At the 1992 Rio Earth Summit in Brazil, the nations of the world agreed as part of the Forest Principles to provide financial resources for conservation efforts in developing countries with significant forest areas.
Yet for more than three decades, the international community has struggled — and largely failed — to fulfill that commitment, particularly to developing nations with tropical rainforests.
These tropical forests are home to a majority of the planet’s biodiversity, play a crucial role in combating climate change, and are critical to people’s livelihoods. Between 2002 and 2022, according to Global Forest Watch data, the world’s tropical humid primary rainforests shrunk by 8%, losing an area equivalent to nearly the size of Pakistan. This magnitude of loss has continued unabated, except in a few key tropical rainforest countries such as Brazil and Indonesia.
The basic challenge continues to be one of simple economics: Cutting and clearing natural forests for timber and agriculture is generally more profitable than leaving trees standing.
Conventional business practices are not designed to tangibly value and reward the conservation of forests, or their biodiversity and ecosystem services. Combined with continuing global demand for commodities, harmful subsidies in many countries, and weak and/or corrupt forest governance practices, this dynamic has increasingly degraded and destroyed the Earth’s tropical forests.
A Potential Breakthrough: The Tropical Forest Forever Facility
Now, Brazil is once again playing a critical role, leading the development of an innovative new forest finance mechanism that could offer a breakthrough and flip the economics in favor of conservation. The Tropical Forest Forever Facility (TFFF) is designed as a “payment-for-performance” model that uses agreed satellite monitoring standards and systems to reward tropical forest countries with a continuing source of funding as long as they preserve their forests.
While other forest conservation mechanisms such as REDD+ and carbon markets focus on rewarding emissions reductions, the TFFF takes a different approach. It aims to pay tropical forest countries directly for each hectare of standing forest they maintain, with payments decreasing based on any deforestation or forest degradation caused by fire.
With Brazil’s leadership, the momentum of this year’s annual United Nations Climate Change Conference (COP30) taking place in the Amazon, and with effective new satellite monitoring technologies, the TFFF could finally turn forest conservation into an investment that benefits countries, investors and the planet.
Following several years of technical and diplomatic work, Brazil published the latest iteration of the TFFF Concept Note in October 2025. Just weeks before, Brazilian President Luiz Inácio Lula da Silva announced at the UN General Assembly that Brazil would make the first $1 billion investment into the facility, which ultimately is expected to reach $125 billion. A few weeks later, Indonesia announced it would also contribute to the facility. The TFFF’s success now depends on other nations, as well as private sector investors, to make it a reality at COP30 and beyond. Currently, Brazil is working with other governments, including the UK, Germany, Norway, the UAE, Singapore and China, and potential private sector investors, to explore how they can commit funding in time for COP30.
How Exactly Will the TFFF Be Funded?
Unlike most previous international assistance to conserve tropical forests, the TFFF will not be financed by donor grants. Once the facility reaches its $125 billion target (or, likely in the shorter term, a smaller sum), it will be the world’s largest “blended finance” mechanism of its kind, designed to pay eligible, participating tropical forest countries annually for maintaining their deforestation rates below 0.5% per year, as measured by agreed geospatial monitoring standards and systems.
The TFFF will borrow an initial capital base (targeted at $25 billion) from traditional “donor” nations and other countries in a position to invest, such as Brazil and China, and potentially philanthropic foundations, too. These “sponsors” would provide 40-year loans (the facility’s capital), or other comparable investment modalities, at an interest rate comparable to the yield of U.S. Treasury bonds (a 30-year bond is currently less than 5%) and would be the first to take responsibility over any losses in what’s known as a junior position in the debt structure.
This arrangement creates a safety net that enables the fund to raise an additional $100 billion from private, corporate and philanthropic investors. The combined $125 billion would then be invested in fixed income emerging markets and other sovereign and corporate bonds (excluding fossil fuels and other environmentally destructive sectors), which would earn a higher return.
The return is ultimately expected to generate some $3 billion to $4 billion per year — enough to make payments of around $4 per hectare of conserved forest to eligible countries which maintain deforestation rates below 0.5% over the long term. (Even in the short term, with a much lesser sum than $125 billion, the payments generated would still be significant.)
The TFFF governance structure is divided into the Tropical Forest Investment Fund (TFIF), managed by the World Bank under a separate governance structure that would manage the investment fund and determine the availability of funds for forest payments; and the TFFF itself, which would coordinate monitoring and reporting, and distribute forest payments to countries.
Where Would the Money Go?
The current TFFF proposal includes 74 UN-listed developing countries that combined are home to more than 1 billion hectares of moist, broadleaf tropical and sub-tropical forests.
The TFFF is not designed to fund countries to reduce their deforestation rates. Rather, it is meant to reward those that already have relatively low deforestation rates, providing a financial incentive to keep their remaining tropical forests standing and prevent any further deforestation. However, if it’s successful, the facility will serve as encouragement for countries with currently high deforestation rates to qualify to join the scheme. A good result would be if countries such as Bolivia, with one of the world’s highest deforestation rates, were able to qualify for TFFF funding in the years to come. The current structure would lead to significant flows of finance to some of the world’s poorest forest countries, including in Africa’s Congo Basin.
The TFFF includes several innovative features focused on where the money should go. The first is that it allows countries to allocate TFFF payments as they see fit on their national policies and programs that, directly or indirectly, contribute to tropical and subtropical forest conservation and forests’ sustainable use. Crucially, the TFFF requires countries to disclose what the funds are used for to ensure transparency and allow for public scrutiny and feedback.
Another striking and positive feature is a provision requiring 20% of payments to go to Indigenous peoples and local communities engaged in tropical forest conservation in eligible countries. This could be the single biggest source of international finance for Indigenous peoples and local communities, so often at the frontline of conservation. This finance could help these communities protect their rights, secure land tenure, tackle illegal mining and criminality, and pursue sustainable alternative livelihoods that are not dependent on clearing areas of forest.
It is also significant because the TFFF is the only such source of funding that could in some instances be accessed directly by Indigenous peoples and local communities — a provision that they have repeatedly asked for, granting these communities decision-making over the use of the funds.
How Will Forests Be Monitored?
The TFFF can only succeed if it is built on credible, transparent and operational forest monitoring that relies on satellite data. This requires methods and data that are produced in a way that can be verified, applied consistently through time and comparable across countries. Robust and universally applied technical standards must be established from the outset, not only to ensure credibility but also to build investor confidence that will attract the early capital needed for scale.
A core principle of the TFFF is that participating nations are expected to use their own national forest monitoring systems, provided these systems meet established quality and transparency criteria. For countries without a qualifying national system, a compliant third-party system, such as Global Forest Watch (managed by WRI) or the EU’s Joint Research Center tropical forests platform, may be used. Given this diversity in monitoring approaches, establishing agreed common methodological standards and definitions across all systems will be paramount.
The TFFF also proposes a fixed forest definition to be applied across all participating countries, creating a common basis for how forests are measured and valued. By setting a 20% to 30% canopy density threshold, a 5-meter minimum tree height and by excluding plantations, this definition establishes a solid technical foundation for consistent and comparable measurements.
What’s Still Needed to Launch the TFFF?
First, sponsors need to follow Brazil’s and Indonesia’s lead and commit contributions to the initial hoped-for $25 billion tranche of junior capital. If additional sponsors fail to make commitments at COP30, the TFFF may lose momentum in 2026, causing private sector investors to doubt the viability of the model.
It is therefore vitally important for industrialized nations across the world without tropical forests to make a significant financial commitment to this bold and ambitious idea. The stakes are global: If tropical forests are lost, adaptation costs from the ensuing climate impacts would far exceed these investments. For wealthy nations, investing in the TFFF is not only about justice and responsibility, but also a matter of economic self-interest. Tropical forests are, in addition to being sovereign national assets, a global public good, with a universal responsibility for their protection.
The World Bank Board has agreed to manage the funds as the trustee and interim host of the TFFF and formalized initial arrangements at its October 2025 meeting, which should provide a strong confidence signal for both sponsors and the private sector. But the World Bank will have to move rapidly to establish the TFIF to maintain momentum and move toward an operational phase of the facility.
Once all of that is in place, a key priority will be development of the operations manual that will govern how the TFFF actually works, including work on some of the more difficult technical issues. These include:
Degradation and Leakage
Not all forest loss is caused by deforestation. Forest degradation, which plays a major role in carbon loss and ecosystem decline (and often occurs at smaller spatial scales) can also take place.
Currently, the TFFF proposes to only consider fire-damaged areas (using burn scars as a proxy) as indicators of degradation, subsequently reducing payments by a 1:35 discount rate. But other degradation factors, such as selective logging, roadbuilding, mining and some edge effects, can be detected using 30-meter or 10-meter satellite data. Including both fire and non-fire degradation would strengthen the system’s integrity and ensure payments reflect actual forest conditions.
Deforestation “leakage” is another thorny issue: the TFFF focuses on broadleaf tropical and sub-tropical forests, the most important forests globally for both biodiversity and climate change. However, there is worry that this might cause deforestation to move into other biomes not covered by the TFFF — Brazil’s Cerrado and southern Africa’s Miombo woodlands are good examples — without notice or punitive measures. The TFFF seeks to address this by requiring participating countries to monitor and report forest cover changes in non-TFFF forest areas where significant increases in deforestation could trigger additional scrutiny and potential payment holds. Though this is a good conceptual solution, implementation could be complex given, among other issues, the difficulties associated with monitoring deforestation in drier or sparser forest landscapes. More work will be needed to ensure that the TFFF does not simply displace, rather than prevent, forest loss.
Consideration for Indigenous People and Local Communities
It will also be critical to maintain a strong consultative process with civil society and Indigenous communities as the TFFF — particularly its operations manual — is developed and moves toward implementation. Much of civil society is supportive of the TFFF and its efforts to engage Indigenous Peoples and local communities; some remain critical and circumspect. There is no formal consensus on the TFFF among the diverse Indigenous peoples’ organizations across the world’s tropical forests. Continuing dialogue, consultation and free, prior and informed consent will therefore be critical in the years ahead.
Developing an Agreed Global Geospatial Monitoring System
Finally, the credibility and longevity of the TFFF will also depend on the quality and reliability of the geospatial monitoring systems that are used to base decisions on eligibility, standing forest area and deforestation rates. It is only in the past decade that credible, affordable satellite monitoring of forest cover has emerged. And there are no international covenants or treaties designating official satellite monitoring standards or systems.
In developing its monitoring standards, the TFFF should consider:
- Fine-tuning its measurement standardsby aligning the standard minimum mapping unit with the pixel resolution of existing, free satellite data archives (30-meters or 10-meters) to provide a more accurate picture of forest dynamics. Using a finer mapping unit, instead of the proposed 1-hectare minimum mapping unit, would also enable more effective monitoring of forest degradation events like logging and roadbuilding.
- Ensuring that the monitoring systems that underpin the TFFF’s payment calculations provide open, independently verifiable data; use methods that produce data that are transparent and reproducible; and regularly validate the results using good practice and international reporting guidelines.
- Finally, governance will be criticalto help ensure that technical decisions remain evidence based. The TFFF’s operations manual will codify the detailed rules and procedures for monitoring, so its development should include structured opportunities for expert and stakeholder input.
In short, there is a clear pathway: strong technical standards, robust degradation monitoring, validation, open data and shared governance. The technology is ready; what is needed now is collective agreement to put it into practice.
The TFFF’s Critical Contribution to the Global Forest Challenge
In summary, the TFFF could make a potentially critical contribution to addressing the world’s forest challenges, which are so closely linked to the biodiversity and climate crises we face. But, as the TFFF proponents themselves have noted, it is not a panacea; other forms of finance will also be needed, and of course there are many other dimensions of tackling tropical forest loss, including governance, legality, regulation, demand and consumption shifts.
The TFFF also inherently faces risks in a volatile world where the future of economies and markets cannot be predicted; it is a bold idea at a time of volatility and instability. But after more than 30 years of forest conservation, forest finance commitments and arrangements that have yet to turn the tide, the TFFF presents an ambitious idea from a major rainforest country that has real potential to make a potentially transformative impact in conserving tropical forests.
It is therefore a pressing global imperative for the international community to contribute generously to its success, starting at COP30, in the heart of the Amazon rainforest — a tropical rainforest, like others, on which the future well-being of humanity so profoundly depends.
