Fit-for-Purpose Forest Finance: A Menu of Financial Mechanisms

This report by the Climate Policy Initiative and Pontifical Catholic University of Rio de Janeiro maps 30 international financial mechanisms designed to support tropical forests. It identifies a significant funding gap, noting that current mechanisms mobilize US$ 25.9 billion, which is far below the US$ 66.8 billion annually required by 2030 to unlock the full potential of tropical forests.

• There is a substantial gap between current forest finance and the estimated needs for 2030. While the Climate Policy Initiative tracked US$ 18.2 billion in finance for Agriculture, Forestry, and Other Land Use (AFOLU) for 2023, the United Nations Environment Programme (UNEP 2025) estimates a requirement of US$ 66.8 billion annually by 2030.
• The report identifies 30 international financial mechanisms that have total planned, issued, and disbursed funds of US$ 25.9 billion. Ten of these mechanisms have a size of US$ 1 billion or more.
• A significant portion of identified funding has not yet been delivered. Approximately 31% of the total funding from existing mechanisms is yet to be issued or disbursed, with this gap being most pronounced for private actors (88%) and blended funds (57%).
• Financial mechanisms are divided between those with a single focus and those with multiple objectives. Half of the 30 mechanisms focus exclusively on one goal: conservation (US$ 2.6 billion), restoration (US$ 2.2 billion), or deforestation reduction (US$ 1.3 billion). The other half pursue multiple objectives, with five mechanisms targeting all three objectives for a total of US$ 11.4 billion.
• The funding landscape varies by objective: public resources are more prominent in conservation due to the support of traditional communities and limited direct revenue from standing forests. Restoration is more frequently supported by private actors and blended funds because it can be linked to productive activities and clearer revenue models.
• Results-based payments, specifically Jurisdictional REDD+, represent a major portion of forest finance, totaling over US$ 15.3 billion, which is more than half of the total funding mapped.
• Geographic access to these mechanisms is uneven. While 48% of the 30 mechanisms are globally accessible, Brazil and Guyana have the highest access with 24 and 19 mechanisms respectively. However, only three of the ten nations with the highest carbon capture potential—Brazil, Cameroon, and Colombia—have access to a significant share of the mechanisms.

APA

Climate Policy Initiative (2025). Fit-for-Purpose Forest Finance: A Menu of Financial Mechanisms. https://www.climatepolicyinitiative.org/publication/fit-for-purpose-forest-finance-a-menu-of-financial-mechanisms/

Chicago

Climate Policy Initiative. Fit-for-Purpose Forest Finance: A Menu of Financial Mechanisms. 2025. https://www.climatepolicyinitiative.org/publication/fit-for-purpose-forest-finance-a-menu-of-financial-mechanisms/.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=Fit-for-Purpose Forest Finance: A Menu of Financial Mechanisms |date=4 November 2025 |url=https://www.climatepolicyinitiative.org/publication/fit-for-purpose-forest-finance-a-menu-of-financial-mechanisms/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2025fitforpurpose, author = {{Climate Policy Initiative}}, title = {{Fit-for-Purpose Forest Finance: A Menu of Financial Mechanisms}}, institution = {Climate Policy Initiative}, year = {2025}, month = nov, url = {https://www.climatepolicyinitiative.org/publication/fit-for-purpose-forest-finance-a-menu-of-financial-mechanisms/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }