What if stopping deforestation became a money spinner for developing countries?
What if financial markets treated trees like shareholders? Enter the Tropical Forests Forever Facility, a new fund that Brazil, which is home to about a third of the planet’s tropical forests, is pitching to the world and that would pay developing countries a fee for every hectare of forest they maintain.
But promising ideas, like carbon credits tied to curbing tree loss and grant schemes that reward forest protection, have struggled to significantly reverse the deforestation trend globally. Payments from the TFFF may be large and predictable enough to succeed where other initiatives haven’t.Brazil’s proposal envisions a $US125 billion fund, which would make it, by some measures, the world’s biggest pot of money to help fight climate change and biodiversity loss.
Garo Batmanian, the director of the Brazilian Forest Service, is one of the architects of the Tropical Forests Forever Facility.The design allows the TFFF to essentially create its own grants for forest protection. While that design is unique, the financial mechanism behind it – getting deposits and reinvesting them for a profit – is common. It’s basically how banks work.
Forests are crucial for curbing biodiversity loss. Orangutans are one species endangered by deforestation.But, at this early stage in the process, no countries or philanthropies have yet announced that they will put money in the fund. Countries that receive TFFF funds would also be penalised $US400 for each hectare of forest they lost in a given year. The penalty is roughly the same annual revenue that a hectare of land used in a soybean farm in the Amazon would bring in, which is one of the most profitable uses of deforested land in developing countries.
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