What is forest funding presently supporting?
Despite forests’ ability to mitigate the ravages of the climate crisis and their essential role in many peoples’ livelihoods, cultures, and traditions, there is limited funding to keep them standing. Historically, donor countries, philanthropies, and the private sector have largely invested in carbon offsetting schemes and 'fortress conservation' models which have been linked with human rights abuses, such as the forced displacement of Indigenous Peoples and local communities (IPLCs). Extensive research has also proved them to be largely ineffective in protecting forests.
The challenge is to find solutions that guarantee revenue for tropical forested countries - which are often low or very low-income - and their populations, without incentivising harmful extractive activities, such as mining or large-scale plantations of export commodities.
The other challenge is finding effective ways to get funding to IPLCs directly, to support their role in protecting forests. Alternative models of community forest management, rights-based conservation and territorial community funds are becoming increasingly prevalent, but they often require further research and piloting to guarantee their effectiveness.
This is increasingly relevant as the EU and Member States are slashing international cooperation and climate budgets and increasingly relying on the private sector, through initiatives like the Global Gateway, to achieve their social and environmental goals. This is particularly concerning because leaving profit-driven, democratically unaccountable companies to drive the green transition risks fuelling the continued over exploitation of natural resources, while excluding IPLCs from management of their land.
In 2022 it was estimated that only 17% of funding for forest protection went to IPLCs to protect forests, despite 55% of the world’s forests being on Indigenous’ land.
What is Fern doing?
New alternatives to fund forest protection must be found. Putting IPLCs at the centre of these solutions is a matter of both justice and common sense, since research has shown that they are the best suited to protect forest ecosystems and have done so for centuries.
Fern and our partners are investigating new initiatives, such as the Tropical Forests Forever Facility (TFFF), to ensure that they do not provoke more harm. We also support partners to promote rights-based initiatives such as territorial community funds and direct payments mechanisms for IPLCs.
What are the next steps?
Fern is working on effective alternatives to ‘market-based mechanisms’ like forest offsetting and advocating for IPLCs to occupy their rightful place at the forefront of the fight to protect forest ecosystems. This will require the EU and Member States to use public funds to support IPLCs directly, and ensure investments and blended finance, such as Global Gateway projects, do not drive deforestation but instead support a just, inclusive transition.
What is the Tropical Forests Forever Facility (TFFF)?
The TFFF is a planned US$ 125 billion investment fund to pay tropical countries to halt deforestation and degradation.
It was proposed by Brazil at the 28th United Nations climate summit (COP28) in 2023, and it was launched at the Leaders' Summit ahead of COP30 in Brazil.
How does the financial model work?
The money will come from a permanent endowment fund created by a combination of sovereign and philanthropic capital and private investment.
How will it work in practice?
The TFFF aims to keep forests standing by paying nations an initial annual fee of $4 for every hectare of forest they maintain, with deductions for any area deforested each year. These deductions are intended to act as an incentive for countries with low deforestation rates to continue pushing towards zero deforestation.
What’s in it for forest communities?
Recipient countries are required to allocate a minimum 20% of the funds to Indigenous and local communities. These communities hold or manage more than half of the world’s intact forests, and studies show that they’re the best custodians of the world’s forests. For the TFFF to succeed, they must move from the fringes of the TFFF to its heart.
