The Brazilian government defended at the 2023 United Nations Climate Change Conference (COP28) this Friday (1) a proposal for countries with sovereign wealth funds and other investors to invest their resources in a fund created to preserve and conserve tropical forests.
Some countries create sovereign wealth funds to accumulate wealth. According to the Sovereign Fund Institute, the largest funds in the world include those from Norway, the United Arab Emirates, China, Saudi Arabia, Kuwait and Qatar.
“The basic idea is to promote nature conservation and to vigorously counteract deforestation and forest degradation,” said the Ministry of the Environment (MMA). The proposal argues that there is an urgent need to advance the idea of an innovative global instrument to reward the conservation and restoration of tropical forests.
“Why are we talking about sovereign wealth funds? Globally, sovereign wealth funds hold $12 trillion, with the 13 largest funds holding eight countries holding $8.8 trillion. We know that most sovereign wealth funds have been capitalized through the sale of oil and fossil fuels,” said Brazilian Forest Service Director Garo Batmanian.
The proposal calls for an initial contribution of $250 billion to enable the fund to start operating. “That represents less than 20% of the lowrisk assets owned by these 13 largest sovereign wealth funds,” he added.
The idea is to create the Tropical Forest Forever Fund (FFTS) to generate resources to be used in projects for the conservation of forests and the economic development of the people who live or depend on them. In addition to sovereign wealth funds, the FFTS could raise funds from the oil industry and investors in general. The fund’s net return would be the source of payments for tropical countries, depending on the size of each country.
This money could be used by the 80 countries with tropical forests. To be eligible for the money, countries must keep deforestation below the set rate (e.g. 0.5% per year) and also be declining or very low. In addition, the country must develop transparent mechanisms for allocating funds and have reliable methods for measuring forest cover.
According to the proposal, countries that meet these criteria will receive a fixed amount for each hectare of forest cover, regardless of whether it is preserved or restored. The proposal also imposes a fine of 100 hectares for every hectare deforested or degraded in a year.
Climate crisis
Deforestation and the decline in forest cover are among the main causes of global warming. Rising temperatures have led to a range of climate events around the world, including prolonged droughts, heavy rainfall and excessive heat. Deforestation is one of the reasons for the emission of greenhouse gases such as carbon dioxide (CO2) and also reduces the ability of forests to store this carbon, triggering the current climate crisis.
Greenhouse gases released into the atmosphere have been increasing since the Industrial Revolution (18th and 19th centuries), primarily from the burning of fossil fuels. This is one of the main concerns of scientists, societies and governments that have been organizing climate meetings since the Eco 1992 in Rio de Janeiro.
In the 2015 Paris Agreement, 195 countries committed to combating global warming “to significantly less than 2°C above preindustrial levels” and limiting it to 1.5°C. Brazil has committed to reducing greenhouse gas emissions by 43% by 2030 compared to 2005 levels.