World Bank Group Backs Brazil’s Forest Recovery With US$488 Million Restoration Plan

The financing package includes US$100 million from the International Bank for Reconstruction and Development, part of the World Bank Group, and US$47 million from the Climate Investment Funds.

The World Bank Group is supporting Brazil's efforts to restore degraded land through a US$488 million project that gives private companies access to long-term financing for forest restoration. The Arc of Restoration Project connects forest recovery with investment and employment in a region where ecological needs and business interest meet. Its work will expand restoration along the deforestation frontier between the Amazon and the Cerrado, with particular attention to the Tocantins-Araguaia Basin.

The financing package includes US$100 million from the International Bank for Reconstruction and Development, part of the World Bank Group, and US$47 million from the Climate Investment Funds. The Brazilian Development Bank, BNDES, will provide US$100 million in counterpart funding, with another US$241 million expected from commercial financing. BNDES will implement the project and channel resources through sub-loans to private companies carrying out restoration work.

Expected results include bringing 68,000 hectares under enhanced conservation and sustainable management, including 17,000 hectares in the Tocantins-Araguaia region. Over its life cycle, the project is expected to reduce net greenhouse gas emissions by approximately 15.9 million tons of CO₂ equivalent. Restoration activities are projected to create around 1,900 direct jobs and 6,700 indirect jobs, connecting environmental recovery with employment opportunities.

Financing that gives forest restoration time to grow

Brazil contains about 60 percent of the Amazon rainforest and has committed to restoring 12 million hectares of native vegetation by 2030. An estimated 23.7 million hectares across the country require restoration, highlighting the scale of investment needed to recover damaged landscapes. Restoring these areas helps store carbon, conserve biodiversity and regulate water, providing public benefits that extend beyond the businesses undertaking the work.

High upfront costs, payback periods of nine to 15 years and carbon markets that are still developing have restricted private financing for restoration. Concessional "patient capital" helps bridge this gap by providing financing suited to projects whose returns take years to develop. The operation targets at least five large-scale subprojects, with an ambition of reaching ten, expanding the pipeline of restoration businesses able to access this support.

Credit for native forests, watersheds and local value chains

BNDES will use IBRD and CIF resources to finance ecological restoration, reforestation with native species, agroforestry systems and sustainable forest management. Eligible activities include watershed protection and value chains for native timber and non-timber forest products, giving companies several ways to build businesses around restored landscapes. This range of activities links forest recovery with the production and management practices needed to sustain investment over time.

Within the Arc of Restoration, the project will blend IBRD and CIF resources through a tiered pricing approach that offers more attractive terms than BNDES's standard credit lines. Borrowers will receive the full funding cost advantage of CIF resources, helping make large-scale restoration more financially viable. CIF Chief Executive Officer Tariye Gbadegesin said the collaboration between IBRD, BNDES and CIF addresses upfront investment needs and delayed returns, emphasizing that every subproject will be led by the private sector.

Carbon revenues and safeguards support lasting recovery

At least 60 percent of subprojects are expected to obtain certification under established standards by project closing, creating opportunities for an additional revenue stream through carbon markets. The project will strengthen environmental and social safeguards, including protections for the rights of Indigenous Peoples and local communities. These protections accompany the financing effort as companies develop restoration activities across the targeted landscapes.

World Bank Country Director for Brazil Cécile Fruman described forest restoration as an environmental imperative and an economic opportunity, with concessional financing and private investment helping make projects viable. She highlighted the benefits for biodiversity, water resources, climate resilience and employment in one of Brazil's most important regions. The operation puts Brazil's Investment Plan under CIF's Nature, People and Climate program into practice and aligns with the World Bank Group's Country Partnership Framework for Brazil for 2024–2028.