The Tropical Forests Mechanism (TFM) concept note outlines how nature finance at scale can guarantee the maintenance and enhancement of tropical forests worldwide. It complements the Brazilian government's Tropical Forests Forever Fund (TFFF), aimed at securing funding to protect rainforests in the Amazon region, Congo Basin, and Southeast Asia.
Partners
- Amazon 2030
- Igarapé Institute
About
Amazon 2030, with the support of BVRio and Igarapé Institute, released a concept note in July 2024 on a Tropical Forests Mechanism (TFM) aimed at supporting nature finance at scale to guarantee the maintenance and enhancement of tropical forests worldwide. The mechanism is expected to complement the Brazilian government’s Tropical Forests Forever Fund (TFFF), announced at COP28, to secure funding to protect rainforests in the Amazon region, Congo Basin, and Southeast Asia.
These three basins hold most of the world’s 1.2 billion hectares of tropical forests, and it is estimated that annual payments of USD 30 per hectare would provide enough incentives for their protection. The oil and gas sector, producing approximately 30 billion barrels a year, could provide most of the funding needed with a USD 1 per barrel contribution.
The concept note proposes rules and procedures for distributing annual payments among tropical countries and to guide the application of resources within participating countries to maximise the impact in the conservation of tropical forests.
Key Features of the Tropical Forests Mechanism:
- Global financial support: Encourages resource-intensive sectors to contribute, aiming for a minimum of USD 1 per barrel of oil produced, potentially generating up to USD 30 billion annually.
- Annual payments for forest conservation: The TFM proposes to allocate USD 30 per hectare of forest to tropical countries, promoting forest maintenance and enhancement.
- Penalties for deforestation: The TFM supports imposing a USD 3,000 penalty for each hectare of deforestation, incentivising countries to reduce forest loss, in the same rationale employed by Brazil’s proposed TFFF.
- Eligibility Criteria: Ensures countries must meet strict deforestation reduction targets and support local communities and forest stewards.
- Fast implementation: By not having complex baselines and financial instruments, countries can achieve qualification in the short term, enabling rapid implementation of the mechanism and thus accelerating the achievement of the global goal of ending deforestation.
Capitalization of the Mechanism: Global Pledge for Tropical Forests
The TFM could be capitalised by a global pledge by resource-intensive sectors: companies in these sectors, such as oil and gas, mining, and agricultural commodity trading, would be encouraged to make voluntary contributions per unit produced by these sectors. In the case of the oil and gas sector, it is proposed that it contributes a minimum of US$ 1 per barrel of oil produced.
Support for the Tropical Forests Mechanism
“Tropical forests provide ecosystem services of inestimable value to humanity and are at the same time victims and heroes of climate change. We need an agile and simple global mechanism that mobilises large amounts of resources to protect and restore tropical forests. This is the core of the Tropical Forest Mechanism proposal.”
Tasso Azevedo
Former General Director of the Brazilian Forest Service, collaborator of Amazônia 2030
“We know that the ecosystem services provided by the planet, on which more than half of the world’s GDP depends, are invaluable. Yet, to avoid the tipping point of tropical forests, we need to create financial instruments to promote conservation and restoration. The Mechanism presented here is another tool that, like the TFFF, advances by offering a financial solution that, to cover the opportunity cost of land uses resulting in forest degradation, incentivizes the conservation of standing forests and more effectively rewards those who protect them.”
Ilona Szabó de Carvalho
Igarapé Institute Co-founder and President
Contact the team
Pedro Moura Costa
BVRio Director (UK)
Mauricio Moura Costa
BVRio Director (Brazil)
Beto Mesquita
Director of Forests and Public Policies (Brazil)
Lucy Cox
Communications (international)
Ludmila Girardi
Communications (Brazil)
SDG Alignment
