ABSTRACT
In 1984, Thomas E. Lovejoy, vice-president for science at the World Wildlife Fund and deeply concerned about the accelerating rate of both debt and deforestation, first proposed that indebted developing countries be allowed to exchange their debt for protection of natural resources, particularly tropical forests. During the inflationary economic environment of the 1970s, the Third World borrowed heavily from three types of creditors — commercial banks, multilateral development banks, and bilateral foreign assistance programs — that were eager to encourage economic development. However, oil price shocks in 1973 and 1979, and the US recession starting in 1981, altered the economic conditions that affected debt payments. Debt creates crises for both creditor and borrower countries in many sectors, including trade, industry, banking, and farming. Since about onethird of US trade is with the developing world, massive job losses in US export-oriented industries occurred partly due to International Monetary Fund import restriction in borrower countries.
