Greenwashing Debt in the Galápagos Islands

The Galápagos Islands harbor some of the most distinctive ecosystems on the planet. Their isolated location in the middle of the Pacific Ocean has allowed species to evolve independently from their relatives on the mainland over millions of years. Creatures such as Darwin’s finches, giant tortoises and marine iguanas are found only on the Galápagos Islands. It was here, 600 miles west of the South American mainland, that Charles Darwin gathered insights that shaped his theory of evolution.

In 1959, the Ecuadorian government founded the Galápagos National Park, protecting around 97% of the archipelago’s landmass. It was the country’s first national park. In 2022, the government expanded the Galápagos Marine Reserve by 60,000 square kilometers with the creation of the Hermandad Marine Reserve, bringing the total protected area to 198,000 square kilometers — almost half the size of mainland Ecuador. But there was a problem: The Ecuadorian state lacked the funding required to protect this vast marine territory.

In May 2023, then-President Guillermo Lasso therefore announced the largest debt-for-nature swap in history. The Ecuadorian state bought back bonds worth $1.63 billion from international bondholders at a discount and exchanged them for a new loan of $656 million to be invested in marine conservation. The government hailed the deal as a “historic agreement” that would help to protect endangered species such as whales and turtles, as well as promote sustainable fisheries and strengthen climate resilience. Ecuador was as wealthy as any of the richest countries in the world, the Ecuadorean foreign minister said, “but our currency is the biodiversity.” The idea behind debt-for-nature swaps is simple: A heavily indebted country like Ecuador reduces its debt burden while promising to allocate funds to environmental or marine conservation. In doing so, nature is increasingly treated as a tradable commodity. It seems like a win-win outcome. But who truly benefits from this arrangement?

“We had no idea there was a debt-for-nature swap — we found out about it through social media,” said Patricia Moreno, a human rights and environmental activist who lives on San Cristóbal, the easternmost island in the Galápagos archipelago. Home to around 6,000 people, it has the second-largest human population in the islands. Moreno said islanders are routinely excluded from the conversation when it comes to conservation. “We exist,” she said. “And we are more than just predators.”

Moreno remembers when Lasso visited the Galápagos Islands in 2023 to announce the agreement. At the time, residents were already protesting a supply crisis. A recent shipwreck had disrupted deliveries, leading to shortages of basic goods like eggs, rice and potatoes. Located hundreds of miles off the Ecuadorian coast, the islands rely on shipments of food and fuel from the mainland by ship and plane. “People were already angry,” Moreno recalled. “And when we learned about the debt-for-nature swap, we got even angrier. We had no information about it. Some even thought that the islands had been traded away and now belonged to another country.”

Moreno said the public wasn’t consulted on the agreement, nor were Galápagos residents invited to the president’s announcement. Only political authorities and tourism industry representatives were present. “We felt like we meant nothing,” Moreno said. She began organizing with other islanders to find out what the debt-for-nature swap was really about and reclaim their right to information, consultation and participation.

Gambling With Government Debt Is Lucrative

The Galápagos Islands’ debt-for-nature swap was the largest to date, but it was not the first. These types of deals have been around since the 1980s. Bilateral debt-for-nature swaps involve one country negotiating directly with another to forgive or restructure debt in return for conservation commitments. Commercial swaps involve private third parties — such as nongovernmental agencies, investment firms or banks — purchasing discounted government bonds from the debtor country on the secondary market. Commercial swaps have taken place in the Seychelles, Belize, Barbados and, most recently, Ecuador.

In the case of Ecuador’s Galápagos deal, the investment bank Credit Suisse facilitated the buyback of more than $1.6 billion in sovereign bonds for the Ecuadorian government. These bonds had fallen in value due to Ecuador’s high national debt and political instability, making them attractive for repurchase. Although the identities of the bondholders are not publicly known, they likely include international investment funds, insurance companies and pension funds.

To finance the buyback of the bonds, a special purpose vehicle (SPV) named GPS Blue Financing was established in Ireland, which is known for its favorable tax regime. This entity issued a new set of “Galápagos Marine Bonds.” In this transaction, Ecuador was the borrower, GPS Blue Financing was the lender and the Bank of New York Mellon acted as the facility agent, a kind of intermediary. According to Bloomberg News, one of the major investors in the new bonds was the Swedish pension fund Alecta, which has faced criticism for high-risk investments and allegations of corruption. Alecta was also involved in the 2021 Belize swap, which was similarly arranged by Credit Suisse. Credit Suisse was the leading bank to arrange debt-for-nature swaps for a long time, until it collapsed in 2023 following several bribery scandals, after which it was taken over by another bank.

To reduce the risk for investors and lower the cost of borrowing for the Ecuadorian state, the U.S. Development Finance Corp. provided a $656 million guarantee in the event of default — equal to the total value of the bonds. Additionally, the Inter-American Development Bank (IDB) provided $85 million to cover the first six interest payments if Ecuador defaulted. These guarantees mean that investors bear very little financial risk, while banks can market the deal as a commitment to marine conservation.

After Credit Suisse collapsed in 2023, its former head of debt-for-nature swaps, Ramzi Issa — who handled the Galápagos deal — founded his own company in 2025: Enosis Capital, a so-called impact credit fund specializing in sustainable financial transactions. Business is booming because gambling with government debt is lucrative. Investors are keen to sell government bonds issued by highly indebted countries in the Global South — known in financial jargon as “junk-rated issuers” — at a good price. Wealthy investors and banks buy debt cheaply, secure public guarantees and profit from restructuring it into conservation-based loans.

Meanwhile, it was these same Western financial institutions, backed by U.S. monetary policy, that caused the debt crisis in the Global South in the first place by offering high-interest loans on predatory terms.

Despite this backdrop, the United Nations, the World Bank, the European Union and U.S. conservation organizations are presenting debt-for-nature swaps as a promising solution to the biodiversity conservation funding gap. At the U.N. Biodiversity Conference in Colombia in October 2024, groups like the Nature Conservancy, World Wildlife Fund, Pew Charitable Trusts, Conservation International and Re:wild formed a coalition to advocate for these instruments. In a joint statement, they described debt-for-nature swaps as “a win-win for governments, local communities and nature,” and as “one of the largest potential sources of funding to help achieve the global climate and nature goals.”

The Myth of “Win-Win”

The new wave of debt-for-nature and debt-for-climate swaps is being framed by Global North institutions as a solution to both sovereign debt crises and conservation funding shortfalls. These instruments, they argue, can channel new financing into developing countries with high biodiversity by turning ecological stewardship into a service that wealthier nations pay for — while incentivizing creditors to offer debt relief. This is an important debate in the context of climate and development policy because the lack of adequate funding for biodiversity conservation remains an urgent and unresolved issue. But behind the technocratic language of innovation and efficiency lie deeper political questions: Who benefits, and who bears the burden?

The Kunming-Montreal Global Biodiversity Framework, adopted in 2022, calls for protecting 30% of land and marine areas by 2030 — a goal commonly referred to as “30 by 30.” The framework also stipulates that those countries most responsible for ecosystem destruction — wealthy, industrialized nations — should provide financial support for conservation efforts in poorer countries. But according to a report on debt-for-climate swaps by the Latin American Network for Economic, Social and Climate Justice (LATINDADD), 80% of climate finance is delivered in the form of loans. This allows rich countries to shift the burden to the private sector while avoiding the use of public funds. “Many countries in the Global South spend less than 1% of their budget on environmental protection, but more than 20% on debt servicing,” said Carola Mejía, an economist with LATINDADD. “Debt-for-nature swaps distract from the fact that the countries responsible for the climate and environmental crises are not fulfilling their international commitments.”

Mejía argues that instead of promoting new debt instruments, the international community should prioritize financing mechanisms for climate mitigation and biodiversity conservation that do not generate new debt. As the main perpetrators of the climate crisis, industrialized countries in the Global North should meet their obligations and provide funds directly in the form of grants or reparations. Together with LATINDADD, Mejía supports the global movement “Debt for Climate,” which campaigns for debt relief for countries in the Global South. “Debt is a neocolonial mechanism that controls our countries,” she said. Debt-for-nature swaps reinforce the narrative that debt is the fault of countries in the Global South, rather than the result of exploitative practices by powerful nations and international financial institutions. In this sense, swaps often serve as a tool for greenwashing and perpetuating debt.

In response, LATINDADD and the Ecuadorian human rights group Centro de Derechos Económicos y Sociales (CDES) have proposed a set of “High-Integrity Principles for Debt Swaps.” Released in October of last year, their report emphasizes transparency, independent auditing and monitoring, democratic participation and equitable distribution of benefits. It also sharply criticizes the Galápagos deal for its lack of transparency and for excluding local actors from decision-making and resource management. In May 2024, CDES and several Galápagos-based organizations filed a formal complaint to the Inter-American Development Bank’s Independent Consultation and Investigation Mechanism (MICI), an office that addresses complaints about possible harms caused by IDB-financed projects. “There are so many needs in the community, and we want to participate,” said Patricia Moreno, who was involved in the complaint alongside members of the Asamblea Comunitaria San Cristóbal. “Local organizations also need support for social and conservation projects, but it’s always the same NGOs that receive the funding.”

After two months of negotiations, an agreement was reached between the representatives of 24 civil society organizations, the IBD, Ecuador’s Ministry of Economy and Finance, and the Ministry of Environment, Water and Ecological Transition. The deal guarantees, among other points, that local communities have public access to information about the Galápagos Life Fund — the entity managing conservation funds from the debt swap — and commits at least 18% of its funding to local social and community groups on the Galápagos Islands. It also establishes a permanent observer role for community representatives on the fund’s board. MICI will monitor the implementation of the agreement.

The Conservation Elite

Lorenzo Idrovo, who was born and raised in the Galápagos Islands and also took part in the complaint, is critical of how conservation is managed on the archipelago. “There’s a very elitist discourse coming from the NGOs, as if the local population doesn’t exist,” he said. His two children attend a public school where the roof is damaged, the tables are broken and basic school materials are lacking. Meanwhile, a biologist friend of his studying sharks uses advanced equipment with sophisticated technology to listen to the heartbeats and perform ultrasounds on pregnant sharks. “Many of the children here have never even heard their own heartbeat,” Idrovo observed, “because the health centers don’t have that kind of equipment. There is a conservation elite made up of large NGOs managing millions of dollars. We’re only asking for a small percentage to go toward social needs — because without social justice, conservation is impossible.”

In biodiversity-rich regions like the Galápagos, conservation is increasingly dictated by international NGOs — particularly U.S.-based organizations. Among the most influential is the Nature Conservancy, a major proponent of debt-for-nature swaps. The organization has been involved in debt swaps in the Seychelles, Belize and Barbados, with more agreements reportedly in the pipeline. Through its Blue Bonds for Conservation model, it claims these arrangements will improve management across more than 4 million square kilometers of ocean. But for critics like researcher Andre Standing, such approaches represent the financialization of conservation — a trend in which financial institutions and conservation NGOs gain increasing control over vast ecosystems and sovereign territories in heavily indebted countries through market-based instruments.

The Galápagos are no exception, with international conservation organizations holding considerable power and influence over the islands. These include the Galápagos Conservancy and Re:wild from the United States, the United Kingdom’s Galápagos Conservation Trust, Belgium’s Charles Darwin Foundation, Switzerland’s World Wide Fund for Nature and Ecuador’s own Jocotoco. While conservation is officially managed by the Galápagos National Park, most of the funding comes from international foundations, organizations and trust funds. In early 2025, for instance, the Bezos Earth Fund — backed by U.S. billionaire and Amazon founder Jeff Bezos — donated a ship equipped with modern monitoring technology worth around $800,000 to the park.

There is also a kind of revolving door between leading roles at the national park and top positions at these NGOs; according to sources on the islands, high-ranking figures in the park used to direct one of these organizations, and vice versa. These dynamics create, on one hand, a dependency of Ecuadorian public institutions on international funding and, on the other, the consolidation of a kind of “conservation elite,” a small group of individuals holding influential positions in conservation management — both of which undermine democratic oversight and exclude local communities from decision-making and the management of funds.

The Galápagos Life Fund (GLF), which manages the debt-for-nature swap funds, is based in the U.S. state of Delaware — a well-known tax haven. The fund was established with assistance from Baker McKenzie, the law firm implicated in the Pandora Papers revelations for facilitating offshore financial secrecy. GLF’s board is composed of 11 members: six from the private sector and five from government ministries. This means the Ecuadorian state is in the minority. Private board members include representatives from the Pew Bertarelli Ocean Legacy project, a partnership between Swiss billionaire Dona Bertarelli and the Pew Charitable Trusts, founded by heirs of a U.S. oil company.

Over the next 18½ years, the Galápagos Life Fund will distribute $12 million per year to marine conservation efforts in the Galápagos Islands. Half will go to state institutions; the other half to local projects for which organizations and companies can apply. Over the next three years, $6 million of that total will be invested annually in the control and monitoring of marine protected areas, to be overseen by the armed forces, the National Park Directorate and the Undersecretariat of Fisheries. Yet, according to multiple sources interviewed for this story, the funds do not go directly to the Ecuadorian state but to the NGOs Re:wild and Jocotoco, which will manage them on behalf of the GLF. Among other things, the money will be used to repair ships and improve satellite systems for monitoring the Galápagos and Hermandad marine protected areas. Two years after the announcement of the debt-for-nature swap for the Galápagos Islands, it remains unclear whether the funds will genuinely benefit marine ecosystems or primarily serve the interests of private investors and NGOs.

Militarization or Sovereignty

The new Hermandad Marine Reserve, located between the Galápagos Islands and Costa Rica’s Cocos Island, is an important migration route for sea turtles, whales and rays. It is one of the most species-rich areas on the planet and is therefore particularly popular with industrial fishing fleets. To prevent illegal fishing in the marine reserve, Ecuador’s military and the national park are set to increase patrols in the area.

The reserve is not only a migration route for marine species — it’s also a transnational corridor for the international drug trade. In 2024, the Washington Post described the Galápagos Islands as a “gas station for drug smugglers” en route from South America to the United States. The recently reelected right-wing President Daniel Noboa has signed a security cooperation agreement with the United States that allows the presence of U.S. ships and submarines in the waters surrounding the islands in order to combat organized crime on the sea. Noboa is also planning to set up a U.S. military base on the Galápagos Islands.

Islanders like Idrovo and Moreno are concerned about the plans for a military base. Together with over 50 organizations, they have started a campaign against the proposed base, under the slogan: “Galápagos, natural sanctuary, not a military base.” In a joint declaration, the coalition stated: “The militarization of our islands is incompatible with their natural sanctuary status and threatens decades of conservation efforts.  … This decision violates our Constitution, ignores the right to prior consultation of local communities and compromises Ecuadorian sovereignty.”

While it is unclear whether the security agreements between Ecuador and the United States are linked to the debt-for-nature swap, both initiatives signal a troubling shift: the erosion of democratic structures in Ecuador that threaten the state’s sovereignty over resource management and conservation strategies. Together, they consolidate power in the hands of U.S.-based organizations, financial institutions and the military at the expense of national autonomy.

Social movements argue that the notion of a benevolent debt swap diverts attention from more transformative proposals, such as debt cancellation, which could free up national budgets for environmental initiatives without deepening financialization or eroding the sovereignty of Global South nations. Still, some contend that, under the right conditions, debt-for-nature swaps could play a constructive role. Daniel Ortega Pacheco, Ecuador’s former environment minister and an expert in sustainable finance and debt-for-nature swaps, believes the Galápagos debt swap could offer valuable lessons for the future if grounded in a transparent, inclusive and resilient global regulatory framework. “The countries involved should be strengthened, not undermined, in their democratic structures and autonomy,” he insists.

Like Idrovo and Moreno, Ortega Pacheco emphasizes that long-term conservation is most effective when rooted in the needs and participation of local communities. “It has been proven that managing nature reserves with the involvement of local communities is cheaper and more sustainable in the long term,” he observed. In contrast, he is critical of what he calls “parastatal structures” — namely international NGOs — that restrict state autonomy, privatize resource management and operate without independent oversight. “It is naive to believe that those involved in debt-for-nature swaps are acting out of philanthropy,” Ortega Pacheco added. “The banks, NGOs, and investors make money from these deals.”

The debt-for-nature swap in the Galápagos reveals not only asymmetrical power dynamics in conservation policy and financing, but also the colonial logic that underpins global climate politics. International actors impose externally defined priorities and frameworks that fail to incorporate the needs, knowledge systems and rights of local populations. For example, the 30 by 30 conservation goal is rooted in the “Half-Earth” concept proposed by U.S. biologist E.O. Wilson, which advocates for protecting half of the planet from the destructive influence of humans. This vision universalizes a specific notion of “humanity” that denies our capacity to coexist with nonhuman life, as Indigenous groups have done for millennia.

Across Latin America and much of the Global South, environmental struggles usually do not artificially separate the protection of nature from the defense of livelihoods, autonomy and the social reproduction of communities. This more holistic vision sees these elements as intrinsically intertwined. “Nature conservation” as an independent concern, represented by U.S. conservation organizations, often treats nature as “wild and untouched” — something detached from our everyday lives. It emerged in contexts in which livelihoods are not existentially threatened by climate change, extractivism and displacement. The feminist theorist Nancy Fraser calls this approach an “environmentalism of the rich,” based on the idea that it is possible to protect nature without questioning the structural dynamics of capitalist society.

Debt-for-nature swaps do not solve either the debt crisis or the climate crisis. While they may be useful in specific cases under a strong regulatory framework, they should not be considered a viable solution to the funding gap for climate action and biodiversity conservation. The case of the Galápagos Islands makes clear that real climate justice cannot be separated from the social needs of local communities and requires going beyond market-based instruments. To effectively address the climate crisis and biodiversity loss, we must confront the global economic structures and colonial legacies that fuel both environmental degradation and social inequality, and reimagine conservation as a radical transformation of social and economic relations.