Colombia’s new president calls for debt swap to protect the Amazon
“We can transform the entire population of the Colombian Amazon into a forest-conscious population, but we need funds from around the world to do it,” says Gustavo Petro.
Recently elected Colombian President Gustavo Petro is proposing a debt-for-nature swap to protect the Amazon rainforest, which is nearing a tipping point after decades of deforestation.
Petro, a former rebel and the country’s first left-wing president, was sworn in on Sunday August 7 in a historic turning point for the South American country.
In his first speech as president, he spoke of the need to mobilize resources to protect Colombia’s rainforests. In 2022, the country experienced the The highest budget deficit in recent years and its external debt counted half of the country’s GDP.
“I propose to humanity to exchange external debt for internal expenditure to save and recover our jungles, our forests and our wetlands,” Petro said during his inaugural speech.
While the Covid-19 pandemic has led to a increase in debt in Latin America, several countries have turned to debt swaps to achieve their climate goals.
Under this program, developing countries obtain the cancellation or reduction of their debts in exchange for commitments to finance green projects.
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Ecuador, for example, has greatly expanded the Galapagos Marine Reserve and finance by this mechanism. The former Colombian government called for a similar measure in 2021, but did not announce new agreements.
After the pandemic and war in Ukraine exacerbated debt in developing countries, debt-for-nature swaps – if done appropriately – can become a realistic opportunity for relief, says Sejal Patel , environmental economist at the International Institute for Environment and Development.
“If structured well, debt swaps can be a way to redirect payments towards national climate and nature goals,” Patel said.
At the same time, climate funds have not been disbursed as needed. Analysis by the Organization for Economic Co-operation and Development (OECD) showed that developed countries fell $17 billion short of the goal of mobilizing $100 billion in climate finance per year by 2020.
There are precedents in the early 2000s where US debt swaps were considered climate finance, Patel said. For this system to work, however, there must be accountability on both sides.
Projects selected by developing countries must align with their national climate plans, and they must also provide transparency on how those plans are developed, said the IIED economist. Creditors should not impose onerous conditions and should allow flexibility for developing countries, she added.
In countries like Colombia, climate action has been limited by the dire economic situation, said Jhoanna Cifuentes, a local activist and co-founder of local climate NGO Climalab.
The country has committed to reducing its emissions by 50% by 2030, most of which is conditional on external financing. To achieve this, the country has pledged to reduce deforestation from the current 174,000 hectares per year to 50,000 by 2030.
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Finding new funds to achieve this will be part of the challenge, Cifuentes said. “There is a big limitation of climate finance in Colombia, like in the rest of the region. Currently, Colombia depends mainly on the fossil fuel industry,” she said. Crude oil and coal are the country’s main exports.
The United States, one of the region’s major creditors, shared positive views on the debt swap idea during a press conference In Monday. USAID Administrator Samantha Power said the new government’s commitments to environmental action represented a “huge opportunity”.
In addition to debt cancellations, Petro called for a “global fund to save the Amazon” and said “speech won’t save” rainforests.
The South American country, home to around 7% of the Amazon basin, the largest rainforest on the planet, was one of the signatories of the COP26 commitment end deforestation by 2030.
However, Colombia’s previous approach to controlling deforestation by military force bore little fruit. The country lost an area of forest larger than the City of London each year between 2017 and 2020.
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Instead, militarization has led to a spike in violence in rural areas, making Colombia the deadliest country for environmental activists, Cifuentes said.
The Amazon Basin, in particular, has been a major hotspot for deforestation in the country. More than half of Colombia’s forest loss in 2020 occurred in the Amazon region, according to official data.
Petro, for his part, offered a more community-centric approach during his inauguration. “We can transform the entire population of the Colombian Amazon into a forest-conscious population, but we need the funds of the world to do so,” he said in his speech.
The Colombian National Indigenous Organization, a coalition of 50 indigenous associations in most of the country’s departments, welcomed the new government’s approach and said in a statement they “firmly believe that the new social pact must combat the legacy of exclusion” towards indigenous communities.