Ecuador’s ‘debt for nature’ swap should help protect, in perpetuity, the archipelago’s unique flora and fauna including many species that can be found nowhere else on Earth.
Ecuador has succeeded in converting $1.6 billion of debt into a loan which will free up millions for conservation in the Galápagos Islands. The deal, announced last week, is the largest of its kind ever made. It is known as a ‘debt for nature’ swap - and it's a win win scenario for both the host nation and for nature conservation.
Nearly 600 miles off the coast of Ecuador, many of the species seen on the Galápagos Islands can be found nowhere else on Earth. And, famously, after visiting the archipelago in 1835, British naturalist Charles Darwin developed his theory of evolution.
Typically, debt for nature swaps are arranged to help governments fund conservation. They involve reducing debt alongside commitments to put money towards the protection of nature.
Ecuador converted $1.6 billion of its existing debt into a $656 million loan financed through a bond, with the help of the Pew Bertarelli Ocean Legacy Project and other partners.
The new loan will be repaid over the next 18 years with the country providing around $17 million a year for conservation. Once the payments from Ecuador finish in 2040, the extra good news is that the assets from stable investment and repayment should be enough to continue funding conservation at the same level in perpetuity.
Deals like this have already proved successful in Belize, the Seychelles and Barbados but Ecuador’s debt for nature swap is the largest ever made. It cuts the country’s debt by more than $1 billion, from which $450 million will be invested in conservation in the Galápagos Islands.
The deal fulfils a promise made by President Guillermo Lasso in 2021 to ensure that there is always funding to manage the Galápagos Marine Reserve.