A Washington-based conservation group has devised a way to use the international debt issue to protect the environment.

Conservation International announced yesterday that it has entered into an agreement with the Bolivian government to retire a portion of that nation's debt in exchange for a pledge to set aside for preservation 4 million acres of tropical rain forest in the heartland of the Amazon.

Under terms of the arrangement, Conservation International will purchase and forgive $650,000 in Bolivian debt in return for the establishment of three conservation areas bordering the Beni Reserve, a tropical forest near the headwaters of the Amazon.

The site, which supports 13 endangered animal species and more species of birds than all of North America, will be granted "congressional law status," the highest level of legal protection in Bolivia.

The Bolivian government has promised to provide $250,000 in Bolivian currency for the maintenance and administration of the areas. Conservation International will provide Bolivia's agricultural ministry with the technical support needed to plan and manage the site.

"This 'debt for nature' swap signifies a major breakthrough, not only as a means to reduce Bolivia's debt burden, but also as an effective way to protect the natural resources upon which our country's long-term economic health depends," Bolivian Ambassador Fernando Illanes said at a press conference at the embassy yesterday.

The swap will make only a tiny dent in Bolivia's $4 billion national debt, but "every little bit helps," said Illanes.

The transaction was made possible by the low market value of Bolivian debt. Because Bolivia has had difficulty in repaying its foreign creditors, Conservation International was able to purchase the nation's outstanding loans from the original lender at about 15 cents on the dollar.

Money for the purchase was provided by a $100,000 grant from the Frank Wheedon Foundation, a California organization that donates exclusively to environmental causes.

According to Peter Seligmann, the executive director of Conservation International, the debt and environmental problems in the developing world are linked because financially strapped borrowers are forced to cut back spending for environmental protection programs and to pursue export-led growth strategies that can deplete natural resources.

Seligmann said that there is a growing interest in "debt for nature" swaps from banks holding large loans to developing nations.

"This is an excellent way for banks to increase their charitable giving," he said.

Conservation International, a nonprofit organization founded this year, is engaged in negotiations for similar projects with four other developing nations, Seligmann said.

Richard Weeden, director of the Frank Wheedon Foundation, said that his organization is prepared to sponsor other "debt for nature" swaps elsewhere in the developing world.