Op-ed: Debt Relief for Climate Investments
A hotel underwater in Kenya. Photo: AP Newsroom / Brian Inganga
Nations vulnerable to climate change, known collectively as the Vulnerable 20 Group, are considering stopping debt payments to wealthy nations to instead invest in climate change mitigation infrastructure. This is an opportunity for wealthy nations to take responsibility for the climate crisis they created, sacrificing money they would receive from debt payments in exchange for a cleaner future.
In response to broken promises and weak efforts to help countries in the wake of a worsening climate crisis, this halting of debt payments reads as a cry for help from V20 countries, including the Maldives and Barbados, already forced to bear crushing debt and weakening economies. Ahead of COP27 next month where global leaders are anticipated to address what burden wealthier nations can be expected to uphold, rerouting debt payments to climate investments offers an excellent solution.
This coupled issue of overwhelming debt and worsening climate impacts make it difficult for countries to stay afloat economically while supporting climate mitigation strategies at home. According to a report last year, developing countries may be spending up to five times more on debt payments than on climate change. In 2025, Uganda’s debt payments are expected to reach $1.35 billion in 2025, money that could actually prove substantial if invested in climate change mitigation efforts. While debt obligations currently bar countries from investing nearly as much money as they would like into climate infrastructure, pausing these payments could allow for countries to invest more of their own money into mitigation efforts as well.
A farmer in Lebanon preparing to plant potatoes. Once able to rely on rainwater to irrigate crops, they now are forced to collect what little rainwater they can: Photo: AP Newsroom / Hussein Malla
Climate-change vulnerable nations proposed creating an international fund to compensate for current and future damages. However, removing debt burdens to allow for climate investments would enable this international fund to be bypassed altogether, offering a more direct route to mitigation efforts.
Rerouting debt payments would also allow for better accountability for climate funding; an issue in recent years, as a promised $100 billion a year of funding to developing countries has either been untraceable or not received altogether. The Green Climate Fund, created to distribute this money, has seen only a fraction of the promised funds which are bound by contingencies that make it difficult for countries to utilize the money promised.If countries are able to channel money they would use towards debt payments for climate investments instead, the money would have less of a chance to go missing as it is already in their possession.
Some critics of the plan argue that even with adequate funding, developing countries may lack the motives or strategies to properly mobilize climate funding. In addition to this, prior international carbon market mitigation strategies such as the Clean Development Mechanism (CDM) had controversial, if not adverse, effects such as exacerbating land rights conflicts and damaging local ecosystems and biodiversity. This track record raises concerns about whether a debt relief program would face similar issues, but could also be offset by requiring auditing and adherence to set international standards on how funding can be used.
As is characteristic of climate change issues on local, domestic, and international scales, most agree that mitigation needs to happen but no one wants to pay for it. In a sense, climate change has developed into a business issue with both winners and losers in all proposals. Wealthy nations do not want to be made to pay in its entirety for the mess they created while developing countries do not want, and frankly do not have the resources or capability, to pay for an issue they are not responsible for. However, to begin to reduce the impacts of climate change, this tension must be resolved, and relieving debt is an excellent place to start.