Question

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

Answer 1

Dear Student,

Brief Introduction

Debt for nature swaps have often been described as agreements in which all parties benefit and that there are no disadvantages

1) For debtors

Through a debt-for-nature swap, a debtor country reduces its total outstanding external debt. The debtor country is able to buy back part of its debt in more favorable terms and pay for conservation initiatives rather than debt service

2) For creditors

Creditors see debt-for-nature swaps as a method to rid themselves of high-risk claim

3) For conservation organizations

Debt-for-nature agreements are a long-term source of funding for conservation initiatives, so both international organizations acting as donors and local organizations using funds are able to further their goals of conservation

* Difference between debt for nature swap and conservation bond

SR	Factors	Debt For Nature Swaps	conservation bond
1	Definition	ebt-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.	Green bonds are liquid investment vehicles that raise capital for conservation efforts and environmentally stable practices in general.
2	Parties Involved	a non-governmental organization (NGO) acts as the funder/donor and purchases debt titles from commercial banks on the secondary market.	Investors commit their capital to these bonds and the money is then allocated towards green initiatives
3	Types	bilateral swap & Multilateral debt	Green Bonds and Land Conservation
4	Benefits	Debt for nature swaps have often been described as agreements in which all parties benefit and that there are no disadvantages. There is benefits to debtor country, creditor, and conservation organizations	Institutional clients and investors are the main parts that are taking benefits from Bonds
5	Propose of Use	Used by Funders for Nature Conservancy, Leonardo DiCaprio Foundation, Oak Foundation and Global Environment Facility	Bonds are used for Land Purchase,Establishment of Forestry or Agricultural Production operation, Mitigation Banking

Outcome Debt for Nature Swap

The debt-for-nature swaps concept was first given birth by Thomas Lovejoy of the World Wildlife Fund in 1984 as an opportunity to deal with the problems of developing-nation indebtedness and its consequent deleterious effect on the environment

Outcome Conservation Bond

This is usually done either by recruiting philanthropists to accept lower returns than other investors, or combining conservation initiatives with more established investments that affect the programe. These could be job creation, education and eco-tourism schemes in the nearby communities

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