LONDON, (Reuters) – Barbados has completed the world’s first ‘debt-for-climate’ swap aimed at raising money to help the Caribbean island build resilience in its water systems to the damaging effects of climate change.
While climate-vulnerable countries require billions of dollars to adapt to the impacts of climate change, getting money flowing to projects from water sanitation to drought-resistant crops is challenging with many projects costly to implement and low in returns.
Barbados’ new deal is first debt-swap to raise money directly for climate adaptation and will free up around $125 million to go towards sewage treatment plant upgrades that should boost water supplies and reduce the amount of pollution going into the Caribbean.
Water-scarcity in Barbados is being exacerbated by the effects of climate change, and water availability for Barbados’ people and economic activity like farming is already far less than the global average.
The buy-back will finance a new facility to boost water management, food security and resilience, Barbados’ Prime Minister Mia Mottley said in a press release.
“In the face of the climate crisis, this groundbreaking transaction serves as a model for vulnerable states, delivering rapid adaptation benefits for Barbados,” she said.