WILLAGRI
A bold plan from Brazil aims to link the preservation of tropical forests to the performance of global financial markets. The country plans to launch at the COP30 climate summit, to finance forest conservation through investments in fixed income assets. Although criticized for risks associated with financial markets, the fund seeks to fill the funding deficit needed to combat change climate and reverse the loss of global biodiversity. Brazil hopes obtain low-cost loans and guarantees from developed countries to raise funds from institutional investors, while offering incentives to countries that protect their forests. However, skeptics question the feasibility and implications of the proposed model.
The fund aims to be autonomous and generate returns to pay the countries that protect their forests, while excluding certain sectors such as the coal. Developed countries are asked to provide loans at low cost and guarantees to raise funds from investors institutional. Payments to countries are subject to rates of deforestation less than 0.5%, with penalties for the destruction of forests. Critics highlight the financial risks and challenges of diversification of the fund’s investments.
Source : Bloomberg