancy: Press release, Landmark Deal to Protect Rainforests in Belize http://nature.org/aboutus/press/press326.html 3/19/02
(4) Maya Mountain Marine
Corridor-Belize: Press Release
Reviewer: Cameron T. Gammill, Colby College '02
By 1990, developing countries all together held over $1.3 trillion in international debt. (Keenan 3/18/02) Beyond this incredulous sum were interest payments that needed to be paid. These developing countries had enough internal problems, so generating this amount of extra income, in general was not an easy task. Often it was coming at the expense of valuable forests or other pristine resources in these deprived countries that were struggling so hard to keep up with the developed world. Thomas Lovejoy, the deputy chairperson for the World Wildlife Fund and later part of the counsel for Presidents Bush Sr. and Clinton, recognized these problems and came up with idea known as “Debt for Nature and Development Swap.” (Post 3/18/02) The idea suggests that countries or private organizations eliminate the debt of developing countries in return for conservation of a valuable resource.
The second type of debt for nature swap is a bilateral debt reduction. This involves the cancellation of a certain amount of debt owed to a sovereign country, in exchange for conservation programs being set up in the indebted country, much like with the commercial debt for nature swap. (WWF 3/18/02)
An historic debt for nature swap occurred on August 2, 2001 between the United States, Belize and The Nature Conservancy, an NGO based in the U.S. It was the first ever such swap to involve both a commercial and bilateral debt for nature swap. This swap reduced approximately one-half of the government of Belize’s national debt owed to the United States. In return for reducing the debt, the government of Belize will protect approximately 23,000 acres, roughly one and one-half times larger than the island of Manhattan (Landmark Deal 3/19/02), of valuable forest land in the Maya Mountain Marine Corridor on the coast of Belize.
In 1998 the United States created the Tropical Forest Conservation Act (TFCA). This act sets aside money to use to protect tropical forests throughout the world, and one of the main ideas behind the act is to set it up to use the money for debt for nature swaps. The United States will use money that was set aside for the TFCA to cancel much of the debt owed by Belize. The Nature Conservatory is also contributing $800,000 in addition to the $500,000 that they have already contributed to the area, this money contributed by the Nature Conservatory will contribute to paying off Belize’s debt. In total, the U.S. with help from the Nature Conservatory, is forgiving almost $9 million owed by the Belize Government to the U.S. (MMMC 3/19/02)
The Belize Government is setting aside money from the reduction of their debt to protect 23,000 acres in the Maya Mountain Marine Corridor. The Belize Government will pay $7.2 million in local currency to local agencies in order to protect this area. This amount is not equal to the amount of debt canceled by the U.S. Government because there was an outright forgiveness of $1.4 million in debt owed. The fact that Belize can pay in their local currency will be a huge stimulator to the economy. This will have a two-fold effect. The first is that the Belize treasury can hold onto their scarce U.S. Dollar reserves, which will give them more financial flexibility in the future. The second advantage for Belize is that the money they would have paid out in debt, is now being turned into an investment for the country. (WWF 3/18/02) Not only is Belize protecting its own natural resources, which are invaluable for many reasons, but the $7.2 million that they are injecting into their economy in local currency will certainly give a boost to their economy.
The Government of Belize will handle the money initially, but will not use the money themselves. Three established organizations will receive funding to be the protectors of this area, as well as one organization that will be created to help with the preservation of the natural resource. All of these groups are private NGO’s that receive money from the government and other areas. A group called the Toledo Institute of Development and Environment (TIDE) will hold 12,000 acres, and will be given nearly $1.5 million to help protect it. Another $4.5 million will be given to Programme for Belize (PfB) and the Belize Audubon Society (BAS) to protect the rest of the area, as well as areas that they already have control of. The rest of the money will be given to a new organization called Protected Areas Conservation Trust Foundation (PACTF). This organization will be a stewardship and an endowment for all of the tropical forests in Belize. (Landmark Deal 3/19/02)
Through this debt for Nature swap, the United States, the Nature Conservatory and Belize are all protecting one of the richest assemblages of biodiversity in the world. (Landmark Deal 3/19/02) The Maya Mountain Corridor contains tropical rainforests, mangrove forests, coral reefs and more than 200 offshore cayas. There are also pine savannas, watersheds that flow into coastal wetlands and an offshore barrier reef, rated second only to the Great Barrier Reef in Australia. Due to the offshore winds and lack of upwelling in the area, there are only limited marine nutrients. Therefore the nutrients for these successful fisheries come directly from the watersheds from the land that is being protected. In addition to the marine and forest resources being protected as a result of this deal, vegetation and rare and endangered species are being protected as well. Almost a third of the vegetation that exists in Belize exists in this newly protected area. In terms of rare and endangered animals, this area is the home for animals including the jaguar, ocelot, maraguay, Baird’s tapir, West Indian manatee, Morelet’s crocodile and more. (MMMC 3/19/02) The effort put for by the United States through the debt for nature swap, will not only protect a valuable natural resource and all parts of its lively and endangered ecosystem, but it will also provide economic relief for a country very much in the need of it.