Debt and the Environment

by Anup Shah
This page last updated Friday, August 24, 2001

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At first glance, it may seem like separate issues, but environment issues and poverty/debt are very much related. In fact, as Jubilee 2000 explains, it affects all of us¹. Basically, the more the developing countries stay in debt, the more they will feel that they need to milk the earth's resources² for the hard cash they can bring in, and also cut back on social, health, environmental conservation, employment and other important programs.

In fact, even the World Wildlife Fund³ has started a campaign for the poor⁴, acknowledging the link between poverty and environmental resource problems.

Brazil's IMF debt and financial problems have severely affected⁵ a project to save the Amazon rainforest.

And then there are many situations where the poor often have indigenous and traditional knowledge of their environment and are the best maintainers of it. However, when poverty has been imposed on them and international trade agreements force them to abandon their ways, much is lost. Indian activist and scientist, Vandana Shiva, for example, shows in her book Stolen Harvests (South End Press, 2000) that those who are often beneficial to the environment have been forced into poverty due to politics and economics such as concentrating land rights, pressure from industry to use the environment for other purposes or in other ways, etc. Industrialization is often to blame for losses in diversity. Excessive debt burden means that it becomes harder to sustain the environment.

Expensive aid and development programs from Europe have been found to be destroying parts of the environment in developing countries and affecting local and indigenous people into further poverty and misery. A lot of this is due to lack of consideration and communication⁶ with the people who are directly in the line of these development programs.

According to a Christian Aid report⁷, industrialized nations should be owing over 600 billion dollars to the developing nations -- three times as much as the conventional debt that developing countries owe the developed ones.

Remember the Kyoto Conference On Climate Change? Washington (primarily) complained about the unfairness because developing nations did not have to reduce emissions like the developing nations were to do. Well, the report above, makes the point that many developing countries have also been trying to make; that the environmental consequences of the policies of industrialized nations have had a large, detrimental and costly effect on developing countries -- especially the poor in those countries, that are already burdened with debt. (For more about the Kyoto Conference, check out this site's section on Global Warming and Kyoto⁸.)

Debt Relief and Natural Disasters

When poor countries face natural disasters, such as hurricanes, floods and fires, the cost of rebuilding becomes even more of an issue when they are already burderned with debt. Often poor countries have had to suffer with many lost lives and some aid while still paying millions a week back in the form of debt repayment.

Debt Relief and The Floods of Mozambique and Madagascar

The worst floods for 50 years and a devastating cyclone in the first three weeks of February, 2000 in Mozambique has been met with a slow response by the international community to provide much needed assistance and aid. As many as 300,000 were feared to have lost everything, while there were fears of more floods⁹.

The floods are also thought to have moved landmines from previously known minefield areas to areas that have already been cleared. Mozambique is one of the world's most heavily mined countries. To find out more about the terrible effects of landmines see this site's page on landmines¹⁰.

As with the effects from Hurricane Mitch, debt burdens once again have come to the fore. Even Mozambique's government has been urging a cancellation¹¹ of the country's debts to help use those saved resources for rebuilding the destroyed infrastructure.

For more information, you can start at the coverage from Guardian¹².

The UN also estimates that 600,000 people have been affected in Madagascar¹³, the world's fourth largest island. That is twice as many in Mozambique. Two cyclones tore through the island. One of them made its way on to Mozambique resulting in the damage that filled headlines. However, a second cyclone that hit Madagascar didn't get to Mozambique.

Debt Relief and Hurricane Mitch

The devastation in Central America caused by one of the deadliest storms¹⁴ in over 200 years, Hurricane Mitch¹⁵, November 1998, has been terrible. A UN report estimates that the destruction caused will set back development in this region by 20 years. The cost of rebuilding after Hurricane Mitch has highlighted the problems¹⁶ of debt repayment¹⁷ and debt relief¹⁸ that these countries are still facing (a repayment of about $200 million a day from Honduras and Nicaragua¹⁹, two of the worst hit areas).

In May 2001, the international community also agreed²⁰ "to seek a moratorium on debt service payments for the world's most highly -- indebted countries in "exceptional" situations -- such as those plagued by civil wars, floods and natural disasters -- and to facilitate access to debt relief for post-conflict countries." Hopefully then, in cases like the above, there might be a chance for some rest bite.

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