The “Forest Innovation” financial mechanism (FM) lies at the intersection between socio-economic development and sustainability in territories around large infrastructure projects through the local environmental potentialities (environmental assets). The pilot of the initiative is the territory around the Jirau hydroelectric power plant with an installed capacity of 3.750 MW, located at the Madeira River in Porto Velho municipality, state of Rondônia, Brazil. The main challenge consisted in developing an intervention (investment) model to revert the usual negative impacts from such large-scale ventures in order for them to act as vectors of sustainable development. Another important challenge involved the structuring of a cooperative environment among a wide range of stakeholders that enables the financing and support to address the territory ́s demands in the forest sector.

The territory is located in the Legal Amazon, a region known for high deforestation rates and unsustainable – in many cases, illegal – forest exploitation. On the other hand, projections indicate that global and domestic demand for wood (logs and processed wood) will increase in the future and markets already signal that a continuous and legal source of wood is imperative to establish business relationships.