Revolutionizing Debt Conversions for Global ConservationConservation has long been viewed as an approach that is beneficial for the environment, the health of people, and the planet. However, it hasn't always been considered affordable for governments. In fact, many view conservation as a financial burden – preventing potentially lucrative development and halting profitable but resource-intensive practices that contribute to the degradation of land and water biodiversity.

Unlocking Sustainable Financing for Environmental Protection

The Rise of Nature Bonds: Transforming Debt into Conservation Funds

The Nature Conservancy (TNC) has pioneered an innovative strategy that is making conservation a fiscally savvy move for many developing nations. By working with countries to refinance a portion of their national debt, TNC is unlocking savings that can be combined with technical assistance in science, planning, and policy to allow these countries to achieve ambitious conservation and climate goals. Known as the Nature Bonds Program, this approach is being leveraged by governments that recognize the value of investing in biodiversity and climate, and by investors seeking positive impact.

Pioneering Debt Conversions for Ocean Conservation

TNC's efforts have already resulted in the successful execution of four debt conversions for ocean conservation in Seychelles, Belize, Barbados, and Gabon. These deals are different from the debt-for-nature deals of the past, which involved government-to-government forgiveness. The current structures tackle commercial debt at a much larger scale, making the refinancing of sovereign commercial debt, tied to conservation goals, highly scalable and replicable. Other foundations, such as Pew, have also adopted this approach, as seen in the .6 billion commercial debt conversion project in Ecuador to protect the Galapagos Islands and surrounding marine habitat.

The Seychelles Success Story: Protecting 30% of the Ocean

The first modern debt conversion approach pioneered by TNC was with the island nation of Seychelles off the coast of East Africa. Facing financial challenges after defaulting on its debt during the 2008 global financial crisis, the Seychelles saw an opportunity to address both its financial and environmental concerns. TNC worked with the Seychelles to develop a project that provided the government a loan to buy back a portion of the nation's debt from its creditors at a discount. This refinancing, along with a lower interest rate, allowed the Seychelles to pledge to protect 30% of its ocean space and conduct a participatory, multi-year marine spatial planning process. By 2020, the Seychelles had progressed from protecting just 0.04% to 30% of its national waters, covering an area larger than Germany.

Scaling Up: Belize, Barbados, and Gabon Debt Conversions

Building on the success in Seychelles, TNC has continued to scale this approach, partnering with the U.S. Development Finance Corporation to achieve the world's largest-ever debt conversion for ocean conservation in Belize, refinancing 3 million in debt. This pairing with the DFC insurance wrap resulted in a 16-notch rating upgrade, making the repackaged debt a much safer and more attractive investment. The transaction generated a principal reduction of 9 million and reduced Belize's debt by 12 percentage points of GDP, with the savings being used to provide approximately 0 million in marine conservation financing over the next two decades.Similarly, TNC executed a 0 million debt conversion with Barbados in 2022, creating long-term sustainable financing for marine conservation and securing a commitment to protect up to 30% of its ocean. And last year, TNC announced an agreement with Gabon to refinance 0 million of its national debt, unlocking 3 million for conservation to support the nation's commitment to protect 30% of its ocean.

Revolutionizing Global Conservation Efforts

The incremental progress of conserving an area the size of the Gulf of Mexico has now been supercharged with this innovative financial approach that allows for conservation at a large scale. Nature Bonds projects are the future of global conservation, transforming debt into a catalyst for environmental protection and sustainable development.