$35 million debt-for-nature deal aims to protect Indonesia’s coral reefs

Story: 2024 C.E.  |  Last updated: May 1, 2026

The United States and Indonesia have signed a $35 million debt-for-nature swap to protect coral reefs across eastern Indonesia — the first such agreement between the two countries and the first of its kind focused specifically on coral ecosystems. The deal cancels a portion of Indonesia’s sovereign debt to the U.S. in exchange for a commitment to direct that funding into reef conservation over the next nine years.

At a glance

• Debt-for-nature swap: The $35 million agreement cancels Indonesian sovereign debt owed to the U.S., redirecting the savings into a dedicated coral reef fund administered by Indonesian nonprofits and local communities.
• Coral Triangle reefs: The deal targets reefs in the Banda Seascape, the Bird’s Head Seascape, and Lesser Sunda — all part of the globally significant Coral Triangle, which spans six nations and holds nearly two-thirds of all known coral species.
• Marine protected areas: Funding will strengthen existing protected areas, upgrade natural resource management, and support sustainable livelihoods for coral-dependent communities across Indonesia’s portion of the Coral Triangle.

Why Indonesia matters for coral reefs

Indonesia is home to 16% of the world’s coral reef area. The reefs provide goods and services — from fisheries to tourism — valued at approximately $1.6 billion each year, according to the Global Fund for Coral Reefs, the international public-private finance body that provided financial and technical support for the swap.

The Coral Triangle, where the deal’s conservation work will be concentrated, is one of the most biodiverse marine regions on Earth. It stretches across Indonesia, Malaysia, Papua New Guinea, the Philippines, the Solomon Islands, and Timor-Leste, supporting hundreds of millions of people who depend on reef ecosystems for food and income.

Indonesian conservation organizations Yayasan Konservasi Alam Nusantara and Yayasan Konservasi Cakrawala Indonesia, along with their international affiliates The Nature Conservancy and Conservation International, will oversee fieldwork under the agreement. The plan aims to protect more than 800,000 hectares — nearly two million acres — of coral reefs in total.

How the funding mechanism works

Debt-for-nature swaps work by allowing a country to reduce what it owes a creditor nation in exchange for redirecting those savings into environmental programs. The mechanism was enabled by the U.S. Tropical Forest and Coral Reef Conservation Act of 1998, which allows low- and middle-income countries to relieve debt to the U.S. government by funding tropical forest and reef conservation.

The Indonesian government will establish a dedicated coral reef fund under the deal. A grant oversight committee that includes local civil society groups will set a strategic plan and monitor its implementation. Community capacity-building is built into the framework, giving coral-dependent communities a pathway to access grant funding directly.

A comparable deal in 2022 saw Belize sign a debt-for-nature swap with The Nature Conservancy that reduced the Central American country’s external debt by a historic 10% of national income — one of the most ambitious such arrangements ever completed.

Real optimism, real limits

Environmental groups in Indonesia have welcomed the funding while urging a sharper focus on outcomes. A 2022 study published in the journal Marine Policy found that of 533 coral restoration initiatives conducted in Indonesia over the prior decade, only 16% included post-installation monitoring. Many efforts are believed to have failed or produced inadequate results once project funding expired.

“If we want to continue coral reef restoration and conservation projects over the next nine years in the same way as before, then we will repeat the same failures,” said Parid Ridwanuddin, oceans lead at Walhi, Indonesia’s prominent national environmental pressure group.

That critique is important context. Research suggests that as much as half of Indonesia’s coral reefs risk death by 2030 due to ocean warming and acidification — a scale of threat no single funding agreement can fully address. Civil society groups also point to contradictory national laws that allow conservation areas to be converted for exploitation, while sand mining and coastal reclamation continue to threaten reef ecosystems.

Broader critics of debt-for-nature swaps argue the mechanisms can be slow to enact, involve high transaction costs, and sometimes limit public participation. Aid agencies have called for outright debt cancellation for countries facing compounding climate and development pressures — a reminder that creative finance tools, however useful, sit within a much larger structural challenge.

Part of a bigger global push

The Indonesia-U.S. deal is one piece of a larger financing effort. The Global Fund for Coral Reefs is working to raise $515 million in grants and investment capital to conserve three million hectares of coral reefs globally. That effort feeds into the Coral Reef Breakthrough, an international initiative aiming to invest more than $12 billion in protecting at least 125,000 square kilometers of shallow-water tropical coral reefs and improving the resilience of more than half a billion people by 2030.

“This agreement helps reinforce the idea that a healthy ocean is in the global interest and a shared responsibility,” said Victor Gustaaf Manoppo, director-general of marine management at Indonesia’s Ministry of Marine Affairs and Fisheries.

For the communities living alongside Indonesia’s reefs, the deal represents something more immediate: new resources, local oversight, and an acknowledgment that the ocean economies they depend on are worth protecting — not just for Indonesia, but for the world.

Read more

For more on this story, see: Mongabay

For more from Good News for Humankind, see:

• Ghana establishes a new marine protected area at Cape Three Points
• Indigenous land rights recognition reaches 160 million hectares ahead of COP30
• The Good News for Humankind archive on marine conservation

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