Picture Credit: The Planet Website
The Bahamas has successfully unlocked $124 million for ocean and mangrove conservation through an innovative debt swap financed by Standard Chartered and backed by private sector contributions. This deal represents the first of its kind to involve private sector guarantees and insurance, setting a precedent for conservation financing globally.
Debt-for-nature swaps, like the Bahamas’ agreement, are emerging as key mechanisms to tackle the $942 billion global nature finance gap, as estimated by BloombergNEF. This particular deal allows the Bahamas to reallocate funds from debt repayments to conservation projects, such as restoring mangroves damaged by hurricanes and managing 6.8 million hectares of marine protected areas.
By repurchasing Eurobonds and a commercial bank loan totaling $296.7 million at a lower cost of $300 million, the country redirects interest savings into essential environmental initiatives.
This groundbreaking deal integrates private sector guarantees and insurance, highlighting the expanding role of private capital in climate financing. Builders Vision provided a $70 million credit guarantee, while Axa XL contributed $30 million in insurance coverage. Additionally, the Inter-American Development Bank (IDB) supported the agreement with a $200 million partial credit guarantee, enabling Standard Chartered to price its 15-year loan at 4.7%.
The Bahamas plans to use this funding to safeguard its marine ecosystems while setting a benchmark for leveraging private sector involvement in conservation financing. The deal exemplifies a scalable model for other nations seeking sustainable solutions to environmental and economic challenges.
Sri Lanka, being a country of significant natural beauty and resources, is also under threat to climate change. With its extensive coastline, biodiversity-rich ecosystems, and mangrove forests, Sri Lanka has strong environmental assets that can attract global interest.
To initiate such funding, Sri Lanka could work with international development banks, private sector entities, and conservation organizations to design sustainable financing models just as the Bahamas have. This is a key opportunity that Sri Lanka can leverage in order to protect its natural assets and reverse the damages that have already been done. A prime example is the X-Press Peral disaster in which a 40 member board estimated the damages from that single disaster to be over $6 billion, of which only $7.85 million has been paid.
Initiating such funding will provide a strong backbone to protect natural resources in the island nation. The dept swap thus is proving to be a key lesson which other nations can take away from the Bahamas.
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