Brazil Proposes a New Type of Fund to Protect Tropical Forests

The multibillion-dollar fund would essentially pay countries to keep forests standing, hoping for success where earlier forest-protection ideas have struggled.

To mow down a forest is usually lucrative. You can sell the wood, then clear areas for animals to graze, or mine for valuable ores, or grow corn or other crops year after year.

This is how most of the world’s tropical rainforests have vanished in the past 25 years, including in Brazil.

Brazil is trying to change that. On Thursday it is due to announce the establishment of an ambitious fund designed to pay countries to keep their tropical forests standing. As many as 74 countries with tropical forests stand to gain a total of $4 billion per year if they leave their forests alone.

If fully financed, the fund would represent nearly three times the current volume of international forest financing, Brazilian officials have said. “It will mobilize large-scale capital with sustained financial flows to conserve our biodiversity,” Brazil’s Minister of Environment and Climate Change, Marina Silva, said this year.

Critics say the fund’s structure has some flaws that could block success. It relies on raising $25 billion from governments and philanthropies to kick-start the fund, which is a tall order.

Others worry it’s not future-proof. Governments change from election to election, and even in Brazil, a future administration may be more interested in the proceeds from deforestation than in the proceeds from saving trees.

The fund foresees payments of around $4 per hectare, $1.60 per acre, of standing forest, which may not offer enough of an incentive to prevent deforestation, and it applies to areas with only 20 percent forest cover, which some environmentalists say sets the bar too low.

Tropical forests are inherently valuable. They are rich in biodiversity, and forests swallow vast amounts of carbon dioxide from the atmosphere, slowing down the heating of the planet. They regulate the hydrological cycle and also local weather.

By turning these standing forests into a protected asset, the Tropical Forest Forever Facility, as the new financial instrument is called, seeks to monetize their value as a global public good and give forested nations financial incentives to not destroy them.

Investors in the fund stand to earn around 5 percent, according to an assessment by Zero Carbon Analytics, an independent research group.

“It’s meant to reward countries for maintaining standing forests, and the measurement is only meant to be of forest cover,” said Andrew Deutz, managing director for global policy at the World Wildlife Fund, who has worked with Brazil on creating the new financing instrument.

The requirement for being paid is simple: Use satellite imagery to show that forests remain in place, and then receive money.

There is still a lot of forest to save. Forests cover about one-third of the Earth’s land mass, around 4 billion hectares. And while deforestation rates have slowed, they haven’t slowed nearly enough, international assessments have found. According to the Food and Agriculture Organization, a United Nations agency, roughly 11 million hectares of forest ecosystems are disappearing every year.

Countries with an annual deforestation rate above 0.5 percent are ineligible for payouts. That includes Indonesia, which has for many years rapidly lost forests to oil palm-oil cultivation and to mining.

Palm oil, a leading driver of deforestation in Southeast Asia, is used in a range of processed foods and cosmetics. Soybeans, which are used to feed cattle, chickens and pigs for human consumption, are the third-largest driver of deforestation overall.

One-fifth of the payments are supposed to go to forest communities, though that may be difficult to enforce, particularly in countries where forest communities have few rights.

The fund is different from what is currently offered on the global market. Earlier systems for protecting forests were typically designed around assigning so-called carbon credits that can be bought or sold. The idea being that, say, a company that wished to offset its emissions of greenhouse gases would pay to purchase a credit representing protected forestland that would pull one ton of carbon dioxide out of the atmosphere, offsetting the company’s emissions. But systems like this have proven difficult to measure and verify, and the nascent carbon-credit market has faced concerns about its integrity.

Carbon dioxide, the main greenhouse gas, warms the world by acting as a blanket in the atmosphere, trapping the sun’s heat.

To get started, the fund needs to mobilize $25 billion. That’s supposed to come from the governments and philanthropies, with private investors contributing the remaining $100 billion. So far, Brazil has put in $1 billion. The World Bank is managing the fund.

The forest fund is the centerpiece of President Luiz Inácio Lula da Silva’s ambitions at the annual United Nations global climate conference, which begins on Thursday in the Amazonian city of Belém.

President Lula has yet to raise anywhere close to the $25 billion required to set up the fund, and he faces powerful agribusiness industries that stand to gain from deforestation. The Amazonian state of Pará, where the climate talks are being held, is one of the states in Brazil with the largest deforestation risks, along with nearby Mato Grosso State. Deforestation has declined significantly in the past three years of Mr. Lula’s tenure.

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