World leaders launch fund to save forests, get first $5 billion

World leaders attending a climate summit in Brazil launched a fund on Thursday to save the world's forests, quickly raking in over $5 billion in pledges to reward tropical countries for not chopping down trees.

The initial government commitments still fall far short of what is needed for the fund to attract the private investment it seeks, but Brazil's President Luiz Inacio Lula da Silva still described the Tropical Forests Forever Facility (TFFF) as unprecedented.

Ultimately, Brazil – the fund's political sponsor – seeks to create a $125 billion facility that would pay out a share of profits to developing countries for every hectare of forest they leave standing.

Private investors would also receive a return from funds invested mainly in emerging market bonds.

The fund was launched in Belem on Thursday as heads of state and government met ahead of an annual round of UN climate talks starting next week.

Brazil has identified more than 70 developing countries that could be eligible for annual payments from the fund.

'Things can change'

The designers of the fund envision raising $10 billion in initial contributions from governments within a year. The $10 billion should be increased to $25 billion in the longer term – startup money that will then attract private investments worth another $100 billion.

Brazil had put in the first $1 billion pledge for the fund, matched by fellow forest nation Indonesia. 

Brazil hopes the fund will create a reliable, long-term revenue stream, an alternative to tropical countries cutting down forests for economic gain. 

"Things can change, this is a long-term project," Brazil's chief climate negotiator Mauricio Lyrio told AFP about countries that have not yet joined the initiative.

Brazil's Finance Minister Fernando Haddad was also positive, saying "we have already surpassed 50 percent of what we envisioned" to raise until the next climate conference in 2026.

France pledged a conditional 500 million euros, Portugal added a more modest $1 million, and Germany made an unspecified commitment. Norway on Thursday pledged 30 billion kroner ($3 billion) for loans, but with strings attached.

"It is vital to stop deforestation to reduce the impacts of climate change and limit biodiversity loss," the Norwegian government said in a statement.

(With input from AFP)