IDB Approves $25 Million Loan to Boost Forest Conservation and Agroforestry in Honduras

The Inter-American Development Bank (IDB) has approved a $25 million loan to strengthen Honduras’ forest conservation and restoration efforts through a comprehensive new program titled “Sustainable and Resilient Agroforests.” The initiative seeks to expand forest cover, empower rural communities through sustainable management, and build institutional capacity to ensure long-term ecological and economic resilience.

Goals of the Project

The project is designed to achieve multiple objectives:

• Promote forestry and agroforestry practices to restore degraded lands and increase forest cover.

• Support community forestry initiatives to diversify income sources and reduce reliance on extractive activities.

• Strengthen the Honduran Institute of Forest Conservation and Development, Protected Areas and Wildlife (ICF) to modernize systems and improve policy implementation.

By combining conservation and livelihood support, the project aims to create a sustainable balance between environmental protection and economic development.

Direct Community Impact

The program will directly benefit more than 4,800 people across the departments of Atlántida, Colón, Yoro, Olancho, and El Paraíso. It will also support 50 agroforestry organizations, enhancing their technical knowledge, organizational management, and access to new market opportunities.

Planned activities include:

• Technical assistance and delivery of technology packages to strengthen agroforestry systems.

• Restoration of micro-watersheds, ensuring better water security for local communities.

• Implementation of business and entrepreneurship plans to expand rural economic opportunities.

• Modernization of forest registration and monitoring systems, improving oversight and transparency.

• Enhanced wildfire prevention and risk management capacity, critical given Honduras’ growing vulnerability to climate change.

Strengthening Institutions and Innovation

The project will also bolster Honduras’ forest governance framework:

• Forest Seed Bank Development: Expanding the national seed bank to ensure the availability of diverse, high-quality native seeds for restoration efforts.

• Wildfire Prevention Incentives: Launching a pilot program with results-based incentives for communities engaged in wildfire prevention.

• Updated Regulations: Revising outdated forest management policies to streamline sustainable practices and facilitate community participation.

By strengthening institutional capacity and updating policies, the initiative is expected to address long-standing governance gaps and enhance resilience.

Financing Details

The $25 million financing package includes two components:

• $15 million from the IDB’s ordinary capital on regular terms.

• $10 million provided on concessional terms, supporting affordability and long-term repayment.

The loan arrangements feature repayment periods of 25 and 40 years, respectively, with a 5.5-year grace period. These flexible terms aim to reduce the financial burden while maximizing impact on the ground.

Environmental and Economic Benefits

The initiative is expected to deliver multiple benefits for Honduras:

• Environmental gains through restored ecosystems, improved watershed management, and greater biodiversity.

• Social benefits by reducing rural poverty, supporting indigenous and farming communities, and strengthening social inclusion.

• Economic opportunities from sustainable forestry value chains, entrepreneurship, and agroforestry products.

By prioritizing areas with high restoration potential and encouraging active community involvement, the project creates a model for sustainable rural development.

Building Climate Resilience

Honduras is among the countries most vulnerable to climate change, facing risks such as deforestation, soil erosion, floods, and prolonged droughts. With increasing wildfire threats, the IDB-backed project highlights the critical need for resilient forest management practices that not only safeguard ecosystems but also protect livelihoods.

The initiative underscores how international financing can help countries like Honduras meet global climate goals while ensuring sustainable economic growth and community empowerment.