Which of the following correctly describes the term 'Debt-for-Nature Swap', sometimesseen in news?a)An arrangement allowing a developed country with an emission-reduction commitment to implement an emission-reduction project in developing countries.b)A mechanism to reduces a developing country’s debt in exchange for a commitment to protect nature.c)It is a process of mutual buying and selling permits and credits to emit greenhouse gases.d)A mechanism allowing low-cost loans for the corporate sector in exchange for emission-reduction commitment.Correct answer is option 'B'. Can you explain this answer?

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Which of the following correctly describes the term 'Debt-for-Nature Swap', sometimes

seen in news?

a)
An arrangement allowing a developed country with an emission-reduction commitment to implement an emission-reduction project in developing countries.
b)
A mechanism to reduces a developing country’s debt in exchange for a commitment to protect nature.
c)
It is a process of mutual buying and selling permits and credits to emit greenhouse gases.
d)
A mechanism allowing low-cost loans for the corporate sector in exchange for emission-reduction commitment.

Correct answer is option 'B'. Can you explain this answer?

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Which of the following correctly describes the term 'Debt-for-Nature ...

Debt-for-nature swaps are financial transactions in which a portion of a developing nation's foreign debt is forgiven in exchange for local investments in environmental conservation measures.
It is a voluntary transaction whereby the donor(s) cancels the debt owned by a developing country’s government. The savings from the reduced debt service are invested in conservation projects
In 1984, World Wildlife Fund [now the World Wide Fund for Nature] (WWF) initiated the debt-for- nature swap as a mechanism for enhancing conservation efforts in developing countries.
The idea arose from the observation that much of the world's biological diversity is harboured in the same countries that face the greatest financial strain from foreign debt burdens.
Debt-for-nature swaps leverage funds for use in local conservation efforts, based on the model of debt-equity swaps - in which private sector interests buy discounted debt and exchange it for local currency investments in the indebted country.While debt-for-equity swaps did provide the initial outline for the financial mechanism, debt-for-nature swaps have a very different purpose. A debt-for-equity swap is used to generate profits for the investor.
A debt-for-nature swap does not seek profit, but rather to provide additional funds for conservation activities within a country. The debt-for-nature swap differs in that there is no transfer of ownership or repatriation of capital to a foreign investor.

Answered by Notes Wala · View profile

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Which of the following correctly describes the term 'Debt-for-Nature Swap', sometimesseen in news?a)An arrangement allowing a developed country with an emission-reduction commitment to implement an emission-reduction project in developing countries.b)A mechanism to reduces a developing country’s debt in exchange for a commitment to protect nature.c)It is a process of mutual buying and selling permits and credits to emit greenhouse gases.d)A mechanism allowing low-cost loans for the corporate sector in exchange for emission-reduction commitment.Correct answer is option 'B'. Can you explain this answer?

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