Swapping Debt for Nature
Between 1980 and 1995, more than 540 million acres of tropical forests were lost worldwide, an area larger than Mexico and Indonesia. This trend continues and it won't stop soon.
Extreme weather across the globe this year has created conditions for widespread fires that could continue to consume one of our planet's most important resources. However, rain forests are casualties not only of intense heat or drought, but of the slash-and-burn agricultural practices of desperate populations.
Developing countries that contain much of the world's important tropical forests are under financial pressure to turn their rain forests into quick cash to meet their immediate domestic needs - and to pay off debts owed to industrial nations, including the United States. These countries are sacrificing long-term, global resources for short-term, financial needs. This is a classic public policy problem - mismatched incentives and interests.
To help bridge this gap, Congress approved and the president last week signed the Lugar-Biden Tropical Forest Conservation Act - a plan to swap debt for nature. Under the law, developing countries around the world would be permitted to reduce their debt to the US in return for setting up trust funds to pay for the protection of their outstanding tropical rain forests.
Tropical forests produce our planet's oxygen, influence global rainfall patterns, and, as the sources of some of the world's great rivers, help to create the farmlands and fisheries that feed us.
We're also becoming increasingly aware of the rich biological diversity in rain forests. Genetic diversity of tropical forests is important for plant breeding, accounting for half of all increases in agricultural yields between 1930 and 1980. More than 25 percent of all prescription drugs come from topical forests. As the rain forests shrink, we lose species of flora and fauna that could be the source of new medicines or disease-resistant crops.
By collecting carbon from the atmosphere, rain forests mitigate the build-up of greenhouse gases. Because of the influence of tropical forests on rainfall, forest shrinkage could create dryer local climates that would make sustainable agriculture even more difficult and fires even more common.
Our new law is modeled after the 1989 Biden-Lugar Debt for Nature bill, which allows the US Agency for International Development to buy back commercial debt at favorable rates in return for a developing country's willingness to place funds in a permanent endowment to protect the environment. Our new law, which applies to government debt, also builds on former President Bush's Enterprise for the Americas Initiative (EAI) by extending its scope beyond Latin America and the Caribbean. Under EAI, developing nations in this hemisphere have already placed more than $150 million in environmental trusts.
Because the world has few environmentally rich areas, it's in the interest of the US, as well as other developed nations, to work with developing countries to protect them. Many low- and middle-income developing nations devote a substantial portion of their public funds to service the debt they have incurred in recent decades. This financial burden diminishes their ability to protect their tropical-forest resources. The Tropical Forest Conservation Act provides a strong incentive to these nations to participate in managing environmental resources that are critical to the future of the world.
This plan passed both chambers with overwhelming bipartisan support. The president quickly signed it. This shows that good public policy can be the best politics. This plan will not extinguish the fires that continue to burn around the world, but it will remove some of the financial fuel that feeds them.
* Sen. Richard Lugar (R) of Indiana is chairman of the Agriculture Committee. Sen. Joseph R. Biden Jr. of Delaware is the ranking Democrat on the Foreign Relations Committee.