Indonesia Weighs Forest Finance Opportunity as COP30 Nears

A proposed $125 billion fund puts standing forests at the centre

Indonesia could receive hundreds of millions of dollars a year for keeping tropical forests standing under a proposed $125 billion investment facility moving towards the centre of discussions at the United Nations climate summit in Belém this November. As of October 25, 2025, Brazil, the host of COP30, has pledged $1 billion to the Tropical Forests Forever Facility and is seeking enough support to build a fund capable of delivering roughly $4 billion in annual forest payments.

The proposal would pay eligible countries according to the area of tropical forest they maintain, with deductions for forest loss and degradation. A reference payment of $4 per hectare per year gives Indonesia a substantial stake: the country reports more than 120 million hectares of forest across its archipelago. Its eventual allocation would depend on verified eligible forest, the treatment of degraded areas and penalties for loss.

For Indonesia, the attraction is a regular source of conservation funding. Forest protection has relied on a patchwork of grants, bilateral support, REDD plus programmes and carbon markets. Those approaches have brought money and experience, but also fluctuating income, complicated verification requirements and slow payment cycles.

The facility proposes a different arrangement. Public and private capital would be invested in global markets, and investment profits would finance payments to countries that protect forests. Instead of paying only for emissions avoided by a particular project, it would pay annually for the services that living forests provide. The proposed rules, investment returns and distribution arrangements will determine how dependable that income becomes.

Why the Belém summit matters

Brazil introduced the Tropical Forests Forever Facility at COP28 and has spent the past year recruiting partners. COP30 offers a setting to bring together governments, investors and the communities expected to benefit from a mechanism designed around payments over many years.

The United Kingdom, Norway and the United Arab Emirates have expressed support. Large investors and banks have taken part in discussions about the design, while civil society organisations and Indigenous leaders have joined consultations seeking stronger rights protections, safeguards and direct access to funding.

The proposal brings together groups with different responsibilities. Governments would help assemble the capital and organise national forest programmes. Investors would help finance the fund. Indigenous Peoples and local communities would have a reserved share of payments and are seeking a role in decisions about their delivery.

The sequence leading into the summit is:

• COP28: Brazil introduced the facility.
• The past year: Brazil recruited partners, with governments, financial institutions, civil society and Indigenous leaders joining discussions.
• October 25, 2025: Brazil's $1 billion pledge supports efforts to assemble a fund targeting $125 billion.
• November 2025: COP30 in Belém will bring the forest finance debate into the climate summit.

How investments would pay for conservation

The proposed facility would pool public and private capital and invest it in a diversified collection of fixed income assets. These include bonds, investments that make payments to investors under agreed terms. The plan is to use the profits from that pool to support forest conservation while maintaining an investment structure that can operate over time.

Organisers are targeting $125 billion in capital, with investment returns sufficient to deliver roughly $4 billion a year to participating tropical forest countries. The model resembles an endowment: a large pool of invested money generates income that supports an ongoing purpose.

Designs under discussion point towards a concentration in investment grade bonds from emerging and developing economies. Investment grade refers to a credit assessment indicating relatively lower repayment risk. The proposal also favours green or sustainable investments and would prohibit exposure to fossil fuels or companies with a high risk of involvement in deforestation.

Indonesia's appeal to the mechanism rests partly on this financial structure. A recurring payment could support programmes that need continuing budgets, including fire prevention and restoration, instead of relying on separate funding decisions for each new project.

What countries would have to protect

The payment formula focuses on tropical moist forest area rather than carbon credits. Backers commonly cite $4 per hectare each year for maintained forest. Countries would need to keep annual deforestation below a low threshold, often described as 0.5 percent, to qualify.

Satellite imagery and national monitoring would be used to check forest conditions. Payments would rise with the area maintained and fall when forest loss or degradation occurred. Outright deforestation would attract heavier deductions, while degradation would attract lighter ones.

Degradation matters because a forest can lose ecological health without losing all its tree cover. Monitoring therefore needs to look beyond whether an area still appears wooded and address damage that weakens the ecosystem.

The final eligibility rules, Indonesia's verified qualifying area and its eventual payment have not yet been specified. The figures describe the proposed scale of the mechanism, while the treatment of canopy condition, exclusions and penalties would shape the amount received.

Why this is different from carbon credits

Carbon markets pay for measured reductions in emissions or removals of carbon from the atmosphere. Prices can change with market sentiment and policy. Projects and programmes covering larger jurisdictions also face technical questions about additionality, permanence and baselines.

In simple terms, additionality asks whether the emissions benefit happened because of the programme. Permanence concerns how long that benefit lasts. A baseline is the estimate of what would have happened without the intervention. Establishing those answers can slow payments and lead to disputes about the quality of credits.

Many carbon projects sell credits that buyers use to offset emissions elsewhere, an approach that can be controversial. The Tropical Forests Forever Facility would not buy offsets. Its proposed payments recognise forests as a public good, supporting rain generation, water filtration, cooling and habitat as well as their role in holding carbon.

A payment per hectare may be worth less than the highest carbon credit prices. Its attraction is a simpler calculation and the prospect of predictable income at a national scale once a country qualifies. Governments could plan programmes over several years around revenue linked to maintained forest cover.

What the money could mean for Indonesia

Indonesia's forests in Kalimantan, Sumatra, Sulawesi and Papua support rainfall patterns, store carbon in deep peat, protect mangroves and coasts, and contribute to food and water security. They also sustain extraordinary biodiversity and communities whose livelihoods depend on healthy ecosystems.

Using 120 million hectares as a reference, a payment of $4 per hectare would equal $480 million a year. Indonesia reports more forest than that reference figure, but the actual allocation would be calculated from eligible, verified area after exclusions and deductions. The potential scale is therefore hundreds of millions of dollars annually, conditional on meeting the rules and keeping deforestation low.

Even part of that amount could support fire prevention, peatland rewetting, mangrove restoration, community forestry and sustainable livelihoods in forest provinces. Reliable funding could help provincial authorities plan work and maintain it beyond a single budget or election cycle.

The proposed mechanism also aligns with Indonesia's Forestry and Other Land Use Net Sink 2030 goal. A net sink means the sector absorbs more carbon than it releases. The facility could support that goal alongside the government's social forestry programme and efforts to expand restoration in peat and mangrove ecosystems.

Turning national income into local programmes

Provincial budgets are where national conservation goals must become practical work. A credible revenue stream governed by clear rules could help connect the two, financing continuing activities such as blocking canals in peatlands, detecting fires early, responding to them and supporting community management of forest resources.

Peatland rewetting and canal blocking aim to retain water in peat. Under the proposed financing approach, such work could receive continuing support alongside restoration and local stewardship, rather than depending entirely on irregular project payments.

Indonesia has issued green sukuk in global markets and is exploring domestic conservation finance linked to waqf. Sukuk are Islamic financial instruments, while waqf refers to an endowment. These approaches form part of the discussion about combining different sources of money for conservation.

A stable annual forest payment could be reserved for matching provincial funding, attracting philanthropic contributions to community projects or supporting contracts that pay for restoration results. Such combinations are often called blended finance. Strong public accounting and open data would be needed to show where the money goes and what it supports.

Communities need access as well as a reserved share

At least 20 percent of each country's allocation would be reserved for Indigenous Peoples and local communities, recognised in the proposal as proven guardians of forests. That commitment is central to how the facility would connect national payments with people managing forests on the ground.

Community organisations would need routes to obtain funding directly, rather than access solely through central governments. Proposed arrangements also include representation in decision making. For Indonesia, credible safeguards and transparent distribution would help support social forestry and customary land stewardship.

Syahrul Fitra, Forest Solutions Global Co Project Lead at Greenpeace Indonesia, warned that forest finance must change incentives that currently reward destruction. His concern points to a practical test for the mechanism: whether money for conservation changes the choices that drive forest loss.

Safeguards would also need to address degradation, not just complete deforestation. A channel for grievances and redress would allow concerns about threatened rights to be raised and addressed. The reserved community share, access arrangements and governance rules would together determine how much influence forest communities have over funding intended to support their work.

Key Points

• The Tropical Forests Forever Facility targets $125 billion in invested capital and roughly $4 billion in annual forest payments.
• Brazil has pledged $1 billion, with COP30 taking place in Belém in November 2025.
• The proposed reference payment is $4 per hectare per year, subject to eligibility rules and deductions for forest damage.
• Indonesia reports more than 120 million hectares of forest, creating potential annual income of hundreds of millions of dollars.
• The mechanism would pay for maintained forests rather than buy carbon offsets.
• At least 20 percent of country allocations would be reserved for Indigenous Peoples and local communities.
• Indonesia's eventual benefit would depend on verified forest area, conservation performance, safeguards and transparent distribution.