Marshall Islands' leaders returned from the Rio+20 Sustainable Development conference enthusiastic about implementing key actions for promoting our Blue Economy, placing debt swaps for climate change adaptation at the top of the agenda of this week’s Micronesian Presidents’ Summit held at the International Conference Center in Majuro.
From the RMI Office of the President, Majuro:
Debts for climate swaps are being implemented by at least 8 Caribbean country governments, with private sector and civil society participation, guided by The Nature Conservancy (TNC). For example, legislation is being drafted, with negotiations and fund raising for Belize’s $130 million debt swap for adaptation to climate change in marine ecosystems.
This innovative financing mechanism which could be applied also in the Pacific region was on the radar-screen of the RMI’s delegation to Rio+20 as a means for Republic of the Marshall Islands (RMI) to retire its $56M ADB debt (half of which is in non-performing loans). Annually repaying debt principal and interest siphons-off a proportion of a nation’s GDP that could otherwise be put to better use achieving “sustainable economic and social development, poverty reduction, adaptation to climate change, and human development goals” - said Rob Weary, Conservation Finance Director with TNC’s Caribbean Program, during his presentation attended by the RMI delegation at the GLISPA (Global Island Partnership) side event at Rio+20.
Weary met after the conference with Minister deBrum and Steve Why to explore a possible climate financing debt-for-adaptation swap in the RMI. Weary has offered his services to RMI to lead a one day workshop this summer to explore this further, together with draft legislation and bylaws for trust operation.
Debt swaps have become an effective development tool. Climate change financing in the most vulnerable countries is a good way of approaching a solution for the national debt problem. Debt-for-adaptation swaps explicitly build resilience of a nation to adapt to climate change. Since resilience is defined as the capacity to recover following a shock, it is necessary, wise and implicit for government to plan ahead how to minimize or avoid economic, social, and environmental shocks.
From any perspective including that of climate change adaptation, planning how to re-finance or get rid of debt burden if successful will free up more of the national budget for beneficial development and build the socio-economic resilience which we need to effectively survive future shocks. Linked to improving the environment - for example through the goals of the Micronesia Challenge to set aside 30% of reefs and 20% of terrestrial resources in managed conservation areas - it becomes a win-win-win for the three developmental pillars. Key also in the package is that countries can use debt re-financing to establish national climate adaptation trusts to sustainably finance their local adaptation.
Debt-swap is a thus a primary opportunity and example of an adaptation, and of adaptation financing, and underpins effective modern sustainable development. In a Blue Economy nurturing and investing in the sustainable production of the ocean ecosystem is fundamental and an inherited pre-requisite; debt swaps will help this happen.
With RMI’s Minister deBrum key-note presentation on leadership towards achieving a blue economy at scale - receiving a standing ovation - as the introductory speech of the GLISPA side event (entitled “Securing the Future We Want - enabling steps towards achieving a green/blue economy at a regional scale”). And with “Resourcing a blue economy - innovative financing mechanisms” the title of Weary’s presentation on debt swaps.
It was natural and pre-ordained for deBrum, Why and Weary to meet up after the conference to explore debt-swap for adaptation as an opportunity for the RMI and the Pacific, dovetailing also with discussion of national trust fund management, RMI’s financing through the Micronesia Conservation Trust, and exploration of national climate adaptation fund capitalization.
Benefits that RMI might realize from debt for adaptation swaps would be magnified many-fold at the regional scale by an all of Micronesia approach to debt reduction and adaptation financing. We are one of the world’s Large Ocean Nations, and before us lay opportunities to work together through Micronesia Presidents’ Summit discussion of debt-for-adaptation swaps to achieve significant Pacific regional scale financial, conservation and adaptation impacts, responding practically as Micronesia Challenge leaders, and sustaining our Blue Economy.
- Yokwe Online, July 5, 2012