US Climate Pullback Threatens Planned Debt-for-Nature Deals

Swaps that trim a country's debt in return for conservation commitments now at risk

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LONDON - Billions of dollars of debt deals aimed at protecting vital ecosystems from Africa to Latin America are at risk of unravelling or may need reworking amid concerns that crucial US backing is about to dry up under President Donald Trump.

The "debt-for-nature" swaps, which reduce a country's debt in return for conservation commitments, have gained traction in recent years with deals involving the Galapagos Islands, coral reefs and the Amazon rainforest among the most prominent.

The US International Development Finance Corporation (DFC) has been a key player, providing political risk insurance for more than half of the deals done over the last five years, accounting for nearly 90 per cent of US$6 billion (S$7.74 billion) of swapped debt.

A source with direct knowledge of the plans said the DFC had about five swaps in the pipeline which are now in question, with chief executive-in-waiting Ben Black and US government efficiency chief Elon Musk both criticising its climate work.

The source did not specify how much debt was covered by the swaps but pointed out that the last few DFC-backed deals involved more than US$1 billion each.

Spokespeople for the White House and the DFC did not respond to requests for comment on future DFC involvement in such deals.