The United States, Bilateral Debt-for-Nature Swaps, and Forest Loss: A Cross-National Analysis

We engage with the theoretical and empirical literature on the effectiveness of debt-for-nature swaps in promoting environmental protection. We present cross-national evidence that US bilateral debt-for-nature swaps are associated with less forest loss. Using a two-stage instrumental variable regression model to analyse a sample of 85 low- and middle-income countries from 2001 to 2014, we find that higher amounts of debt reduction and higher amounts of conservation funds generated as a result of such swaps are associated with lower rates of forest loss.