Amazon Fund: brief analysis of risks and challenges

This text has the objective of presenting a summary of risks and challenges currently perceived in the Amazon Fund implementation.

The Amazon Fund (FA) was created on August 1, 2008 by Decree No. 6527. Guidelines and criteria for fund application were defined at the first two meetings of the Fund’s Guidance Committee (COFA) held last October and November, respectively. A third meeting was held on May 29 to present the technical cooperation agreement jointly signed by the Ministry of the Environment (MMA), the Brazilian Forest Service (SFB) and the National Bank for Economic and Social Development (BNDES), and also to discuss the participation of private companies as beneficiaries of the Fund.

Despite the urgency of financial incentives to promote the “standing forest,” in practice the FA remains only on paper. In addition, there are several practical and political aspects that need to be defined and qualified:

1.      The decision to restrict the action of Amazon Fund Guidance Committee (COFA) has caused concerns. This committee, made up of representatives from the federal government, state governments, and civil society, is not responsible for defining who will receive the funds made available by national and international donors. In addition, according to Decree No. 6527, COFA’s only function is to take notice of funding application and have access to the Fund’s annual report.

2.      Another issue is the methodology and instruments to be used  for approving funding requests; assessment of the physical and financial execution of approved projects, and those utilized to measure social and environmental impacts generated in the short- and middle-term, taking into account the goals of preventing, monitoring, and combating deforestation, and above all, forest conservation and sustainable use in the Amazon biome. As far as we know, all this has not been made public, nor has this been discussed with COFA members.

3.      We are concerned with the political, technical, and financial fragility of the Ministry of the Environment which has a secondary position vis-à-vis the powerful interests of big landowners who are responsible for most Amazon deforestation. Their influence is rapidly increasing in the Executive and Legislative Branches, ignoring and disqualifying environmental legislation and laws dealing with the Amazon. The passing of Provisional Measure No. 458 by both the  Chamber of Deputies and the Senate threatens the collective right to the land of indigenous populations, Quilombolas,[1] and traditional peoples because it stimulates the integration of those lands to the land market; regulates and stimulates land grabbing in the Amazon; and creates the conditions for agribusiness development, with the objective of expanding cattle-raising, and the palm oil , sugarcane, and soybean monocultures.

4.      There is a great risk of the Fund becoming a way of mitigating and compensating for the socioenvironmental impacts of economic infrastructure works planned or in  their execution in the Brazilian Amazon. Even worse, to become an “exchange currency” for local populations and civil society organizations (including those represented in COFA) active in the region, and to end up financing those who deforest and pollute both in Brazil and other countries.

5.      We are concerned about private sector pressure to ensure access to the Fund’s financing. It is true that there is no restriction to this type of support in any official Fund document. However, the understanding that donations should not be geared to lucrative investments has prevailed so far.

6.      Another real risk is the federal government using Fund resources as substitutes for investments it should make through the public budget (Multi-Annual Plan and Annual Budgetary Law). For example, covering cutbacks in expenditures and investments through the process of withholding authorized fund releases (contingenciamento).

7.      2010 is an electoral year in Brazil and “traditionally” governments make broad and intensive use of  the administrative apparatus and public funds to elect and reelect candidates, mostly under the pressure of a conservative sector, the big landholders, who are the main force behind Amazon deforestation and degradation.

From the perspective of those who want the Fund to comply with its objectives, to avoid being politically used and ending up with a negative impact on the region, we think it is key that independent groups can monitor and freely assess the use of funds. Ensuring transparency and capacity for independent evaluation is undoubtedly important for the Amazon's future and for adequate utilization of Amazon Fund financial support.