SAN JUAN, Puerto Rico (AP) — The Bahamas announced Friday that it will refinance $300 million of its external debt to free up more than $120 million for marine conservation projects and climate change mitigation.
It is the fifth such debt-for-nature swap in the world, with the Bahamian government signing the deal with The Nature Conservancy, the Inter-American Development Bank and other financial partners.
“We see this project not just supporting the biodiversity and climate objectives of the country, but ultimately the economy and livelihoods of many, many folks,” Shenique Albury-Smith, the Bahamas-based deputy director for The Nature Conservancy, told The Associated Press.
The deal involves buying back the existing debt via a new loan by Standard Charter with reduced interest rates, a move expected to free up some $124 million in funding. That money will be used for marine conservation projects for the next 15 years. An endowment fund also will be created to secure financing for the projects after the 15 years are up. Overall, the Bahamas holds some $5.7 billion in external debt.
The Seychelles, Belize, Gabon and Barbados previously signed similar deals, said Melissa Garvey, global director for The Nature Conservancy’s bond program.
Together, the deals protect conservation areas larger than the Gulf of Mexico, she said.
The agreement with the Bahamian government marks the first time a private investor, Builders Vision, provides a co-guarantee and a private insurer, AXA XL, provides credit insurance. It’s also the first time that the project includes climate change mitigation commitments, according to The Nature Conservancy.
Smith said officials will likely use some of the money to protect, restore and manage the mangrove ecosystem, which stores carbon dioxide, a greenhouse gas, better than tropical forests. Officials also are looking to protect other ecosystems including seagrass, which also absorbs carbon dioxide, helping counter global warming.
Protecting marine areas also would ensure the stability of commercially important fisheries in the Bahamas, with the spiny lobster one alone generating some $100 million a year, Albury-Smith said.
In addition, climate change mitigation would help protect the low-lying archipelago that is still struggling to recover from Hurricane Dorian, which hit as a powerful Category 5 storm in 2019.
The Bahamas already has a strong conservation history: more than 17% of coastal waters are protected, representing more than 6 million hectares (16 million acres) of the world’s ocean.
In 1958, the Bahamas established the world’s first protected land and sea park at Exuma Cays.