Fact Sheet: Tropical Forest Conservation Act

"We are committed to protecting the hemisphere's natural resources. That's why I am committed to using the Tropical Forest Conservation Act to help countries redirect debt payment towards local projects that will protect biodiversity and tropical forests."

President George W. Bush

April 21, 2001

The Tropical Forest Conservation Act (TFCA) is a unique and valuable mechanism that funds activities to protect tropical forests in developing countries through debt relief agreements. Under the program, eligible countries can engage in a debt swap, buyback, or reduction/restructuring.

Local currency payments resulting from the debt treatment go into a Tropical Forest Fund in the eligible country. Grants are made from the Fund to local NGOs and other entities that engage in conservation activities. Benefits of the TFCA Program include:

• Forest conservation: Resources that once went to debt payments now remain in the debtor's domestic economy and are channeled to local groups that engage in forest conservation activities.
• Cash flow relief: Cash flows for debtors improve because hard currency payments are converted into local currency payments and because loans can be restructured or reduced.
• Financial leverage: To the extent that the debt is priced below its face value, the USG is able to leverage its funds for forest conservation. This leverage increases substantially if the country engages in a debt swap with a third party.
• Good Governance: Encourages growth and development of local NGOs, and fosters close cooperation between governments and civil society in addressing tropical forest issues.

Program Status: The President's budget makes over $30 million available for TFCA in FY 2002. As the program demonstrates success, President Bush is committed to working with Congress to increase funding.