Financing Forest Conservation: An Overview of the Tropical Forest and Coral Reef Conservation Act

Best known for enabling “debt-for-nature” swaps, the Tropical Forest and Coral Reef Conservation Act (TFCCA) of 1998 was retitled in 2019 after a reauthorization act added coral reefs. The act offers eligible developing countries options to relieve certain official debt owed the U.S. Government while, at the same time, generating funds in local currency to support tropical forest or coral reef conservation activities. In addition to conserving forests and coral reefs and relieving debt, TFCCA is intended to strengthen civil society by creating local foundations to support small grants to NGOs and local communities. The program also offers a unique opportunity for public-private partnerships, and the majority of TFCCA agreements to date have included funds raised by U.S.-based NGOs.

The old acronym, TFCA, is still used for all program deals arranged prior to 2019. As of December 2014, approximately $233.4 million in congressionally-appropriated funds have been used to conclude 20 TFCA debt-for-nature agreements with 14 countries. The Nature Conservancy, Conservation International, the World Wildlife Fund, and one Indonesian foundation (KEHATI) have contributed an additional $22.5 million to 12 of these agreements, enabling more debt to be treated and, in turn, generating more funds for conservation. The TFCA programs, arranged prior to 2019, will generate more than $339 million for grants and projects to help protect and sustainably manage tropical forests in beneficiary countries.

TFCA agreements offer many benefits to participating countries, including:

  • Forest conservation and debt redirection Resources that once went to the U.S. Government for debt payments remain in the host-country economy and are redirected to local organizations that undertake forest conservation activities.
  • Leverage opportunities: Participation of third parties under the debt-swap option increases the amount of funds available to treat debt and/or support the trust fund.
  • Stronger civil society: Grants to community and other NGOs build grass-roots capacity to complement government sponsored activities.

The TFCCA program status

Annual appropriations for the TFCA program were provided from 2000–2013. After the addition of coral reefs to the program through the 2019 reauthorization, a $15 million appropriation was made in FY 2020. As of mid-2020, no new agreement has yet been negotiated. The last TFCA agreement signed was with the government of Indonesia in 2014; it targeted threatened and endangered species on the island of Sumatra. Of the original 20 TFCA agreements, four will have terminated by mid-2020: Peru I & II, Philippines I, and Brazil.

USAID works with the Departments of Treasury and State to advance the objectives of the TFCA, and USAID hosts a Secretariat to support the implementation and oversight of agreements and management of local funds established under them.

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Last updated: April 13, 2020

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