Posted on May, 28 2025

Mauricio Voivodic, Executive Director & CEO, WWF-Brazil
Dr Longe Etienne, Country Director, WWF-DRC 
Dr Henry Chan, Senior Director of Conservation, WWF-Malaysia

Despite a glut of commitments in recent years, finance for conserving the world’s forests for people and nature remains woefully inadequate. An estimated US$460 billion a year will be needed to effectively protect, restore and enhance forests at a global scale by 2030, but current financing is a tiny fraction of that total. And with government budgets being squeezed and many countries’ overseas development assistance threatened, bridging this gap is challenging.

Against this backdrop, the new Tropical Forest Forever Facility (TFFF) is a smart and essential initiative. The largest-ever funding mechanism for forests, it aims to provide a long-term source of finance for countries that keep their tropical forests standing. A global effort led by the government of Brazil, the TFFF will be formally launched at the COP30 climate summit in Belém, Brazil, in November.

The TFFF is a blended finance structure that seeks to mobilize US$125 billion in capital from public and private sector sources. These funds will be reinvested in a diverse portfolio to generate a reliable return for investors, with the remaining earnings being transferred to tropical forest countries that maintain forest cover. 

The TFFF is designed to distribute approximately US$4 billion each year for the long term. Countries will receive performance-based payments at an initial fixed rate of US$4 per hectare of forest per year, though this will be discounted if deforestation or forest degradation increase – and countries with high levels of deforestation won’t be eligible at all.

There’s a lot to like about the TFFF:

It rewards countries that keep their forests standing, recognizing the global benefits this provides. This is particularly significant in areas with high forest cover and historically low levels of deforestation, like the Congo Basin, which have less opportunity to benefit from existing financial mechanisms aimed at reducing deforestation rates or increasing carbon sequestration.

It offers a bold and timely solution to the central challenges of climate and nature finance: how to provide increased funding to developing countries in a world of decreasing foreign aid budgets. The TFFF financial model relies on investments – not grants – from sponsor countries, who will get their paid-in capital back with interest over time. That sovereign investment then leverages private investment at a ratio of 1:4. And for the sponsors, the TFFF financing structure is effectively “one and done” – the investment structure does not require periodic replenishments the way most global funds do. 

It’s not about aid or charity – it’s a partnership. The TFFF is designed by tropical forest countries and positions their forests as a global asset class. By providing a financial return for investors and a long-term dividend for tropical forest countries, it offers a win-win for all participating countries, and everybody gains from the carbon storage, biodiversity, water and other ecosystem services that the forests provide.

At least 20% of the annual funding will go to Indigenous Peoples and local communities, recognizing and remunerating them for their stewardship. This will generate up to an anticipated US$800 million annually to support community-led initiatives, or roughly triple current financial flows, making the TFFF by far the largest source of international funding to Indigenous and community forest stewards, helping improve their livelihoods where financial assistance is inadequate.

It’s simple and transparent and won’t create new bureaucracy. Payments are based on independently verified satellite data that track changes in forest cover using existing systems. Rather than having to meet donor conditions, recipient countries decide how they spend the proceeds, so long as it supports forest conservation. This will also help strengthen country-level monitoring systems in the long term. 

With the COP30 climate summit a few months away, we encourage a fast resolution of key issues to strengthen the TFFF:

• Establish a threshold of 50% canopy cover to ensure protection of high-integrity forests. While a 20% canopy cover threshold as the universal criterion for payments allows for broad tropical forest country participation, this threshold is too low for regions with historically high canopy density, such as tropical moist forests, where coverage typically is 60% and higher. We recommend setting the forest canopy threshold at 50% for full payment to prioritize high-integrity forests while allowing for a partial payment between 20% and 50%. This will help incentivize maintenance and restoration of dense forests with greater canopy cover.
• Eliminate the eligibility criteria of 0.5% or less deforestation rate at a country level to ensure a more inclusive approach and to allow more tropical forest countries to participate in the TFFF from the outset.
• Review standards and approaches to assess deforestation and forest degradation, eligibility criteria and thresholds, among others, three years from the launch at the COP30 climate summit and every three years thereafter. 
• Better address and monitor forest degradation. We believe the approach to addressing forest degradation needs to be improved from the start, capturing salient degradation dynamics using existing monitoring platforms. The current reliance on fire-damaged forest as the sole proxy for degradation does not adequately account for degradation caused by activities such as selective illegal logging and roadbuilding.
• Use higher-resolution data for monitoring deforestation. We recommend using a minimum mapping unit of at least 30-meter resolution, which is globally available and technically feasible. The deforestation reporting unit would remain at the 1-hectare unit, but a 1-hectare minimum mapping unit for monitoring deforestation is too coarse a resolution to fully capture the tree loss TFFF is designed to stop.
• Adopt a strong Environmental, Social and Governance (ESG) investment criteria to ensure that the Tropical Forest Investment Facility (TFIF) aligns its investments with the overall sustainability goals of the TFFF. Investments are expected to comprise a wide range of debt instruments, with a strong tilt towards sovereign bonds issued by both emerging and developed countries. The TFIF should, therefore, include robust ESG factors in its investment decisions and transparently disclose them.
• Co-design the use of finance with Indigenous Peoples and local communities. One of the most laudatory elements of the TFFF is that it would require countries receiving payments to set aside at least 20% of the funding for Indigenous Peoples and local communities. The Brazilian Ministry of Indigenous Affairs and Indigenous and local community representatives have initiated a process to co-design the details of this mechanism. This process should ensure provisions for direct access to funding by Indigenous Peoples and local communities, build on best practices from existing global and territorial funds and support and strengthen current programs and mechanisms.

The TFFF is designed to complement other forms of funding for forest conservation. While it will provide an additional financial incentive for countries to conserve their forests, the payments per hectare won’t necessarily match the opportunity cost of, for example, converting an area of forest into an oil palm plantation or cattle farm.

Nevertheless, the TFFF has huge potential to help bridge the finance gap and secure the future of the world’s tropical forests. It is a novel solution to incentivize tropical forests from being converted for other more lucrative land use, and it represents a major innovation in large-scale and performance-based development and nature finance. It’s an opportunity that we can’t afford to miss.