Peru’s 1.35 million hectare Cordillera Azul National Park (PNCAZ) has been approved for the Amazon’s largest loan by a private investment fund, secured by carbon credits to promote forest conservation and sustainable agro-forestry.

The deal was unveiled by Peru’s Environment Vice-Minister, Gabriel Quijandría, the U.S. Ambassador to Peru, Brian A. Nichols, and the Sernanp director, Pedro Gamboa, in a joint announcement at the U.N. climate talks.

The loan, extended by the Luxembourg-based Althelia Climate Fund and secured by more than 8 million carbon credits, will be used to fund park conservation operations of the Center for Conservation, Research and Management of Natural Areas (CIMA), which is the institution that holds the 20-year management contract with the Peruvian park authority, Sernanp. Under this deal their work will now include the promotion of profitable yet sustainable livelihood activities such as coffee and cacao production, working with farmer cooperatives on the borders of the park.

Reducing emissions from deforestation
Promoting sustainable activities through the restoration of degraded lands with cocoa/coffee-based agroforestry systems benefits local communities by introducing new ways to earn income, while also reducing their incentive to poach inside the park or to clear forested areas for unsustainable agriculture or forestry activities.

The deal comes at a time when some projects have reached an impasse in seeking private finance for Reducing Emissions from Deforestation, a policy framework known as REDD+ in U.N. climate talks. In this case, it will replace funding previously provided by international donors such as the United States Agency for International Development (USAID).

REDD+ emerged from U.N. climate talks as a way to incentivize countries and communities to protect forests by giving them credit for the carbon forests store and by developing new, more sustainable livelihood options for the millions of poor families who depend on forest resources.

Althelia is dedicated to using innovative financing approaches to finance conservation and sustainable development in developing countries. The fund’s impact investing activities were given a boost earlier this year by USAID through a risk buy-down mechanism known as a credit guarantee.

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