United States and Indonesia Sign Landmark Debt-for-Nature Swap to Protect Coral Reef Ecosystems

The United States, Indonesia, and leading environmental non-governmental organizations (NGOs) signed a groundbreaking debt-for-nature swap on July 3 to protect Indonesia’s precious coral reef ecosystems by redirecting $35 million of Indonesia’s debt into an investment in coral reef conservation. The fourth agreement with Indonesia under the Tropical Forest Conservation Act, reauthorized in 2019 as the Tropical Forest and Coral Reef Conservation Act (TFCCA), and the first focused primarily on coral ecosystems, marks a pivotal step in efforts to safeguard the biodiversity of one of the world’s most vibrant marine environments.

The signatories to the agreements under this initiative are the U.S. Chargé d’Affaires a.i. (CDA) Michael F. Kleine, Director General of Marine Spatial and Ocean Management of the Indonesia Ministry of Marine Affairs and Fisheries, Director General of Budget Financing and Risk Management of the Indonesia Ministry of Finance, Yayasan Konservasi Alam Nusantara (YKAN), Yayasan Konservasi Cakrawala Indonesia (YKCI), Conservation International Foundation, and The Nature Conservancy.

“This agreement is a testament to the strong bilateral relationship between the United States and Indonesia and our continued deepening engagement under the U.S.-Indonesia Comprehensive Strategic Partnership,” said CDA Kleine. “By forgiving this debt and redirecting the funds back to Indonesia through this debt-for-nature swap, we are taking concrete action to protect Indonesia’s invaluable coral reefs and support sustainable development.”

“Indonesia is strongly committed to safeguarding coral reefs and healthy marine ecosystems as a part of national development policy. This agreement helps solidify the idea that a healthy ocean is a global interest and shared responsibility,” said Victor Gustaaf Manoppo, Director General of Marine Spatial and Ocean Management, Ministry of Marine Affairs and Fisheries, Indonesia. “What has been agreed upon by the governments of the Republic of Indonesia and the United States benefits not only Indonesian waters and local people, but also the global community.”

Indonesia is home to 16% of the world’s coral reef areas and approximately 60% of the world’s coral species. Coral reefs provide food, livelihoods, and storm protection for just under half of the world’s population, but approximately 75% of coral reefs worldwide are threatened.  This debt-for-nature swap will redirect funds initially earmarked for debt repayment into initiatives to support coral reef ecosystem conservation. The initiative underscores Indonesia’s and the United States’ commitment to the importance of coral reefs and working together to address the pressing issue of protecting them.

An Oversight Committee comprising representatives from the Indonesian and U.S. governments, NGO swap partners, and other civil society organizations will manage the funds generated from the debt-for-nature swap. The focus area of the activities will be at Lesser-Sunda, Banda, and Bird’s Head Seascapes. Priorities include conserving globally threatened or endemic species that depend on coral reef ecosystems for critical habitat; protecting threatened or vulnerable coral reef ecosystems of high conservation value;  promoting sustainable use of coral reef biodiversity; reducing the threat to, or increasing the connectivity between, coral reef areas; creating new protected areas as appropriate; and directly contributing to the improved management of existing public, private, municipal, or communal protected areas and their conservation targets.

“When Conservation International facilitated the first debt-for-nature swap in 1987, we never imagined it would eventually unlock billions for global conservation,” said Dr. M. Sanjayan, CEO of Conservation International. “Still, debt-for-nature swaps continue to evolve — today’s announcement marks the first time the TFCCA will be used to focus on coral reef protection. We commend the governments of Indonesia, the United States, and our partners for their vision and commitment to marine conservation.”

“We congratulate the Government of Indonesia and the U.S. Treasury Department for closing a bilateral debt for nature swap today, which is the first time that this specific instrument is being used to protect marine habitat and coral reefs,” said Jennifer Morris, CEO of The Nature Conservancy. “Unlocking new funding to help preserve biodiversity and enhance climate resilience is exactly what is needed in order to achieve important wins like this for conservation and communities.”

YKCI’s Senior Vice President Meizani Irmadhiany said, “The agreement is a conservation financial breakthrough to realize the Indonesian vision of protecting 30% of its waters and improve the wellbeing of its coral reef dependent communities. It has been added to the existing blended financial models and will accelerate the achievement of conservation objectives now rather than later.”

YKAN Executive Director Herlina Hartanto emphasized that the TFCCA deal will significantly bolster the current protection and conservation of coral reef ecosystems in the Bird Head’s Seascape and the Lesser Sunda-Banda Sea. “We strongly believe this innovative TFCCA deal will enhance marine conservation efforts and inspire others to join this important initiative for the benefit of nature and people in Indonesia.”