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ndonesia and the US are negotiating the second deal in the debt-for-nature scheme to help conserve deteriorating forests in the country and mitigate climate change.

US Ambassador to Indonesia Cameron R. Hume said the debt-for-nature agreement as stipulated under the US Tropical Forest Conservation Act (TFCA), was a practical way to mitigate climate change.

"This is an important symbol of our partnership with Indonesian on issues of the climate change and environment," Cameron said in a statement on Friday.

"It is a practical way we can work together to protect critical forests and mitigate climate change."

The two countries signed the first debt-for-nature deal in June 2009, swapping Indonesia's debt by US$30 million, the first ever biggest under TFCA.

The debt's reduction will be used to conserve around 7 million hectares of degraded forest in Batang Gadis National Park in North Sumatra, Bukit Tigapuluh National Park in Central Sumatra, and Way Kambas National Park in Lampung, in eight years.

Director of forestry and water resources conservation at the National Development Planning Board (Bappenas) Basah Hernowo said that negotiations on the deal focused on the amount of debt to be swapped and conservation forest locations.

"There will be another meeting to determine the areas of forest that will be conserved under the scheme," he told The Jakarta Post on Friday.

Basah said that the implementation of the first debt swap deal would be deployed this year.

"Local NGOs will lead in implementing the forest conservation programs," he said.

Basah added that Indonesia had also signed the debt-for-nature deals with the government of Germany, including protecting the forests in the country.

Debt-for-nature swaps are financial transactions where a portion of a developing nations' foreign debt is swapped in exchange for local investments in conservation measures.

The concept was first introduced by the WWF in 1984 as an opportunity to deal with the problems of developing nation indebtedness and its consequent deleterious effect on the environment.

The TFCA was initiated in 1998 to offer eligible developing countries options to relieve certain official debt owed to the US government, while at the same time generating funds in local currency to support tropical forest conservation.

Cameron said further that the US Treasury Department has provisionally set aside over US$19 million for treatment of eligible debt.

It said that to date, 13 countries had entered into debt-for-nature agreements under the TFCA, which was expected to generate $218 million to protect tropical forests. The TCFA was implemented through a bilateral agreement with eligible countries.

Indonesia is the world's third largest forest nation with 120 million hectares of tropical forest.

The high deforestation rate and forest degradation in Indonesia has been blamed as the main contributor to the country's greenhouse gas emissions.

The Intergovernmental Panel on Climate Change (IPCC) said that the forest contributed about 20 percent of global carbon emissions causing global warming.

A number of countries, including the US, Germany and Australia have provided huge dollars to Indonesia to help protect forests.

The Australian government for example, has channeled A$70 million to develop emission cut reduction projects, reducing emissions from deforestation and degradation (REDD) in Kalimantan.