SDG Impact Finance Initiative with the support of Convergence has awarded a proof-of-concept grant of USD 350,000 under its Innovation Window to Treevive to design the Amazon Forest Landscape Restoration Fund (AFLR Fund), aimed at addressing large-scale deforestation and environmental degradation in the Peruvian Amazon. Through reforestation, agroforestry, and sustainable timber production, the AFLR Fund aims to restore degraded forest landscapes while generating both social and environmental benefits. This innovative initiative leverages carbon credits and timber revenues to create a scalable, impactful, and financially sustainable model for carbon dioxide removal (CDR).
The Ucayali region in Peru faces severe deforestation, with an annual loss of 32,884 hectares, driven by illegal logging, unsustainable agricultural practices, and cattle ranching. This degradation has led to biodiversity loss, soil erosion, and increased carbon emissions, making large-scale intervention critical. The AFLR Fund is designed to tackle these challenges by blending concessional and commercial capital, de-risking private investment through results-based financing (RBF) and carbon offtake agreements. AFLR Fund targets the restoration of 13,000 hectares consisting of nucleus estates with mixed native tree plantations and natural forest restoration, and of smallholder farmers in an outgrower program. Smallholders will benefit from technical support, market access, and revenue-sharing mechanisms, ensuring alignment with community needs and project goals.
Design Question: How can a fund be structured to provide scalable upfront capital for large-scale afforestation and reforestation projects in the CDR space?
The AFLR Fund illustrates a robust model for structuring a blended green financing facility that addresses the scale challenge in afforestation and reforestation projects. At its core, the dual-revenue model of carbon credits and timber production ensures financial sustainability and mitigates risks for investors. By generating high-quality carbon credits certified under globally recognized standards such as Gold Standard or Verra, the Fund secures a stable revenue stream, particularly through partnerships with NGOs, public and institutional investors . These carbon credits, which are tied to rigorous verification and monitoring methodologies, appeal to buyers seeking reliable offsets for compliance and voluntary commitments. Simultaneously, timber revenues diversify income streams, adding resilience against fluctuations in carbon markets. The establishment of a timber processing facility will ensure value addition and market demand, particularly for high-value products like Balsa wood, widely used in wind energy, and Cumaru, used in high end solid wood applications.
By combining environmental restoration with community benefits and investor returns, the AFLR Fund represents a replicable framework for addressing global deforestation and advancing climate goals. The project also received support from UKAID’s Partnership for Forests program in the form of GBP 780K of grant funding for feasibility studies and setting up the local operations in Peru, as well as a EUR 0.9 Million investment from Treevive.
