Environment : A River Teems With Hope : Philippines’ magical park is preserved through a world effort that uses the nation’s foreign debt to help conservation.

The scenery is spectacular a mile inside the Earth.

As a lantern-lit canoe glides along, shimmering stalactites hang down in surreal shapes. In the flickering shadows, the imagination sees an ornate calliope here, a grinning gargoyle there. A giant limestone elephant stands with his trunk in the water, near a huge rock turtle crawling up the bank.

From the steamy darkness appears the “cathedral,” a cavernous vaulted chamber complete with muddy altars and rock pipe-organs. A long, dark tunnel called the highway is wide enough for trucks. Nearby, endless years of dripping water have created a fantastic, fluted wall of glittering quartz.

“It’s like a waterfall of diamonds,” says Federico Relova, a park guide, as he paddles the small outrigger. “It’s God’s handiwork,” Edmenilda Santos, a park official, agrees in hushed tones.

This is St. Paul National Park, home to what is believed to be the world’s longest navigable underground river. The subterranean river flows more than five miles deep inside an awe-inspiring cave on the rugged western shores of Palawan, a jungle-covered Philippine island known locally as the “last frontier.”

Unlike most of the 67 other national parks here in one of Asia’s poorest countries, St. Paul also has trained rangers, clean campsites, well-marked trails, research programs and detailed management plans. And unlike in most other Philippine parks, there are no illegal loggers, fishermen using dynamite or slash-and-burn farmers steadily destroying the wetlands, wildlife and other rare resources.

The reason for the environmental success story here is a so-called “debt-for-nature” swap, a creative financing scheme pioneered by the World Wildlife Fund, one of the world’s largest nonprofit conservation organizations, to help impoverished countries reduce their foreign debt while conserving their environment.

Since the first swap was launched with $100,000 in Bolivia in 1987, swaps have taken place in at least a dozen developing nations, including Costa Rica, the Dominican Republic, Ecuador, Guatemala, Jamaica, Madagascar, Mexico, Nigeria, the Philippines, Poland and Zambia.

It works like this: Poor countries owe hundreds of billions of dollars to international banks and lending institutions. Since many governments have problems paying off the loans, part of the debt often can be bought at a discount on a secondary market.

That’s where the World Wildlife Fund and other wealthy conservation groups step in. They buy the debt at a heavy discount, then redeem it at face value to the debtor government for local currency. The money is then used for parks, projects and other conservation needs in that country.

“It’s a way to leverage funds for conservation purposes,” said Richard L. Edwards, the World Wildlife Fund representative in Manila. “And it’s a way to influence governments toward conservation practices.”

Major banks in America, Japan, Britain and other industrialized countries have joined in by donating millions of dollars in bad loans to conservation groups and projects. And rather than straight swaps, conservation trust funds and endowments are increasingly being created to provide long-term, self-sustaining sources of money for conservation purposes.

While environmentalists hail such programs, bankers are less impressed. The U.S. General Accounting Office reported in December, 1991, for example, that a study of 26 swaps in three years found little or no impact on debt load. Only about $126 million had been swapped through 1990, the report said, while more than $770 billion was owed by countries with debt-servicing problems.

Still, the program has undeniable benefits. The Philippines, for example, is considered one of the world’s top 10 countries for biological diversity. It teems with about 960 vertebrate species, nearly half of them unique to its forests, and 541 species of birds. The tropical archipelago is blessed with miles of coral reefs, rain forests and wetlands.

But the Philippines is also under severe environmental attack. Widespread overlogging has denuded all but a fraction of the original forest. And the remaining forest is shrinking fast as one of Asia’s fastest-growing populations pushes increasingly into once-remote mountain regions. Along the coasts, an estimated 70% of reefs have been damaged, often by fishermen who use explosives to catch fish.

In 1988, the country was the first in Asia to try a debt-for-nature swap. The World Wildlife Fund, working with the Philippine Department of Environment and Natural Resources, and Haribon, a local environmental group, used a $1-million grant from the U.S. Agency for International Development to buy about $2 million in Philippine debt.

That, in turn, was redeemed with the Central Bank of the Philippines for the peso equivalent of $2 million. The money was used to bankroll 23 field projects, mostly at five parks, including St. Paul National Park. But after three years, the money was running out.

So in 1991, USAID issued another $6.1-million grant. Most went to purchase $9.8 million of Philippine debt from international banks. This time the debt was exchanged for interest-bearing bonds from the Central Bank. The bonds were used to create an endowment, administered by a national foundation, and the interest was channeled to scores of non-governmental environmental organizations.

USAID recently provided another $13-million grant. Once it is spent to buy debt, Edwards said, the Philippine endowment will become “a self-sustainable funding mechanism, in country, managed by Filipinos and used for conservation, we hope, for a long, long time.”

Edwards, who first came to the Philippines as a Peace Corps volunteer, calls the expanding program here “a model in the conservation finance field. It’s really on the leading edge of financing for conservation.”

International finance seems a long way off in the St. Paul park, however. Most of the 14,000-acre park, nestled along the crystal waters of St. Paul Bay in western Palawan, is blanketed by triple-canopy virgin rain forests on mist-shrouded mountains of porous limestone, or karst. Flying fish skim the lagoons as surf breaks on reefs offshore.

At dawn, the jungle is alive. Monkeys chatter, pigeons coo and cockatoos screech. Giant trees, covered in creepers, soar into the sky. “The loggers would love to come in here,” Relova, the park ranger, muttered as he hiked along a ridge.

Since the debt swap began, the park has built a cluster of simple huts for visitors and has upgraded trails with simple bridges and signs to view wildlife and find swimming beaches. Park rangers have a breeding program for endangered species and assist in research on such animals as long-tailed macaques and monitor lizards.

“We want to do a complete inventory of the wildlife,” said Arthur Palatino, the project leader. “It’s never been done here.”

The park also helps provide drugs and medical support for about 400 people, members of an indigenous Batak tribe, who live and traditionally have hunted game and gathered rattan in and around the park for sale to outsiders. Malnutrition is acute in the tribes, and malaria is endemic.

In Odiongan, a beachside village of 15 Batak families, Damaso Panaday stacks bundles of rattan on the beach. He wears torn shorts, a T-shirt and a long machete in a wooden sheath. He earns about 100 pesos, or $4, a week. Both of his wives and his six children have malaria, he says. “But the park gives us medicine that we couldn’t get before,” he adds with a smile.

Another villager hands Santos, the park official, a crudely written request for drugs, from “peniselin” to “ante bayatik.” She scans the list and nods. “We can get this,” she says, and issues an order over her radio.

It took two days to reach the park a decade or so ago, and there were no radios, signs or rules. Now, with the road graded and graveled, it takes a two-hour jeep trip from Puerto Princesa, the provincial capital, and then a short outrigger ride or hourlong hike, to reach the park.

As a result, about 10,250 tourists, a third from overseas, visited and paddled up the underground river at St. Paul last year. The total is expected to increase this year. Since fumes from the boat lanterns apparently affect bats in the cave, some believe the park should begin to limit its visitors.

But that’s not likely. On Dec. 16, the Philippine secretary of environment signed a memorandum in Manila agreeing to formally transfer management of the St. Paul park to the newly elected mayor of Puerto Princesa, a former restaurant owner best known for running a local lottery.

The decision caught park officials and the World Wildlife Fund by surprise. It was part of a national move to decentralize and hand national functions to local governments. But city officials clearly have different priorities.

“We expect tourists will triple or quadruple,” said city administrator Lucilo Bayron. “So we should add the maximum number of (canoes) possible so we can take as many people as possible into the cave.”

Whether the mayor, who now has formed an advisory committee, will protect the underground river and surrounding park as carefully as it is protected now remains to be seen. In the meantime, the trip inside the cave is an excursion into the deep unknown.

“There’s really no place like it,” said Santos. “It’s a wonder of the world.”