Brazil's Amazon Fund bogs down, donors frustrated

(REUTERS) - An international fund to protect the Amazon forest launched by Brazil in 2008 has gotten bogged down in red tape and donors are frustrated their $466 million contributions are hardly put to use, a Norwegian official said.

The fund was designed to slow deforestation by stimulating sustainable economic alternatives to cattle ranching and farming, which have destroyed parts of the forests.

So far Brazil has only used $39 million on 23 sustainable growth projects, with another $53 million under contract. This poor performance has weakened Brazil's voice as a leading advocate for the protection of the developing world's forests with funding from rich nations.

A government official from Norway, the fund's largest donor, told Reuters in Brasilia that his country is unhappy with Brazil's slow pace in identifying new projects, which has raised questions about the use of the funds in Brazil, where they are managed by the state-owned National Bank for Economic and Social Development (BNDES).

The source, who asked not to be named, said the funds contracted by the BNDES dropped by half between 2010 and 2011. This has discouraged other potential donors from committing funds, the source said.

Rich from offshore oil, Norway has dominated projects to safeguard rainforests as part of a U.N.-led goal of slowing climate change. Trees soak up greenhouse gases as they grow and release them when they are burnt or rot.

Norway pledged $1 billion to the Amazon Fund and has donated $418 million to date. Unused funds are deposited in the Norwegian Central Bank.

Germany has donated $27.2 million and Brazil's state-owned oil giant Petrobras has given $4.2 million.

Conservationists say the BNDES has stymied projects with paperwork and endless meetings. Erika Nakazono, who runs a project for a social map of the communities living in the Amazon, said it took 19 months to get approval and some researchers quit because of the delay.

"The bureaucracy is very difficult. At one point I wondered whether all the effort was worth it," Nakazono said.

The BNDES official heading the bank's deforestation control department, Mauro Pires, admitted that the fund is not working as well as donors hoped.

"People wanted things done faster and to cover a wider range (of projects)," Pires told Reuters. He said the fund was a pioneering venture and procedures were still being worked out.

"We are working to create projects that go the heart of the deforestation problem," he said.

Destruction of the Brazilian portion of the world's largest rainforest fell to its lowest in 23 years in 2011, due to the adoption of a tougher stance against illegal logging, the Brazilian government said in December.

Deforestation dropped last year to less than a quarter of the forest area destroyed in 2004, when clear-cutting by farmers expanding their cattle and soy operations reached a recent peak.

Brazil's Senate passed a forestry law in December that environmentalists say would set back conservation efforts. (Editing by Anthony Boadle and Stacey Joyce)