As of: 03/2024
The Amazon Fund serves to protect the rainforest in Brazil. Its funds are used to combat deforestation and promote the sustainable use of resources. The aim is to preserve the rainforest in the Amazon basin as this is crucial for the world's climate. Between 2016 and 2023, KfW contributed around EUR 90 million to the Fund on behalf of the German Federal Government; this was in addition to funds from the Norwegian Government. Of these, close to EUR 75 million have been paid out so far. The Fund was established in 2008 and has supported more than 100 individual projects that contribute to protecting the forest.
The Amazon is the world’s largest tropical rainforest and covers an area of over 5.5 million square kilometres. It falls within the territory of nine nations, but 60 percent is in Brazil. The forest affects the climate throughout the world. It is also home to an enormous variety of different species. The Amazon and its tributaries are a source of drinking water for several million people. Most of the rural population lives from the forest and its resources. Agriculture throughout the country is dependent on the Amazon's circulation of water.
It is therefore impossible to overestimate the importance of the forest, but resource depletion is still taking place. Illegal deforestation continues to play a major role. The forest is under a great deal of usage pressure. The causes of deforestation are mainly down to the expansion of agricultural land and uncontrolled settlement.
The Amazon Fund was established in 2008 by the Brazilian government and the Brazilian development bank Banco Nacional de Desenvolvimento Econômico e Social (BNDES). Its purpose is to help the country achieve its goals for reducing greenhouse gas emissions. These goals also include significantly reducing the annual deforestation in the Brazilian Amazon region. A reduction of 80 percent was planned for the period from 2005 to 2020 – this had already been achieved by 2012. Since then, however, deforestation has again been on the rise, moderately at first but at a rapid pace since 2018. It has only been possible to reverse this trend since the new government took over in 2023.
So far, Germany has contributed around EUR 90 million to the Fund via KfW. The Norwegian government is also a donor. The Brazilian oil company Petrobras has also supported the Fund by contributing more than USD 7 million. The Fund currently has a volume of close to USD 1.3 billion. The new government's political turnaround, which has put forest protection back at the top of its agenda, has encouraged other donors to participate in the Fund. The United Kingdom, Denmark, Switzerland, the EU, the USA and Japan have shown interest.
Brazil aims to stop all illegal deforestation by 2028 and halve its greenhouse gas emissions by 2030. The development of the Amazon is carefully monitored. Brazil monitors more than two-thirds of its forests by satellite. The deforestation figures, volumes of emissions and payments for reducing emissions are entered online in a publicly available national carbon register.
The funds from the Amazon Fund are helping Brazil to recover some of the costs associated with its reduction in deforestation. This is because controlling deforestation requires time and effort, such as in the management of protected areas, establishing the environmental register and refraining from agricultural use. Science and research are also to be promoted.
The Fund supports individual projects aimed at rubber tappers and collectors, indigenous peoples, small farmers and agricultural and forestry producers. Today, the portfolio comprises more than 100 projects, which have already received a total of USD 693 million in finance.
The Fund promotes projects to enable local residents to make a living from the sustainable use of forest resources. As a result, the collection and processing of rubber, acai, andiroba and other fruits and oils from the forest are promoted. Agroforestry systems are being created. Sustainable fisheries and fish farming also provide income. Alternative income opportunities have also been created. In total, 200,000 people have so far benefited from the projects supported by the Fund. Numerous research results on the Amazon forest have also been published.
The first signs of success are visible. Between 2004 and 2012, the rate of deforestation decreased significantly, namely by 83 percent. Monitoring and checks have proved to be appropriate means for mitigating deforestation. However, political processes led to a chequered history for the Fund. After 2012, the rate of deforestation increased again – moderately at first and then at a rapid pace from 2018 to 2023.
The Fund donors responded to this destructive development. Between the end of 2019 and the end of 2022, there was a freeze on payments for Fund projects that had not yet been approved, as the then government of Bolsonaro had suspended the agreed committees tasked with the management of the Amazon Fund. During Jair Bolsonaro’s term of office, Brazil’s annual rate of deforestation was 60 percent higher than in the previous four years. Environmental authorities were weakened. However, with the re-election of Lula da Silva in 2023, the steering committees were immediately restored, so the Fund can now continue its work. At the moment, it is assumed that the rate of deforestation will again be reduced, as the political will to do so is strong again. A new action plan to protect the forest has been adopted and the environmental authorities have been strengthened.
The project contributes to the achievement of these following United Nations Sustainable Development Goals:
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KfW Group
KfW Development Bank
Biodiversity and natural resources – Latin America and the Caribbean
florian.arneth@kfw.de
KfW Office, Brasilia
kfw.brasilia@kfw.de
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