IFU co-finances development of sustainable reforestation in the Amazonia region

By Investment Fund for Developing Countries

IFU co-finances development of sustainable reforestation in the Amazonia region

IFU is co-financing the first stage of an afforestation and reforestation project that will transform degraded pasturelands in the Amazon region of Colombia. The operation is based on planting native species of hardwood and acai palms. The first phase includes an area of 550 hectares, with the future potential to be scaled to 7,500 hectares.

Large areas of the project region have been transformed from native grasslands and/or gallery forests into low-productivity pasturelands for cattle or agricultural activities, leading to land degradation and soil erosion. A new afforestation and reforestation project, Amazonia Nativa, is set to revert the development and plant an area of up to 7,500 hectares with native species in the form of hardwood and acai palms.

IFU is together with FMO financing the first phase of the project of 550 hectares that aims to prove the project design concept and be ready for the scale-up. IFU’s share of the investment is USD 900,000 financed through a project development program that has been set up to mature projects for larger-scale investments and impact.

“The Amazonia Nativa project is very interesting and fits well with IFU’s aspiration to support climate action and greening the economy. We hope to see it evolve and become a project that can be commercialized and attract other investors as well,” Jesper Kaspersen, Senior Investment Manager in IFU.

Based on FSC and Rainforest Alliance certification

The overall purpose is to demonstrate that commercial operation with native species is durable thereby increasing the green forest of the Colombian Amazon ecosystem, benefitting biodiversity, and supporting the development of a sustainable wood value chain. The project will be environmentally managed using forest management practices such as low-impact logging, water protection, forest conservation, and obtaining FSC certification.

20 per cent of the area will be planted with acai palms grown in accordance with Rainforest Alliance certification, or any other applicable certification. Moreover, the project will benefit local employment and sequester carbon.

IFU is investing in strong partners

The project design and implementation are led by ACT Group, an experienced carbon project developer, and Campo Capital, a local project implementer with vast experience in agroforestry management.

“Thanks to IFU’s support, we are moving steadily closer to the goal of restoring the Amazon region through high-level investment projects. As local project implementers with expertise in forestry investments, we have been preparing for this for the last decade and it is already becoming a reality,” Paula Sanchez, Co-founder and Managing Partner in Campo Capital.

“We are proud to be pioneering the use of native species in this strategic region with an innovative science-driven design. If we do not start showcasing alternative sustainable land use business models, we will continue to see deforestation and degradation of the Amazon region. ACT is committed to continuously delivering carbon development and nature-based expertise to make this project successful and scalable,” said Jonathan Grassiano, Global Head of Research and Development, at ACT.