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The European Union’s powerful lending arm, the European Investment Bank, expects to back its first ‘debt-for-nature’ swap this year as it bolsters efforts to stem biodiversity loss.
Debt-for-nature swaps, which help countries cut their debt in return for conservation commitments, are attracting growing interest after Ecuador’s record $1.6 billion deal last month to protect the Galapagos Islands. “We are working with a number of countries,” Maria Shaw-Barragan, a Director of Lending at the ‘EIB Global’ arm of the bank that lends outside the EU, told Reuters.
Multilateral development banks play a crucial role by providing “credit guarantees” that allow cash-poor governments to borrow cheaply — savings which are then funnelled into protecting ecosystems from barrier reefs to rainforests. Due to the EIB’s vast firepower its entrance into this pocket of finance has long been on the wishlist of those wanting a rapid increase in debt swaps.
