Brazil’s Bold Climate Finance Plan Could End Tropical Deforestation

Tropical rainforests represent one of our planet’s most critical natural assets in the fight against climate change, storing approximately 25% of all terrestrial carbon despite covering just 6% of Earth’s land surface. Of the world’s roughly 1.84 billion hectares of tropical forests—an area roughly the size of Russia—Brazil contains some 420 million hectares (an area about two-thirds the size of Australia), including 60% of the Amazon rainforest. The Amazon alone stores an estimated 140–200 billion tons of carbon, an amount equivalent to about 15–20 years of current global fossil fuel CO₂ emissions. Forests are also important to the water cycle since they store moisture, known as “green water.” A recent World Bank Group report found that deforestation-driven reductions in green water can lead to annual losses of around $379 billion, or about 8 percent of global agricultural GDP.

Yet we are losing this natural infrastructure at an alarming rate. Tropical deforestation currently removes about 3–4 million hectares of forest each year, with total global forest loss reaching up to 10 million hectares. In 2024 alone, Brazil’s Amazon lost approximately 954,000 hectares of primary forest—more than twice the size of Rhode Island—despite recent improvements. Scientists warn that the Amazon may reach an irreversible tipping point if deforestation exceeds 20–25% of its original forest cover. Today, that figure already stands at 17–20%, risking a shift from a vital carbon sink to a net carbon source, while also destabilizing regional weather systems that sustain agriculture across South America. When intact, tropical forests absorb roughly 2 billion tons of carbon annually—about 5% of global fossil fuel emissions—making their protection one of the most cost-effective climate solutions available

The Business Drivers of Deforestation

Businesses, especially in agriculture, are central to deforestation patterns that threaten environmental stability and future economic prosperity. For example cattle ranching is responsible for roughly 80% of deforested land in the Amazon, while soy cultivation has driven large-scale conversion of the Cerrado savanna. Brazil’s agribusiness sector, valued at about $500 billion annually and accounting for over 20% of national GDP, generates approximately 40–50% of the country’s exports. The sector is vast, including over 2 million cattle operations and 240,000 -300,000 soybean farms, many of which engage in both activities. Most are small, family-run businesses—about 70% of farms are between 1 and 50 hectares—but the largest 1% of properties (over 1,000 hectares) control nearly half of Brazil’s agricultural land.

The problem isn’t that agribusiness is inherently anti-environmental, but that current market systems fail to recognize the full value of standing forests. For instance, a hectare cleared for cattle pasture typically generates just $100–$200 in annual income, while the same area of intact Amazon forest provides ecosystem services worth several times more. Estimates range from $400 to over $700 per hectare per year, depending on the region and valuation method, though some recent research puts the value even higher. But the former is hard cash, and the latter is still largely considered an intangible.

In the past few decades market mechanisms and financial incentives to address deforestation have been implemented, notably in regions with high rates of deforestation through jurisdictional REDD+ (Reducing Emissions from Deforestation and Forest Degradation) programs. Established under the United Nations Framework Convention on Climate Change (UNFCCC), they provide a framework, monitoring and verification guidelines, and a policy architecture which enable measurable emissions reductions, primarily through avoided deforestation or reforestation, which can then be monetized through carbon markets. While progress has been made under REDD+ it faces a number of limitations, and much more must be done to prevent deforestation.

Against this backdrop of ecological urgency, the Brazilian business community finds itself at a pivotal moment, sitting at the intersection of major economic opportunity and environmental responsibility.

The Tropical Forest Forever Facility (TFFF)

In a bold initiative to tackle deforestation without undermining Brazil’s economic prospects, the Tropical Forest Forever Facility (TFFF) will be formally announced by Brazilian President Lula at COP 30 which is being hosted by Brazil in Belém, the gateway to the Amazon. TFFF is targeted specifically at tropical and subtropical moist broadleaf forests—the world’s most carbon-rich, biodiverse forest biome. According to the WWF Forest Pathways Report 2023, “Estimates of the area of degraded tropical forest range from around 100 to 500 million hectares, but vary from source to source, with undisturbed moist tropical forest likely covering close to 1 billion hectares globally.”

For Brazil, current conservation science and WWF-backed mapping indicate that roughly 300 million hectares qualify as native moist broadleaf forest—making Brazil the world’s largest single steward of this vital biome. TFFF funds will support conservation and restoration in these scientifically recognized forests only (i.e., excluding monocultures, dry forests, and plantations) thereby ensuring payments are strictly focused on the most ecologically valuable portion of global tropical forests. In a strong endorsement of the TFFF Kirsten Schuijt, Director General of WWW International stated that, ‘The TFFF offers the most promising pathway this year for delivering a bold breakthrough in nature and climate finance, We urge countries and financial institutions to mobilize capital at scale and help turn the TFFF into a true success for people and the planet.”

The foundation of TFFF is the Tropical Forest Investment Fund (TFIF), an ambitious and innovative form of blended finance at a scale that far exceeds anything done so far. TFIF is a complex structure, but its essence is to raise $25 billion in junior, risk-bearing capital from developed countries. This amount will be leveraged by $100 billion from institutional investors and the money will be invested in corporate and sovereign market bonds. Financial modeling shows this will generate approximately $3-4 billion per year ($3-4 per hectare) in performance-based payments to countries that maintain their forest cover. For Brazil, this could mean over $1 billion per year, more than triple the current Environment Ministry budget, flowing into forest conservation efforts. As explained by Undersecretary for Economic and Fiscal Affairs at the Ministry of Finance of Brazil João Paulo de Resende, “This financing solution mobilizes private capital and addresses the growing challenge of tight fiscal budgets from sovereigns. Climate action can’t get less concessional than that.”

How Will the Money be Spent?

TFFF’s Concept Note 3.0 is vague on how the money will be spent, except that 20% of it must go to indigenous communities. But lessons from successful efforts to limit deforestation, such as Costa Rica’s Payments for Environmental Services program, suggest the following categories for getting a good deforestation return on investment: (1) direct payments to forest stewards, (2) monitoring and enforcement systems, (3) policy and governance strengthening, (4) community based conservation, (5) economic incentives and market development, and (6) restoration and enhancement.

What’s particularly interesting is that the government will only receive the money if it maintains forest cover year-on-year. In the case of very small operations, of which there are millions, this would provide economic incentives to not cut down forests. In the case of large operations it would provide the incentives to not expand the land on which they’re operating and for improving how the land is being used. Here is a breakdown of these categories by government, large operations, and small operations.

• Government:
  • Monitoring and Enforcement Systems (satellite monitoring, ground verification, fire management)
  • Policy and Governance Strengthening (protected area governance, law enforcement, anti-illegal logging)
  • Parts of Economic Incentives (setting up payment schemes, certification oversight)
  • Parts of Restoration (public land restoration, buffer zones around protected areas)
• Large Operations:
  • Direct Payments for maintaining forest cover on large properties instead of converting to agriculture
  • Economic Incentives like payment for ecosystem services on commercial scales
  • Restoration contracts for large-scale forest restoration projects
  • Certification programs for sustainable forestry/agriculture operations
• Small Operations:
  • Direct Payments to small landowners/farmers for forest conservation
  • Community-Based Conservation (capacity building, training, indigenous support)
  • Alternative livelihood programs to prevent small-scale deforestation for subsistence
  • Small-scale agroforestry and silvopastoral systems
  • Eco-tourism development for local communitiesThe Critical Role of the Business Sector

The business sector has an essential role to play in ensuring the success of the TFFF. Yet to date, no clear articulation has been made about what this role should be. What will help to jump start the benefits of TFFF is if the very large cattle and soybean companies deliver on science-based, credible, and transparent deforestation and land-conversion commitments even before the money is raised. The good news is that many of the largest traders have already made public commitments to eliminate deforestation in their supply chains, and are actively working on this, both as individual companies and as part of coalitions such as the Agricultural Sector Roadmap to 1.5°C and the Soft Commodities Forum.

Two business associations are playing especially important roles: the Brazilian Business Council for Sustainable Development (CEBDS) and the World Business Council for Sustainable Development (WBCSD). CEBDS has some 100 members of Brazil’s largest companies and has emerged as a crucial institution for coordinating corporate forest protection efforts.

I asked Marina Freitas Grossi, the CEO of CEBDS , how they were working with their companies to prevent deforestation in Brazil, and she said, “CEBDS member companies have been advancing on traceability across their operations and value chains, while also supporting initiatives for the sustainable use of biodiversity, conservation, and regeneration. In 2023, for example, we launched a study on regenerative agriculture in Brazil that highlights ten corporate cases leading this transformation. These efforts show that the Brazilian private sector is committed to combating deforestation and building long-term solutions.” I also asked her how the TFFF could enhance and accelerate what they were doing, and she told me, “The TFFF stands out in this process by creating the steady economic incentives needed to keep forests standing and by strengthening the initiatives that companies are already pursuing. This facility has the potential to amplify the positive impact of business action and accelerate the transition toward a more sustainable economic model.”

Similarly, many of the biggest agribusinesses and downstream food companies are members of the WBCSD. I asked the same question of Diane Holdorf, Executive VP and she observed, “Brazil’s Tropical Forest Forever Facility takes a new and innovative approach to climate finance and forest protection. But while additional funding mechanisms are critical, business, government, communities, and other stakeholders must be at the table to turn ambition into impact. At WBCSD, we see COP30 as a turning point from pledges to delivery. The TFFF is a unique vehicle to align finance, policy, and business action at scale, and we must seize it together.”

Finally, I asked de Resende what the business community could do to help with a successful launch of the TFFF and thereafter. He told me, “Support government policies, such as the Ecological Transformation Program in Brazil, which will contribute to sustainable forest management and reduced deforestation.”

The Opportunity

The TFFF represents more than innovative finance. It’s a fundamental reimagining of how we value nature. Success depends on unprecedented cooperation between governments, financial institutions, and the private sector. If partner countries can demonstrate that forests generate more economic value standing than cleared, it will create a replicable model for tropical countries worldwide. COP 30 in Belém offers the perfect stage to prove that economic growth and forest protection can be synonymous.