Madagascar to Get U.S. Aid in ‘Debt-for-Nature’ Swap

The U.S. government announced Thursday that it will provide a $1-million grant to support a “debt-for-nature” swap aimed at helping to preserve tropical forests in Madagascar.

Part of a pioneering effort led by Environmental Protection Agency chief William K. Reilly, the grant to the World Wildlife Fund underwrites the largest such swap yet undertaken by the Agency for International Development and the first financed largely by the federal government instead of by international agencies.

In the transaction, Madagascar will receive $2.1 million in relief from its national debt in exchange for supporting a number of conservation efforts on the island nation off the east coast of Africa.

Using the $1 million, the World Wildlife Fund will purchase $2.1 million in the nation’s debt on the financial market at a discount. In exchange, Madagascar will use local currency to help train park rangers, conduct wildlife preservation, plant new trees and engage in other environmental activities.

The Bush Administration also is looking at other ways to combine easing the debt burden of Third World nations with incentives to protect important natural environments. Brazil, one of the world’s largest debtors, is under pressure to find ways to protect its Amazon region, the world’s largest tropical forest, but it has rejected outside efforts to limit development in the region as an infringement on its national sovereignty.

The swap promoted by Reilly “turns the debt crisis into an opportunity to protect the natural resources of the developing world,” said Sen. Bob Kasten (R-Wis.), author of a provision in the 1987 foreign aid law authorizing the transactions.

At the international economic summit in Paris last month, leaders of the seven major industrial nations endorsed debt-for-nature swaps to enhance global environmental programs.

Bounty of Plants, Animals

Madagascar, blessed with a bounty of plant and animal life almost unrivaled on Earth, faces serious environmental problems because its recent population explosion has prompted widespread land clearance for agriculture.

“Virtually everyone in Madagascar is dependent on an endangered ecosystem,” Martin Nicoll, a World Wildlife Fund official in Madagascar, told The Times earlier this year.

The Madagascar initiative is the first in Africa and the third and largest debt-for-nature swap under an AID initiative launched in May, 1988. Bolivia and the Philippines were previous beneficiaries.

“It may not seem like a lot of money,” said one Treasury Department official, “but environmentalists are enthusiastic because of the leveraging of funds and because it helps raise awareness in developing countries of environmental issues.”