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

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Summary

The Amazon Fund is the largest dedicated fund supporting efforts to reduce emissions from deforestation and degradation in the Amazon, the world’s largest tropical forest with invaluable biodiversity. It is managed by the Brazilian Development Bank with US$ 1 billion in funding from the government of Norway, and technical assistance support from Germany. The Fund has demonstrated that developing country institutions can meet high standards of fiduciary governance and operational transparency. Yet while the $1 billion committed to the fund is a significant sum relative to other climate funds, it is a small sum of money relative to the size of the Brazilian economy and the incentives that are driving deforestation. While the fund is intended to work on a payment for performance basis, in practice the payments have been less clearly linked to demonstrated emission reductions. A key priority is to better develop a strategy that will link the programs it funds with the realisation of national sustainable development aspirations. While there is formal space to engage a diversity of Brazilian stakeholders in the governance of the fund, they have not been actively involved in such decision-making processes over the past year. This working paper is one of a series of ODI studies of the effectiveness of international climate funds using a common analytical framework. 

Authors

Maya Forstater
Smita Nakhooda
Charlene Watson