Sri Lanka among countries that could benefit from debt-for-nature swaps, says report

Ghana too, which like Sri Lanka is now restructuring its debt, is another obvious candidate.

Reuters reported that Debt-for-nature swaps, where poorer countries have debt written off in return for protecting ecosystems such as barrier reefs or rainforests, could provide $100 billion for the fight against climate change, a new report has calculated.

The UK-based, non-profit International Institute for Environment and Development (IIED) based the estimate on the possibility of debt swaps in many of the 49 less developed countries seen as most at risk of debt crises.

Belize, Ecuador, Barbados, Gabon and Cabo Verde have all done such swaps in recent years and Laura Kelly, the director of IIED’s sustainable markets research group, said many of those in debt distress and also often most threatened by global warming, were looking at them.

Kelly said countries that could benefit included Pakistan, Sri Lanka and The Gambia in West Africa, which is at “huge risk” of sea level rise she stressed and needs to invest heavily in flood prevention and wetland preservation.

Ghana too, which like Sri Lanka is now restructuring its debt, is another obvious candidate. One of its key exports, cocoa beans used for chocolate, could thrive if more is done to protect its vital rainforests.

“For governments (that do debt swaps) it creates some fiscal space, but also it helps to achieve outcomes in terms of climate and nature that have global impact,” Kelly said, adding that many countries were interested in potentially doing them.