Can a new fund give tropical forests a future?

RIO DE JANEIRO - As global temperatures smashed records last year, wildfires raged in South America, driving record global tropical forest loss, according to more than 20 years of data from the environmental NGO World Resources Institute.

The unprecedented damage complicates the target to halt and reverse deforestation and forest degradation by 2030, agreed upon by more than 140 countries at the COP26 U.N. climate change conference in 2021.

As host of this year's COP30 conference in the Amazon city of Belém, Brazil wants to launch a global fund to protect and restore tropical forests. Brazil initially proposed it at COP28.

Called the Tropical Forest Forever Facility (TFFF), the fund would start with $125 billion and simple rules, aimed at bypassing international negotiations that have stalled other financing schemes.

Here is what you need to know:

What is the TFFF, and where would the money come from?

In the Amazon and elsewhere, a hectare of forested land is often worth less money than deforested land, where cattle or crops can be more easily introduced.

By better valuing the services that forests provide to natural systems and society, the TFFF would incentivise countries to keep trees standing.  

These so-called ecosystem services include cooling the climate, regulating water flow, storing planet-heating carbon and supporting biodiversity, according to the latest concept note on the initiative from Brazil's government.

The fund would seek to raise money through loans from high-income countries, the World Bank, nonprofit organisations, market investors and others, fully repayable within 30 to 40 years.

That money would be invested in assets such as sovereign bonds, with some of the returns given to investors. Another share would be distributed to 70 countries that collectively hold 1 billion hectares of tropical forests.

Each year, those countries would be paid $4 for each forested hectare. Countries that lose forests would lose money, and those that recover forests would be paid more.

Are there other forest-protection funding schemes?

Other mechanisms include direct donations to funds such as the Global Environment Facility or Brazil's Amazon Fund, as well as bilateral pacts between countries, like Norway and Indonesia, for conservation goals.

Other vehicles include carbon-credit initiatives, in which landholders or governments are paid for the carbon captured in forests, and debt-for-nature swaps, in which creditors allow indebted countries to redirect part of their repayments to conservation.

However, most of these initiatives have not gained scale. The rules for a U.N.-backed global carbon market have been debated for years, and funding streams can be cut when governments change power.

How is the TFFF different, and at what stage is it now?

The TFFF could raise money already available in the market by attracting investors interested in low-risk, environmentally friendly investments, Brazil's government argues.

Countries with tropical forests would be provided a stable stream of money under a relatively simple framework, as long as they demonstrate transparent public finance management, that they are able to track deforestation and it is under control.

Money would be distributed to each country's finance ministry, and governments would invest in forest conservation as they see fit.

Brazil's government is proposing to channel 20% of the money to Indigenous and other local communities, or $800 million annually, which is more than double the amount these communities received to protect land in 2024, according to the Rights and Resources Initiative, a global coalition.

However, the Global Forest Coalition, an international alliance of NGOs and Indigenous peoples, has dubbed the initiative "a false solution for tropical forests" that "could be used to greenwash companies that invest in it."

What are the risks if tropical forests remain unprotected?

Scientists say the impact of degradation and climate change is pushing vast swaths of the Amazon, the Congo Basin and other rainforests past a tipping point, after which they become drier and more vulnerable to fires.

As fires and forest loss accelerate, stemming climate change becomes increasingly difficult, feeding into yet more degradation, heat and fires.

Last year, a record drought in the Amazon led to fires that burned twice the amount of forested areas in Brazil than the previous record, according to 40 years of data from mapping consortium MapBiomas.

(Reporting by Andre Cabette Fabio; Editing by Ellen Wulfhorst and Ayla Jean Yackley.)