Pix and the Path to Climate Resilience in Brazil

In the Sertão of Brazil, a semi-arid region in the country’s northeast, small-scale farmers face increasing droughts which threaten their livelihoods. Riverine communities, which branch off the Amazon, are seeing rivers dry up or flood, affecting transportation and access to schools, food and basic services. Indigenous communities struggle with droughts and fires that threaten their way of life. Coastal cities in the country are vulnerable to rising sea levels. 

Local climate adaptation projects work with these Brazilian communities to help strengthen their ability to adapt to the changing climate. And with the increasing pace of climate change, these types of local projects take on ever greater importance. However, they need funding. While international climate finance commitments have accelerated in recent years, very little of it reaches local communities to support those most affected by the climate crisis.  

Of the $1.9 trillion in climate finance in 2023, the vast majority went to mitigation projects, primarily related to cutting emissions from energy systems, transport, buildings and infrastructure. Less than 4% of it went to adaptation finance. And of this small percentage spent on adaptation, even less goes to projects with a specific focus on local communities. Too often, funds remain in the hands of intermediaries, mainly multilateral banks, government agencies, and international NGOs, frequently headquartered in donor countries themselves. While mobilization is needed at the international and regional levels, there is evidence that climate finance at the local level can deliver more effective, efficient and sustainable results.

So, how can climate finance actually reach those most affected by the climate crisis? 

As policymakers, negotiators and implementers from around the world gather in Brazil for this year’s UN Climate Change Conference (COP30), they should focus on answering this question. And they should look to Brazil. Brazil might just have one of the keys in its pocket: Pix, the country’s instant payment system developed by the Central Bank. 

The potential of Pix

In an article published earlier this year, Nobel Prize–winning economist Paul Krugman drew attention to Pix as a possible “future of money,” delivering low-cost transactions and large-scale financial inclusion. Indeed, Pix is cited as one of the main drivers of digital financial services growth in Brazil. In 2024, 120 million Brazilians, or 71% of the population, accessed banks or financial institutions online, 22 million more than in 2022. 

Pix has already become part of daily life in Brazil. Its free use for individuals, low costs for businesses, speed and security are well-known. But its impact runs deeper. It promotes economic formalization, generates data that expands access to credit, and integrates with social policies such as the Digital Social Savings Account linked to the Bolsa Família cash transfer program. Beyond simple transfers, Pix can also provide the infrastructure for insurance premium payments and claims, emergency assistance, and social protection programs.

Pix as a channel for climate finance

During the devastating floods in Rio Grande do Sul in 2024, Pix became the primary channel for donations: individuals, companies and NGOs raised millions almost overnight, demonstrating the system’s ability to move resources directly to affected people. At the same time, risks were exposed as scammers exploited the surge in goodwill. The experience showed the importance of pre-arranged financing mechanisms that can reach people fast and efficiently, but also with strong safeguards.

Building on that lesson, Pix can help improve how money gets transferred for disaster response and beyond, providing a way to channel climate finance towards local climate adaptation initiatives.  For example:

• Families could use Pix-linked accounts to save small amounts for resilience, with governments or donors matching contributions.
• Affordable insurance premiums could be collected seamlessly, lowering barriers for low-income households. The recent introduction of the recurrent Pix functionality has made it even easier to enable monthly premium payments.
• Pix could channel disaster insurance payouts, adaptation subsidies or humanitarian transfers straight to households.
• Existing programs like Bolsa Familia could integrate climate resilience components, subsidizing resilient seeds, clean cookstoves or solar energy systems.
• Pix could provide the transfer infrastructure for inclusive financial tools which help families withstand climate shocks, such as savings and parametric insurance. Savings accounts provide a buffer against sudden losses, while parametric insurance delivers quick, automatic payouts when rainfall, wind speed, or temperature cross critical thresholds.

Brazil can showcase its example

Pix shows how a public infrastructure that democratizes access to financial services can be useful in times of crisis. With COP30 underway, Brazil has the chance to show the world that digital innovation and social inclusion must be central pillars of the climate transition.  In addition, as global climate justice gains recognition, there could be even more need for effective channels to transfer resources for climate compensation and reparations.

Leveraging pre-arranged risk financing instruments coupled with instant payment platforms like Pix for disbursement in critical times would ensure that resources move quickly to communities on the frontlines of the climate crisis. At a time when the global debate revolves around how to channel promised but still undelivered resources, Brazil can contribute with an important building block for the climate financing architecture.