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Debt-for-nature swaps occur when a creditor reduces or forgives a country's external debt in exchange for the debtor country redirecting a portion of its debt repayment to conservation and other environmental projects. In commercial swaps, a commercial bank donates or sells at a discount a country's debt to an international nongovernmental organization (INGO). The INGO (most commonly Conservation International, World Wildlife Fund, and the Nature Conservancy) separately negotiates a contract with the debtor government. The INGO cancels the original debt, and the debtor government pays a percentage of the original debt toward conservation projects.

A bilateral swap operates similarly, except that the creditor is a country. INGOs play a role either as an intermediary in the debt transaction or by designing conservation projects. In both commercial ...

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