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Developing the International Financing Facility for Forests (IFFFor)

Program Summary

The International Financing Facility for Forests (IFFFor) is a proposed mechanism designed to fill an incentive gap in the effort to combat deforestation. The IFFFor is a long-term investment fund, which will offer financial incentives to forest countries to preserve and restore the world’s most valuable forests. This would contribute to combatting climate change, preserving biodiversity, and enhancing economic development of forest countries.

Conceived by the World Bank Treasury and developed by the Center for Global Development (CGD), the IFFFor is currently being co-financed by PROFOR and the Rockefeller Foundation. Currently, this activity aims to develop IFFFor and explore its feasibility by building support across internal and external stakeholders and developing the investment case for different types of target investors.

Challenge

Despite intensifying global conservation efforts, deforestation continues at unsustainable rates. In addition, investments to protect forests have been insufficient due to the following:

  • Limited foreign assistance for promoting the development benefits of forests;

  • Compensation for forests’ public goods is primarily focused on carbon – and even those programs are underfunded compared to the value of the services that forests provide;

  • Progress in “greening” trade and investment in forest-risk commodities has been slow;

  • Domestic subsidies and international investments in “grey” agricultural practices that drive deforestation far outweigh “green” investments that help maintain forests.

Approach

IFFFor aims to offer countries a large, highly-visible reward for successfully tackling deforestation. Specifically, IFFFor proposes to raise significant non-ODA investments and manage that capital in an endowment-like fund. Shares of the portfolio’s gains would then be allocated to forest countries, conditional on their success in reducing and reversing forest loss.

The team is developing IFFFor in a three-phased approach:

  1. analysis of design feasibility and review of the concept;

  2. detailed modeling analysis and external consultations; and

  3. fundraising and launch of the facility.

Results

This activity is ongoing. Currently, the team is advancing financial and ecological modeling and external outreach. This research and engagement will inform the final structure and operations of the design.

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Last Updated : 07-09-2019

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