Here’s why European nations are considering joining the Amazon Fund

By the time Jair Bolsonaro left the Brazilian presidency, the Amazon Fund had been frozen but his departure has sparked renewed European interest in boosting efforts to preserve the so-called lung of the earth.

Created in 2008 by Norway and Brazil, the Amazon Fund (or Fundo Amazônia, in Portuguese) is the main cooperation tool used by Europe to invest in projects in the Brazilian portion of the Amazon forest. Currently, 93.8% of the funding comes from Norway, another 5.7% was donated by Germany and 0.5% comes from Petrobras, a state-owned Brazilian oil and gas company.

But under Bolsonaro’s leadership, the committees responsible for managing the Fund were dismantled, prompting concern among environmentalists that the far-right politician could potentially destroy the mechanism that has accrued over R$ 3,4 billion (equivalent to €616 million) in donations for halting deforestation in the tropical forest.

However, since Luiz Inácio Lula da Silva beat Bolsonaro in the last elections, and passed a law that reinstated the fund in January, the initiative is back on – and it’s gaining more attention than ever from European countries.

Norway, Germany, France, Switzerland and the UK

Norway and Germany have for instance announced they will be restarting their donations, which were frozen during Bolsonaro’s government.

Oslo is expected to remain the main donor in the next couple of years because it has a longstanding tradition in international cooperation, and is investing heavily in tropical forests, Brazilian environmentalist Fernando Mathias, a policy advisor at the Rainforest Foundation Norway, told Euronews. Mathias has been living in Norway for several years and works with environmental cooperation policies between the two countries.

“The Amazon Fund is part of a broader policy of the Norwegian government which is very much focused on their climate and forests strategy,” he said.

“Norway has a tradition in the field of international cooperation and is one of the few countries in Europe that dedicates 1% of its GDP to international cooperation. Although it is a small country, it is a relevant player on the international scene,” he added. 

France is also among the countries that are now considering supporting the Fund, foreign minister Catherine Colonna said during an official visit to Brazil in February.

“France is studying the possibility of a bilateral contribution, as well as the European Union, which is also very actively studying the possibility of contributing [to the Amazon Fund]”, said Colonna in a press conference in Brasília.

Switzerland is another one.

“Switzerland has been discussing the Amazon Fund in its informal exchanges with the Brazilian transition authorities. A contribution to the Fund is currently under consideration” said the spokesperson, in December.

The UK also said it is studying the possibility of joining the group, although it did not disclose information on how much its contribution would be.

“Our ministers received the request for the United Kingdom to join the Amazon Fund from several representatives of the transitional government in Egypt, during COP27, and we are evaluating the possibilities,” the Embassy of the United Kingdom in Brazil said in a note to Euronews in December. 

Outside of Europe, the United States’ participation is still to be confirmed, but analysts expect a donation of around $50 million. 

Donations have ‘geopolitical values’

According to Adriana Ramos, advisor at Instituto Socioambiental (ISA), a Brazilian civil society organisation, the Amazon Fund attracts foreign countries because it represents a cost-effective strategy for investing in tropical forests. In the past, Adriana was the representative of the civil society in the committee that oversees the strategy of the fund.

“There’s a political interest in supporting a new government that is committed to reducing deforestation, but there’s also a more practical reason behind this support from European countries. For them, it’s cost-effective,” Ramos told Euronews.

“These are countries that are already committed to reducing emissions, so they have a direct interest in forest carbon. Although investing in the Amazon Fund does not give them credits to offset their own emissions, it generates a sort of diploma that has a lot of geopolitical value,” she also said. 

The money from the Fund is intended to finance projects to preserve the forest and ensure its sustainable development, and the use is supervised by the National Bank for Economic and Social Development (BNDES). 

The donations received so far have been directed to finance 102 projects conducted by either NGOs or governmental agencies, such as the Brazilian Institute of Environment and Renewable Natural Resources (Ibama), which is responsible for monitoring and combating deforestation. According to governance reports, 207,000 people – most of them residents of the Amazon – were positively impacted by the projects so far.

The fact that the positive impacts of the projects can be easily measured by the governance system in place is another reason why new donors might join the Amazon Fund in the near future, according to Eugênio Pantoja, director of Public Policies at the Institute for Environmental Research in the Amazon (IPAM), who participated in periodic evaluations of the fund.

New research published in the Review of Evolutionary Political Economy in late February demonstrates that the Amazon Fund’s positive impacts “are largely due to its three interconnected innovative dimensions”: the multistakeholder governance of the fund, its donor-based pay-for-performance system and the fact that the non-reimbursable financing of projects is conducted by BNDES.

New projects in the pipeline

European countries are well aware of the importance of tropical forests in the fight against climate change and biodiversity loss, and governments across the continent stress that this relevance might motivate new contributions to the Amazon Fund.

The importance of the Amazon forest for climate change was highlighted by the Federal Department of Foreign Affairs of Switzerland when it confirmed firsthand that the country is considering starting contributions in the future.

For the next months, the Amazon Fund is expected to restart its selection of new projects, in addition to restoring those that were interrupted in 2019 after Bolsonaro dismantled the governance committees that allowed the mechanism to distribute its funds.

Environmentalists believe that the focus of the fund will be on sustainable development of small-scale production in the Amazon, support for indigenous communities and, of course, monitoring and combating illegal deforestation.

“When the European countries agree to finance the fund, they are actually financing public policies of the Brazilian government that aim to reduce deforestation in the Amazon,” Eugênio Pantoja, from IPAM, told Euronews. 

“It’s not just investing in the forest: it also means supporting these three main lines of action for the coming years, and that is a very important statement.”