Brazil officially launched a new financial market fund, called the Tropical Forests Forever Facility, or TFFF, at a Nov. 6 event ahead of the COP30 climate summit it will host in Belém.
Countries with significant amounts of tropical forest cover can receive up to $4 per hectare ($1.62 per acre) of standing forest per year under the fund’s rules. But with penalties of up to $800 per hectare ($324 per acre) of deforestation, payments shrink fast, meaning even small increases in deforestation can amount to hundreds of millions lost.
“Forests are worth more standing than cut down. They should interact with the GDP of our nations,” Brazilian President Luiz Inácio Lula da Silva said at the event. “The ecosystem services they provide to humanity must be compensated, as should the people who work to protect them.”
Tropical forest countries must allocate 20% of payments to Indigenous and local communities, but it’s up to governments to decide how; it may not even be in the form of direct cash payments.
Every hectare of forest cleared can have a big impact on how much a country gets paid. If deforestation rates are low (less than 0.3%), each hectare deforested faces a discount of $400, or the equivalent of 100 hectares if the price per hectare falls below $4. For higher deforestation rates (0.3-0.5%), each hectare cleared is discounted at the value of 200 hectares. Forests degraded by fire are counted as 35 hectares lost.
In 2021, the Brazilian Amazon’s worst deforestation year since 2006, the biome lost around 1.3 million hectares (3.2 million acres). In 2024, this fell to 671,200 hectares (1.65 million acres).
This difference of more than 628,000 hectares (1.5 million acres) could be worth hundreds of millions of dollars under the fund’s rules, creating a significant incentive for governments to keep forests standing.
According to the TFFF’s latest concept note, investor repayments and interest payments are top priority; remaining profits will go toward forest payments. If there isn’t enough left over to meet the $4 target, the per-hectare payment is reduced.
Marina Silva, Brazil’s environment minister, said this adds to the fund’s long-term feasibility. “It is possible to have a tool to finance the maintenance of tropical forests that is not based on donations,” she said at a press conference following the announcement, adding that investor returns are guaranteed.
Groups such as the World Rainforest Movement have criticized this feature of the fund, saying it prioritizes investors over Indigenous communities and other forest stewards. Also, financing that relies on emerging market bonds depends on high borrowing costs for developing nations to be feasible.
The fund’s architects aim to secure $25 billion in seed money from countries attending COP30, and an additional $100 billion from private investors. So far, more than $5.5 billion has been pledged, including $3 billion from Norway and $1 billion each from Brazil and Indonesia.
Banner image: Brazilian Environment Minister Marina Silva at a Nov. 6 press conference. Image courtesy of Fernando Donasci/MMA.
This story first appeared on Mongabay
This article is licensed under a Creative Commons Attribution-NoDerivatives 4.0 International License.
You may republish this article, so long as you credit the authors and Mongabay, and do not change the text. Please include a link back to the original article.
