Tropical Forests Forever Facility

Tropical Forests Forever Facility Latest News

Brazil will become the first country to announce an investment in the Tropical Forests Forever Facility.

About Tropical Forests Forever Facility

• It is an innovative multilateral global permanent fund dedicated to supporting tropical forest conservation over the long-term.
• It is a global initiative led by the Government of Brazil.
• The idea for the fund was presented by the Brazilian government in 2023, at COP28 in the United Arab Emirates.
• Goal: The TFFF is a blended finance structure that seeks to mobilize US$125 billion in capital from public and private sector sources.
• The fund would invest the money into a diversified portfolio that generates a return that is higher than its cost of capital.
• This would be used to pay the tropical forest countries (TFC) a fixed amount of money per hectare of standing forest.

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Financial Mechanism of Tropical Forests Forever Facility

• It aims to raise capital from two main sources, sponsors and market investors through financial markets by issuing debt instruments such as bonds. 
• Sponsors: Sponsors would be the ‘high income’ countries as classified by the World Bank, along with philanthropies. (account for 20 per cent of the total corpus)
• Market Investors: Institutional investors, sovereign wealth funds, and endowments (account for 80 per cent of the total corpus) investing through debt instruments.
• Fund Management: Funds are managed via a Multilateral Development Bank (MDB), e.g., World Bank.

Source: DD News