{"id":151072,"date":"2025-11-24T11:18:11","date_gmt":"2025-11-24T11:18:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/151072\/"},"modified":"2025-11-24T11:18:11","modified_gmt":"2025-11-24T11:18:11","slug":"the-worlds-new-us125-billion-rainforest-trust-fund-revives-a-1990s-idea-and-shows-its-limits","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/151072\/","title":{"rendered":"The world\u2019s new US$125 billion rainforest trust fund revives a 1990s idea \u2013 and shows its limits"},"content":{"rendered":"

A US$125 billion rainforest fund is being hailed as a flagship announcement from the 2025 UN climate summit<\/a> in Bel\u00e9m, Brazil. The goal is noble: this is essentially a trust fund that will pay countries to keep their tropical forests standing. But its core idea was tried 30 years ago, and the results weren\u2019t great. <\/p>\n

Brazilian president Luiz In\u00e0cio Lula da Silva suggests<\/a> the so-called Tropical Forests Forever Facility<\/a> (TFFF) is innovative because it is \u201can investment fund, not a donation mechanism\u201d. This, in theory, means investors can benefit too, providing a long-term stability<\/a> that isn\u2019t affected by political cycles. <\/p>\n

Turning to private markets is not in itself all that innovative. But years of efforts to mobilise private finance for climate action have<\/a> routinely<\/a> failed<\/a> to attract sufficient investment. <\/p>\n

The reasons for this are pretty simple. Many necessary activities simply aren\u2019t \u201cgood\u201d investments<\/a>. Even commercial renewable energy<\/a> projects often struggle to offer returns high enough to compete with other assets.<\/p>\n

All of these problems are particularly pronounced<\/a> for forest conservation. There aren\u2019t many ways to generate income by leaving forests alone, and clearing them for timber or agriculture is generally more profitable. Indeed, this is one of the key drivers of deforestation in the first place. <\/p>\n

\"Aerial<\/a><\/p>\n

Drone footage of illegally deforested land in Mato Grosso, Brazil.
\n PARALAXIS \/ shutterstock<\/p>\n

Back to the future?<\/p>\n

The TFFF is designed to work around these constraints. Rather than investing directly in conservation projects, it functions like a large endowment or trust fund. It aims to raise US$25 billion in \u201csponsor capital\u201d from government and philanthropic donors. <\/p>\n

Brazil has pledged US$1 billion. Norway followed suit<\/a>, promising about US$3 billion. The fund also plans to sell US$100 billion in bonds to private investors.<\/p>\n

Eventually, the full US$125 billion will be invested in financial markets. After paying interest to investors and sponsors, the remaining returns will be used to pay participating countries around US$4 per hectare of standing tropical forest, minus penalties for forest loss. <\/p>\n

By separating investors\u2019 returns from conservation success, the TFFF does potentially create a more appealing offer for private investors than previous climate finance schemes. <\/p>\n

However, this model has been tried before.<\/p>\n

Trust funds for conservation<\/p>\n

In the early 1990s, around the time of the first global negotiations on climate change, the World Bank\u2019s Global Environment Facility financed a trust fund for biodiversity conservation in the Himalayan kingdom of Bhutan. It was followed by similar projects<\/a> in Uganda, Mexico, Peru, Brazil, and Poland, Slovakia and Ukraine.<\/p>\n

These funds were justified in terms very similar to Lula\u2019s pitch for the TFFF. Private finance was needed, wrote<\/a> one World Bank official in 1993, \u201cbecause it is impossible to predict whether the current \u2018boom\u2019 in international [government] financing for conservation will last\u201d.<\/p>\n

Yet evaluations<\/a> of these conservation trust funds highlighted recurring problems.<\/p>\n

Returns on investment were often lower than anticipated, delaying projects sometimes by years, including the very first one in Bhutan. (And quite how much revenue the TFFF\u2019s investments will actually generate is uncertain.) <\/p>\n

The money was tied up in investments and only a small amount was available for conservation. And, while a trust fund can generate a steady trickle of revenue to pay operating costs, it\u2019s much harder to use this model to start new projects.<\/p>\n

\"furry<\/a><\/p>\n

The endangered golden langur exists only in Bhutan and one tiny corner of India.
\n Odd Man \/ shutterstock<\/p>\n

In Bhutan, the managers of the trust fund struggled with how to finance start-up costs for establishing new conservation areas without eating into the fund itself. Eventually they received a separate grant from the World Wildlife Fund. The TFFF would likely face similar difficulties funding initiatives such as returning farmed land to indigenous communities.<\/p>\n

The TFFF inherits these issues, and adds a new one. To attract private investors, interest payments will be prioritised over conservation spending. The TFFF\u2019s concept note<\/a> is explicit that payments to participating countries will fall if investment income can\u2019t cover payments to bondholders. In other words, there is a real risk that reassuring investors may come at the expense of the fund\u2019s ability to actually protect forests.<\/p>\n

There are bigger questions to ask, too. For instance, a coalition of civil society organizations<\/a> from across the Amazon, as well as Africa and Asia, have already rejected the initiative. They argue it risks turning forests into commodities with a price tag, and that despite claims of centring Indigenous communities, it actually allocates them a paltry amount of money in top-down fashion.<\/p>\n

The revival of a mechanism first tried in the early 1990s should give us pause. If private capital can only be mobilised on terms that weaken climate action, then perhaps there\u2019s no longer any alternative to greatly increased public funding and much stronger redistributive measures. Rich countries, corporations, and individuals will need to shoulder more of the cost of mitigating a crisis they\u2019ve played a disproportionate role in creating.<\/p>\n

In recent years activists and researchers have proposed a long list of alternative options. These include diverting some of the trillions<\/a> currently spent on the world\u2019s largest militaries, reforms to reduce corporate tax avoidance<\/a>, and debt relief<\/a> for climate vulnerable countries. <\/p>\n

We can debate whether any all of these specific options is effective or appropriate. The TFFF and its limits are a sign that it\u2019s well past time to take such measures seriously.<\/p>\n

\"Imagine<\/p>\n

Don\u2019t have time to read about climate change as much as you\u2019d like?
\n
Get a weekly roundup in your inbox instead.<\/a> Every Wednesday, The Conversation\u2019s environment editor writes Imagine, a short email that goes a little deeper into just one climate issue. Join the 47,000+ readers who\u2019ve subscribed so far.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"A US$125 billion rainforest fund is being hailed as a flagship announcement from the 2025 UN climate summit…\n","protected":false},"author":2,"featured_media":151073,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[273,111,139,69,147],"class_list":{"0":"post-151072","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-environment","8":"tag-environment","9":"tag-new-zealand","10":"tag-newzealand","11":"tag-nz","12":"tag-science"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/151072","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=151072"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/151072\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/151073"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=151072"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=151072"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=151072"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}