In 2023, at the COP28 climate summit in Dubai, the Brazilian government proposed a groundbreaking funding mechanism known as the Tropical Forest Forever Facility (TFFF). This initiative aimed to assist tropical nations in preserving their forests. The incentive was straightforward: using satellite monitoring in participating countries to identify those that had safeguarded their forests and rewarding them based on the data. Fast-forward to the COP16 biodiversity summit in Cali, Colombia, in 2024. Mongabay contributor Justin Catanoso attended the conference and covered this new fund. It functions not as a traditional donation mechanism or loan but rather as an investment portfolio. As he explained, "The money is not going to a country as a loan that they have to repay. The investors get paid back first, and the money generated by the investments above what the investors get is what will be given to the tropical countries."

Key Insights from the Podcast

On this episode of Mongabay's podcast, hosts Mike DiGirolamo spoke with Justin Catanoso, Charlotte Streck (co-founder of Climate Focus), and Frédéric Hache (lecturer in sustainable finance at the Paris Institute of Political Studies) about the TFFF. These guests addressed some of the more complex and critical questions regarding the proposed facility.The fund is currently a proposal and is subject to change before its official launch at the COP30 climate summit in Belém, Brazil, in 2025. There is a mix of optimism and skepticism regarding its potential as a novel forest finance mechanism. Critics like Hache prefer redirecting the $500 billion of "harmful" governmental subsidies enjoyed by polluting industries.Charlotte Streck was impressed by the fund's simplicity, design, and the fact that it was championed by tropical nations. She emphasized, "I think that TFFF is an initiative that has great potential because it is put forward and supported by tropical rainforest countries. It is not a mechanism defined by donors or experts. It is now pushed and promoted by the countries that harbor all this tropical forest."Justin Catanoso explained how the TFFF works. It is an investment fund with six wealthy nations (the U.S., Norway, Germany, France, Great Britain, and the United Arab Emirates) investing $25 billion in early 2025, which is expected to attract an additional $100 billion from international financial institutions. The money is invested in a portfolio to generate an average 5.5% return over 20 years. The interest above this return will be used to distribute about $4 billion annually to 70 tropical countries to incentivize them to protect their forests.Regarding the concern of adding debt to tropical countries, Justin clarified that the money is not given as a loan. The investors get paid back first, and the generated funds are given to the tropical countries.Mike DiGirolamo also discussed the failure of wealthy nations to keep their financial pledges at COP16. Justin pointed out that G20 nations are not fulfilling their obligations to offset the damages caused by their fossil fuel consumption.Charlotte Streck further elaborated on the advantages of the TFFF. She mentioned that the seed funding comes in the form of long-term loans, making it easier to mobilize funds compared to grant funding. It leaves less room for excuses from donor countries. Additionally, the mechanism links payments to hectares of tropical forest in place, making it easier to explain and measure.However, Charlotte also had some critiques. She noted that the penalty for deforestation is currently a foregone income rather than a strict penalty. The details of how to define and enforce the penalty still need to be negotiated.Frederic Hache expressed skepticism about the fund. He questioned the investment mandate, how the extra return would be generated, and who would bear the loss if the fund loses money. He also raised concerns about the high penalty for host countries and how it would be enforced.In conclusion, while the TFFF shows promise, there are still many questions and challenges to address. Redirecting harmful subsidies and implementing environmental regulations remain crucial for protecting forests and biodiversity.If you want to learn more about the TFFF or COP16, please click the links in the episode summary. You can also support Mongabay by leaving a review, becoming a monthly sponsor at patreon.com/Mongabay, or subscribing to the podcast on your preferred platform.