Financing forests: financial flows to highly forested areas in Brazil and Indonesia

Financing forests: financial flows to highly forested areas in Brazil and Indonesia

This project estimated the finance gap for the protection of natural forests in Brazil and Indonesia. By analyzing how financial flows supported or harmed forests, Conservation Strategy Fund (CSF), in partnership with WWF UK, assessed the level of funding needed annually to meet forest policy goals and identified opportunities to redirect and scale resources toward conservation.

The study mapped financial flows across key forest-related activities and classified them by source, instrument, delivery mechanism, and impact, whether positive or negative. It also considered how these flows affected forest conservation, restoration, sustainable management, and Indigenous Peoples and local communities.

The analysis revealed a significant imbalance between finance supporting forests and finance contributing to their degradation. In Brazil, annual forest-positive flows averaged US$408 million, compared with US$3.1 billion in forest-negative flows. In Indonesia, positive flows averaged US$244 million, while negative flows reached US$3.4 billion. This meant that negative flows were approximately 8 times larger than positive ones in Brazil and 14 times larger in Indonesia.

The study also found substantial gaps between existing forest-positive finance and the resources needed to meet national forest policy goals. Brazil required an estimated US$12.8 billion annually, with existing positive flows covering only about 3% and leaving a US$12.4 billion annual gap. In Indonesia, approximately US$5.3 billion was needed each year, while current flows covered around 5%, leaving a gap of approximately US$5.1 billion.

Based on these findings, the study highlighted the need to both increase forest-positive finance and redirect financial flows that contribute to forest loss. Recommendations included repurposing private loans and harmful subsidies, increasing domestic public finance, strengthening donor ambition, scaling innovative financial instruments, and improving direct and equitable access to forest finance for Indigenous Peoples and local communities. Together, these findings underscored that closing the forest finance gap requires not only mobilizing additional resources, but also addressing the broader financial and economic incentives driving forest loss.

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Photo: Banyumala Twin Waterfalls, Bali, Indonesia, Roman Vasilenia