Guyana forest carbon plan struggles to get off paper

(Reuters) - After decades of depending on bauxite, timber and gold for revenue, Guyana proposed five years ago that wealthy foreigners pay it to protect its tropical South American rainforests.

The idea was hailed as an innovative way to spur economic development while helping prevent destruction of rainforests like the Iwokrama reserve - home to thousands of species of trees, a broad array of orchids and wildlife from caimans to rare tropical birds.

The initiative even led the U.N. Environment Program to dub former president Bharrat Jagdeo "Champion of the Earth." But today, Guyana is still struggling to get the projects off the ground.

It has yet to receive any substantial financing from a climate fund created by Norway because Guyana has largely been unable to win approval for its proposals to spend the money. A separate agreement meant to preserve forests while providing returns to private investors never took off.

"There's been some frustration about this," Donald Ramotar, the former British colony's newly elected president, told Reuters. "But we still feel that Guyana should be compensated for the value of its rainforests because they are crucial to human survival."

Guyana's case highlights the hurdles facing a much-vaunted global environmental initiative - Reduced Emissions from Deforestation and Degradation (REDD) -- that seeks to create incentives for preventing deforestation and put a monetary value on natural resources often taken for granted.

Donor governments may be reluctant to finance rainforest protection because of concerns about corruption. Private investors are unlikely to see forest protection as profitable without a comprehensive global emissions treaty that continues to elude the world, as proved at the U.N. climate summit in Durban, South Africa, this month.

The problems with Guyana's plan parallel a similarly slow start to an initiative in Ecuador under which foreign nations would pay it not to extract oil buried under the pristine Yasuni rainforest. Few financial pledges have been forthcoming.

CAPITALIZING FORESTS

Despite the slow progress, climate experts insist forestry agreements are a crucial part of limiting greenhouse gas emissions, about 20 percent of which come from deforestation.

Tribal leader Bradford Allicock, who heads Fairview Village in Guyana's Iwokrama reserve, agrees. He said such plans give incentives for forest-dwellers to protect their environment.

"It makes a lot of sense. We continue to hunt, fish and farm and do gathering from the forest," said Allicock, 43, in his village of mostly wooden houses where signs of modernity range from a new school and health center to loudspeakers playing reggae versions of Christmas songs.

Allicock hopes villagers will be able to install solar panels as part of a government program to provide renewable energy to indigenous communities.

Guyana originally planned to pay for that project with the climate fund but ended up bankrolling it alone following delays in getting approval, according to local media.

CARBON NEUTRAL

Norway has said it could provide up to $250 million by 2015 for environmentally sustainable economic development if Guyana can keep deforestation from spreading, part of its effort to offset the climate change effects of its own economy.

Guyana so far has received only $305,000 from that fund, according to the World Bank, which acts as the fund's trustee, to finance consultations on low-carbon development and to provide support for the presidential climate change office.

Iwokrama, a non-profit group led by Guyanese officials and foreign environmental experts, signed an agreement in 2008 with British investment group Canopy Capital that hoped to generate profit from forest management.

That revenue was in large part expected to come from selling certificates known as carbon credits used by polluters to "offset" their emissions of greenhouse gasses.

The agreement lapsed without any such credits being sold due to the financial crisis and the lack of a global climate treaty that would effectively tax polluters and use the proceeds to pay for environmental projects such as forest management.

But Dane Gobin, Iwokrama's chief executive officer, remains optimistic.

"If people are willing to pay for utilities like electricity and telephones, why shouldn't they pay for forests that provide fresh air?" Gobin said. (Reporting By Brian Ellsworth; Editing by Bill Trott)