At COP28 in Dubai, United Arab Emirates (UAE), the Government of Brazil launched its proposal for a global instrument – the “Tropical Forest Forever Facility” – aimed at protecting standing tropical forests in up to 80 countries.
Launched on December 2, 2023, the proposed Tropical Forest Forever Facility would mobilize at least US$250 billion in existing resources from sovereign wealth funds and, with no extra cost, deploy them to pay for conserved tropical forests in more than 80 countries.
Tropical forests provide an array of ecosystem services beyond carbon. The proposal recognizes the role of tropical rainforest conservation for biodiversity, carbon capture, and cooling effects, as well as its importance for social and economic development, said Marina Silva, Minister of Environment and Climate of Brazil.
Minister Marina Silva also underscored Brazil’s expectation to further develop this initiative collaboratively.
We are proposing an innovative process, inviting partners to work together with us to design the operational details of this initiative, Minister Marina Silva said.
Brazil expects that the Facility can be fully operational by COP30, which is to be held in Belém, State of Pará, Brazil.
Payments based on area
The General Director of the Brazilian Forest Service, Garo Batmanian, emphasized that the payments by the Facility would be based on the area of conserved or recovered forests – not on carbon value, biodiversity, or environmental services.
This would make it simple to set up, as well as to check and monitor. In addition to incentives for conservation, the scheme should also include disincentives to deforestation and forest degradation – for example, payments would be reduced by 100 hectares for every hectare deforested.
Crucially, the scheme would provide a guaranteed, long-term flow of resources for tropical forest conservation.
To be eligible, the deforestation rate of a country must remain below a certain percentage and deforestation must be decreasing or less than a percentage.
Acknowledging that each country faces specific challenges, the allocation of financial resources would be a decision of the recipient countries but accompanied by a robust and inclusive transparency mechanism to help those responsible for the management, conservation, and recovery of tropical forests.
Unique and innovative funding mechanism
The Tropical Forests Forever Facility should initially receive investments from sovereign wealth funds, in addition to other institutional investors and other forms of resource input, such as the oil industry.
Currently, sovereign funds gather around US$12 trillion in assets globally. The 13 largest of them – from just 8 countries – correspond to US$8.8 trillion – and around US$1.3 trillion are invested in low-risk assets.
The Facility would be housed in a global organization with an AAA rating, which would enable it to issue bonds at the AAA market rate.
This way, sovereign funds would have an option to redirect their current low-risk assets toward bonds that would contribute to the protection of tropical rainforests, without any additional cost.
The main advantages of this global payment initiative are that: it would be simple to implement and verify; it would encourage good forest stewardship whilst discouraging deforestation and degradation, and it would provide a predictable, long-term resource buffer for forest conservation and restoration. Importantly,
however, it would align incentives for both investing countries and forest countries, without the need for additional costs, said Gato Batmanian.
