Debt reduction – Countries are relieved of some of their debt in return for protecting their rainforests

To remember the meaning of the term Debt Reduction, use the following mnemonic:

Your debt is reduced (debt reduction) if you stop reducing your trees (protect rainforests).

Between twenty and forty years ago, debt accumulated by some developing countries was leading to deforestation. Their leaders turned to the exploitation of natural resources as a means of affording interest payments to international banks.

Some organisations that are owed money by developing nations are now cutting the debts in return for the poorer countries providing protection of their rainforests.

While this debt relief has resulted in a slowdown of deforestation in some instances, private sector investment and even some state-owned banks are still driving commercial exploitation of rainforests. They invest in industries such as timber and mineral extraction that result in large areas of forest being cleared.

Deals that secure agreements to protect rainforests between nations that owe money and the lenders in better-off countries are often referred to as "debt-for-nature swaps".