World Bank launches forest carbon fund

By Emma Graham-Harrison

NUSA DUA, Indonesia (Reuters) - The World Bank on Tuesday launched plans for a $300 million fund to fend off global warming by preserving forests, but protesters said it risked turning homes of indigenous people into an asset for the rich.

The new financing mechanism, launched at U.N. talks on tackling climate change, aims to turn better forest management into a tradeable commodity to try to halt destruction so rapid it accounts for around a fifth of annual carbon emissions.

"If we don't focus on retaining the world's remaining tropical forests, we drastically narrow the options for reducing greenhouse gas emissions," World Bank President Robert Zoellick told the project's launch.

"Deforestation and changes in land use are the second leading cause of global warming," he said, adding the project was just the start of tackling the problem.

He quoted economist Nicholas Stern's estimate that more than $5 billion a year was needed to halt deforestation.

A $100 million "readiness" fund will provide grants to around 20 countries to prepare them for large-scale forest protection under a future climate change deal, also known as reducing emissions from deforestation and degradation (REDD) in developing countries.

Grants will fund projects including surveys of current forest assets, monitoring systems and tightening governance.

A second $200 million "carbon finance mechanism" will allow some of these countries to run pilot programs earning credits for curbing deforestation. The credits will belong to the countries or groups that put up the cash for the fund.

Of the $300 million, they already have $160 million pledged from seven developed countries, the World Bank said.

Emissions cuts from forest areas are not yet eligible for formal credits because they were excluded from the Kyoto Protocol's first round, which runs out in 2012, but they may be able to sell them on voluntary markets.

The projects could include anything from straight forward reforestation and better zoning of agricultural and forest lands, to paying people for environmental services or improving management of forest areas, said the World Bank forest and climate change official Benoit Bosquet.

There is interest from around 30 countries for projects that many in the carbon trading industry and developing nations fighting deforestation hope could provide a model for financing forest protection in a successor deal to Kyoto.

The World Bank had previously said it was in talks with Papua New Guinea, Costa Rica and Indonesia, and regional bodies in Brazil and the Democratic Republic of Congo.

INDIGENOUS CONCERNS

But indigenous and environmental groups say they are worried deals to prioritize the carbon-retaining value of forests might exclude some of the people who have most at stake.

"While the facility can be a good thing, we are very apprehensive on how this will work because of our negative historical and present experiences with similar initiatives," said Victoria Tauli-Corpuz, Chair of the United Nations' Permanent Forum on Indigenous Issues.

An indigenous person herself, she said the forests targeted by the initiative were home to 160 million people who were custodians of forest biodiversity and should be involved in the design and management of the projects as equal players.

"The success of efforts to lower carbon emissions from reduced or avoided deforestation hinges primarily on whether indigenous people throw their full support behind these mechanisms," Tauli-Corpuz said.

Outside the conference centre, protesters were handing out cartoons of worried indigenous people massed outside a fenced off forest, thinking of their homes, religious sites, food and fuel that were now off limits.

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(Editing by David Fogarty)