The rapid rate of urbanization and infrastructural development has increased the threat of eliminating natural resources. As a result, there is an increasing interest in developing new conservation approaches towards preserving the biodiversity of the Earth's resources. Market-based approaches to forest conservation are innovative ways of stretching resources, and extending conservation practices and procedures in farms, forests and ranches. Not only do market-based approaches preserve productivity, but they also promote and maintain the livelihoods of landowners; consequently generating environmental benefits ( Fletcher, Dressler, B ü scher, and Anderson, 2016). Developed countries have begun to acknowledge the need to working together with other nations that still contain rain forest lands. Friess et al (2016) note a large segment of the earth's remaining rain forest to be concentrated among nations with high indebtedness. Debt swapping, carbon credit, and the Kyoto protocol provide a promising opportunity for developed nations to support conservation measures in developing countries.
Statement of Problem
There is an increasing interest among special-interest environmental groups, as well as private and government banking sectors towards Debt for Nature swapping in the previous decade. The concept demonstrates a potentially significant innovation opportunity for both private and public sectors. The World Bank as collaborated with the national governments and commercial banks to positively impact the swapping initiative around the world. Carbon (IV) oxide emission credits were also established as a possible means of dealing with challenges of forest conservation. Carbon emission credits were to enhance the redistribution of power both at local and global scales. Despite all the efforts, issues surrounding the sustainability as well as the efficiency of conservation initiatives continue to ail developing nations. Scheba and Rakotonarivo (2016) suggest a continuous application of Dept for Nature swapping, along with the provision of incentives to environmentally friendly policies and carbon (IV) oxide emission credit for a constructive redistribution of both power and wealth. Fletcher et al (2016) support the strategy as the most promising approach for alleviating economic instability without compromising the rain forests. There is no doubt about developing countries being the earth's rarest forest resource destinations. However, countries harboring tropical forest resources like Brazil and Bolivia are still struggling with national debts and economic instability. Effective implementation of economic strategies will meet the need for future economic stability in developing countries while executing and expanding constructive forest conservation activities.
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Debt for Nature Swapping
Ar é valo and Ladle (2016) describe the Dept for Nature swapping as derived from the dept swapping practice that is common within the banking industry. Over time, environmental conservationists and financiers developed a means of promoting and protecting the interest to conserve the valuable tropical rain forest. Scheba and Rakotonarivo (2016) identify the three basic types of swaps as; debt-debt swaps, debt-equity swaps, and debt-rescue swaps. Debt-debt swapping involves two parties of creditors who end up exchanging foreign loans. Debt-equity swapping entails the conversion of debts owed to external investors to equity. In debt-equity swap the foreign investor will continue to claim a country ’ s resources. Debt-rescue swapping is the repurchasing of the debt owed by a nation to the secondary market.
However, Debt for Nature swaps is unique forms of Debt-Equity swapping that entail the buying of the debts owed by a developing nation at a reduced price in the secondary debt market. The transaction ultimately results in the cancellation of the debt following the implementation of an environmental conservation initiative by the country holding the debt. According to Friess et al (2016), there are four proposed kinds of Debt for Nature Swapping. First is the transformation of a nation's debts to local debts that are distributed to the local environmental conservation projects. Second, donating a nation's debt to local environmental institutions charged with the responsibility of investing in conservation projects. Third, involves an environmental organization buying a nation's debt to facilitate environmentally sound initiatives. Fourth, granting of official debt relief following the support of environmental Management.
Challenges of Debt for Nature Swapping
Ar é valo and Ladle (2016) record the first-ever Debt-Nature Swapping as having taken place between Bolivia and America in 1987. During the incident, a non-governmental organization in America bought external debts owed by Bolivia amounting to $650000. During that period, Bolivia had a foreign debt that summed to $ 4Billion. Ar é valo and Ladle further describe the action as a mere positive gesture rather than an aggressive action to eradicate a national debt challenge. In that case, the Bolivian government developed a partnership between private and public sectors to generate 3.7million acres of land that were used for the establishment of rainforests. Similarly, the government was provided with an additional $250000 to protect and manage the forest reserves. As a result, the bank cancels the debt upon the agreement that the government will protect the rain forest reserve from being destroyed. Other successful cases of debt swapping included those that involved Ecuador, Costa Rica as well as Jamaica. Lim et al (2017) however noted that the increasing debt-related pressure limited developing economies' ability to come up with an environmentally sound regulation framework to control and manage fair enforcement of the debt swapping. The process not only compromised the conservation of natural forests but also enhanced the exploitation of poor economies.
Debt-For-Nature Swapping by itself could not be an entirely comprehensive solution since a limited number of commercial bank creditors could agree to it. Most of these creditors denied civic gestures especially when they perceived the circumstance to be too distances with indirect benefits. Similarly, the term required the creditor to provide huge discounts; consequently discouraging the creditors. Ar é valo and Ladle (2016) also described the debtor countries as less likely to use the money provided for conservation initiatives; especially when they are provided with amounts that are higher than what they expected to get. Moreover, the debtor country also required a yearly budgetary allocation to facilitate the management and the protection of the forest reserves. Such budgetary allocations could be difficult to set aside when a country's economy is ailing. Therefore, although debt swapping was a positive step towards the right direction, it failed to provide the ultimate answer as the results were too minimal in scale.
Carbon Credits
Lim et al (2017) describe Carbon credit as a more economic strategy for forest conservation. The two major carbon credit market-based approaches include; strategies developed to make consumers pay for the entire cost of resource utilization, also referred to as the "internalization of the externalities, and directing the market system into prolonged sustainability". The second approach entails the definition of the environmental resources as capital. Thereby the reluctance to regard such reserves as capital risks them into being utilized as incomes. Scheba and Rakotonarivo (2016) illustrate a successful case of carbon credit application in Tanzania.
Kyoto Protocol
Almer and Winkler (2017) describe the Kyoto Protocol as the most meaningful policy toward reducing the currently increasing rates of deforestation among the few existing natural rain forest. Despite rain forest being covering 6 percent of the surface of the earth, it is inhabited by half of the world's species. Countries that have ratified Kyoto agree to the implementation of land-use change and policies, as well as forestry conservation and management in meeting the Kyoto targets. The protocol is based on the idea that a change in land use would ultimately have significant impacts on the climate. The protocol emphasizes the management of cropland, grazing land as well as forests in a bid to reduce the observed global warming. Ratification of the protocol limits a member states to a given allowable level of emission per capita, beyond which they would be required to pay for extra amount emitted. The collected money would be used for reforestation, forest and land use management practices geared towards reduce global warming and its negative impacts.
Birhanu (2016) developed a market-based mechanism to mend market failure. The success of the market based approach would be attained through selling forest services to generate revenues that would be used to improve the benefits of private entities engaging in individual forest managements and conservation. Similarly, the financial resources generated by the mechanism would fund conservation initiative by either individuals, groups or the public. Birhanu in is diagrammatic representation of a market based mechanism demonstrates two hypothetical market-based mechanisms. One of the mechanisms sells service related to sedimentation reduction to the water users down the stream. The other avails carbon sequestration services to be bought by the purchasers in need of the credit to attain the Kyoto emission limit as demonstrated in the figure below.
Market-based Mechanisms for Forest Conservation and Development
(Birhanu, 2016)
Reflection
It is apparent that the availability of conservation opportunities continues to outstrip the readiness to purchase conservation. An increase in the supply of conservation projects in need of funding and the low efforts towards pushing for the payment of these projects. An increase in emphasis in measuring, strengthening and enhancing the readiness to pay for the project aimed at conservation of forest resources. Kyoto Protocol standing out as the most effective economic market-based approach to forest conservation. However, the world's slow uptake of environmentally sound policies like the Kyoto Protocol would clear up the remaining of the natural forest reserves in the near future. The Plan is hopeful when the numerous obstacles facing it are eradicated. Among the greatest obstacle is the refusal of the United States to ratify it as it would require the state to significantly reduce its overall emission. Although it is unlikely that a promising market-based forest conservation approach such as the Kyoto protocol would pass in developed nations, I have learnt that there is a need to arouse public awareness and participation in the initiative that would that would cause a the ultimate realization of the dream for widespread forest conservation across the world .
References
Almer, C., & Winkler, R. (2017). Analyzing the effectiveness of international environmental policies: The case of the Kyoto Protocol. Journal of Environmental Economics and Management , 82 , 125-151.
Ar é valo, J. E., & Ladle, R. J. (2016). Challenges to Forest Conservation. The Paradigm of Forests and the Survival of the Fittest , 172-195.
Birhanu, K. (2016). Impact of Climate Variability on Food Security at Rural Household Level: The Case of Misrak Badawacho Woreda, SNNPR, Ethiopia (Doctoral dissertation, Addis Ababa University).
Fletcher, R., Dressler, W., B ü scher, B., & Anderson, Z. R. (2016). Questioning REDD+ and the future of market ‐ based conservation. Conservation Biology , 30 (3), 673-675.
Friess, D. A., Thompson, B. S., Brown, B., Amir, A. A., Cameron, C., Koldewey, H. J., ... & Sidik, F. (2016). Policy challenges and approaches for the conservation of mangrove forests in Southeast Asia. Conservation Biology , 30 (5), 933-949.
Lim, F. K., Carrasco, L. R., McHardy, J., & Edwards, D. P. (2017). Perverse market outcomes from biodiversity conservation interventions. Conservation Letters , 10 (5), 506-516.
Scheba, A., & Rakotonarivo, O. S. (2016). Territorialising REDD+: Conflicts over market-based forest conservation in Lindi, Tanzania. Land Use Policy , 57 , 625-637.
