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Tropical Forest Finance Facility (TFFF)
Non-Profits, Indigenous People Raise Concerns over proposed Tropical Forest Finance Facility
Context: Non-profit organisations and indigenous peoples’ groups have raised major concerns over the upcoming Tropical Forest Finance Facility (TFFF) — a financial mechanism proposed to help developing countries conserve their tropical forests.
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- The TFFF is designed to offer substantial financial incentives to countries by paying a fixed amount per hectare of forest that is preserved or restored each year.
- However, the Global Forest Coalition (GFC) — an alliance of non-profits and indigenous peoples’ organisations focused on protecting the rights of forest communities — has voiced serious reservations about the initiative’s structure and long-term impacts.
What is the TFFF?
- Set to be launched later in 2025 around the 30th Conference of Parties (COP30) to the United Nations Framework Convention on Climate Change (UNFCCC) in Belem, Brazil, the TFFF proposes two operational models.
- The concept was jointly announced by Brazil, Indonesia, and the Democratic Republic of the Congo during the 2022 G20 summit in Indonesia.
- These three nations collectively hold about 52% of the world’s tropical rainforests.
- The TFFF aims to provide an annual payment of $4 per hectare of standing forest, linked to a financing target of $125 billion in loans.
- This massive fund would generate around $4 billion per year, with about $5.375 billion earmarked for paying investors and $4 billion distributed to participating countries — subject to penalties for any deforestation.
Indigenous Concerns Over Forest Valuation and Profit Motives
- The GFC warns that placing a monetary value on tropical forests risks deepening the same extractive and profit-driven logic that has historically endangered these ecosystems.
- The group criticised the model for attempting to “commodify” ecosystem services such as carbon storage, oxygen production, water regulation, erosion control, and habitat protection — essentially, the intangible benefits forests provide beyond timber and fruit.
- According to the GFC, the financial structure of the TFFF is uncertain.
- Key questions remain unanswered, such as who the investors are, how local forest communities would be involved, and what safeguards would exist if the financial model fails.
- Moreover, under the current plan, national governments would receive the bulk of the payments, with only 20% allocated to indigenous and local communities.
- The payment rate is also not guaranteed; it could decline if investment profits fall.
- Additionally, the repayment of loans or investments is scheduled to begin only after a 10-year grace period, further complicating the financial stability of the model.
- The coalition also pointed out that under certain financial crises, the fund could be liquidated, posing additional risks to forest conservation efforts.
TFFF and the Risks of Greenwashing
- While the TFFF is positioned as a complement to market-based forest initiatives like REDD+, it does not aim to create carbon credits.
- Instead, investors would acquire “TFFF credits,” raising concerns that the system could be exploited for greenwashing — allowing corporations to falsely claim sustainability credentials without genuine impact.
- The GFC argues that forests should not be treated as assets to be managed through financial markets.
- Instead, the focus should shift toward recognising the rights of indigenous peoples and local communities who have historically been the best stewards of these ecosystems.
Alternative Proposals to Save Tropical Forests
In contrast to the TFFF’s market-based model, the GFC has proposed alternatives to secure more robust, long-term funding for tropical forests. These include:
- Redirecting 1% of all national defence budgets toward forest conservation, potentially raising $26.4 billion annually — six times more than the TFFF’s expected returns.
Imposing a $1 tax per barrel of oil, which could generate $38 billion per year, nearly ten times more than the TFFF’s targeted annual investment.
