Question

what is the difference between debt for nature swap and conservation bond, what was its actual outcome(effect)?

Answer 1

There are conceptual differences between debt-for-nature swap and conservation bonds

1) Conservation bonds are primarily issued by multilateral institutions such as the World Bank, or agencies of national governments such as the German Development Bank, whereas Debt-for-nature swap are issued by creditor (developed) countries to the developing or under-developed countries

2) Conservation bonds carry relatively low interest rate

3) Conservation bonds are primarily for conservation efforts include preserving endangered watersheds and rainforests, whereas, Debt-for-nature swap is for conservation of threatened or endangered species and re-forestation

4) Debt-for-nature swaps are financial transactions in which a portion of a developing nation's foreign debt is forgiven in exchange for local investments in environmental conservation measures, whereas, Conservation bonds are fixed income, liquid financial instruments that are used to raise funds dedicated to climate-mitigation, adaptation, and other environment-friendly projects.

5) Conservation bonds can generate predictable, steady cash flows, whereas Debt-for-nature swap generate far less funding than the face value of the debt purchased in the secondary market.

6) Under debt-for-nature dwap, the government of the indebted country is still responsible for payment of the debt, albeit to a conservation organization rather than to the creditor, whereas, in case of Conservation Bonds, debtor countries are directly responsible to the financier of conservative bonds.

The end-effect is that environment is protected. Developing countries enact certain environmental policies and prevent nature from further depleting. In some cases, restoration of river, eco-system, bio-diversity and expansion of forestation and re-juvenation of river system takes place.