Ecuador achieves historic debt swap for conservation of the Galapagos Islands, what is it about?

Ecuador has taken an unprecedented step in Financial Diplomacy for the Conservation of its biodiversity, it has done so by executing the largest transaction in the history of mankind: the debt-for-conservation swap, specifically for the Galapagos Islands.

Ecuador exchanged approximately US$1.63 billion of existing debt for a new loan of US$656 million.

This loan is backed by insurance from the Development Finance Corporation and a guarantee from the Inter-American Development Bank, with the structuring and technical advice of Credit Suisse for the financial implementation of the transaction.

Thanks to this transaction, close to US$ 450 million, which were previously destined to pay debt service, will be directed to the Galapagos Life Fund, a fund that will finance conservation projects in the Galapagos Marine Reserve and the Hermandad Marine Reserve, which together add up to 198,000 square kilometers of protected area. In addition, it generates savings of US$ 1,121 million dollars in debt.

How was the historic exchange achieved?

• The participation of the academy, through research and science that allowed us to have solid data and arguments to carry out a decision of this type.
• collaborative work with civil society, productive sectors, local governments, NGOs and the financial sector. Even between institutions from developing countries and developed countries.
• The Consensus: Ecuador has the largest fishing fleet in the Eastern Tropical Pacific, so this milestone had the participation of the fishing sector. Ecuador demonstrated maturity in terms of sustainability and sent a strong message about the importance of sustainability in fishing worldwide.
• Financial resources in perpetuity for conservation As an innovative mechanism, it was essential for this transaction of the international agreement to obtain resources for the protection of biodiversity.
• Leadership, in which the determination and vision of the President of Ecuador, Guillermo Lasso, to carry out this milestone were fundamental.

A trade in perpetuity for biodiversity

The debt swap will last for 18.5 years. However, the operation is structured to have the resources that guarantee the perpetuity protection of the marine ecosystems of Galapagos, in addition to generating a positive impact on the financial sustainability of the country.

During the announcement, the Ecuadorian Foreign Minister, Gustavo Manrique, indicated that, With this historic milestone, Ecuador is positioned before the world as a benchmark in the use of biodiversity as the new currency that the planet needs, thus leading the international race for the transition towards the blue economy.

historical landmark

This milestone closes an important circle in the president’s government William Lasso regarding the country’s commitments at the international level. During COP26, in Glasgow, in November 2021, the creation of the Brotherhood Reserve was announced. Then, in January 2022, the creation of said Reserve was decreed. Now, this milestone closes this cycle with the exchange to guarantee the protection of these ecosystems.

In Ecuador, since the beginning of the government of President Guillermo Lasso, the country’s protected areas have increased by 42%, which represents 7.7 million more hectares in reference to the year 2021, including the Hermandad Marine Reserve.

Thanks to the debt-for-conservation swap, nearly 2,500 marine species will be protected, 38 of them migratory. In addition to the conservation of protected areas in the Galapagos Islands, this initiative is expected to generate a positive impact on sustainable development, reports the World Economic Forum.

Ecuador has thus become an example for other countries by leading this initiative and establishing a model that encourages collaboration between different sectors and actors. The success of this transaction strengthens the global commitment to the protection of biodiversity and sustainable development.

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