Delivering climate finance at the local level: the Babacu Fund

The Sustainable Development Goals and the Paris Agreement pledge international support to help less developed countries build their resilience to climate change. Climate finance, the funding to support action on climate change, is growing rapidly – but little of it is reaching locally-led initiatives. IIED estimates less than US$1 in $10 of funding from dedicated climate funds explicitly seeks to support local climate action.

IIED is exploring solutions for getting climate finance to local communities. We are researching case studies of good practice, focusing on investments that do not jeopardise access and rights to land and natural resources; that support local level climate action; and that demonstrate ways of building capacity for the long term.

This case study looks at how the Babacu Fund is delivering support to landless women in some of Brazil’s remotest and poorest municipalities in the northeastern Amazon.

Some 300,000 people in the region, mainly women, earn a large part of their livelihoods by harvesting and processing the nuts of the babacu palm tree. The nuts have a high oil content; the shell is used for charcoal, the flesh for flour and the pulp for drinks.

Ninety per cent of nut collectors are landless: they don’t have title to the land on which the babacu trees grow.

The Interstate Movement of Babacu Palm Nut Breakers (MIQCB) is a social movement campaigning for the rights of landless palm nut collectors. In 1997 MIQCB successfully lobbied for the ‘Babacu Free Law’, which recognises nut collectors as traditional occupiers of the forest and gives them rights to access babacu forests and responsibility for their management.

MIQCB decided to set up the Babacu Fund to help communities access finance and protect babacu forests. The fund aims to reach nut collectors in remote regions where large intensive farms are causing significant deforestation and disruption of ecosystems. For nut collectors, these challenges have been compounded by the enclosure and privatisation of babacu forests.

The Babacu Fund is reaching communities that conventional development interventions were failing to reach, giving them the opportunity to prioritise investments that will make the greatest difference to them.

And because the fund is governed by the communities it seeks to reach, it also helps empower them to have a collective voice to influence policy, investment and land use access rights that relate to their livelihoods

MIQCB first established the Babacu Fund in 2013. They received initial funding from the Ford Foundation and technical advice from the Institute for Society, Population and Nature (ISPN) and the Dema Fund, a fund that supports community action to protect the Brazilian Amazon. 

The fund has also received compensation from Natura, a large Brazilian cosmetics company, after a dispute with nut harvesters over appropriation of traditional knowledge.

By June 2018 the fund was worth more than $500,000, with a new grant from the Amazon Fund being negotiated. During 2018 the fund plans to spend $1.3m.

The Babacu Fund is still a young institution: 2017 was its first year of full operations. So far, it has achieved formal legal recognition of community associations' rights to babacu forests in 14 municipalities. It is providing grants to strengthen community associations of nut collectors and processors, and supports projects for the restoration, protection and better management of babacu groves.

Breaking down barriers – insights from the Babacu Fund

IIED’s research has identified four important factors that can help to break down the barriers between large-scale climate funds and locally-led initiatives. We looked at how the Babacu Fund’s structure and operations delivered on each of these.

1. Building trust and a shared understanding of risk

Trust is a critical ingredient for successfully delivering climate finance to the local level. Funds can act as intermediaries: they can reassure investors about their investment and community organisations about their priorities.

The Babacu Fund’s host organisation, MIQCB, has been campaigning for nut collectors’ rights since the 1990s; it retains a clear sense of mission and has strong bonds of trust with the communities it benefits.

“Growing out of a social movement has given the fund a clear mission and ensured strong trust between the fund and the communities it benefits.”

A network of like-minded organisations helped MIQCB to design the fund’s procedures and operations. Advice was given by experienced NGOs such as FASE and Action Aid, and by donors, including the Ford Foundation. Donors have appreciated the clear and inclusive governance model that has been developed.  

2. Aggregating finance at scale

Another barrier to delivering local-level climate finance is the issue of scale: achieving the transition between large international funders and diverse community projects.

The Babacu Fund is specifically structured to disaggregate large grants from funders and disburse them to many small local associations.

It uses one funding window and calls for proposals from communities. Communities that want to make a proposal get support from a technical advisor who helps them design their bid.

Grant sizes vary, depending on the project and the donor: Ford Foundation grants typically translate into US$1,000-$2,000 for projects relating to organisational development, and $1,000-$3,000 for projects focusing on production.

3. Setting the direction and rules

The fund’s governance framework includes community participation at every level.

The 12-member steering committee selects projects for investment and visits them for monitoring. It includes representatives of nut collectors from four states, together with representatives of local NGOs, agroecology experts and academics. Community representatives also sit on the executive committee and on the evaluation committee, which assesses the overall effectiveness of the fund.

This inclusive governance model and the fund’s deep roots within the nut collectors’ movement give it a credible collective voice with which to influence national policies.

MIQCB plays an active role in government policy discussions and is a recognised partner in relevant national plans. The fund remains responsive to community priorities: it supports projects that challenge the state to promote the interests of babacu collectors.

4: Building long-term capabilities

Building the capacity of the Babacu Fund staff was a first step for setting up an effective delivery mechanism. From the outset, MIQCB staff were mentored by international donors to build their understanding of donor and government requirements.

In turn, the fund offers extensive technical support to communities via paid technical advice teams. Regional MIQCB offices employ technical teams to give communities unlimited support, ensuring they have enough contact time to help communities deliver projects and fulfil reporting requirements. 

Almost 60% of the fund's resources are dedicated to technical support and administration. Local people are directly involved in the fund’s governance, and there is a participatory approach to project management; both these factors have significantly increased the capabilities of local communities.

Building capabilities remains a challenge: donor requirements for proof of spend and assurance of impact generate significant transaction costs; the time spent by staff on administration reduces the time they have for technical support.

Additional resources

Read more about our work on getting climate finance to the local level: Mobilising Money to where it Matters

The Ford Foundation funded the NGO If not us then who? to make a film profiling the women Babacu nut collectors of the Amazon. The film has been shown at international events and has been nominated for several awards. You can watch the film below or on the NGO's YouTube channel: