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The country that managed to exchange part of its foreign debt for projects to protect the oceans

After defaulting on its foreign debt, the Seychelles received an unusual offer that can generate economic and environmental dividends.

Located about 1,600 kilometers off the coast of East Africa, the Seychelles are an ecological paradise.

The archipelago of 115 lush, rocky islands sits among vast swaths of ocean, covering some 1.35 million square kilometers.

Home to some of the last pristine coral reefs in the world and teeming with endangered speciessuch as the southern fin whale and the only dugongs in the Indian Ocean: large marine mammals also known as “sea cows”.

But the island nation has had its fair share of problems.

The Seychelles have one of the smallest GDPs in the world and less than 100,000 inhabitants, whose livelihoods depend heavily on marine tourism and fishing.

After years of indebtedness, in 2008 Seychelles defaulted on its foreign debt payments of $ 406 million and it had to be rescued by the International Monetary Fund (IMF).

At the same time, plastic pollution, climate change and overfishing threaten to deal a catastrophic blow to the nation’s marine ecosystem, which supports more than two-thirds of the local economy.

After massive bleaching in 1998, in some areas the Seychelles have already lost up to 90% of their coral reefs. The archipelago is also extremely vulnerable to flooding and coastal erosion.

In an attempt to build resilience to the effects of climate change and boost its blue economy, the island nation signed a unique agreement in 2015: nearly $ 22 million of its foreign debt was written off, in exchange for the country doing more to protect its oceans.

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Seychelles banned fishing in almost half of its marine protected areas.

The “debt for nature” swap involved the US conservation group The Nature Conservancy (TNC) who bought the debt in exchange for a promise to establish 13 new marine protected areas (MPAs).

In the five years since then, Seychelles has passed from protecting 0.04% of its national waters to 30%, covering 410,000 square kilometers of ocean, an area larger than Germany.

Fishing, oil exploration, and other marine developments have been banned or severely restricted in MPAs. Anyone carrying out illegal activities in these areas faces a hefty fine or, in some cases, prison.

The agreement has been celebrated as an important milestone for the conservation of the oceans.

Conservation groups consider that it constitutes a strong precedent for other countries to reach similar pacts that benefit both the economy and the environment.

Conservation debt

Most of the external debt of the Seychelles is contracted with the United Kingdom, France, Belgium and Italy.

TNC acquired it at a discounted price and then raised another $ 5 million from philanthropic donors to lower the interest rate applied to the remaining outstanding debt.

Rob Weary, who leads TNC’s debt conversion program, notes that the agreement has enabled the Seychelles government to buy back some of your debt at a discount and restructure it, while freeing up cash flow for conservation.

It highlights that debt-for-nature swaps have been conducted in the past to preserve tropical forests in the Caribbean and South America, but the Seychelles agreement is the first of its kind to focus on marine conservation and the first to use loan capital to help finance the exchange.

The government repays TNC’s loans to an independent trust created especially for this process, the Seychelles Climate Adaptation and Conservation Trust (SeyCCAT), which will use it to fund marine conservation and climate adaptation programs for the next 20 years.

Sea turtle in Seychelles.

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The Seychelles are home to one of the last remaining pristine coral reefs in the world.

“We have already distributed more than $ 1.5 million dollars,” says Angelique Pouponneau, executive director of SeyCCAT.

The trust has invested in several women-led initiatives, including a project that pays poor women to clean seaweed from beaches and compost it for home gardens.

The debt-for-nature swap also involved one of the world’s largest ocean mapping projects, second only to the Marine Space Plan completed by Norway.

Helena Sims, a marine biologist who led the project, notes that the process took several years to complete, as a team worked to identify which areas of high biodiversity should be protected, while trying to minimize the economic damage to existing industries.

MPAs cover 85% of the Seychelles’ coral reefs and 88% of the country’s shallow waters, where the majority of nature tourism occurs.

Sims ensures that during the process consultations were held with fishermen, oil companies, conservationists and tour operators. “We had to balance social, economic and ecological objectives. If you do not reach a good agreement, it is possible that later it will not be fulfilled ”.

Financial benefits

A recent report by more than 100 scientists and economists indicates that the world economy would benefit greatly from the creation of more protected areas.

Diver in Seychelles.

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The agreement in Seychelles involved drawing an underwater map of the area to determine the areas of greatest biodiversity.

Protecting at least 30% of the world’s land and oceans could lead to an increase in $$ 250 billion in annual global economic income, according to the report.

Currently, only 15% of the world’s land and 7% of the oceans are covered by protected areas. Furthermore, only 2.5% of the oceans are within MPAs that expressly prohibit fishing and the extraction of natural resources, such as oil and gas.

Anthony Waldron, a researcher focused on conservation finance and lead author of the report, says that protected areas significantly drive economic growth.

The benefits (of conservation) outweigh the costs. Protected areas generate more income than fishing (and act) as an economic engine for nature tourism, a rapidly growing industry, ”says Waldron.

The Seychelles recognized the benefits that marine conservation could bring.

“Sustainability is particularly important for a small island nation like the Seychelles, which is highly dependent on the environment. Fishing and tourism are the two pillars of our economy, ”says Pouponneau.

Fishery products represent 96% of the total value of the archipelago’s exports and they are fundamental for the food security of this nation that – according to the World Bank – has one of the highest levels of fish consumption per capita in the world.

In a 2017 report, the World Bank warned that “unsustainable use of the marine environment is a major risk to the future of the Seychelles blue economy.”

Enric Sala, a marine ecologist and National Geographic explorer who has conducted research in the Seychelles, argues that MPAs will help regain declining fish populations, as well as increase the size and diversity of fish, which in turn it should increase fishermen’s income and general income.

“The fish in these areas are in much better shape. They produce more eggs and larvae and replenish life in the ocean, “he says.

According to a 2018 study, fully protected marine reserves can increase total fish biomass by more than 600%, increase its size by more than 25% and expand the variety of species by more than 20%, compared to nearby unprotected areas.

Sala says the benefits of tourism are also huge, noting that a healthy coral reef can generate billions of dollars in income.

Aerial image of Seychelles.

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Preserving the environment can be a profitable business for Seychelles.

According to an analysis published in 2017, the Great Barrier Reef contributed $ 6.4 billion to the Australian economy in 2016 and helped sustain more than 64,000 jobs,

Coral reefs are also effective storm barriers, saving countries more than $ 4,000 in flood damage each year, according to the Conservancy.

Without coral reefs, the annual cost of flood damage would double and the costs of storms would triple, TNC researchers said in a 2018 release.

Healthy ocean, healthy planet

Sala says there are also significant benefits for people’s physical and mental health associated with spending time in nature.

“When people visit protected areas, their mental well-being improves. Nature has this power to reduce our stress, “he highlights.

A 2019 study found that “forest baths,” the Japanese practice of spending time among trees, could significantly lower levels of cortisol – the stress hormone -, lower blood pressure, improve concentration and memory.

Seychelles landscape.

The Seychelles are a popular honeymoon destination.

Exposure to chemicals in the air emitted by plants and trees can also boost immunity.

For example, a small-scale investigation found increased activity of a certain type of white blood cell in men who had been exposed in their hotel rooms to phytoncides, a type of antimicrobial compound that contributes to the pleasant scent of the woods.

Experts say a healthy ocean should be a critical part of the global recovery from the coronavirus pandemic.

“A healthy ocean presents better opportunities for economic recovery after COVID-19, and for building resilience and withstanding the impacts of natural disasters and extreme weather events,” Commonwealth Secretary General Patricia Scotland said in May.

Sala believes that the pandemic was caused by human destruction of ecosystems and highlights the importance of countries prioritizing conservation in their recovery from the crisis.

According to the expert, the recovery presents “a good opportunity to reconsider the debt of low-income countries and help them pay part of their debt; while helping them to invest in the nature sector, which will be key to long-term prosperity. “

TNC estimates that up to 85 countries could use a debt-by-nature model to make their economies more resilient. In fact, Weary says there are already plans for similar deals in several countries in the Caribbean and Africa.

“This type of treatment builds long-term resilience. With climate change we should be prepared for many crises, “says Pouponneau.

Read the versionoriginal of this note in English.

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