The World Bank Group is supporting Brazil’s Arc of Restoration Project, a USD 488 million operation to expand financing for forest restoration by private companies and mobilize USD 241 million in commercial financing. The project focuses on degraded land along the deforestation frontier between the Amazon and Cerrado, particularly the Tocantins-Araguaia Basin.
Funding includes USD 100 million from the International Bank for Reconstruction and Development (IBRD), USD 47 million from the Climate Investment Funds (CIF) and USD 100 million from the Brazilian Development Bank (BNDES). BNDES will implement the project, channeling resources to private restoration companies through subloans. Blending IBRD and CIF resources will offer more attractive terms than BNDES’s standard credit lines, with the full funding cost advantage of CIF resources passed on to borrowers. These terms address financing barriers arising from high upfront costs, payback periods of nine to 15 years and still maturing carbon markets.
The project is expected to bring 68,000 hectares under enhanced conservation and sustainable management, including 17,000 hectares in the Tocantins-Araguaia region. It also targets a reduction in net greenhouse gas emissions of approximately 15.9 million metric tons of carbon dioxide equivalent over its life cycle and around 1,900 direct and 6,700 indirect jobs. At least 60% of subprojects are expected to obtain certification under established standards by project closing, creating an additional revenue stream while strengthening environmental and social safeguards, including protections for Indigenous peoples and local communities.