Brazil’s $5.5B Forest Fund: A New Model Using Loans, Not Donations

A new era of climate finance may be dawning at the Belem climate summit, where Brazil has proposed a conservation fund financed by debt, not donations. The “Tropical Forests Forever Facility,” championed by President Luiz Inácio Lula da Silva, aims to pay 74 developing nations to keep their rainforests standing.
This model is a significant departure from traditional aid. It would be financed by interest-bearing debt, with wealthy nations and commercial investors providing loans. The core idea is to create a sustainable and powerful economic incentive that makes preservation more profitable than deforestation.
The proposal has already attracted $5.5 billion in pledges, signaling strong initial interest. Norway has made the largest commitment of $3 billion, and Germany’s Chancellor Friedrich Merz is expected to add to the total, boosting Lula’s ambitions.
The talks are taking place in Belem, a city in the Amazon, underscoring the critical role these forests play in absorbing carbon dioxide. Brazil is arguing that while destruction provides short-term profits for industries like logging, preservation offers immense long-term rewards for the entire world.
This financial innovation is contrasted by political stagnation. The leaders of the top three polluting nations (US, China, India) were absent from the opening. Meanwhile, the UN chief issued a stark warning that “deadly negligence” and “fossil fuel interests” are threatening the 1.5-degree climate goal.