Aerial view of the Amazon Rainforest, near Manaus, the capital of the Brazilian state of Amazonas, Brazil. Photo by Neil Palmer/CIAT

As South America’s most heavily forested country, Brazil has also received the largest amount of funding in the region for reducing deforestation. Its Amazon Fund, launched in 2008, was the world’s largest programme for financing the reduction of greenhouse gas emissions from deforestation and forest degradation (REDD+).

Suspended in 2019, when former Brazilian President Jair Bolsonaro rolled back many environmental protections, the fund was revived in January 2023 when his successor, President Lula da Silva – who was also chief executive when the Amazon Fund was first established – took office.

Between 2008 and 2017, the fund received more than USD 1.2 billion in donations and committed USD 667.3 million to finance 96 projects ranging from the development of a national satellite monitoring system to helping smallholders implement more sustainable farming methods. But assessments of the effectiveness of projects and programmes financed by the fund have been mixed.

That led researchers from CIFOR-ICRAF’s 14-year, 22-country Global Comparative Study of REDD+ to take a closer look at how Brazil’s REDD+ financing has been used as the Amazon Fund begins receiving donations again. They discussed those findings as part of a science-policy dialogue on 10 March 2023, which brought together researchers, policymakers and project implementers. 

“When you look at different evaluations of REDD+ projects, you get different conclusions,” said Richard Van der Hoff, Brazilian Country Coordinator of CIFOR-ICRAF’s Global Comparative Study on REDD+ and visiting professor at the Federal University in Minas Gerais. “We need to look more closely at what we want to measure. Now that the new government has revived the Amazon Fund, we need to look at the lessons we can learn to get better results.”

The Amazon Fund is one of the earliest and longest-running examples of results-based financing (RBF) for reducing deforestation. The idea is straightforward: donors commit funds based on deforestation goals already achieved, while Brazil can distribute the funds according to its own criteria. The logic is that, because the recipient country will want to continue to receive funds, it has an incentive to ensure that deforestation continues to decrease.

But the reality is more complicated, Van der Hoff says.

“There is a great deal of diversity in how the funds are used by national, state and local entities,” he says. “And there are very diverse ways to understand impact – which is fine because REDD+ projects are not all the same. But we need better communication between scientific production and policymakers to help ensure that the money invested has an impact.”

Of the USD 6.5 billion committed by donor countries for REDD+ projects globally between 2010 and 2019, Brazil received USD 1.3 billion – the largest share received by a country, according to a presentation at the science-policy dialogue by CIFOR-ICRAF scientist Stibniati Atmadja and senior scientist Pham Thu Thuy, who leads CIFOR-ICRAF’s Climate Change, Energy and Low-carbon Development team.

Globally, more than half of all country-to-country REDD+ funding, also known as REDD+ aid, is channelled through multilateral entities such as the World Bank or the United Nations Development Programme. In Brazil, however, almost all contributions to the Amazon Fund are channelled through the national government and distributed by the Brazilian Development Bank. 

A handful of donors have been funding REDD+ in Brazil via country-to-country funding. The biggest contributor during that period was Norway, which represents 48% of REDD+ funding globally but provided 80% of Brazil’s funding, followed by Germany and the United Kingdom, with 7% each, and the Inter-American Development Bank, with 5%. That situation highlights how Brazil’s largest source of REDD+ funding is vulnerable to changes in government priorities in a small group of donor countries, Atmadja said. 

More than a decade ago, Brazil won acclaim for sharply reducing annual forest loss from around 30,000 square kilometres in 2004 to around 5,000 square kilometres in 2012. Since then, however, the deforestation rate has risen again, with a sharp jump under Bolsonaro, although it is still below the 2004 peak. In addition, there is a lingering question about the extent to which REDD+ aid and voluntary REDD+ markets contribute to emission reductions. Recent studies suggest that those reductions have been overstated globally and in Brazil, pointing to the need to reassess how those projects are evaluated.

Those findings could dampen enthusiasm for funding REDD+, Atmadja said at the science-policy dialogue, adding, however, that it could be mitigated by the new government’s pro-forest policies, including reactivation of the Amazon Fund. 

A small but substantial addition to REDD+ funding in Brazil comes through mainly private funds via voluntary carbon credit markets. Using ID-RECCO, the largest, most frequently updated and free   international dataset on REDD+ projects, which CIFOR-ICRAF has updated every two years, Atmadja estimates that the value of carbon credits sold on the voluntary carbon market from Brazilian REDD+ projects was about USD 250 million, or 27% of approximately USD 950 million generated worldwide as of 2020.

Between 2010 and 2017, the Amazon Fund distributed more than USD 667 million to federal, state and municipal governments, nongovernmental organizations and universities. The largest share (about 38%) went to states, mostly for monitoring and control of deforestation, although about one-quarter of their share was used for sustainable production activities. The state-owned oil company Petrobras also contributes to the Amazon Fund.

The federal government received about 21% of the funds, also largely for monitoring and control, law enforcement and firefighting, while universities received about 1.3% for research and municipalities received about 1.1%, mostly for sustainable development activities and strengthening their environmental agencies.

In a study of Amazon Fund disbursements between 2010 and 2018, Van der Hoff and colleagues found that some funds apparently made up for budget cuts in government environmental agencies, raising questions about “financial additionality” – whether the money was actually used for activities that would not have happened without the fund.

Nongovernmental organizations received nearly as much money as states, at 36%, with most going to sustainable development projects and smaller amounts to land tenure regularization and monitoring and control.

That wide diversity of uses points to areas that merit greater attention as the Amazon Fund ramps up again, Van der Hoff said.

Although much of the funding went to address structural factors related to Amazonian deforestation, such as implementing a registry of landholders that makes it easier to track compliance with forest conservation requirements, only two of the 10 municipalities with the highest deforestation rates were among the 100 municipalities that received the most funding, Van der Hoff said.

That could be corrected if the fund is more proactive in seeking projects that meet predetermined targeting criteria, he said. One area overlooked in those criteria, he added, is the supply chain for commodities such as soy and beef, which is critical, as most of Brazil’s greenhouse gas emissions come from land-use change and deforestation for industrial farming and ranching.

As REDD+ has developed, objectives have expanded to include not just emissions reduction but also factors such as sustainable livelihoods, land tenure and gender equality, said Heliandro Maia of GIZ, the German government’s international development agency, during the science and policy dialogue.

As a result, the question of whether REDD+ is working is too simple to capture the complex combinations of goals and the variety of approaches projects may take, said Cauê Carrilho of the University of São Paulo during the dialogue. Instead, he said, researchers, policymakers and implementers should ask “What works best, in what way, and under what circumstances?”

Projects must be designed to address the context-specific drivers of deforestation, but they also must be aligned with national plans, Carrilho said. To assess impacts, it is crucial to gather qualitative and quantitative data about how a project was carried out, and to select a control area with similar characteristics that can show what could have happened if the project had not been implemented – known as a counterfactual scenario. Quantitative data is essential to determine whether REDD+ projects avoided deforestation in comparison to the counterfactual scenario, while qualitative data should provide greater insight into how REDD+ interventions are operating on the ground, Carrilho said. The impact should also be assessed over the long period as it takes time for REDD+ to fully operated and create impacts on the ground.

One critical factor, he added, is the time frame – both the past baseline against which the project is compared to assess deforestation outcomes, and the timeline of the project itself. It is especially important to consider permanence (whether the effects continue after the project has ended).

“Project implementers should think in terms of short-, medium- and long-term outcomes and what needs to be implemented for each,” he said. “It’s important for society to understand what is being done and when to expect outcomes, and it is important for money from funds like the Amazon Fund to be spent at those three levels.”

The science-policy dialogue highlighted a structural issue in REDD+ implementation but also opportunities to address the knowledge gaps and implementation problems, Van der Hoff said. 

From the perspective of investors, REDD+ is a tool not only for rewarding past achievements, but also for fostering sustained deforestation reductions as a contribution to climate change mitigation. 

This means that understanding REDD+ finance in terms of its contribution to reducing emissions from deforestation and forest degradation is fundamental. At the same time, deforestation rates alone do not reflect the extremely complex dynamics of deforestation in the Amazon, which underscores the need for a broad set of performance indicators, Carrilho and Maia said.

“Performance assessments that capture the complexity are crucial,” Van der Hoff said, “if we are to transition to a new development paradigm – one where forest loss ceases to be the principal side effect.”

The next science-policy dialogue will be held on May 4  and will centre on a diagnostic of deforestation.

For more information on this topic, please contact Pham Thu Thuy at t.pham@cifor-icraf.org and Richard Van der Hoff at richard.vanderhoff@inteligenciaterritorial.org

This work was carried out as part of the Center for International Forestry Research’s Global Comparative Study on REDD+ (www.cifor-icraf.org/gcs). The funding partners that have supported this research include the Norwegian Agency for Development Cooperation (Norad, Grant No. QZA-21/0124), International Climate Initiative (IKI) of the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU, Grant No. 20_III_108), and CGIAR Research Program on Forests, Trees and Agroforestry (CRP-FTA) with financial support from CGIAR Fund Donors.