Originally published in FAZ, authored by Katja Gelinsky
Brazil aims to prevent deforestation with the help of a new international investment fund. Performance-based payments to tropical countries are planned.
Climate protection and biodiversity conservation should be better integrated. This is the goal of the Brazilian government, as host of the next UN Climate Change Conference. The so-called COP30 will take place from November 10 to 21 in Belém, in the Brazilian Amazon region. The protection of tropical forests is central to the fight against climate change and biodiversity loss. However, the global financial architecture for climate and the environment has so far largely lacked an instrument that rewards the conservation and restoration of tropical forests. Brazil aims to close this gap with a new international billion-euro initiative: the “Tropical Forest Forever Facility” (TFFF).
At its core is an investment fund with a planned total volume of $125 billion. Donor countries and possibly also philanthropic institutions are to provide incentives with a $25 billion “sponsorship tranche” to mobilize $100 billion in private capital. The money is to be repaid later with interest. The fund’s income is to finance annual “performance-based, large-scale forest payments,” according to the Brazilian government’s updated TFFF concept, which was obtained by the Frankfurter Allgemeine Zeitung. The forest payments are to be three times as large as the current international non-repayable funding for tropical forest conservation.
The new funding pot is intended to provide incentives to preserve or restore tropical and subtropical forests. Countries that sustainably increase forest cover will receive more money. Deforestation will be penalized. Forest development will be monitored using satellite-based systems.
A pleasing result
Up to 74 countries in the “Global South,” which together own more than one billion hectares of tropical and subtropical deciduous forests, are to be potential recipients, according to Concept Paper 3.0. The funds will be awarded as non-repayable grants to national forestry programs. Twenty percent of the money is to go to indigenous and local communities.
Germany is one of the five potential sponsoring countries so far. Others include France, Norway, the United Arab Emirates, and the United Kingdom. The German government is currently examining options for supporting the innovative proposal for international forest protection with a view to the next World Climate Conference, a spokeswoman for the Federal Ministry for Economic Cooperation and Development told the Frankfurter Allgemeine Zeitung (FAZ). It is still too early to make concrete financial commitments. An alliance of environmental and climate protection organizations has called on the German government to set a good example for other potential sponsors and allocate at least one billion euros for the planned Tropical Forest Fund in the 2026 budget – without offsetting it against other financial resources for international climate and biodiversity protection.
Brazil floated the idea for the Tropical Forest Fund at the UN Climate Change Conference in Dubai in November 2023. The new financing instrument will then be officially presented at the climate conference in Belém. Representatives of financial institutions, international organizations, governments, non-governmental organizations, and indigenous and local communities were involved in developing the concept for the TFFF.
From the perspective of the organization Campaign for Nature, a positive outcome of the global consultation process is the development of an exclusion list for the investment portfolio. Investments should not be made in coal, oil, and gas, nor in activities that promote deforestation. Among the tasks that still need to be done is the creation of a scientifically and technically experienced advisory board to improve the reporting and monitoring mechanisms of the Tropical Forest Initiative, Campaign for Nature demands.
Protection of the tropical forest
According to Thomas Hickler, a professor at the Senckenberg Biodiversity and Climate Research Center in Frankfurt am Main, the Tropical Forest Fund could be a “game changer.” Deforestation in Brazil alone produces more greenhouse gas emissions each year than an industrialized nation like Germany. For many key stakeholders, tropical forests “simply have no value; however, there is money to be made from pasture and arable land,” Hickler explains. With the TFFF, a mechanism is now being developed to make preserving the rainforests economically worthwhile.
But the scientist also sees risks: “One danger is that intensive land use will then be driven into the last natural oases outside the forests, such as the last more or less natural savannas, which also harbor unique biodiversity and are already threatened by reforestation projects that are not always effective.” Another challenge is that much of the deforestation is illegal in many places. Nevertheless, the TFFF is important and appropriate: “The nations that host the rainforest and the people who live there get something for its protection. And those who want to raise funds to protect it will have a clear process with success monitoring.”
Environmental and energy economist Andreas Löschel from the University of Bochum believes the fund’s basic idea is sound, but still sees “many open flanks” for it to bring success to international forest conservation. The preservation of tropical forests is a global public good, he says, and the global South depends on the support of the North to protect them. Therefore, it is good that an innovative financing approach is being discussed with the TFFF, says the economist. However, the current concept does not adequately safeguard the sustainability of tropical forest protection. “In particular, it must be ensured that the mechanism is robust against future political interventions,” says Löschel. One suggestion would be to award the money to tropical forest countries not as grants, but as interest-free loans that would have to be repaid when deforestation exceeds a certain threshold. This would also create a strong incentive for future governments of the recipient countries to protect tropical forests.
Photo credit: Amazon rainforest in Brazil AFP
