The Tropical Forest Forever Facility turns one

It is a simple idea: how do you protect the world’s most biodiverse forests when their countries cannot afford to protect them? Establish a USD 125 billion investment fund that makes it pay to curb deforestation.

However, one year on from the unveiling of the Tropical Forest Forever Facility at COP30 (2025’s UN climate summit hosted by the Amazonian city of Belém in Brazil), the initiative is still billions short of its fundraising targets.

Since the Tropical Forest Forever Facility (TFFF) was introduced to the world more than 65 countries have endorsed it. But only eight have actually pledged money, amounting to USD 7.8 billion. The latest is USD 500 million from the Netherlands.

Nonetheless, as the fund approaches its first anniversary, the mood among its backers appears to be celebratory. At a TFFF event attended by ministers, UN officials and Indigenous representatives during this month’s UN biodiversity conference (COP17) in Armenia, the gathering of approximately 200 cheered the re-election of Brazil’s president, Luiz Inácio Lula da Silva. They felt his victory had removed the immediate political threat to the Amazon rainforest posed by his hard-right opponent, Flavio Bolsonaro. It also signalled continuity for the TFFF, they argued.

The fund has targeted USD 10 billion by the end of the year – and Norway’s USD 3 billion pledge is contingent on that target being achieved.

The TFFF has already set up its governance: an interim charter and board and the World Bank as trustee and host. It is expected to become operational in 2027, but the first payments are not anticipated before 2028.

Meanwhile, some of the rules that will determine how the TFFF works are still being negotiated. That includes how forest degradation will be monitored and penalised, what the fund can invest in and how Indigenous communities will receive their share.

“It was launched without being bulletproof,” Mauricio Voivodic, executive director of the environmental NGO WWF-Brazil, told Dialogue Earth. “We need to recognise the vulnerabilities and things that can be improved by making adjustments as we go. If not, we risk losing many years. TFFF has a real potential to change the game.”

A fund taking shape

Tropical forests are vital for biodiversity and the water cycle. The Amazon basin, the Congo basin and Borneo alone hold about 78% of the world’s remaining tropical forests. Yet they are facing a financial shortfall. By 2030, the tropical forest countries will need a total USD 67 billion a year in investment, according to the UN Environment Programme: USD 33 billion for reforestation, USD 18 billion for agroforestry and USD 16 billion for conservation.

The TFFF was set up to address that gap. Unlike conventional conservation funding, which largely relies on grants, it aims to generate income from financial markets over many years.

“It’s designed to work side by side with other mechanisms,” Torbjørn Gjefsen, a climate policy adviser at Rainforest Foundation Norway, told Dialogue Earth. “It will pay countries for standing forest, which is a new thing and something that is sorely missing in the forest finance landscape.”

Governments and philanthropic groups would provide USD 25 billion in long-term loans, repaid over decades. Private investors would add USD 100 billion by buying bonds issued by the fund, which pay a fixed return.

The whole USD 125 billion would be invested in other fixed-income assets, such as emerging-market government and corporate bonds. If those investments earn more than the fund owes in interest, the surplus is paid each year to countries with tropical forests. That surplus is anticipated to be worth billions of dollars.

But countries are paid only if returns stay above the fund’s own costs. And any shortfall in paying those costs would be covered by using the money loaned from governments.

Under the scheme, eligible tropical forest countries would receive up to USD 4 a year for every hectare of standing forest (measured by satellite), of which at least 20% must go to Indigenous peoples and local communities. Inversely, payments would be cut in conjunction with rises in deforestation and forest degradation.

The facility will operate through two linked entities. The Tropical Forest Investment Fund (TFIF), based in Luxembourg, will manage the investments. The TFFF will oversee reporting and distribute payments. For now, the World Bank is hosting its secretariat.

The countries that have so far pledged money are Brazil, Indonesia, Norway, Germany, France, Luxembourg, the United Kingdom and the Netherlands. More countries could follow in the coming weeks. During the TFFF’s COP17 event, the fund’s co-chairs expressed confidence in reaching USD 10 billion by the end of this year. Sources tell Dialogue Earth that South Korea, Canada and Japan could be next.

Anita de Horde, executive director of the Finance for Biodiversity Foundation, expects private investors to engage once the structure is fully in place. A group of 34 financial institutions and organisations, including Allianz Global Investors and Deutsche Bank, signed a statement of support this year – although these are not commitments to invest.

“What makes it unique is that it combines scale and impact with a financial return. Institutional investors manage money on behalf of clients, pension holders and asset owners, so they need a return. That’s why it has been so well received,” De Horde told Dialogue Earth at COP17.

The challenges ahead

Despite the simple concept, whether the scheme works will depend on rules that are still being ironed out.

Under the design, the annual payment of USD 4 per hectare of standing forest functions alongside a penalty deduction for each hectare of forest that is lost. This deduction cancels out the payment for 100 hectares of standing forest – in other words, a USD 400 per hectare penalty. “No one will stop deforestation for getting four dollars, but others will because of the penalty deduction,” Felix Finkbeiner, founder of the NGO Plant-for-the-Planet, told Dialogue Earth at COP17. “The incentive is the money they are not getting.” The penalty doubles for losses above a 0.3% annual deforestation rate. This mechanism can only reduce what a country receives, not leave it owing money.

Voivodic acknowledged the payment cannot compete with profits from cattle ranching or soy. But he also said that the total amount a country could receive would still be “something they can’t ignore”.

WWF has made calculations and prepared fact sheets to show tropical countries what they could receive. Suriname, for example, could get an estimated USD 42-46 million a year if the fund hits the full USD 125 billion. That compares with about USD 2 million a year that it currently receives in bilateral aid for biodiversity. “Once countries start receiving it, there will be so much pressure to avoid and decrease deforestation,” Voivodic said.

With so much money at stake, the way forest loss is measured will be vital. As currently designed, the fund only penalises fire-based degradation. “Fire-based degradation is easier to monitor than other forms,” Finkbeiner explained, adding that it is only behind about a third of all forest loss. Ignoring the other causes “is a bad incentive for countries”.

Voivodic agrees, but said there is no global methodology reliable enough to use right away. Waiting for one would cost years.

Participants attend a TFFF side event at the UN Convention on Biological Diversity’s COP17 in Yerevan, Armenia, October 2026. More than 65 countries have endorsed the fund since it was unveiled but only eight have actually pledged money (Image: CBD COP17 Yerevan Armenia / Flickr, CC BY NC)

Getting things right now will be important, as most future board decisions will require a two-thirds majority. Donors and rainforest countries will hold equal seats. Changing the method for measuring deforestation in the future would create winners and losers, Finkbeiner said: “You can get a majority in most cases, but it will be tricky.”

Plant-for-the-Planet has therefore suggested that the scientific advisory panel be able to propose new measurement methods. The board could veto them but would not have to approve them, allowing a method to become employed without needing a vote in its favour. The current charter covers only the preparation phase and is due to be updated before the fund takes effect, which is when such a change could be written in.

The fund’s investment criteria are also still being worked out. Finkbeiner said the broad principles are set: no money should be invested in activities that lead to deforestation or the extraction of fossil fuels. “But the details matter a lot,” he adds.

De Horde said investors are pushing for safeguards that go beyond deforestation. They want social and environmental checks to apply to the whole company the fund buys bonds from, not just to the project the money pays for: “They are united with the NGO world.”

Valentina Figuera Martínez, who coordinates the Global Forest Coalition’s gender justice and forests campaign, is not reassured. It is not clear that extractive companies would be kept out of the portfolio, she told Dialogue Earth: “At the same time you are financing a miner in the Congo, you are paying four dollars per hectare of standing forest. That is contradictory. It is not sustainable.”

Indigenous empowerment

The 20% for Indigenous peoples and local communities is among the fund’s most welcomed features. The fund has outlined two routes: national accounts overseen by community committees, or, where countries agree, payments through a global agency.

Finkbeiner said the fund’s respect for national sovereignty makes sense but oversight would still be necessary: “We don’t want governments to use TFFF money to pick their favourite communities and exclude others.”

Indigenous organisations, including the Global Alliance of Territorial Communities, helped design the fund but, as Figuera Martínez points out, their role is only advisory. Communities are meant to have a say over how their share is spent but their representatives hold no voting rights on the board. Speaking at London Climate Action Week in September, Brazil’s vice minister of Indigenous peoples, Marcos Kaingang, said consultations were underway on governance, and on criteria for spending the payments.

Political differences will inevitably continue to build obstacles to the TFFF’s work as the years pass by. President Lula’s re-election in Brazil has eased much of that worry for now, although in Voivodic’s view, the fund is built for exactly the kind of government that is not on board: “If we have a government against the environment, it’s even more important to have TFFF. We need a strong, robust financial mechanism to hold deforestation down even if there is no political willingness.”