Brazil is championing a new global financing mechanism, the Tropical Forest Forever Facility (TFFF), to be launched at the upcoming COP30 conference. The initiative aims to shift forest conservation from a reliance on volatile foreign aid to a self-sustaining, market-driven model.
The TFFF is designed to raise a massive $125 billion to pay tropical forest countries a fixed amount for every hectare of standing forest they maintain, with deductions for deforestation.
How the Financial Mechanism Works
The TFFF operates as a blended finance fund, combining public and philanthropic capital with private investments to generate returns. Public sponsors, primarily high-income countries, will provide 20% of the initial capital at low interest rates. The remaining 80% will come from market investors like pension funds and sovereign wealth funds.
The fund’s investment arm, the Tropical Forest Investment Fund (TFIF), will invest this capital in a diverse portfolio of financial assets, such as bonds. The revenue generated from these investments will then be used to pay tropical forest countries for their conservation efforts.
A portion of these payments (≥20%) is mandated to go directly to Indigenous peoples and local communities (IPLCs), who are recognized as vital stewards of the forests.
Uncertainties and Criticisms
While the TFFF is intended to be a robust and predictable source of funding, its market-based approach has raised significant concerns. The fund’s ability to generate returns relies on its investments in the Global South, where a flawed credit rating system often forces developing countries to borrow at a higher cost.
Critics argue that this means the money for conservation will effectively be coming from the developing world itself through debt repayments, rather than from developed countries as an obligation.
Additionally, the TFFF faces other challenges:
The fund’s reliance on being housed at a multilateral development bank like the World Bank could make it vulnerable to political influence.
There are doubts about whether the mandated funds will successfully reach IPLCs, given historical precedents where less than 1% of climate-related aid reached them.
The facility’s eligibility criteria, which requires a specific canopy cover, could disadvantage countries with naturally less dense forests and incentivize a “one-size-fits-all” approach that might not align with local ecosystems.