Debt-For-Nature Swaps and the Environment in Africa

Abstract

This paper discusses the use of debt-for-nature swaps as a funding mechanism for environmental expenditures in Sub-Saharan Africa. The pros and cons of such transactions for creditor banks, environmental groups and debtor countries are discussed and evaluated in terms of their ability to address environmental problems prevalent in the region. It is concluded that the usefulness of debt swaps may be limited and that direct donations to developing countries for environmental purposes may often be superior to swap transaction.