WWF chief: Finance has long failed forests - now it may save them

Kirsten Schuijt is Director General of WWF International

For too long, financial markets have perversely encouraged deforestation. Clearing trees for agriculture, mining or infrastructure yield more than keeping trees alive. This needs to change.

Forests have an estimated value of $150 trillion - double the total value of all global stocks. Yet $409 billion in subsidies are directed to activities that harm forests each year, compared to just $5.9 billion in international public finance that goes toward forest protection and restoration.

Currently, only 1 in 10 dollars for forests comes from private finance. We cannot rely on public funds alone to bridge the gap in climate finance – history has shown that it will not be enough.

Brazil and other tropical forest nations want to turn this on its head with smart investment of public and private money. In just weeks, when it hosts the U.N. COP30 climate summit, Brazil is expected to launch the Tropical Forest Forever Facility (TFFF).

Expected to reach $125 billion when fully established, the TFFF is a self-sustaining investment fund that would reward forest countries that keep their forests standing while also yielding returns for investors.

By blending capital from countries, philanthropies and institutional investors, the fund borrows at low interest rates and invests in higher-yielding bonds. The profits are then used to pay tropical forest countries and forest stewards $4 for each hectare of satellite-verified standing forest.

Successfully raising such sums would make the TFFF the world’s largest ever fund to support forest conservation work.

Brazil is so confident the fund will work that it has invested the fund’s first billion. A country that has historically been an aid recipient has taken the reins.

This kind of courageous leadership, backed by significant investment, should compel other countries and investors to join hands. It also means the TFFF has a leadership that is particularly attuned to the needs of the very countries it seeks to support, and is well-versed in avoiding and correcting past mistakes.

One mistake the fund is keen to rectify is the lack of reward for countries protecting globally significant tropical forests.

Benefits provided by forests like the Amazon, the Congo Basin, Southeast Asia and the Southwest Pacific - such as storing carbon, regulating water cycles and harbouring biodiversity - aren’t currently valued financially.

The TFFF will go some way toward redressing the balance, positioning tropical forest countries as holders of a valuable global asset class. It will reward countries for maintaining their existing forests by providing them with a predictable, long-term income from their forests which they can reinvest into activities that support forest conservation.

One of the most significant innovations is that at least 20% of the funds will be paid directly to Indigenous peoples and local communities, recognising their crucial role in forest stewardship. This would make the TFFF by far the largest international source of finance for these communities, helping to create jobs and reduce poverty.

For sponsor governments and investors, too, the TFFF makes a lot of sense. The model isn’t about grants; capital for the fund will come from one-time loans and guarantees, and sponsors and investors will be paid back with interest over time. This is important because investment in the TFFF needs to be complemented by other financial support for forests.

Getting the TFFF up and running now needs to be a top priority. Sponsor countries and financial institutions need to step up to capitalise the fund and ensure a successful launch at COP30. It’s a chance for leaders to reaffirm their commitment to the world’s forests and invest in our shared future.

We know that we cannot survive without nature. The loss of our forests is accelerating our path towards catastrophic climate change. The TFFF is one of our best opportunities to positively change financial flows - and to secure a thriving planet for all.