THE ROLE OF FOREIGN DEBT IN DEFORESTATION IN LATIN-AMERICA

Much current controversy exists about the role that foreign debt plays in deforestation in Latin America In an attempt to familiarize concerned biologists with this issue, we present an overview of the proposed positive and negative effects that foreign debt bas had on neotropical forest loss. From the literature, we identify three main hypotheses as to bow the large external debts of developing Latin American countries may contribute to deforestation. We find that (1) countries bave not increased exports of tropical timber and beef in response to rising debt; (2) external debts bave contributed to economic stagnation and an associated increase in poverty in Latin America, which in turn bas caused the degradation of marginal lands, but the role of debt in this process cannot be isolated from other important contributing factors; and (3) while debt payments bave probably led to governmental budget cutbacks in environmental spending historically spending in these areas bas not been high. On the positive side, we found that (1) innovative debt-for-nature swaps bave traded devalued debt for a commitment and funds to create and protect nature reserves; and (2) debt could be exchanged for forestry and agricultural sectoral reform, which would have very large positive effects on the conservation and management of forests.