Environmental Management: Principles and practice

Paying for conservation
The value of conservation in economic terms is considerable, but not adequately
realized. An assessment in the late 1970s suggested the contribution of plant and
animal species to the USA economy was roughly 4.5 per cent of GDP (in the region
of US$ 87,000 million) (McNeely et al., 1990:18). If the value were better known,
conservation might be given better funding. Provided it is compatible with
conservation, forest extraction, tourism and sport may generate supporting funds.
Eco-tourism has attracted particular attention as a means of funding conservation
(see chapter 10). So far, there has been little progress with taxing biotechnology or
pharmaceutical industries to support conservation, yet both draw upon biodiversity.
However, ways have been found of trading off debt for conservation or other forms
of environmental care.
There have been promising developments since the 1980s of debt-for-nature
swaps (Thomas Lovejoy has been credited with their invention in 1984). These have
been negotiated in a number of countries, and are widely seen to provide a way for
the recipient to pay off some or all foreign debt with less loss of face than would be
caused by defaulting. The debtor country avoids defaulting and still retains control
over conservation or environmental activities, and USA banks should be able to
write off some of the expense against taxes (Simons, 1988; Pearce, 1989; 1995:35,
47–48; Cartwright, 1989:124; McNeely, 1989; Shiva et al., 1991:63). Opponents,
especially in the recipient countries and on the staff of NGOs, are less supportive
(Hayter, 1989: 258; Sarkar and Ebbs, 1992). The earliest debt swaps were negotiated
in Ecuador and Bolivia by 1987, and subsequently in Costa Rica, the Philippines,
the Dominican Republic, Mexico, Malagasy, Jamaica, Cameroon, and other countries
(George, 1988: 168; Patterson, 1990; Yearley, 1991:182; 258).

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CHAPTER FIVE
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Debt-swaps take a variety of forms, but most involve conversion of hard
currency debt to local currency debt. When a lender realizes it will probably never
recoup, it sells the debt, at a discount, to another (donor) who then releases cash to
the debtor country in local currency, so the donation goes further to support
environmental management or conservation. Some debt-swaps are bond-based (a
central bank pays interest on a bond created, usually for an NGO, over a period
typically of five to seven years); others are government policy programmes (under
which the recipient government pledges to implement a policy or initiatives aimed at
improving the environment or conservation). Debt-debt swaps are the interchange
of foreign loans between creditors. Debt-rescue swaps (‘buybacks’) are the repurchase
of a country’s debt in secondary markets. Sometimes linked to debt-for-nature swaps
are carbon sequestration deals, whereby a developed country or corporation
establishes tree plantations to lock up carbon dioxide to compensate for their emissions
elsewhere.
Criticisms levelled at debt-for-nature swaps are that:
♦
they offer limited potential to pay off existing debts (i.e. are tiny compared
with typical national indebtedness);
♦
they may be used to ‘smear’ indigenous environmental groups efforts, i.e.
opponents of environmental protection spread rumours of foreign interference
to divert attention from other issues;
♦
there may be difficulties in adopting them in some countries because of different
accounting and regulatory systems;
♦
there is no guarantee of ongoing protection or care;
♦
they may be seen as an erosion of a developing country’s sovereignty;
♦
if operated through NGOs, swaps may not assist or train local agencies;
♦
they do little to change commercial forces that damage the environment;
♦
they have so far been applied to a limited range of activities, mainly park and
reserve establishment and maintenance;
♦
the main beneficiaries, it has been argued, were the debt-seller banks (Mahony,
1992).