Brazil’s tropical forest fund aims to be the largest financial instrument of its kind. But as COP30 enters its final hours, the effort has attracted limited political support and money.

The Tropical Forest Forever Facility, Brazilian President Luiz Inácio Lula da Silva’s flagship initiative to protect the world’s tropical forests, reached $6.6 billion in pledges as COP30 entered its final hours, with Germany becoming the third nation alongside Brazil and Indonesia to commit $1 billion to the effort.

“It is symbolic that the celebration of its birth is taking place here in Belém, surrounded by sumaúmas, açaí palms, andirobas, and jacarandás,” Lula said. “For the first time in history, countries of the Global South will take a leading role in a forest agenda.”

The billions raised mark significant progress for the highly technical financing instrument that Lula has championed since COP28 in Dubai, set up to pay tropical forest nations for keeping trees and their surrounding forests standing rather than cutting them down, rewarding conservation with cash instead of traditional grants.

But the president’s soaring language masked a fundamental problem: the fund remains well short of the $25 billion target Brazil set for government investments, designed to secure investor confidence and unlock an additional $100 billion in private financing for a total goal of $125 billion.

Norway is the largest contributor by far, pledging $3 billion over ten years, nearly half the current total. France committed €500 million, while smaller pledges came from Portugal ($1 million) and the Netherlands ($5 million) to assist with technical matters pertaining to the fund’s secretariat.

In effect, the entire tranche of start-up funding raised over the course of COP30 comes from just five nations, two of which, Brazil and Indonesia, are set to be major beneficiaries of the fund itself.

Notably absent from the investor line-up were major economies that had previously expressed interest in supporting the fund, including China, Saudi Arabia, and the United Kingdom. The United States, viewed as another possible backer under former president Joe Biden, has reversed course under Donald Trump’s administration.

Britain’s withdrawal came as a last-minute blow to Lula’s flagship project: the UK had been involved in designing the facility and pioneered tropical forest preservation when it hosted COP26 in Glasgow, but declined to invest on the eve of the summit due to a view in Downing Street that the effort remains in “too early a stage” to commit substantial finance, according to reporting by the Guardian.

“It is telling—and concerning—that the UK, as one of the world’s richest countries, has not announced an investment to match those from less wealthy countries,” said Tanya Steele, chief executive of WWF-UK.

The need for finance to protect the world’s tropical forests from the Amazon to the Congolian rainforests is urgent, despite repeated global pledges to protect them. The 2025 Forest Declaration Assessment shows that deforestation is continuing at crisis levels, with 8.1 million hectares lost in 2024 alone, 63% above the rate needed to meet 2030 targets.

“At the halfway point to 2030, the world should be seeing a steep decline in deforestation. Instead, the global deforestation curve has not begun to bend,” the latest assessment found. “Financial flows are still grossly misaligned with forest goals, with harmful subsidies outweighing green subsidies by over 200 to 1.”

Tropical forests store 15-20 years’ worth of global carbon emissions and represent roughly 30% of the planet’s carbon storage. Scientists warn that cumulative deforestation could trigger a catastrophic tipping point, converting forests to deserts.

At least 92 countries in attendance at COP30 back a separate “deforestation roadmap” pushed by Lula, likely to be one of the key outcomes of the summit, including the EU and the Coalition for Rainforest Nations representing over 50 rainforest countries, more than the 82 nations supporting the parallel fossil fuel phase-out roadmap, according to Carbon Brief.

The majority of remaining forests outside that coalition sit in Russia, Canada and the US, none of which support the roadmap in its current state.

Despite the uphill battle, Lula characterised the fund as a centrepiece of Brazil’s climate agenda.

“The Tropical Forest Forever Facility will be one of the main tangible outcomes in the spirit of COP30 implementation,” he said. “In just a few years, we will begin to see the fruits of this fund. We will take pride in remembering that it was in the heart of the Amazon rainforest that we took this step together”.

A fund built on profits

Without sufficient capital to generate significant returns, the mathematics collapse.

The concept note published by the Brazilian presidency describes it as a mechanism “to support the full range of less-marketable tropical forest ecosystem services,” designed to correct a perceived market failure: it is more profitable to chop forests down for lumber, agriculture or mining the ground beneath them than keep them standing.

The facility aims to raise $25 billion from governments as “sponsor capital,” then leverage that to attract $100 billion from private investors who buy bonds. The combined $125 billion will then be invested in a global portfolio of sovereign and corporate bonds, with a particular focus on emerging market and tropical forest country bonds.

In the scenario where the fund secures the full $125 billion, countries would receive approximately $4 per hectare annually for standing forest, according to World Bank calculations, provided they maintain deforestation rates below 0.5%, with heavy financial penalties applied for forest loss.

The World Resources Institute noted the facility “could be the single biggest source of international finance for Indigenous peoples and local communities,” potentially funding land purchases, fighting illegal mining, and securing rights. But that depends on achieving scale the current funding makes impossible.

Despite the steep financing challenges, some groups maintain the fund represents progress. WWF called it “a landmark moment for nature and climate finance.”

“The TFFF is already a defining legacy of the Belém COP,” said Mauricio Voivodic, executive director of WWF-Brazil. “Not only for Brazil, but for the entire planet, especially the Global South.”

Christopher Egerton-Warburton, a former Goldman Sachs banker whose London firm Lion’s Head Global Partners engineered the structure of the fund, told Global Witness success requires near-perfect execution.

“The sun, the moon and stars have to all come together” for the fund to succeed, he said.

The math at current funding levels

With $6.6 billion instead of $125 billion, the fund currently holds 5% of its target.

Assuming 7.5% in annual returns, a high rate of profitability that is far from guaranteed, the fund would possess roughly $495 million in annual investment income. After paying private bondholders and government sponsors their shares, approximately $213 million remains for 74 eligible tropical forest countries.

That’s less than $3 million per tropical forest nation annually. The 20% earmarked for Indigenous communities amounts to about $43 million total, split among hundreds of territories across three continents.

At current levels, the fund projects to pay tropical forest nations roughly 16 cents per hectare, a 96% decrease from the World Bank’s $4 projection at full capitalization.

The fund’s model further relies on providing a strong financial incentive for nations currently pushing ahead with deforestation, like Bolivia, to scale back in return for money. If that money isn’t there, the incentive, and projected impact of the initiative on global deforestation rates, is weakened significantly.

“Having raised only $5.6 billion from sponsoring and beneficiary countries, it is impossible to imagine that the mechanism can attract $100 billion in investment,” said the Global Forest Coalition following the launch. (Germany’s additional $1 billion commitment arrived after this analysis.)

A UNEP report released ahead of COP30 found that annual forest finance alone needs to reach $300 billion by 2030, triple current levels of $84 billion.

“All the calculations made by the World Bank regarding the TFFF are collapsing due to the very logic of capital they aspire to conquer: private investors only invest when profits are relatively certain,” GFC said. “Capitalism only bets on the green of dollars, not on the green of forests.”

Who gets paid first? 

If investments hit the target 7.5% annual return, the fund generates roughly $9.4 billion. But that money doesn’t go straight to forests, and $120 billion in assets needed to generate that return are still missing.

First in line for payment are the bondholders, private investors and major financial institutions who would receive approximately $4 billion in annual returns on a combined $100 billion share in the fund. Second come the developed country government sponsors, which would collect roughly $1 billion in interest on their $25 billion seed investment.

Only after investors and sponsors take their cuts does money flow to tropical forest countries.

Under ideal conditions, assuming the fund hits both the $125 billion base and achieves 7.5% returns, tropical forest nations would receive approximately $4 billion annually, less than half of what the fund generates, as more than half is used to incentivize investment from wealthy nations and private capital.

The facility mandates that at least 20% of payments to forest nations flow directly to Indigenous communities, meaning roughly $800 million, while $3.2 billion goes to national governments. The direct funding to Indigenous peoples and local communities is unique among global climate finance instruments, which typically channel money through national governments.

The payment waterfall is explicit: investors first, forest nations and indigenous frontline communities last. The income generated by the assets held in the fund depends on successful returns on investment and global economic conditions. If a global economic downturn occurs, the entire structure could collapse.

“As TFFF is an investment fund its returns cannot be guaranteed,” the fund’s framework states. “In the event that the market value drops below certain key thresholds it may be necessary to reduce the rate of payout to tropical forest nations.”

Forest countries receive whatever’s left, which could be far less than the promised $4 per hectare, or nothing.

Cash on delivery meets debt

Unlike conventional forest finance that distributes grants directly for conservation, the facility operates what’s known as the “cash-on-delivery” model, meaning governments can spend the money received in exchange for forest preservation however they want.

The money received from the fund is not required to be spent on forest protection, though governments will have to submit transparency records on how the money received from TFFF is spent. “The TFFF does not determine how tropical forest countries will use the funds awarded to them,” the concept note states.

Beyond generating returns for forest payments, the fund is also meant to channel capital from developed nations to Global South financial markets. Egerton-Warburton told Global Witness that country sponsors are “increasingly focused” on this “secondary benefit,” “over and above its benefit to the tropical forest countries.”

The fund’s investment strategy raises additional concerns amid current worries of a global debt crisis, particularly in low- and lower-income nations across Africa, South America and Asia, many home to the world’s tropical forest reserves.

By purchasing sovereign bonds from emerging markets and tropical forest countries, the facility is effectively buying these nations’ debt, then using returns from those bond investments to pay the countries for forest protection. Proponents note this does provide capital to Global South nations that might otherwise struggle to access international markets at favorable rates.

However, critics warn the circular structure creates risks. Countries receive payments derived partly from interest on loans they themselves are servicing. With many developing nations already struggling under massive debt burdens, this arrangement could prove problematic if economic conditions deteriorate, potentially trapping forest countries in a cycle where debt payments undermine their capacity to protect forests.

Greenpeace raised governance concerns in its statement following the launch: “Instead of prioritizing paying sponsors and investors first, the system should ensure equitable and timely payments to tropical forest countries and Indigenous Peoples.”

Carolina Pasquali, Greenpeace Brazil’s executive director, warned of the risks inherent in the market-dependent structure: “As the Facility is dependent on the volatility of global markets, the TFFF funding and the allocation of resources by tropical forest countries must be critically scrutinized to ensure forest protection funds are stable and reliable.”

Civil society and indigenous communities turn against TFFF

The facility’s reception among Indigenous and forest communities has shifted dramatically since last year, tracking closely with new understanding how the financial structure actually works.

Early in the design process, major conservation groups expressed enthusiasm. Brazil conducted consultations with Indigenous leaders, incorporating feedback on direct funding provisions.

At the G20 Social Summit in 2024, a joint document crafted by over 2,500 civil society representatives from 91 nations endorsed the forest fund.But as the fund’s financial structures became clear, opposition mounted. More than 200 civil society organisations from Brazil, the Amazon, Asia, and Africa signed a statement strongly opposing the facility ahead of its launch last week.

“The TFFF is a mechanism for privatizing forest finance,” it declared. “The TFFF mistakenly and deceptively considers deforestation a market failure that will be resolved by putting a price on ecosystem services to attract private investment. The ecological collapse caused by capitalism will not be solved with more capitalism.”

Separately, the People’s Summit on the road to COP30, attended by 25,000 participants, issued a declaration categorising TFFF among “false solutions” to the climate crisis.

“We oppose any false solution to the climate crisis that perpetuates harmful practices, creates unpredictable risks, and diverts attention from transformative solutions based on climate justice and the well-being of people in all biomes and ecosystems,” the declaration stated. “We warn that the TFFF, as a financial program, does not constitute an adequate response.”

The mechanism was first conceived more than 15 years ago by a World Bank executive. In 2018, the Center for Global Development circulated a proposal, which the Brazilian government adopted and presented at COP28 in Dubai.

Civil society groups objected to the fund being hosted at the World Bank, a common point of contention with other similar funds to funnel capital towards developing nations like the Loss & Damage climate fund, which they view as dominated by major shareholders like the United States.

“The World Bank will have significant influence over the TFFF. The wealthy countries that sponsor this mechanism will hold a majority on its board. Developing countries and civil society will have no decision-making power in the governance of the TFFF,” the statement continued.

“The TFFF’s profitability is not guaranteed, and in the event of a decline in profits, payments will be made first to the fund’s managers and consultants, then to private investors, then to the sponsoring wealthy countries, and finally to the countries with tropical forests,” the civil society and indigenous community coalition said.

The Global Forest Coalition questioned why Brazil and Indonesia would invest $1 billion each in an uncertain mechanism rather than “channel it directly to indigenous peoples and local communities to strengthen solutions like agroecology and promote actions to curb the expansion of deforestation, mining, and oil extraction.”

The high health stakes of forest loss

The health consequences make the opposition more urgent. Indigenous communities have proven to be forests’ most effective guardians, with deforestation rates significantly lower in their territories.

Yet for the 30 million people living in the Amazon, including Indigenous nations, riverine communities, and urban residents, environmental degradation carries severe consequences.

Sixty percent of emerging infectious diseases originate in wildlife, with nearly one-third of outbreaks linked to habitat destruction. In 1997, Indonesian forest fires drove fruit bats carrying Nipah virus into populated areas. 265 people were infected, 105 died.

In 2013, a West African boy playing near a tree infested with bats displaced by deforestation became the index case for an Ebola outbreak that killed 11,000. Surveillance in deforested Amazon areas has detected Oropouche fever, a viral disease now spreading across South America, according to research published in The Lancet Infectious Diseases.

Climate change compounds these threats. During the record drought of 2024, 11 million hectares burned in Brazil, blanketing cities in smoke and triggering spikes in respiratory and cardiac disease. River levels halved, stranding communities without access to health care, safe water, or food. Illegal gold mining has poisoned rivers with mercury.

Each forest lost represents not just carbon released but potential medicines never discovered. Roughly 25% of modern medicines derive from rainforest plants, yet less than 1% of tropical species have been examined for pharmaceutical properties.

Private capital out of the picture, for now 

The fundraising strategy on which the success of TFFF depends also heavily on something that hasn’t happened: private investors committing capital.

After two years of advocacy and political maneuvering, private capital remains entirely absent from the picture. The shaky government backing so far, $6.6 billion versus the promised $25 billion that would absorb first losses and shield private investors from risk, eliminates the safety margin private investors were pitched to join the initiative.

The firms floated as possible major investors in the fund, including major multinational banks such as JP Morgan and private equity groups, have remained silent in recent months, with no indications of incoming investments since TFFF’s launch in Belém.

Questions also surround the fund’s investment advisers. Bracebridge Capital, a Boston firm serving as one of the advisers, specializes in “high risk bets on debt from struggling economies,” according to Global Witness reporting.

The firm was dubbed a “vulture fund” in 2016 for aggressively pursuing claims against Argentina after its debt default. More recently, Bracebridge has made investments far removed from conservation finance, including bailing out the Hooters restaurant chain and building cryptocurrency positions.

A crowded labyrinth

The TFFF enters a fragmented ecosystem of global development finance, from health to humanitarian aid and climate change, where even celebrated mechanisms continue to fall dramatically short of their funding targets.

The Green Climate Fund, launched in 2010 and posited as the primary vehicle for channeling climate finance to developing countries, raised less than $17 billion over 15 years.

The Loss & Damage Fund, celebrated as a landmark achievement of COP28 fought for by developing nations on the frontlines of the climate crisis they did little to cause for decades, has mobilized just $431 million against $724 billion annual needs. Two years after creation, it has yet to disburse any money.

The Cali Fund for biodiversity, created at COP16 in Colombia with a target of $500 billion, remains empty as well.

At COP29 in Baku, developed countries agreed to $300 billion annually by 2035 for climate action in developing nations. Economists estimate total climate finance requirements at $2.4 trillion annually, of which the Baku target covers around 12%.

The labyrinth of overlapping funding structures, each with different governance, eligibility criteria, and reporting requirements, creates contestation and confusion about what counts toward international obligations.

Whether TFFF contributions count toward the New Collective Quantified Goal remains hotly debated, especially in view of its unique mechanism in which countries that contribute stand to benefit financially from their investments.

Greenpeace argued following the launch that “any contributions to the TFFF should not count towards the NCQG, nor should it divert resources already allocated.”

For now, the facility enters operation with a fraction of intended resources, no private investors, and deepening skepticism from the communities it claims to serve.