Amazon Fund
Radical Simplicity and Bold Ambition – Insights for Building National Institutions for Low Carbon Development
The Amazon Fund is an innovative and nationally developed climate finance fund, designed to mobilize funding to support the combat of deforestation and sustainable management of forests. It was set up by the Government of Brazil in 2009, and is managed by the Brazilian National Development Bank (BNDES).
The Amazon Fund’s design aims to ensure sufficient and appropriate accountability to local stakeholders and to funders but also, crucially, to direct funding towards projects and activities that catalyse a transformation towards low carbon development in the Amazon. It has now awarded its first grants and is growing from being an ambitious start-up initiative to a fully operational part of Brazil’s institutional framework for managing the Amazon.
Simon Zadek together with Maya Forstater and Fernanda Polacow have been working with the Amazon Fund over the past two years to understand the lessons learned from the development, design and early implementation of the initiative. Supported by Fundación Avina, the findings are summarised in a working paper: Amazon Fund: Radical Simplicity and Bold Ambition – Insights for Building National Institutions for Low Carbon Development.
This working paper was presented for discussion at a side-event to COP16 in Cancun on 9 December. The event titled: ‘Innovative Experiences from Latin America in Response to Climate Change’ was hosted by FARN (Environment and Natural Resources Foundation, Argentina) and addressed innovative tools for climate change mitigation, adaptation and financing in Latin America, such as Brazil’s Amazon Fund and the Yasuni-ITT Initiative. Simon Zadek formed the panel along with leading Latin American figures on climate change: Yolanda Kakabadse President of WWF International and Chair of the Advisory Board of Fundación Futuro Latinoamericano; Tarsicio Granizo, responsible for the Yanusi initiative for Ecuador’s government; Leonardo Boff, renowned theologian, philosopher, writer, and environmentalist; Manuel Rodriguez Becerr, professor at the Faculty of Management, University of the Andes and international consultant on environmental policy. These leading figures also shared their perceptions on the preliminary results and conclusions of COP16 in Cancun through a live broadcast. View the session invite in spanish.
The paper highlights the Amazon Fund as a crucial early experiment in developing a national climate funding entity, with key design innovations:
- Performance-Based Financing: the Amazon Fund provides simple intermediation between pay-for-carbon funds and project investing.
- Restricted Multi-Stakeholder Governance: a multi-stakeholder committee involving federal and state officials and civil society representatives provides oversight, but the fund’s managers have significant autonomy.
- Low-Cost Local Management: the Fund is managed by the national development bank BNDES, with an agreement to take 3% of donations to cover costs.
Core to the Amazon Fund’s design was a decision to ‘start-fast and evolve’ with a simple structure. However, while it has been able to get started quickly, it has begun to face design and operational challenges as it seeks to evolve towards greater impact in effectively tackling the economic and political drivers of deforestation.
Currently the Amazon Fund is caught between simplicity and ambition. In future its stakeholders must decide whether to develop it as a simple, low cost funding mechanism within a broader Brazilian Reducing Emissions from Deforestation and Forest Degradation (REDD) system, or as a mature institution that is proactive in fundraising and investment, learning and influencing broader systems.
The Working Paper draws on a series of interviews with key Amazon Fund stakeholders in Brazil and internationally, who are navigating this pathway, and who have discussed with us the challenges and success factors they have experienced. We hope that the study will provide useful insights to the Amazon Fund’s Board, executive and principle supporters, as well as to those involved in developing climate and forestry initiatives in other countries.
The Working Paper is a discussion document, and we welcome comments from all interested parties. Please send comments to: Maya Forstater (in English) at Maya[at]zadek.net and Fernanda Polacow (in Portuguese) at Fernanda[at]zadek.net.
The working paper follows on from an earlier study: Radical Simplicity in Designing National Climate Institutions: Lessons from the Amazon Fund (2009) conducted by the same team.
Further resources:
South African Renewables Initiative (SARI) – a climate-related economic initiative exploring how to boost renewables whilst driving industrial development opportunities deep into the industry’s value chain; and help to vaccinate South Africa’s energy and carbon intensive against the expected growth of ‘carbon sensitivity’ in its key international markets by establishing a green purchase obligation for these sectors. Simon Zadek, Maya Forstater and Saliem Fakir are contributing to this project, on behalf of the South African government.
Project Catalyst - a multi-organisation initiative to advance international co-operation in addressing climate change, involving McKinsey, the European Climate Foundation, and the ClimateWorks Foundation. Co-authored outputs from the partnership have been Business of Adaptation, White Paper on Institutions, and Low Carbon Growth Plans: Advancing Good Practice.
