Brazil is home to many rare flora and fauna

The bank says it is the largest single loan given to protect a country's environment, with an initial payment being made this year of $505m.

The cash is to ensure Brazil, thought to have the greatest biodiversity on earth, considers environmental issues and management in government policies.

"For us, this (loan) is highly relevant," said a government minister.

The money will be used to hire more environmental experts to quicken the process of licensing projects, including offshore oil rigs and hydro-electric plants.

The country will have 17 years to pay back the loan at an interest rate of 4.9%.

'Gains to society'

One third of the world's rain forests are to be found in Brazil, which is also home to vast tropical savannah, one of the largest reservoirs of fresh water, and a coastline that stretches over 5,270 miles (8,500 km).

"In few countries is the national environment as crucial to development and people's welfare as in Brazil," the bank said.

Vinod Thomas, the bank's director for Brazil, said environmental destruction was costing the country as much as 4% of gross domestic product (GDP).

"The gains to society from environmental protection accrue especially to the poor because their incomes are primarily derived from environmental assets," he said in a statement.

The country is also home to a vast range of unique flora and fauna spread over six major zones.