Are debt-for-nature swaps scalable: Which nature, how much debt, and who pays?
Christoph Nedopil, Mengdi Yue, Alice C. Hughes
Abstract
With the ongoing sovereign debt and biodiversity crises in many emerging economies, applications of debt-for-nature swaps as a dual solution for sovereign debt and nature conservation have been re-emerging. We analyze how debt-for-nature swaps (DNS) can be scaled to protect biodiversity priority areas and reduce debt burden. We build a dataset for biodiversity conservation and debt restructuring in 67 countries at risk of sovereign debt distress and show that they hold over 22% of global biodiversity priority areas, 82.96% of which are unprotected. Furthermore, we show that for 35 of the 67 countries, using conservative cost estimates, 100% of unprotected biodiversity priority areas could be protected for a fraction of debt; for the remaining countries, applying DNS would allow the protection of 11-13% of currently unprotected biodiversity priority areas. By applying interdisciplinary research combining fundamental biodiversity and economic data and methods merging, the research contributes methodologically and practically to the understanding of debt-for-nature swaps for emerging economies.