Earlier this year, Ecuador, which owns the 100 Families Assistance Program sovereignty, announced a record deal. With the help of Credit Suisse Private Investment Bank and the US Development Bank, it refinanced US$1.6 billion (£1.3bn)** of bonds at a discount rate and issued new "blue bonds". In exchange, at least $12 million of the annual savings through this cheaper loan will now go to conservation efforts in the remote archipelago. 
These new financial instruments, known as "debt-for-nature" or "debt-for-climate" swaps, are gaining popularity in heavily indebted countries from Barbados to Belize. In addition, some argue that by freeing up finance to restore ecosystems and build resilience, they are becoming part of a broader problem: how to finance the world's climate change response?
According to the Organisation for Economic Co-operation and Development (OECD), developing economies will need $2. per year in the coming years$4 trillion) for climate action. But so far, rich countries have been slow to make good on their financial promises to help poorer countries adapt to a hotter world. A new 'loss and damage' was announced at COP28 this year, with $400 million in funding from wealthy countries. But it is estimated that developing countries will suffer 1,000 times more each year due to climate change.
The money could fund projects that strengthen nature's defenses, such as restoring mangroves to help withstand floods, or reforming agriculture to improve the resilience of food systems.
However, many countries are also unable to finance such a transformation. Loans can help – 71% of public climate finance in 2020 was provided in this way – but more than 50 developing countries were already heavily indebted last year. Some countries are currently paying creditors more than 12 times as much as they spend on climate measures.
The cost to indebted countries can be very high. In addition, this can also be a risk for creditors, as a country defaults if it is unable to repay its debts. For some heavily indebted countries, creditors can mitigate risk by negotiating an agreement to ** part of their debt at a lower interest rate.
New cheaper loans are then issued in exchange for a commitment to use some of the savings for nature or climate action.
One way for indebted countries to respond to the debt crisis is to increase exports of primary resources such as fuel, forests or fish, but keeping these assets intact is now key to capturing carbon and saving biodiversity. Similarly, debt cannot be resolved without climate action, as the economy is further strained when climate-related disasters occur. The 28 most indebted countries have become among the most vulnerable to climate impacts.
The United Nations Development Programme (UNDP) has warned that urgent debt relief is therefore needed "to avert a deepening development crisis".
In 2015, Seychelles cancelled nearly $22 million in debt in exchange for the creation of 13 new marine protected areas that prohibit or severely restrict fishing, oil exploration and other developments. In 2021, Belize was on the verge of defaulting on $500 million, but it also reduced its debt by issuing blue bonds, channeling savings into protection**. This year in Portugal, ** pledged to put Cabo Verde to 6$500 million reinvested in the green transition of the archipelago.
In 2021, Belize reduced its debt through the issuance of blue bonds and shifted savings to protection**.
One of the advantages of such "swaps" is that they do not harm a country's credit rating, making them more expensive to borrow in the long term. Andrew Deutz, managing director of global policy and conservation financing at The Nature Conservancy, an international conservation organization, said this could happen if the debt was completely written off. The Nature Conservancy has helped launch a series of programs in Belize, Gabon and Barbados.
In addition, early recommendations suggest that the concept is useful for protection. According to the first impact report.
The Belize Agreement has expanded its marine protected areas and designated public lands as mangrove protected areas. Meanwhile, in the Seychelles, new conservation efforts have been in place for a longer period of time, with 400,000 square kilometres of sea area now protected and blue whales returning.
One of the first beneficiaries of Belize's new ** is MarAlliance, a non-profit organization founded by marine conservation scientist Rachel Graham. The $327,000 (£260,000) they received over three years will be used to help restore the Gladon Spit and Silk Reef Marine Reserve. These areas are home to a large number of spawning fish and have also been a feeding hotspot for whale sharks. More than 20 years ago, Graham's research was instrumental in declaring the area a Special Conservation Area, helping to replace local unsustainable fishing with tourist opportunities. Since then, however, management has been lax and poaching has increased to the point where sharks are almost nowhere to be seen.
In the words of Darwin himself: "In the long history of humans (as well as animals), those who have learned to cooperate and improvise most effectively have triumphed".