A new model for development lending is giving nations the opportunity to refinance their debt while pledging to invest in conservation efforts. So-called blue bonds are giving developing economies a pathway to reduce their foreign debt and in the process fight climate change. Belize, for example, recently got $350 million in loans from an environmental nonprofit, part of which Belize will have to use to preserve its oceans.

Anatoly Kurmanaev, a reporter at the New York Times, recently published a story on these so-called debt-for-nature-swaps. He spoke with “Marketplace Morning Report” host Sabri Ben-Achour.

The following is an edited transcript of their conversation.

Sabri Ben-Achour: Can you help us understand how this works. And you wrote about the case of Belize. So you got a country with a debt problem. It wants to spend money on conservation, in this case. How do you put the two together?

Anatoly Kurmanaev: At the very simplest, you can think of it as refinancing a mortgage, right? You have existing debt load and you’re trying to exchange it for something that hopefully will have low-interest rates, and you can pay it at a later date. So in the case of Belize, it was approached by a local marine biologist who suggested them a plan. Basically, her nonprofit – she worked for The Nature Conservancy in the U.S. – would lend money to the government of Belize to repay the debts and then return some of the savings that the government believes would get from that transaction would have to go towards marine conservation.

Ben-Achour: So you have an environmental group that says “we will lend you the money to repay your debts, and use some of it to spend on conservation.” Where does an environmental group like the Nature Conservancy or whoever, where did they get $350 million?

Kurmanaev: They went to Credit Suisse, a big global investment bank, and they asked them to participate in the transaction. Credit Suisse gave them the money, gave the Nature Conservancy, the money. And on their side, they, you know, basically issued new debt themselves.

Ben-Achour: But if a country has high interest rates, that it’s trying to get out of trying to get better terms on, usually, for developing countries, that’s because there’s a certain amount of risk. So, if it gets new loans, does that mean that, you know, the environmental group is taking on risk, but not getting compensated for it, or likewise, Credit Suisse?

Kurmanaev: The way that Nature Conservancy and its partners were able to get around this is to get involved the development arm of U.S. Treasury, which guaranteed the transaction. So basically, the risk of Belize became the risk of United States. So if one of the parties doesn’t do their part, they can be taken to international courts and sued for it.

Ben-Achour: Now, in this case, $350 million, that is, obviously a lot of money. But of course, just a piece of that gets spent on conservation, the United Nations estimated $125 trillion would need to be spent globally by everybody to reach net zero emissions by 2050. So, I mean, how far can this kind of model go?

Kurmanaev: Belize has been the largest transaction of its kind to date. And the idea is that now that the model, you know, has been worked out, it can be scaled up, so to speak. You know, the amounts can keep increasing. The second and perhaps more interesting aspect of it, to me, is the way it changes mentality of stakeholders. What is valuable to us here, you know, what kind of development do we want? What kind of a nation do we want to be? Do we want to be based on extraction of natural resources and mass tourism and cruise ships? Or do we want to base our financial growth, economic growth on more sustainable models that can also bring in money into the public coffers.