In this article, Professor O’Neill and Professor Sunstein first explore and suggest improvements in current debt-for-nature swaps, with the ultimate aim of defending the use of economic incentives and Paretian principles in the context of international environmental policy. Second, they examine some of the limitations of the exchange of debt for nature, and thus suggest an alternative exchange that overcomes those limitations. The exchange they envision is quite simple. Developed nations would transfer to developing nations environmentally advanced technologies, particularly technologies designed to increase efficient energy use or to replace non-renewable sources with renewable sources of energy. In return, developing nations would agree to provide a measure of environmental protection. In Part II of this article, they outline the concerns, both ecological and economic, that lead to the creation of debt-for-nature swaps. In Part III, after detailing the mechanics of such swaps, they discuss various objections to these exchanges and examine potential limitations on their usefulness. In Part IV, they discuss the current possibilities for the implementation of technologies for the efficient use of energy and for the development of renewable sources of energy. Then they propose an exchange of such technologies for nature and note several considerations that will bear upon the structuring of such trades. Professors O’Neill and Sunstein conclude that trades of energy technology for nature have significant advantages over debt-for-nature swaps. Trades that involve technology hold out the best long-term promise for helping both developing and industrialized nations to promote economic development, to protect the environment, and to bring about an equitable international sharing of the burdens imposed by both of these imperatives.
Catherine O'Neill and Cass R. Sunstein,
Economics and the Environment: Trading Debt and Technology for Nature, 17 COLUM. J. ENVTL. L. 93