Dec 07 2021
Investing in the Lungs of the Planet: The Economic Potential of the Peruvian Amazon

As the home to over 3 million species of plants and animals and 30 million people of 350 different ethnicities, the Amazon rainforest stores about 125 billion tonnes of carbon dioxide, making it one of the Earth’s critical buffers in the fight against climate change. But the ‘lungs of the planet’ are at risk due to destructive and illegal activities in the region such as mono-cropping, illegal mining, logging, cattle ranching, and coca production.

Despite tireless efforts from advocates around the world to save the Amazon from destruction using strategies that empower communities through protection, policy solutions, and economic growth, illicit activities have proven to be far more profitable than licit investments.

Simply put, illegal and destructive activities are highly profitable, and therefore have more active and prolific financial backers than legal and sustainable ones. In this environment, these protection-only strategies are not enough. The result is the disappearance of 17 percent of the entire Amazon rainforest over the past 50 years, bringing it dangerously close to a tipping point from which it may never recover.

What’s the solution? While it might seem to be an issue of money, the problem is far more complicated than that. Billions of dollars have been raised globally by a range of development finance institutions, governments, and the private sector to invest in climate smart solutions that include new technologies, land protection, and regeneration efforts across the continents. Yet, most of this money, once raised is not actually placed where it’s needed most.

The refrain from financial institutions inside and outside of Peru is that they don’t invest in the Amazon because there are ‘no investable deals’. However, the fact remains that sustainable investments do exist to generate new value in the Amazon to effectively combat poverty, such as those to expand sustainable and more inclusive production of products on existing plots of land or on already deforested land.

The latest report from U.S Agency for International Development’s CATALYZE program in Peru breaks down how exactly blended finance can mobilise funds into licit enterprises and activities in the Peruvian Amazon, proving that investing in the Amazon can in fact be ‘good business’.

Already, the CATALYZE Peru team has mobilised USD 2.75 million and has identified upwards of USD 210 million in sustainable investment deals across Peru that will involve everyone from farmers, communities, buyers, and financial institutions, ultimately producing more on the same amount of land, while still protecting our planet’s critical ‘lungs’.

These findings, along with Peru’s many assets demonstrate that Peru has all the tools it needs to leverage the financing needed to transform the Amazon into a model of inclusive, sustainable growth.

USAID's CATALYZE project engages with domestic and international finance providers to mobilise financing across sectors, geographies and transaction type and size. Download the report and contact for more information.