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Friday, July 29, 2005

Time for Forest Outsourcing

Farmers in Maharashtra are all set to cash in on opportunities offered by carbon credit trading, a scheme aimed at setting the wheels in motion to reduce green-house gas (GHG) emissions globally, following the signing of the Kyoto Protocol by 141 countries.

A Pune-based non-governmental organisation, ‘Friends of Carbon’ (FoC), has already brought together 5,000 farmers to exploit the option, which permits a developed country to meet part of its targeted emission cuts by funding tree plantations in developing countries like India, for carbon sequestration. According to the provisions of the Kyoto Protocol, which came into effect in February 2005, developed nations have to reduce their GHG emissions by an average of 5.2% below their 1990 levels by 2012. Says Shekhar Kadam, who is in charge of the financial and commercial aspects of FoC, “Plantations are one of the best solutions to curbing damage from GHG emission. But the expenditure for that in developed countries is high.” So, companies there can fund plantations in countries like India, where the costs are low, and in turn take credit for the carbon absorbed by the trees. Farmers need a minimum of 50,000 acres to begin trade in carbon credits. “This system will be a bonus for old plantation owners. Along with the standard yield from the trees, they will also be able to now earn through carbon-credit trading. Improvement in quality of soil is an additional benefit,” he says. Ninety per cent of the funds FoC earns will go to its farmers. Five per cent will go to its associates around the country and the remaining 5 per cent will be used to pay the International finance corporation, which will act as a mediator and facilitate interaction with developed countries like Japan and others in Europe. The quantum of funding will be based on the tonnage of carbon absorbed. This is calculated taking into account factors like age and height of trees and canopy cover. Kadam claims that the mango tree is one of the best variety. The current average rate for a tonne of carbon is around $4 (Rs 174).

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