UPSC CURRENT AFFAIRS – 21st March 2025

Home UPSC Current Affairs Billions needed to save forests, but funding fuelling their destruction, reveals UNDP report

Billions needed to save forests, but funding fuelling their destruction, reveals UNDP report

About the Report

A recent report, Transforming Forest Finance, released on March 20, 2025 was released by the Forest Declaration Assessment and supported by the United Nations Development Programme (UNDP).
It highlights a severe shortfall in global financial support for forest conservation.
The report warns that, instead of preventing deforestation, financial flows are actively contributing to environmental destruction.
The findings come ahead of the International Day of Forests on March 21, emphasizing the urgent need for financial reforms in forest conservation.

Funding Gap and Misallocation of Resources

The report reveals that while approximately $460 billion annually is required to halt deforestation, actual financial support falls significantly short. Moreover, for every $1 allocated to forest protection, $6 is directed towards industries that drive deforestation, such as industrial agriculture and logging.

In 2023, private financial institutions invested $6.1 trillion in sectors linked to deforestation.
Governments provided $500 billion annually in subsidies that encourage environmental destruction rather than conservation.

This financial misallocation underscores the systemic failure in global forest finance, where unsustainable economic activities receive greater financial backing than conservation efforts.

Debt Burden and Policy Failures

The report highlights that many developing nations, burdened by a collective debt of $11 trillion, are compelled to exploit forest resources for short-term economic gains.
Debt-driven deforestation emerges as a significant challenge, making financial reform an essential aspect of sustainable forest management.
According to Imogen Long, lead author from Climate Focus, the current financial system prioritizes short-term profits over long-term sustainability.
Similarly, Pablo Pacheco from WWF stresses that Indigenous Peoples and local communities—who are the best forest stewards—receive only a fraction of climate finance, which must change.

Criticism of REDD+ Programme

The report critiques the REDD+ (Reducing Emissions from Deforestation and Forest Degradation) programme, which compensates countries for reducing deforestation. However, it argues that the financial incentives provided under REDD+ are inadequate:

Payments range between $5–$10 per tonne of carbon dioxide reduced.
The actual cost of reducing emissions is estimated at $30–$50 per tonne.

This financial shortfall weakens the incentive for forest-rich nations to prioritize conservation over economic exploitation.

Successful Conservation Models

The report also highlights successful funding mechanisms that have shown positive conservation outcomes:

Mesoamerican Territorial Fund and Podáali Fund have demonstrated that direct funding to Indigenous communities leads to better conservation efforts.
These models emphasize the need for decentralization of financial support to those who directly protect forest ecosystems.

Key Recommendations for Financial Reform

To address the challenges of inadequate and misallocated funding, the report proposes six key reforms:

Reforming Public and Multilateral Finance – Institutions like the World Bank should increase funding for forest conservation.
Overhauling Sovereign Debt Systems – High debt levels force countries to exploit forests for economic survival; debt restructuring is essential.
Redirecting Harmful Subsidies – Governments must shift subsidies away from industries that drive deforestation toward sustainable alternatives.
Increasing Direct Funding for Local Communities – Indigenous Peoples and local groups should receive more financial support to protect their lands.
Strengthening Financial Regulations – Banks and investors should be required to account for deforestation risks in their portfolios.
Developing New Financing Models – Initiatives like the Tropical Forest Forever Facility could provide stable, long-term funding for conservation.

Global Implications and Way Forward

With the 30th Conference of Parties (COP30) to the United Nations Framework Convention on Climate Change approaching, these findings are expected to influence global discussions on forest finance.
The report warns that without urgent financial reforms, the world risks losing forests—one of its most crucial natural defences against climate change.
Addressing financial misallocations, strengthening institutional frameworks, and prioritizing sustainable funding models are essential to reversing deforestation trends and ensuring the long-term health of global forest ecosystems.