Earth Today | Debt-for-nature swaps: The Jamaican experience
THE FIRST debt-for-nature swap in Jamaica created the Jamaica National Parks Trust Fund (JNPTF) in January 1991.
It provided support for the two protected areas established in the 1990s: the Blue & John Crow Mountains Protected Area and the Montego Bay Marine Park. Today, the fund stands at approximately $22 million (US$150,000) and is managed by the Jamaica Conservation and Development Trust (JCDT).
Over the more than 30 years since its establishment, it has not been significantly increased and monies have been allocated, from time to time, to the cost of managing the protected areas. Currently, the JNPTF is being re-organised to focus on providing support for the Blue & John Crow Mountains National Park, which is Jamaica’s only World Heritage Site.
The United States (US) government created the Enterprise of the Americas Initiative (EAI) as an innovative mechanism through which the proceeds of debt forgiveness and debt reduction were channeled into the promotion and implementation of sustainable environmental and child development programmes. The Environmental Foundation of Jamaica (EFJ) was established out of two bilateral debt-reduction agreements between the governments of Jamaica and the US and began operations in May 1993.
CIVIL SOCIETY CAPACITY
Jamaica was the first country in the Caribbean and Latin America to sign an EAI agreement. An essential component of the EAI agreement is that programmes be undertaken by non-governmental organisations (NGOs) and community-based organisations and not by the State, with the intention of building a stronger civil society capacity for sustainable development. The EFJ managed the funds it received under this agreement essentially as a sinking fund, and the proceeds were allocated as grants to environmental and child development projects presented for funding by local NGOs.
The Forest Conservation Fund (FCF) was established pursuant to the Tropical Forest Conservation Act (TFCA) of 1998. The TFCA was enacted to offer eligible developing countries relief from identified official debt owed to the US, while at the same time generating funds to support local tropical forest conservation activities. The FCF promotes conservation and sustainable management and use of natural resources, including forests, for the benefit of local communities.
The Forest Conservation, Debt Swap and Swap Fee Contractual Agreements were signed on September 21, 2004, by the Governments of Jamaica and the US, The Nature Conservancy and the Jamaica Protected Areas Trust (JPAT). JPAT paved the way for the creation of the FCF, where the GOJ has been depositing a total of US$16 million into the FCF over a period of 19 years (2005-2024).
The debt swaps from the EAI and the FCF have disbursed J$3.03 billion to over 1,300 projects. Negotiating the various agreements, especially in the case of the latter three debt swaps, took more than three years each and involved several ministries as well as the USAID and various US government entities, with The Nature Conservancy, as a registered USA-based NGO and charity organisation, acting as a partner to consummate the agreements.
While the major challenge with debt swaps is that they take years to negotiate, and require the commitment and collaboration of all the partners, the EFJ experience points to several lessons to be learnt, including:
• Getting GOJ and USG buy-in early and dedicated people who want to see the success of the initiatives;
• Putting aside a portion (in the case of the EFJ, 50%) as an Endowment Fund to be wisely invested, preferably by professional investment advisers to seek to earn more than the inflation rate to have a sustainable fund after the debt swap expires; and
• Focusing on funding projects that are sustainable and have a major impact on communities and nature conservation.
In the final analysis, despite the time to consummate debt swaps, every island state and developing country should pursue this approach to garner funds which can be specifically targeted to environmental protection and child development, and any other priority deemed worthy by the country involved.
The countries will need to first ascertain where it is that they have the highest amounts of debt owing to sovereign nations and then initiate discussions on the use of the funds realised from the debt-for-nature swap. Outside of Jamaica, there are now several countries where debt swaps have been successfully negotiated, and both Barbados and Ecuador recently completed significant debt swaps.
Contributed by Robert Stephens, EFJ director & chairman of the Fundraising & Marketing Committee and deputy chairman & chairman of Finance Committee with the JCDT.