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The effectiveness of climate finance: a review of the Amazon Fund

Research report

Written by Charlene Watson, Smita Nakhooda

Research report

The Amazon Fund aims to raise finance to support actions that prevent, monitor and combat deforestation, and promote the preservation and sustainable use of forests in the Amazon Biome. While Brazil’s policies for sustainable development in the Amazon could not be conditional on international finance, resources were needed to support their development and implementation, as was international recognition of any achieved contribution to global climate change mitigation goals. As of February 2013, pledges to the Amazon Fund US$1.03 billion has been pledged to the Amazon Fund and it is the largest source of international climate finance in Brazil.

The Amazon Fund has attracted substantial international attention for its design and operation. It is seen to have demonstrated that an institution based in a developing country can lead and manage its own climate fund in an inclusive manner, and that its institutions – in this case, the Brazilian Economic and Social National Development Bank (BNDES) – can meet high standards of transparency and accountability in its operations. The devolved decision-making seeks guidance on how to use the funds from a steering committee which includes representatives from local government, national ministries and civil society (including indigenous peoples, traditional communities, NGOs, industry and scientists). The Amazon Fund has also pioneered results-based finance for REDD+. A payment-for-performance model continues to be used to raise funds from international and domestic donors, although it does not generate offsets in line with Brazil’s approach to UNFCCC negotiations. Furthermore, project funding is decoupled from fundraising, such that non-reimbursable grants are reduce liability and risk for project implementers that range from Federal Ministries to local communities.

Four years after the operationalisation of the fund, and with the emergence of a portfolio of supported projects, it is useful to reflect on its achievements in practice.

This working paper is part of a series of studies of the effectiveness of dedicated climate funds and is based on a framework for reflecting on the effectiveness of international climate, developed by ODI through an iterative process of research, analysis and engagement, released as working papers to stimulate discussion and feedback.  It is part of a series of studies of the effectiveness of dedicated climate funds, released as working papers to stimulate discussion and feedback. These studies will be further revised and refined to respond to discussion and feedback, and new developments.

Maya Forstater, Smita Nakhooda and Charlene Watson