AS oil drilling moratoria, spotted owl coverage, and forest fire images proliferate in the press these days, one of the most important environmental stories of the year has gone unnoticed. In his recent announcement about reducing Latin American debt, President Bush embarked on a bold path that could result in protecting millions of acres of endangered tropical rain forest and saving countless thousands of living species from extinction. The president announced his intention to seek legislation that would allow part of the $12 billion owed the US government by Latin American countries to be converted to local currency trust funds to generate income for environmental conservation in those nations. This type of innovative financing for environmental protection has already been successfully tested in the private sector. During the past three years, private environmental groups have spent over $15 million to purchase delinquent debt from banks and other creditors. They then swapped those debt notes for more than $100 million in equivalent local currencies to invest in conservation projects in the developing world - multiplying the investment sixfold.
Commercial creditors have been happy to recoup loans by selling discounted, delinquent debt. Debtor governments welcome the opportunity to pay off part of their debt. The success of the privately-developed debt-for-nature swap bodes well for similar federal efforts. Private debt-trades have reinforced protection on more than 2.5 million acres of Ecuador's critical natural areas, including the Galapagos Islands. They have contributed to a reforestation effort in Costa Rica's Guanacaste province, and have hired and trained dozens of conservation workers throughout the country's natural reserves.
Debt-trading has helped establish computerized Conservation Data Centers in Ecuador and Bolivia, where scientific information can now be gathered and better-informed land use decisions made. Thousands of acres of tropical habitat are acquired for inclusion in protected areas, providing grass-roots environmental education, and building infrastructure for tourism and other projects.
Yet these efforts are a drop in the bucket compared with what a federal initiative could generate. Converting 10 percent of the US government's Latin American debt to environmental trust funds could, at current interest rates, generate a sustained $72 million-per-year cash flow to conservation. As the actual rate of rain forest destruction is greater than predicted, the urgency of such action is clear.
The Nature Conservancy has worked with conservation organizations throughout Latin America and the Caribbean, where some of the world's most important ecological resources are disappearing. We know there is strong support for conservation in those countries. It is not for lack of will that governments are not halting the destruction. It's due to a severe shortfall in public funding. If President Bush's lead can encourage the rest of the industrialized world to follow, a significant step would be taken toward filling that shortfall.
It's questionable whether the US would ever have recovered the debt Mr. Bush is considering for conversion. The budgetary impact of such a conversion will be modest. As an example, OMB determined that forgiving $1 billion of US government debt in Africa would result in only $17 million in lost expected revenue. It is certain, however, that North Americans and others will benefit by the use of that debt for conservation of natural resources and sustainable development. Ecosystems that influence global climate will be protected, as will habitat for migratory species. Natural resources that attract tourism will be safeguarded, as will plant species.
National environmental endowments in every indebted Latin American country will provide permanent sources of funds to employ thousands of people in a new or revitalized conservation sector and fund small business start-ups.
Rep. Peter Kostmayer (D) of Pennsylvania, has introduced legislation responsive to Mr. Bush's call for action. Current front page environmental issues will mire the country in months of wrangling. But Bush's announcement on bilateral debt offers a plan both Democrats and Republicans can support.