A billion dollars to start a financial mechanism that wants to make the conservation of the forests more profitable than their destruction. This is the commitment put on the table by the Brazilian president Luiz Inácio Lula da Silva during the United Nations Climate Week. The announcement concerns the “Tropical Forests Forever Fund” (TFFF), a multilateral tool that will be officially launched at the Belém Cop30, in the heart of the Brazilian Amazon, in November.
“Brazil will give the good example and become the first country to commit a billion dollars in the bottom,” Lula said on Tuesday 23 September, inviting other international partners to present “equally ambitious contributions”. The goal is to transform the protection of forests into a measurable economic asset, providing a stable and predictable annual annuity to those who keep their ecosystems standing.
How the bottom works
The mechanism differs from traditional approaches based on payments for reducing emissions. The TFFF will pay directly for the preserved forest. The idea is to create a supplied fund which, up to operation, can generate about 4 billion dollars a year to be distributed to the participating countries. The sum will be proportional to the hectares of forest preserved, with a target of up to four dollars per hectare. The control will be technological and transparent. “Every year, satellite monitoring will allow you to determine if the countries are respecting the objective of maintaining deforestation below 0.5%,” Lula specified. Brazil, through its National Institute for Space Research (Inpe), already has an advanced monitoring system that could serve as a model for other nations.
The beneficiaries, over 70 nations with tropical forests, will have autonomy on how to allocate the funds received. In Brazil, for example, the Ministry of the Environment provides that resources can strengthen programs such as the “Green Bolsa” (a scholarship for low -income families live in protected areas), the national policy for the payment of environmental services and initiatives for the development of bioeconomics. A binding condition for adhesion is commitment to allocate 20% of resources directly to indigenous populations and traditional communities. “To direct a part of these resources to those who have always taken care of our forests guarantees the right support,” concluded the president.
A 125 billion financial architecture
The final goal is a 125 billion dollar fund. Financial architecture provides for an initial contribution of 25 billion by governments and philanthropists, who will act as “Junior capital”. In practice, these public funds would take the first risk share, acting as a bearing to absorb any initial losses. This would make the investment safer and more attractive to attract the next 100 billion dollars from the private sector, such as pension funds or investment banks. The investments of the fund will in turn be directed towards a green economy, with an explicit ban on financing projects related to fossil fuels.
The initiative, carried out by Brazil since the Cop28 of Dubai, has already collected the adhesion of five other countries (Colombia, Ghana, the Democratic Republic of the Congo, Indonesia and Malaysia) and the interest of potential investors such as Germany, United Arab Emirates, France, Norway and the United Kingdom. This setting, according to Razan Khalifa to Mubarak, a special correspondent for the nature of the United Arab Emirates, “marks a turning point”, defining the TFFF “an innovative initiative led by the South of the world”.
Two approaches in comparison
This approach based on direct economic incentives emerges while, on other fronts, environmental policies meet significant obstacles. In the same hours of Lula’s announcement, the intention of the European Commission to propose a second postponement of its anti-deforestation regulation (Eudr) emerged from Brussels. The rule, which would oblige importers to trace the supply chains to exclude products related to the destruction of forests, is opposed by some European commercial partners and agricultural sectors, which consider it a protectionist, expensive and complex implementation measure.
Thus two parallel and philosophically distant paths are outlined. On the one hand, a “pull” model based on economic incentives, led by the South of the world to make conservation profitable. On the other, a regulatory “push” model, promoted by Europe, which aims to exclude non -sustainable products from the market but which clashes with bureaucratic obstacles and commercial resistance.
