Landmark debt swap to protect Indonesia’s coral reefs

10 July 2024 Off By Bambam

<p>The government of Indonesia announced this week a deal to redirect more than US$ 35 million it owes to the United States into the conservation of coral reefs in the <a href="https://oceanexplorer.noaa.gov/okeanos/explorations/10index/background/biodiversity/biodiversity.html#:~:text=The%20Coral%20Triangle%20is%20the,Solomon%20Islands%2C%20and%20Timor%20Leste." target="_blank">most biodiverse</a> ocean area on Earth.&nbsp;</p><p><span style="background-color:initial;font-family:inherit;font-size:inherit;text-align:inherit;text-transform:inherit;word-spacing:normal;caret-color:auto;white-space:inherit;">The &ldquo;<a href="https://www.conservation.org/blog/what-on-earth-is-conservation-finance">debt-for-nature</a>&rdquo; swap will fund coral restoration in two key areas of the Pacific Ocean&rsquo;s <a href="https://oceanexplorer.noaa.gov/okeanos/explorations/10index/background/biodiversity/biodiversity.html" target="_blank">Coral Triangle</a> &mdash;&nbsp; the <a href="https://www.conservation.org/places/birds-head-seascape">Bird&rsquo;s Head</a> and Lesser Sunda-Banda seascapes, which encompass three-quarters of the world&rsquo;s coral species and more than 3,000 types of fish, turtles, sharks, whales and dolphins, Marc Jones reported for <a href="https://www.reuters.com/sustainability/land-use-biodiversity/indonesia-us-seal-35-mln-coral-reef-debt-swap-2024-07-08/" target="_blank">Reuters</a>.</span></p><p><span style="background-color:initial;font-family:inherit;font-size:inherit;text-align:inherit;text-transform:inherit;word-spacing:normal;caret-color:auto;white-space:inherit;"></span><span style="background-color:initial;font-family:inherit;font-size:inherit;text-align:inherit;text-transform:inherit;word-spacing:normal;caret-color:auto;white-space:inherit;">Debt-for-nature swaps aim to alleviate two problems for developing countries: heavy debt burdens and a lack of funding for conservation.&nbsp;</span></p><p><span style="background-color:initial;font-family:inherit;font-size:inherit;text-align:inherit;text-transform:inherit;word-spacing:normal;caret-color:auto;white-space:inherit;"></span><span style="background-color:initial;font-family:inherit;font-size:inherit;text-align:inherit;text-transform:inherit;word-spacing:normal;caret-color:auto;white-space:inherit;">Conservation International brokered the first <a href="https://www.washingtonpost.com/archive/business/1987/07/14/a-debt-swap-of-a-different-nature-for-bolivia/66073e32-0b77-4b8f-b150-d7cb7cee3478/" target="_blank">debt-for-nature swap</a> in Bolivia in 1987 &mdash; and in the years since, they have become a <a href="https://www.conservation.org/blog/us-peru-trade-debt-for-nature" target="_blank">powerful tool</a> for financing conservation. While Indonesia has participated in three earlier swaps, this will be the first to focus on protecting coral reefs.</span></p><p><span style="background-color:initial;font-family:inherit;font-size:inherit;text-align:inherit;text-transform:inherit;word-spacing:normal;caret-color:auto;white-space:inherit;"></span><span style="background-color:initial;font-family:inherit;font-size:inherit;text-align:inherit;text-transform:inherit;word-spacing:normal;caret-color:auto;white-space:inherit;">&ldquo;We never imagined that this critical mechanism to alleviate burdensome debt and protect the world’s most valuable ecosystems would eventually unlock billions for global conservation," Conservation International CEO M. Sanjayan said in a statement. &ldquo;We commend the governments of Indonesia and the United States for their vision and commitment to marine conservation.&rdquo;</span></p><p><span style="background-color:initial;font-family:inherit;font-size:inherit;text-align:inherit;text-transform:inherit;word-spacing:normal;caret-color:auto;white-space:inherit;"></span><span style="background-color:initial;font-family:inherit;font-size:inherit;text-align:inherit;text-transform:inherit;word-spacing:normal;caret-color:auto;white-space:inherit;">Conservation International will provide US$ 3 million to support Indonesia&rsquo;s debt swap.</span></p><hr /><p><span style="background-color:initial;font-family:inherit;font-size:inherit;text-align:inherit;text-transform:inherit;word-spacing:normal;caret-color:auto;white-space:inherit;"><strong>F</strong></span><span style="background-color:initial;font-family:inherit;font-size:inherit;text-align:inherit;text-transform:inherit;word-spacing:normal;caret-color:auto;white-space:inherit;"><strong>urther reading:</strong> <a href="https://www.conservation.org/blog/the-most-important-conservation-law-youve-never-heard-of">The most important conservation law you&rsquo;ve never heard of</a><br /></span></p><hr /><p><span style="background-color:initial;font-family:inherit;font-size:inherit;text-align:inherit;text-transform:inherit;word-spacing:normal;caret-color:auto;white-space:inherit;"></span><span style="background-color:initial;font-family:inherit;font-size:inherit;text-align:inherit;text-transform:inherit;word-spacing:normal;caret-color:auto;white-space:inherit;"></span><span style="background-color:initial;font-family:inherit;font-size:inherit;text-align:inherit;text-transform:inherit;word-spacing:normal;caret-color:auto;white-space:inherit;">Known as the &ldquo;rainforests of the sea,&rdquo; coral reefs support a <a href="https://sanctuaries.noaa.gov/news/dec15/coral-bleaching.html" target="_blank">quarter of all marine species</a> and are the cornerstone of healthy ocean ecosystems. Moreover, more than 500 million people rely on coral reefs for food and livelihoods. But they&rsquo;re <a href="https://climate.nasa.gov/explore/ask-nasa-climate/3273/vanishing-corals-part-one-nasa-data-helps-track-coral-reefs/" target="_blank">quickly vanishing</a>. Record heat, ocean acidification and pollution are all contributing to <a href="https://www.smithsonianmag.com/smart-news/the-worlds-fourth-mass-coral-bleaching-event-is-underway-and-it-could-become-the-worst-one-yet-180984164/" target="_blank">mass coral bleaching</a>, which is only expected to get worse as climate change accelerates.</span></p><p><span style="background-color:initial;font-family:inherit;font-size:inherit;text-align:inherit;text-transform:inherit;word-spacing:normal;caret-color:auto;white-space:inherit;color:inherit;">Roughly 18 percent of the world&rsquo;s coral reefs are found in Indonesia&rsquo;s waters, where they provide food, livelihoods, and storm protection for coastal communities.</span></p><p><span style="background-color:initial;font-family:inherit;font-size:inherit;text-align:inherit;text-transform:inherit;word-spacing:normal;caret-color:auto;white-space:inherit;color:inherit;"></span><span style="background-color:initial;font-family:inherit;font-size:inherit;text-align:inherit;text-transform:inherit;word-spacing:normal;caret-color:auto;white-space:inherit;color:inherit;">Indonesia&rsquo;s deal was made possible under the </span><a href="https://www.conservation.org/blog/the-most-important-conservation-law-youve-never-heard-of" style="font-family:inherit;font-size:inherit;text-align:inherit;text-transform:inherit;word-spacing:normal;white-space:inherit;">Tropical Forest and Coral Reef Restoration Act</a><span style="background-color:initial;font-family:inherit;font-size:inherit;text-align:inherit;text-transform:inherit;word-spacing:normal;caret-color:auto;white-space:inherit;color:inherit;"> (TFCCA), which allows countries to reduce their debt to the U.S. in exchange for commitments to conserve forests and coral reefs. In the 25 years since its adoption, the act has supported swaps in 14 countries and unlocked more than </span><a href="https://home.treasury.gov/news/press-releases/jy2451" target="_blank" style="font-family:inherit;font-size:inherit;text-align:inherit;text-transform:inherit;word-spacing:normal;white-space:inherit;">US$ 415 million</a><span style="background-color:initial;font-family:inherit;font-size:inherit;text-align:inherit;text-transform:inherit;word-spacing:normal;caret-color:auto;white-space:inherit;color:inherit;"> to protect tropical forests and coral reef ecosystems.</span></p><p><span style="background-color:initial;font-family:inherit;font-size:inherit;text-align:inherit;text-transform:inherit;word-spacing:normal;caret-color:auto;white-space:inherit;color:inherit;"></span><span style="background-color:initial;font-family:inherit;font-size:inherit;text-align:inherit;text-transform:inherit;word-spacing:normal;caret-color:auto;white-space:inherit;color:inherit;">Alexandre Portnoi, a legal advisor with Conservation International who worked on the deal, said the swaps &ldquo;open up a new pool of funding for conservation by breaking the cycle of increasing debt that contributes to the destruction of nature.&rdquo;</span></p><p><span style="background-color:initial;font-family:inherit;font-size:inherit;text-align:inherit;text-transform:inherit;word-spacing:normal;caret-color:auto;white-space:inherit;color:inherit;"></span><span style="background-color:initial;font-family:inherit;font-size:inherit;text-align:inherit;text-transform:inherit;word-spacing:normal;caret-color:auto;white-space:inherit;color:inherit;">&ldquo;That&rsquo;s because countries with high levels of debt may be more likely to exploit their natural resources in an effort to meet financial needs,&rdquo; he added.</span></p><p><span style="background-color:initial;font-family:inherit;font-size:inherit;text-align:inherit;text-transform:inherit;word-spacing:normal;caret-color:auto;white-space:inherit;color:inherit;"></span><span style="background-color:initial;font-family:inherit;font-size:inherit;text-align:inherit;text-transform:inherit;word-spacing:normal;caret-color:auto;white-space:inherit;color:inherit;">As global commitments to protect and restore nature </span><a href="https://www.conservation.org/blog/countries-agreed-to-protect-30-of-the-planet-now-what" style="font-family:inherit;font-size:inherit;text-align:inherit;text-transform:inherit;word-spacing:normal;white-space:inherit;">gain ground</a><span style="background-color:initial;font-family:inherit;font-size:inherit;text-align:inherit;text-transform:inherit;word-spacing:normal;caret-color:auto;white-space:inherit;color:inherit;">, the money generated from debt-for-nature swaps can help address a persistent gap in funding to support these efforts. A </span><a href="https://www.unep.org/resources/report/state-finance-nature-2022" target="_blank" style="font-family:inherit;font-size:inherit;text-align:inherit;text-transform:inherit;word-spacing:normal;white-space:inherit;">United Nations report</a><span style="background-color:initial;font-family:inherit;font-size:inherit;text-align:inherit;text-transform:inherit;word-spacing:normal;caret-color:auto;white-space:inherit;color:inherit;"> found that the world will not reach its climate and biodiversity goals unless financing more than doubles &mdash; from the current US$ 154 billion a year to </span><a href="https://www.unep.org/news-and-stories/press-release/doubling-finance-flows-nature-based-solutions-2025-deal-global" target="_blank" style="font-family:inherit;font-size:inherit;text-align:inherit;text-transform:inherit;word-spacing:normal;white-space:inherit;">US$ 384 billion</a><span style="background-color:initial;font-family:inherit;font-size:inherit;text-align:inherit;text-transform:inherit;word-spacing:normal;caret-color:auto;white-space:inherit;color:inherit;"> a year by 2025.</span></p><p><span style="background-color:initial;font-family:inherit;font-size:inherit;text-align:inherit;text-transform:inherit;word-spacing:normal;caret-color:auto;white-space:inherit;color:inherit;"></span><span style="background-color:initial;font-family:inherit;font-size:inherit;text-align:inherit;text-transform:inherit;word-spacing:normal;caret-color:auto;white-space:inherit;color:inherit;">Read the full story from Reuters </span><a href="https://www.reuters.com/sustainability/land-use-biodiversity/indonesia-us-seal-35-mln-coral-reef-debt-swap-2024-07-08/" target="_blank" style="font-family:inherit;font-size:inherit;text-align:inherit;text-transform:inherit;word-spacing:normal;white-space:inherit;">here</a><span style="background-color:initial;font-family:inherit;font-size:inherit;text-align:inherit;text-transform:inherit;word-spacing:normal;caret-color:auto;white-space:inherit;color:inherit;">.</span></p><p><em>Mary Kate McCoy is a staff writer at Conservation International. Want to read more stories like this? <a href="https://www.conservation.org/act/subscribe">Sign up for email updates</a>. Also, <a href="https://www.conservation.org/act">please consider supporting our critical work</a>.</em></p>