Project Snapshot

The investment blueprint focuses on transforming degraded land into productive forests through blended finance. The project is based in Brazil and led by Belterra, an enterprise specialising in agroforestry systems in partnership with small- and medium-sized rural producers. The financial instrument used is debt with a term of up to 10 years, depending on investor tranche. The proof of concept has been established.

In a nutshell

Belterra has utilised a blended finance instrument to scale its agroforestry operations successfully. By integrating philanthropic capital, concessional, and commercial debt, the company is expanding from managing 2,000 hectares to a target of 10,000 hectares by 2025. The enterprise provides financial support to rural producers while facilitating loan access from financial institutions and generating high-integrity carbon credits.

Investment and operating model

Belterra employs an innovative business model to support farmers in transitioning to agroforestry through leasing and rural partnership contracts. These flexible service models cater to diverse producer needs, providing capital structuring, technical assistance, and access to environmental credits and consumer markets. The company’s revenue comes from crop sales under long-term purchase guarantee contracts, which command premium prices due to sustainable agroforestry practices.

The enterprise also acts as an intermediary between financial institutions and landowners, reducing credit risk and ensuring adherence to best production practices. To scale its operations, Belterra uses a blended finance investment vehicle, pooling philanthropic and private capital in a layered capital structure. The funding mix includes concessional and commercial debt, with a Rural Receivables Certificate (CRA) engaging mainstream investors such as banks and asset managers. To date, Belterra has secured USD 60 million, with the subordinated tranche acting as catalytic capital. Carbon credit generation is also leveraged as a financing mechanism.

Impact measurement

Belterra measures its impact using IRIS+, a performance metrics framework for impact investors. Key indicators include reforested land area, ecological restoration management, and protected land area. Social and economic indicators cover job creation and income generation for small- and medium-sized rural producers.

Scalability and replication

The blueprint outlines a vision to expand to 60,000 hectares, requiring a USD 400 million investment. Initial investment per hectare is estimated at USD 10,000 over the first three years, with positive cash flow from year four, reaching USD 7,000 per hectare by year ten. Carbon credit generation begins in year two, averaging 136 tons per hectare over a 14-year cycle. This approach demonstrates replicability in developing regions reliant on small- and medium-scale farming for food security and socio-economic development.

Blended finance investment structure

• Belterra’s investment model integrates various funding sources:
• Philanthropic contributions – Grants and donations.
• Public banks and mainstream investors – Concessional and commercial lending.
• Enterprises and rural producers – Shared production, income, and co-production of carbon credits.
• Market players – Purchase guarantees and technical support.

The layered capital structure includes 35% in subordinated and mezzanine tranches, with an expected return of 6%-8.5% per annum, while the senior tranche offers a 13.65% yield per annum plus the Brazilian Interbank Deposit Rate + 2.1% per annum.

Sectoral context and strategic considerations

The Coalition for Private Investment in Conservation (CPIC) promotes investment models such as this to increase private sector participation in conservation finance. Additionally, the SUSTAIN initiative aims to equip businesses, financial institutions, and regulators with the knowledge to assess nature-related dependencies.

The report underscores the importance of alternative business models in high-risk sectors like agriculture, which place significant pressure on natural resources. Tools such as ENCORE are recommended to manage nature-related risks effectively.

The Forest Finance Investment Incubator (FFII) seeks to reduce reliance on public finance in developing countries while fostering investment opportunities. The blueprint is supported by funding from the European Commission and the U.S. Department of State through Conservation International.