Debt-for-Nature Deals at Risk Amid U.S. Policy Shifts

Debt-for-nature swaps, which help countries reduce debt in exchange for conservation efforts, face disruptions due to possible U.S. policy changes under President Trump. These swaps have been instrumental in protecting ecosystems, but uncertainty about future U.S. support is causing concern for current and planned deals.

Debt-for-nature swaps, designed to alleviate debt by securing conservation commitments, are encountering potential turmoil as U.S. policy support wanes. Under President Trump, the U.S. may reduce backing, threatening these critical financial agreements protecting ecosystems globally from Africa to Latin America.

The U.S. International Development Finance Corporation (DFC) has played a pivotal role, insuring over 90% of $6 billion in debt swaps recently. However, with internal criticism of its climate efforts and uncertain leadership, new and ongoing swaps, including those in Angola, Zambia, and Latin America, could face reevaluation.

Despite the uncertainty, alternative financial support options like multilateral bank credit guarantees are being explored. Yet, the transition away from DFC's longstanding involvement poses challenges for scaling future deals, critical for countries intent on linking financial relief with environmental conservation.

(With inputs from agencies.)