The innovative tropical forest conservation fund (TFFF) launched by Brazil at COP30
Updated by Takanobu Aikawa on October 28, 2025, 10:12 PM JST
Takanobu AIKAWA
PwC Consulting Godo Kaisha
Senior Manager, PwC Intelligence, PwC Consulting LLC / With a background in forest ecology and policy studies, he has been extensively engaged in research and consulting for the forestry and forestry sectors for the Forestry Agency and local governments. In particular, he contributed to the establishment of human resource development programs and qualification systems in the forestry sector in Japan, based on comparisons with developed countries in Europe and the United States. In the wake of the Great East Japan Earthquake, engaged in surveys and research for the introduction of renewable energy, particularly biomass energy; participated in the formulation of sustainability standards for biomass fuels under the FIT system; since July 2024, in his current position, leads overall sustainability activities with a focus on climate change. He holds a master's degree in forest ecology from the Graduate School of Agriculture, Kyoto University, and a doctorate in forest policy from the Graduate School of Agricultural Science, Hokkaido University.
The 30th Conference of the Parties (COP) to the United Nations Framework Convention on Climate Change (UNFCCC) will be held in November 2025, with Brazil as the host country. The decision to hold the conference in Belem, a regional city at the mouth of the Amazon River, despite challenges such as a lack of places to stay, is of course a reflection of Brazil's strong will to place forest conservation at the center of the COP agenda. This mechanism is not only important for the future of forest conservation around the world, but also has many points of reference for forest management in Japan.
When forest issues are discussed in the context of global climate change, the first priority is to "halt deforestation. It should be noted that while it may be generally accepted in Japan that "cutting down trees and using timber is good for the environment," the exact opposite is true.
In fact, the world has lost an average of 6 million ha/year of forest over the past decade, and the resulting carbon dioxide (CO2) emissions account for about 10% of global greenhouse gas emissions.
There are various factors contributing to deforestation, but if anthropogenic factors other than fires are excluded, it is estimated that conversion to plantations for the production of agroforestry commodities accounts for an average of less than 60% of deforestation over the past 20 years. It should be noted that commodities include not only food products such as palm oil, soybeans, cattle, cacao, and coffee, but also natural materials such as wood and rubber. As a result, regulations and corporate efforts to require that the agricultural and forestry products handled are not accompanied by deforestation (zero deforestation) are gaining momentum.
Under these circumstances, how to halt deforestation has been a major topic of discussion at previous COPs.
Against this backdrop, an innovative financing mechanism proposed by the COP30 Presidency, Brazil, is the Tropical Forest Forever Facility (TFFF). The TFFF is an international investment fund that will provide economic incentives to countries that conserve tropical forests. It aims to raise US$125 billion from the public and private sectors, invest it in low-risk financial instruments such as government bonds, and then contribute US$4 billion annually from the returns on these investments to pay for forest conservation.
Countries with tropical forests are eligible to receive US$4 per hectare of forest conserved each year, provided that deforestation is kept within 0.5% of the total forest area. However, the amount will be reduced by US$400-800/ha if forests are deforested, and by US$100/ha if forest degradation occurs due to cutting, etc. This scheme has become possible because satellite data has made it possible to monitor forest conditions with a high degree of accuracy.
Under the TFFF scheme, carbon credits are not issued. Therefore, while complementary to other forest credits, it should also be noted that forest carbon credits have faced a number of problems in the past.
The first is doubts about credibility. Specifically, in REDD+ (Red Plus), which has been the majority of forest carbon credits to date, there was a scandal when it was revealed that the baseline for "deforestation" was set too leniently. To begin with, REDD+ is premised on deforestation, and there is also the structural problem that efforts to reduce deforestation are not rewarded.
Consideration must also be given to the relationship with the communities in the area to be conserved; problems were also identified in REDD+, such as insufficient agreement by local residents and the lack of distribution of the benefits to be gained.
Another major issue is the "use" of carbon credits. It should be noted that schemes such as SBTi, which are referenced in the global business world, do not allow the use of carbon credits to offset either their own direct emissions (Scope 1 and 2) or their supply chain emissions (Scope 3).
The TFFF proposed by Brazil is designed based on reflections on previous forest credits such as REDD+. In other words, the TFFF is expected to have the effect of maintaining carbon in forest ecosystems, and therefore, if deforestation is assumed as the baseline, credits can be generated. However, the TFFF does not dare to appeal to that value, but recognizes the cost and value of "maintaining forests as forests.
In addition, Brazil has emphasized the participation of civil society, including indigenous peoples, in the discussions at COP30 itself, and the same consideration can be seen in the TFFF. Specifically, 20% of the aid will be allocated to indigenous peoples and other local communities.
In addition to Brazil, which has announced that it will lead the way with a US$1 billion contribution to the TFFF, the United Kingdom, Norway, China, and the UAE are also considering participation. In addition to these public funds from the government, private-sector funds, mainly from pension funds and other institutional investors, are expected to play an important role.
At first glance, the TFFF mechanism, which was conceived for the conservation of tropical forests in developing countries, appears to be unrelated to forest management in Japan. In fact, however, it offers various suggestions for Japan's forest management.
The first is a method of support that focuses on the outcome (outcome) of paying for the conservation of tropical forests. Similarly, it would not be pointless to envision simplification of Japanese subsidy procedures.
Currently, most subsidies for forestry and forestry in Japan are based on the amount of work done, such as the area thinned and the distance of work roads. Furthermore, there are detailed regulations on the rate of thinning and the width of the working paths, etc. Although simplification using drone photos is allowed, it is basically necessary to undergo a completion inspection on site in the presence of prefectural government officials and others.
Although there is a menu based on the amount of thinned wood removed, mainly by local governments, production-stimulating subsidies are inherently prohibited by the WTO. In addition, it is generally believed that subsidies based on production volume in agriculture, forestry, and fisheries lead to excessive production, which disturbs the market and has a negative impact on the environment.
Rather, we can scientifically establish outcome indicators (water quality, biodiversity, etc.) that indicate desirable forest environmental conditions, and as long as these indicators are met, we can consider encouraging creativity and ingenuity, regardless of the means used.
In the case of the TFFF, this was made possible by the development of a well-defined value system for maintaining tropical forests, as well as by the development of monitoring methods. In the case of Japan, on the other hand, it is unlikely that the forest area itself will decrease significantly. Rather, it is desirable to organize the response mechanism and quantitative relationship as to how the required functions can be improved by the type of operations. Unless this is done, there will be no development from the 25-year old argument that "the public benefit function of Japan as a whole is ● trillion yen, so if it is divided by ● ha, it will be ● yen.
Another point is the participation and emphasis of local communities: the amount of US$4/ha in the TFFF may not always be sufficient, but it may introduce various monetizations, such as recreation using forest space, and may be the basis for a "minor subsistence" place for local communities (traditionally It could serve as the basis for a place of "inherited livelihoods" for the local community.
In Japan, a forest and environmental concession tax of 60 billion yen has been allocated to prefectures and municipalities, and depending on the ingenuity of local governments, this tax could be used to enrich local communities through appropriate forest management. The discussions that Brazil is initiating at the global level may provide material for considering other possible futures for regional forest management in Japan. (Takanobu Aikawa, Senior Manager, PwC Intelligence, PwC Consulting, LLC)
■References
Tropical Forest Forever Facility (2025)“An innovative financing mechanism to incentivize long-term forest conservation at scale CONCEPT NOTE 3.0”
Damania, R., et al. (2023). “Detox Development: Repurposing Environmentally Harmful Subsidies”Washington, DC: World Bank. doi:10.1596/978-1-4648-1916-2.
Takanobu Aikawa, "Climate Change Report Vol. 9: Halting Deforestation and Forest Fires-Businesses Must Confront the Complexities of Forests-." (PwC Intelligence, June 2025)
Takanobu Aikawa and Yuji Hasama, "TheClimate Change Report Vol. 12: Presidency Brazil Leads COP30 - The Challenge of Governance Transformation from Ambition to Implementation" (PwC Intelligence, October 2025)
