Financializing Tropical Forests? The Case of the Tropical Forest Forever Facility, Brazilian Elites, and Shallow Change
7 May, 2026.
Catharina Janovitz
CityDiplomacy.org
Introduction
“For the first time in history, countries of the Global South will be center stage in forest governance.”
President Lula, COP30, 2025
Months before COP30 was set to start, the government of Brazil announced the Tropical Forest Forever Facility (TFFF): a global fund aimed at providing fixed payments to tropical forest countries that vowed to conserve their forest areas. The measure was announced following criticisms towards Brazil’s tropical forest stewardship, as the country had been aiming to curb deforestation and illegal mining in Amazônia for years (Human Right Watch, 2021; Watts, 2025). The fund describes itself as “an incentive … to encourage Tropical Forest Countries to continue protecting and conserving (tropical forests) at the right scale and speed…” (TFFF, 2025a). At its core, the fund was designed by leading Global South tropical countries (Brazil, Congo, and Indonesia) to provide results-based payments to countries who, at the time of ascension, commit to increasing broad moist leaf canopy coverage and curbing deforestation.
The TFFF is also described as a complementary mechanism to existing environmental policy measures that aim to protect tropical forests (such as Reduced Emissions from Deforestation and Degradation (REDD+)) (TFFF, 2025b). Alongside providing member countries long-term standing payments, it vows to redirect 20% of its payments towards Indigenous Peoples and Local Communities, recentering their leadership in forest conservation and acknowledging the importance of Indigenous modalities for sustainable development (TFFF, 2025a).
While the TFFF has been praised by leading international environmental organizations, questions still arise in the fund’s capacity across many fronts (Global Forest Coalition, 2025). Considering the scope of this paper, it asks the following research question:
What is the potential of TFFF to signal a change in tropical forest conservation techniques?
TFFF: Mechanisms
The TFFF describes its financial structure as “innovative”, insofar as it largely departs from traditional climate financing mechanisms. First, the TFFF establishes a blended finance fund, combining sponsor capital (coming from government funds, philanthropists, or foundations), and private capital (TFFF, 2025b). The fund then leverages sponsor capital to achieve 125 billion USD as capital base – around 25 billion USD in sponsor capital, and 100 billion USD in senior market debt. Second, the fund invests its acquired capital in a fixed-income investment portfolio, intending to generate higher returns than the funds initial cost of capital. Third, the organization monitors the tree canopy coverage of the member state via satellite, checking for deforestation and degradation.
Importantly, payments are result-based, meaning demonstrated maintenance or increased canopy coverage is the driving factor of fund allocation. For every hectare of standing or new forest, USD 4 are awarded to the tropical country, discounted for deforestation and degradation rates. Fourth, with the fund allocated, 20% of forest payments are paid out to Indigenous Peoples and Local Communities. Fifth, and finally, the remainder of the allocated capital is expected to fund conservation and environmentally regenerative public policies. The countries are required to disclose a list of national conservation programs or public policies, yet no policy is mandated by the TFFF. In fact, the fund allocation can be used in whatever way the country sees fit, ultimately leaving decision-making to each member-state.
The TFFF’s goal is to provide stable fiscal returns and incentives to developing nations that necessitate financial support in their climate mitigation efforts through the blended finance fund. The expected annual payments range from USD 4 – 6 billion, and, unlike past conservation mechanisms, shifts away from the short-term, project-based financing the tropical countries have historically received (World Resources Institute, n.d.; TFFF, p. 14, 2025b). The TFFF enables tropical forest countries to use such payments to support expensive, time consuming, and complex national forest programs, with the funds being non-reimbursable grants. Thus, framed as a response to the persistent underfunding of tropical forests, TFFF aims to translate standing forest percentages into a global public good that necessitates continuous compensation for its demonstrated ecosystem services.
TFFF: Market Mechanisms & Environmental Accounting
The fund explicitly frames its mechanism as a response to market failures: “By valuing standing and restored tropical forests, the TFFF will mitigate a market failure by assigning a value to and paying for the ecosystem services provided by tropical forests” (TFFF, 2025a). Here, the facility’s goal closely aligns with the logic of environmental-economic accounting (EEA), seeking to render environmental assets visible in both economic and political frameworks (King et al., 2024). The representation of forests heterogeneously across accounts makes comparison and monitoring seamless, facilitating results-based fund allocation. Further, the TFFF follows an EEA-inspired approach of demonstrating how ecosystem services that sustain daily life can be rewarded financially and be valued economically when it otherwise wouldn’t (TFFF, 2025a). Yet while this provides stable returns to countries in the Global South, as well as instigating forest recovery and maintenance through stock-based indicators, the simplification of treating forests as economic assets raises critical concerns over how ecosystems are valued and governed. Additionally, it raises questions on the TFFF’s true potential to reframe environmental conservation narratives, seeing as the initiative is largely embedded in the systems that promoted deforestation and exploitation in the first place (Russell et al., 2017).
Indeed, the TFFF’s quantification of the environment, beyond subscribing to market logistics, ultimately fails to address the true issues tropical forests face today. TFFF frames itself as a “transformative mechanism”, one that values tropical forests beyond the natural resources they provide. What the fund fails to address, however, is the political and economic drivers of deforestation. Simple increase of canopy coverage for payment reveals that the measure is compensatory rather than transformative, centering a market mechanism instead of structural regulation. Beyond failing to tackle entrenched practices of deforestation, the fund further sidelines elite interests in tropical forests. Below, these pitfalls will be addressed, followed by the specific case of elite surcharge and shallow power distribution that a financial mechanism such as the TFFF pushes for.
TFFF: Pitfalls
First, relying solely on canopy coverage to determine payments is insufficient to accurately assess forest conservation. The TFFF fails to account for EEA measures (like species richness, forest regeneration rates, etc.) that truly demonstrate the ecosystem services that forests provide. Thus, the TFFF’s results-based approach renders forest systems depoliticized, oversimplified, and mainly governable through shallow numbers (Global Forest Coalition, 2025).
Second, the fund remains a victim of an unequal financial market and thus promises of transferring genuine environmental governance to tropical countries remains limited. The fund’s existence is not the issue – Global South countries, indeed, require stable capital income to preserve their tropical forests. What is increasingly concerning is the message of environmental stewardship, governance, and leadership. Incidentally, or uncritically, the fund reproduces global financial dependencies in at least two ways. One, the payments and fund allocation in US dollars further embeds Global South countries in a system of monetary hierarchy. Without being able to allocate funds in their own currency, some member states can face exchange-rate volatility that generate severe economic pressures, while Global North investors remain insulated from such macroeconomic risks (Fritz et al., 2018). Second, it shifts conservation responsibilities to Southern states, while Northern countries finance and invest in the TFFF from afar (Clark & Hermele, 2013). Being ultimately exempt from their consumption patterns, Northern states bear no responsibility in the conservation of a biome that has been largely required to maintain their modes of living.
Third, the fund exemplifies the contemporary shift towards financialization over regulation (Kemp-Benedict & Kartha, 2019). The Concept Note 3.1 justifies the necessity of the fund by framing that forest loss and degradation are an issue due to its “undervaluation” (TFFF, 2025b). Removing many of the inherent aspects of what makes the environment difficult to price in the first place, mechanisms such as the TFFF reduce ecosystems to a number. More than that, it assumes the lack of forest monetization is the main driver of deforestation, when, at its core, valuing nature in this manner follows the same capitalistic logic that is used to extract from nature in the first place. It further demotivates governments to preserve forests for its cultural, social, and ecological values: it steers states to act through fiscal incentive (Smith, 2021). This logic demonstrates how financial instruments have increasingly started to shape development policies, measured by market logistics of risks and returns rather than science and democratic deliberation (Clark & Hermele, 2013). The TFFF’s redirection of 20% of the fund to Indigenous People and Local Communities, while innovative, also equates monetary compensation to environmental stewardship, downplaying the necessity of fair Indigenous inclusion in political and environmental policymaking.
Fourth, and finally, the TFFF treats deforestation as a pointedly technical issue, omitting the larger political and economic structures that perpetuate environmental degradation. Degradation is not merely the consequence of insufficient conservation measures, but driven by powerful economic actors that drive illegal logging, mining, and land grabbing. While the goals of the fund are straightforwardly focused on increased canopy cover (and acknowledge the limited scope of the initiative), financial mechanisms such as the TFFF inadvertently aid powerful economic actors that benefit from a depoliticizing discourse of conservation. Omitting the elite’s historical unequal transfers of land, labor, and energy render the TFFF as a superficial solution to an issue that can only be tackled when power differentials are addressed.
Below, this paper further argues that a tropical fund facility ultimately benefits those in power by pushing discourses of monetization, depoliticization, and superficial goal setting – even as it promises to center indigenous stewardship and environmental policymaking. In the specific case of Brazil, the TFFF demonstrates itself to be yet another measure that vows a façade of environmental protection, allowing agribusiness lobbyists to hide profit-seeking endeavors behind discourses of sustainable development for economic growth. Despite promising to center “the Global South’s environmental governance”, the TFFF intentionally ignores unequal distributions of land and agribusiness monopoly in an attempt to reconcile conservation with an extractive development model.
TFFF, Local Elites, and Failed Transformative Potential
Brazil is an evident case of when political elites make use of their power to justify environmental destruction (Simionatto & Costa, 2012). In a political arena ruled by landowners, Brazil’s Congress has historically impeded environmental laws, instead prioritizing capitalist interests and extractive corporations (Melo et al., 2022). By centering narratives of ´sustainability´ and expansion as a vehicle for economic security to Brazilian voters, influential leaders provide generous subsidies, regulatory slack, and state support for extractive projects and industries (Ferrante & Fearnside, 2019; de Area, 2020). In the states of Amazônas and Pará, where most of the Legal Amazônia is located, regional political elites, landowners, mining families, and loggers, pressure local governance measures to enable land acquisition (Menezes, 2020). In the context of environmental governance, much of the decision-making and policy framing is influenced by the Rural Caucus. The thus usurped political and structural power of results-based conservation – at the expense of multi-focal regulation – indirectly reinforces existing elite interests and the status quo. So long as measurable forest is attained in the Legal Amazônia, extractivism can coexist elsewhere or through other means. Here, this further means that the dedicated portion of the fund meant to finance environmental legislation and climate mitigation can be co-opted by local vested interests, that would make use of greenwashed policymaking to preserve capital-producing industries.
Finally, while the promise of 20% of the fund being redirected to Indigenous Peoples and Local Communities (IPLCs) is promising, it concomitantly provides one solution to an issue that requires much more than capital. Smith et al., (2019) note that the allocation of financial resources to IPLCs with no further integration in decision-making capabilities renders the goal of environmental stewardship null. In line with the repeated criticism of shallow pathways into conservation, granting stable payments to communities does not solve issues of land grabbing, illegal logging on demarcated land, or underrepresentation in political institutions.
Conclusion
The TFFF’s market logistics are ultimately unable to concretely shift environmental governance and pivot unequal exchange. Overall, the TFFF reinforces the logic that only when forests are quantified can financial returns occur, reinforcing the notion that one cannot exist without the other. Yet for its intended purposes, the measure can be seen as a demonstrated attempt to reconfigure the relationship between finance and the environment. At its essence, it acknowledges that tropical forests, and their ecosystem services, deserve international recognition and compensation. This paper acknowledges the importance of such yet criticizes its shallow approach. Solely attributing stable payments to increased or continued canopy coverage can deter the market (and governments) to press for real regulatory change, of which would halt deeply institutionally embedded practices such as land grabbing and mining that account for most deforestation in the world. In the case of Brazil, the measures further attempt at redirecting parts of the fund for environmental policymaking is a first step at recognizing the importance of financing environmental governance, yet with vested political interests usurping policy arenas, the fund again faces a standstill. The same can be said to redirect capital to IPLCs – on its own, money is unable to rebuild the institutions that maintain marginalized communities in environmental injustice.
This paper acknowledges the potential of the TFFF but cautions that forest conservation requires regulatory bodies that concern themselves with pressing for institutional change beyond monetary incentive. Further research should look into the success of other similar measures or empirically compare the TFFF to modern international conservation tactics.
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