Energy and economics have once again upstaged the environment. The United States has struggled with its own budget while the Middle East crisis and rising oil prices exert pressures on our economy and those of many in the developing world. It is true that a wiser energy policy here and elsewhere would have partly sidestepped those problems. Yet at the moment it is hard to see how environmental problems -- particularly the soaring ones of tropical nations as well as those that have festered behind the Iron Curtain -- can receive their due.

The solution, at least in part, involves the crushing international debt itself and the mechanism known popularly as the debt-for-nature swap. These swaps capitalize on the discount at which debt of many nations sells on the secondary market. One of the first such swaps involved purchase at 35 cents on the dollar of sovereign debt of Ecuador by two U.S. conservation organizations, the World Wildlife Fund and the Nature Conservancy. In a process prearranged by Fundacio'n Natura in Ecuador the debt was then donated to that foundation. Fundacio'n Natura in turn took it to the Central Bank for conversion to bonds at face value in local currency. The income was and is used for protection of national parks and reserves, environmental education and related activities.

Billions upon billions of dollars of debt had already been converted in similar fashion for commercial purposes such as factory construction. This was one of the first such uses of the mechanism for socially beneficial purposes. At least eight countries (Bolivia, Costa Rica, Ecuador, Philippines, Dominican Republic, Madagascar, Poland and Zambia) have been involved so far.

Debt for nature alone is not the solution to the debt problem. Nor is it the solution by itself to all environmental ills. It is not uneconomic: it both pays for things that need to be done and can generate economic productivity itself, e.g. national parks and tourism. The inflation bugaboo, partly reduced by the elimination of the hard currency obligation, is further reduced when conversion is not just to cash but rather to interest bearing instruments.

Swaps have sometimes been seen as invasions of sovereignty. This reaction springs from ongoing concerns about the United States telling developing countries what to do, as well as from antiquated notions that environment prevents development, when instead it is the base for sustainable economic activity. And perhaps the term debt-for-nature swaps smacks of some ecological version of the Louisiana Purchase? In reality, the swaps are simply financial resources provided for environmental activities that a country finds hard to afford but wants to do anyway.

The administration's Latin American Initiative on debt and trade includes debt for nature as an integral part. Once certain economic conditions are met, the United States will engage in major debt-for-nature swaps with bilateral debt. Dollar obligations will be converted into local-currency environmental trusts.

Many are worried about the tough conditions required before environmental trusts can be created. These conditions are: an IMF agreement; a World Bank structural adjustment loan; if necessary, reform toward an open investment regime; and a satisfactory agreement with commercial bank creditors. There is a little point in a bill that will yield few resources late. Perhaps presidential discretion or a way to approach the problem incrementally is the solution. Rep. Nancy Pelosi (D-Calif.) even has suggested the environmental trusts themselves be made a condition.

Others are concerned that debt will be reduced only to the level the country is currently paying. The counter argument is that their obligations will be reduced and in 15 years will be paid off. Some organizations have justified concerns about the environmental effects of new economic activity. Predictably, economic interests have tried to broaden the trusts to include development in the classic as opposed to sustainable sense. There seems little point in that; this money already has been used once for development.

Most important to remember is that this is probably the only chance for significant amounts of bilateral debt to be devoted to the environment of the countries in question. When major amounts of bilateral debt are forgiven (as recently proposed for Egypt), an important chance to do something for the environment is lost forever. When debt is restructured, the secondary market discount is reduced, and the leverage required for swaps dwindles. Debt for environment should be an integral part of debt restructure. The opportunity to do that for the first time is here. The writer is assistant secretary for external affairs of the Smithsonian Institution.