Peru's Ambassador to the United States, Allan Wagner, and Treasury Department Under Secretary for International Affairs, John B. Taylor, signed the agreement this morning during a ceremony at the U.S. Treasury Department. A debt-for-nature swap relieves a government's foreign debt burden in exchange for its commitment to spend a certain amount of their local currency for conservation work. The Peruvian debt swap will generate funds for distribution to local Peruvian conservation groups engaged in a wide variety of conservation activities. This will greatly increase the ability of these groups to conserve ten tropical rain forest areas covering more than 27.5 million acres—about the size of Virginia—and containing some of the richest, yet most threatened biodiversity on Earth, including rare pink river dolphins, jaguars, scarlet macaws, walking palms and giant water lilies.
Under the agreement, Conservation International, The Nature Conservancy and the World Wildlife Fund each committed approximately $370,000 for a total of $1.1 million. The U.S. government allocated $5.5 million to cancel a portion of Peru's debt to the United States. The federal funding is authorized by the Tropical Forest Conservation Act of 1998, which encouraged the reduction of foreign debt in exchange for a financial commitment to forest conservation.
As a result, Peru will save about $14 million in debt payments over the next 16 years, and will provide the local currency equivalent of approximately $10.6 million toward conservation over the next 12 years.
"This strong international partnership marks a key step in protecting a spectacular place that is among the biologically richest on Earth and facing imminent threats," said Peter A. Seligmann, Chairman and Chief Executive Officer of Conservation International. "The money from this debt swap will provide a critically important income stream to those on the front lines of the effort to conserve this vital resource. I am pleased that CI is able to use resources from our new Global Conservation Fund, in cooperation with the Critical Ecosystems Partnership Fund, to support this effort. I commend President Toledo, President Bush, and our partner organizations in the United States and Peru for making this initiative possible."
"This agreement provided a perfect opportunity for our organization and our conservation group partners to put our monies where our convictions lie," said Steve McCormick, President and CEO of The Nature Conservancy. "We have long advocated the use of the Tropical Forest Conservation Act as a tool to help protect vital rainforests around the globe, so being able to pitch in to help make this agreement happen is particularly gratifying to me."
"With this debt-for-nature swap, one of the world's great biological libraries can be saved for future generations," added Kathryn Fuller, President of WWF. "We applaud the governments of Peru and the United States for helping protect these places of exceptional wonder and beauty."
Located within the Peruvian Amazon, the ten areas that will benefit from the $10.6 million are home to some of the world's richest biodiversity. Within the country of Peru are 20,000 species of vascular plants, and nearly 1,800 bird species. Yet this rich biodiversity faces a number of threats including the loss of habitat due to unsustainable logging (particularly of hardwoods such as mahogany and cedar), conversion of forest land to agriculture, mining, oil and gas exploration and unsustainable harvesting of nontimber forest products such as Brazil nuts and heart of palm.
Funding for conservation and sustainable development projects will go to Peruvian conservation organizations that have demonstrated a successful track record of conservation success and for managing donated funds wisely. The funding may be used for:
- establishment, restoration, protection and maintenance of parks, protected areas and reserves;
- development and implementation of scientifically sound systems of natural resource management, including land and ecosystem management practices;
- training programs to increase the scientific, technical and managerial capacities of individuals and organizations involved in conservation efforts;
- restoration, protection, or sustainable use of diverse animal and plant species;
- research and identification of medicinal uses of tropical forest plant life to treat human diseases, illnesses, and health-related concerns; or
- development and support of the livelihoods of individuals living in or near a tropical forest in a manner consistent with protecting such tropical forest.
Stuart Irvin and Steve Hess of Covington & Burling acted as counsel to The Nature Conservancy, World Wildlife Fund and Conservation International in this transaction.