Carbon Offsets Are Failing. Can a New Plan Save the Rainforests?Yale Environment 360 Fred Pearce • Oct 29, 2025 Brazil is set to unveil an ambitious international plan that would provide up to $4 billion a year to countries that protect their tropical forests. Proponents see it as a potential game-changer for forest conservation, but some ecologists and economists are raising concerns. It could be the last and best chance to save the world’s tropical forests. As international aid budgets for conservation crash and carbon offset schemes for protecting forests are widely discredited, Brazil is about to unveil an ambitious plan that would triple current finance for saving forests worldwide by channeling profits from international trade in government bonds. The Tropical Forest Forever Facility (TFFF) is set to be announced by President Luiz Inácio Lula da Silva as a centerpiece of the U.N. climate conference in the Amazon city of Belém next month. It would create a $125 billion investment fund intended to provide up to $4 billion a year to potentially 74 tropical and subtropical nations as a reward for protecting their forests. The viability of the proposed scheme is being questioned by some ecologists and economists. And rich-world governments and philanthropic organizations have so far been slow to follow Brazil in pledging the seed funding thought necessary to attract private investors.
But late last month the World Bank agreed to become the facility’s trustee and interim host, raising hopes ahead of the TFFF’s launch. Under the initiative, countries would be paid according to satellite measurements of the extent of their standing tropical forests. The TFFF’s backers see the fund as a potential jewel in the crown of green capitalism, with bond markets coming to the rescue of the rainforests. Brazilian environment minister Marina Silva told a London Climate Week audience in June: “It will mobilize large-scale capital with sustained financial flows to conserve our biodiversity.” For Zac Goldsmith, British senior fellow at the Bezos Earth Fund, a potential funder, “the TFFF is the only game in town for forest finance… We will not have this opportunity again.” The World Bank will now become the administrative headquarters of the facility, as well as eventually overseeing transference of its anticipated profits to tropical countries. “With this foundation in place, the TFFF is now ready for countries to follow Brazil’s lead by making their own pledges,” said Brazil’s finance minister Fernando Haddad.
But there are concerns. Forest ecologists warn that the plan’s rulebook is so loose that it could allow payouts for forests even as they are being logged. Rights activists warn that Indigenous peoples could lose control of their forests. Meanwhile, some economists argue that the project’s proposed financial architecture is both risky and inherently unfair. Much of the money for forest protection would come from the high interest rates charged on volatile loans to the very countries whose forests it promises to benefit. Without those hefty payments, says Max Alexander Matthey of the University of Witten/Herdecke in Germany, “there is no money for the forests.” Under the TFFF, countries would be paid initially according to satellite measurements of the extent of their standing tropical and subtropical moist broadleaf forests, at an annual rate of $1.60 per acre. In subsequent years, every acre deforested would result in a reduction in payments equivalent to at least 100 acres. Countries with an annual deforestation rate above 0.5 percent — which currently includes major forested nations such as Indonesia and the Democratic Republic of the Congo — would be barred from receiving any funds.
It could potentially be a “game-changer” for forest conservation, says Robert Nasi, director general of the Indonesia-based Center for International Forestry Research. If successful, it “could become a blueprint for other… critical ecosystems like peatlands and mangroves,” he says. Nobody doubts the need for new impetus to save tropical forests from continued invasions by farmers, loggers, and miners and the spread of wildfires. Last month, a new assessment found an upsurge in deforestation rates in the tropics, reaching a record 16.5 million acres last year and leaving the world far off track to meet the promise of governments to end deforestation this decade. (The only good news was from the Brazilian Amazon where a sharp decline achieved the lowest rate of forest loss since 2015.) As drafted, the fund “would allow payments even where industrial logging is occurring in primary forests,” says one critic.
Meanwhile, foreign aid budgets that have funded much forest conservation in recent years are in freefall, both in the United States and Europe. And market-based systems of forest protection and restoration based on trading in carbon offsets are floundering. A global analysis published in October found that less than a fifth of such projects met their emissions targets. So, for governments and forests alike, the investment-led TFFF — with just a fifth of the fund intended to come from governments and philanthropic sponsors, and the remainder from private investors — seems like a lifeline. It has strong backing from major environmental groups such as the WWF and Conservation International. But there are concerns among forest ecologists that the small print defining what counts as standing forest worthy of rewarding could create perverse incentives for further destruction. Most intact moist tropical forests have canopy cover greater than 80 percent. Much less usually indicates they are badly degraded, for instance by loggers, says environmental scientist Brendan Mackey of Griffith University in Queensland, Australia. Yet the TFFF’s criteria for full payment currently require only 20 percent cover. “This is not scientifically credible” he says.....read on https://e360.yale.edu/