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MEMO SERIES: Environmental Finance in the Debt
and Ecological Crises

A series of briefings looking at financial mechanisms that (in theory) support climate action and biodiversity conservation in the midst of a new debt crisis.

Debt for Environment Swaps

by Patrick Bigger

December 2022

Debt swaps aim to alleviate these pressures by offering some level of debt relief in return for commitments to devote freed up financial resources toward achieving environmental objectives. 

  • Debt for Environment Swaps are a tool meant to reduce Global South countries’ debt burden to enable increased investment in environmental priorities like biodiversity conservation or climate change adaptation.

  • Debt for Environment Swaps have a long history dating back to the 3rd World Debt Crisis and can be a useful stopgap measure to contend with debt distress and environmental degradation in limited ways.

  • These swaps have a number of drawbacks and are not a substitute for a new, comprehensive global debt architecture or increased direct funding for environmental priorities flowing form North to South. 

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