Where Are All of Asia’s Debt-for-Nature Swaps?

Since their inception in 1987, debt-for-nature swaps (D4NS) have emerged as a popular policy tool to simultaneously address sovereign debt burdens and environmental challenges. Drawing on a newly constructed database of global D4NS transactions, this paper shows that Asian economies have played only a marginal role, accounting for just 13% of global transactions. I argue that a combination of limited debt distress, relatively inexpensive debt burdens, and low levels of privately held debt help explain this historical underrepresentation. Using a logit econometric model, the analysis identifies missed opportunities for D4NS transactions in the 1990s in countries such as Papua New Guinea, Thailand, and Turkmenistan. Applying this framework to current economic conditions highlights that, within Asia, Indonesia, the Lao People’s Democratic Republic, Maldives, Mongolia, and Thailand are particularly well positioned for future D4NS activity. The findings emphasize the need for a more proactive, anticipatory approach by fiscal policymakers, debt managers, and conservation organizations to capitalize on emerging opportunities in a region facing mounting debt and environmental pressures.