Congress in 1989 directed the Secretary of the Treasury to ask the U.S. Executive Director of the World Bank to develop a pilot debt-for-nature program and other ways of reducing debt owed by foreign countries while generating funds for the environment. In 1998, the Tropical Forest Conservation Act (TFCA; P.L. In the 115 th Congress, S. 1023 would authorize appropriations for the TFCA of $20.0 million annually from FY2018 to FY2021. In a three-party swap, a conservation group purchases a hard currency debt owed to commercial banks on the secondary market or in some cases a public (official) debt owed to a creditor government at a discounted rate compared to the face value of the debt, and then renegotiates the debt obligation with the debtor country. In these cases, the fund is administered by the conservation organization, representatives from local environmental groups, and the debtor government. Bilateral Debt-for-Nature Initiatives

The model for bilateral debt-for-nature agreements conducted by the United States was first defined in 1990 by the Enterprise for the Americas Initiative (EAI; Title 15, Section 1512 of the Food, Agriculture Conservation and Trade Act of 1990, "1990 farm bill," P.L. 105-214 ; 22 U.S.C. Funds can be used to support environmental, natural resource, health protection, and child development programs within the debtor country. Debt swaps, buybacks, and restructuring are three mechanisms authorized to conduct debt-for-nature transactions under the EAI. In a debt-restructuring agreement, the original debt agreement is cancelled (e.g., a percentage of the face value of the debt could be reduced) and a new debt agreement is created with a provision for an annual amount of money (in local currency) to be deposited into an environmental fund. 2431), which was established to generate funds to conserve tropical forests by reducing external debt in countries with such forests. TFCA is an extension of the Enterprise for the Americas Act, in that it allows debt swaps, debt restructuring, and debt buybacks to generate conservation funds. To date, 14 countries have participated in this program, establishing 20 agreements (several countries have two agreements) that will reduce a total of at least $90.0 million from the face value of their debts to the United States and generate $339.4 million in local currency for tropical forest conservation projects (see Table 4 ). Conservation funds (in local currency) from these transactions are deposited in a tropical forest fund for each country. Interest earned from this principal balance and the principal itself is usually given in the form of grants to fund tropical forest conservation projects. Eligible conservation projects include (1) the establishment, maintenance, and restoration of parks, protected reserves, and natural areas, and the plant and animal life within them; (2) training programs to increase the capacity of personnel to manage parks; (3) development and support for communities residing near or within tropical forests; (4) development of sustainable ecosystem and land management systems; and (5) research to identify the medicinal uses of tropical forest plants and their products. This law also authorizes the use of the principal of restructured loans for debt-for-nature transactions. §262p-6) aims to reduce debt in developing countries. Decline of Debt-for-Nature Transactions

The number of debt-for-nature transactions has declined in recent years, perhaps due to accounting changes that require greater appropriations to fund debt-for-nature transactions with official (public) debt and a higher price of commercial debt on the secondary market (see Figure 3 ). TFCA has not received appropriations since FY2014. Future Directions

Bilateral debt-for-nature initiatives implemented by the U.S. government were supported through appropriations under programs such as the EAI and TFCA. Others have supported expanding TFCA to include coral reefs. Reauthorization of Appropriations under the Tropical Forest Conservation Act ( P.L.
In the late 1980s, extensive foreign debt and degraded natural resources in developing nations led to the creation of debt-for-nature initiatives that reduced debt obligations, allowed for debt repayments in local currency as opposed to hard currency, and generated funds for the environment. These initiatives, called debt-for-nature swaps typically involved restructuring, reducing, or buying a portion of a developing country's outstanding debt, with a percentage of proceeds (in local currency) being used to support conservation programs within the debtor country. Most early transactions involved debt owed to commercial banks and were administered by nongovernmental conservation organizations and referred to as three-party transactions. Other debt-for-nature initiatives involved official (public) debt and were administered by creditor governments directly with debtor governments (termed bilateral transactions).
In the early 1990s, the United States initiated a program called the Enterprise for the Americas Initiative (EAI), which involved debt-for-nature transactions. The United States restructured, and in one case sold, debt equivalent to a face value of over $1 billion owed by Latin American countries; these transactions were authorized by Congress as part of the EAI, which broadened the scope of debt transactions to include a number of social goals. Nearly $177 million in local currency for environmental, natural resource, health protection, and child development projects within debtor countries was generated from these transactions.
The model for debt-for-nature transactions, outlined in the EAI, was used in the Tropical Forest Conservation Act (TFCA; P.L. 105-214; 22 U.S.C. 2431) to include countries around the world with tropical forests. Under this program, debt can be restructured in eligible countries and funds generated from the transactions are used to support programs to conserve tropical forests within the debtor country. TFCA authorizes the use of debt swaps, debt restructuring, and debt buybacks to generate conservation funds. Under these agreements, the existing debt agreement is canceled and a new one is created; a Tropical Forest Agreement is created and interest payments for the principal of the loan are deposited in local currency equivalents in a Tropical Forest Fund; and the money in the fund is given in the form of grants to local conservation groups or the debtor government to conduct conservation activities for tropical forests.
Eligible conservation projects include (1) the establishment, maintenance, and restoration of parks, protected reserves, and natural areas, and the plant and animal life within them; (2) training programs to increase the capacity of personnel to manage parks; (3) development and support for communities residing near or within tropical forests; (4) development of sustainable ecosystem and land management systems; and (5) research to identify the medicinal uses of tropical forest plants and their products. Since 1998, $233.4 million has been used under TFCA to restructure loan agreements in 14 countries (20 transactions), and over $339.4 million will be generated for tropical forest conservation at the conclusion of these agreements. TFCA was authorized to receive appropriations through FY2007, but no funds have been appropriated for the program since FY2014. TFCA is being considered for reauthorization in the 115th Congress in S. 1023. This bill would expand the purpose of TFCA to include coral reefs and authorize $20 million in appropriations annually from FY2018 to FY2021, among other things.
Debt-for-nature transactions generally are viewed as a success by conservation organizations and debtor governments because of the funds generated for conservation efforts. Debt-for-nature transactions under TFCA have stopped in recent years. Some observers suggest that this is due to lack of appropriations to support TFCA and competing debt-relief programs, such as the Highly Indebted Poor Countries Initiative.