New report on the Tropical Forest Forever Facility:

Norway should contribute to new forest finance fund

Brazil will launch a new financing mechanism for rainforest conservation launch ahead of the COP30 climate summit in November. Rainforest Foundation Norway supports the establishment of the Tropical Forest Forever Facility (TFFF) and recommends that Norway contribute to the sponsor capital of the fund.

Photo: Thomas Marent

By Rainforest Foundation Norway. Last updated 14. October 2025

“The Tropical Forest Forever Facility is a new and innovative mechanism for rainforest conservation, and a unique opportunity to provide a major boost in support for rainforest countries. We encourage the Norwegian government to support this opportunity to substantially scale up global support for rainforest protection,” says Toerris Jaeger, Director if Rainforest Foundation Norway.

The financial support to Tropical Forest Forever Facility (TFFF) will be paid annually based on the returns from a fund, which means that the mechanism is not dependent on annual transfers from donors and can theoretically last forever – hence the name.

Rainforest Foundation Norway commissioned Vista Analyse to assess both the support mechanism and the financing model proposed in the TFFF. The report includes an assessment of how a Norwegian contribution should be handled in the state budget, with a specific recommendation on how large a proportion of a contribution (investment) should be allocated as an ordinary expense in the state budget (a so-called “loss provision”).

The report was first launched in Norwegian in August 2025, so the analyses in the report are based on the TFFF Concept Note 2.0 from March 2025.

Main findings of the report:

TFFF complements existing mechanisms for rainforest conservation such as REDD+ and gives countries stronger incentives to preserve intact rainforest areas – areas that contribute significantly to global and local ecosystem services.
The TFFF has the potential to introduce countries to a marginal cost of deforestation of US$450–850 per hectare. This is higher than the income per hectare associated with some of the less profitable land uses in tropical forest lands, such as small-scale cattle ranching and other livestock farming, which account for a large proportion of tropical deforestation.
The TFFF will provide results-based payments, allowing countries to assess which measures are most effective in halting deforestation and degradation. The TFFF also proposes an objective system for measuring results based on forest cover, which strengthens the credibility of the results.
Based on an assessment of the credit risk for countries contributing with sponsor capital to the fund and a comparison with similar investment-based mechanisms, such as Norfund, Vista Analyse recommends that between 20 and 25% of a Norwegian contribution should be an ordinary allocation from the state budget (loss provision), while the remainder is recorded as an investment "under the line".

Rainforest Foundation Norway's recommendation to the Norwegian government:

The Rainforest Fund recommends that Norway contribute with a loan to TFFF. Rapid funding of the necessary sponsorship capital is crucial for TFFF to succeed. We therefore recommend that Norway contribute at least 10% of the necessary sponsorship capital (25 billion NOK) over four years.

Based on Vista Analyse's assessment, we recommend a loss provision of 20%. For a loan of 25 billion NOK, this would amount to 5 billion NOK. Spread across four budget years, this would amount to 1.25 billion NOK in loss provisions on the state budget per year.

Rainforest Foundation Norway’s recommendations to TFFF, Concept Note 3.0

To ensure its effectiveness, legitimacy, and positive impact, we shared five key recommendations with the TFFF Secretariat in June as input to Concept Note 2.0. We welcome the improvements made in Concept Note 3.0, while still recommending further work on some elements.

Robust Monitoring of Forest Degradation: It is key that the measurement of degradation is based on more indicators than just forest fires. We welcome that the updated Concept Note 3.0 includes an explicit need for a review and revision process for how TFFF monitors forest degradation, but recommend that it takes place earlier than the timeline proposed by the TFFF Secretariat. Improvements should be made, and other indicators, such as changes to canopy cover, logging, or road development, should be considered.
Provide Direct Support to IPs & LCs: We welcome that the Concept Note 3.0 clarifies that upon accession to the TFFF, Tropical Forest Countries will have to within one year, establish the required governance structures (i.e., IP&LC-National Steering Committee, Dedicated Financial Allocation for IP&LCs account) to successfully transfer the minimum 20% allocation to IP&LCs, and that the TFFF consulted the Global Alliance for Territorial Communities (GATC) for the development of this proposal.
Introduce Social and Environmental Safeguards: The forest conservation activities implemented by forest countries must uphold internationally recognized human rights and respect the rights of Indigenous Peoples as well as Local Communities (IPs & LCs). We still ask TFFF to include a requirement for participating countries in TFFF to uphold their international human rights obligations in the implementation of forest conservation activities, including The United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP).
Responsible Green Investment Strategy: We recommended an ESG-focused due diligence process to avoid funding projects linked to deforestation or human rights violations. We welcome that the Tropical Forest Investment Fund (TFIF) will refrain from investments that cause significant negative environmental impact, such as deforestation and GHG emissions. While the final exclusions list has not been published, we also welcome the explicit exclusion of investments in activities related to coal, peat, oil and gas.
Effective Grievance Mechanism: We called for a transparent and rights-compatible process to ensure accountability in both TFFF’s payments to forest countries, as well as of its investment fund (TFIF). We welcome that the TFFF’s minimum criteria for national GRMs to meet TFFF standards will include the following elements in alignment with the United Nations Guiding Principles on Business and Human Rights (UNGPs): legitimate, accessible, predictable, equitable, transparent, and rights compatible (confidential and non-retaliatory)

About the Tropical Forest Forever Facility

TFFF provides financial incentives to conserve forests through two elements:

Flat support for standing forests: Rainforest countries receive support per hectare of tropical rainforest each year. The support amount is estimated at up to USD 4 per hectare.

Deforestation reduction: For each hectare deforested from one year to the next, the total support will be reduced by 100 or 200 times the support amount, i.e. 400 or 800 USD. The degree of reduction depends on the extent of deforestation. If deforestation exceeds a certain level, the entire support will be lost.

This differs from established mechanisms such as REDD+, which pay countries for reduced carbon emissions from tropical deforestation and degradation and to a lesser extent provide incentives for the conservation of intact forests. TFFF thus fills a critical gap in existing schemes by providing incentives for the long-term conservation of tropical forests, including large and intact forest areas that are not under immediate deforestation pressure.

The support will be paid from the returns to a fund that will be built up with capital from (i) sponsors (countries and philanthropists) and (ii) market investors, and invested in a portfolio with an expected return of 7.6%. This model means that payments to forest countries do not depend on annual transfers from donors and that the mechanism can in theory last forever, which gives rainforest countries long-term sustainability and predictability. Sponsors and market investors will receive a return of 4.9%, while the rest goes to pay rainforest countries.

Support for forest lands is expected to be around 3 billion USD per year, assuming the fund reaches the desired size of 125 billion USD. In the event of a drop in returns, support for rainforest lands will be reduced first, followed by returns for sponsors, while market investors will be affected last. This will contribute to a AAA credit rating for market investors, low risk for sponsors and low capital costs for TFFF.