Can credits traded in the world’s financial centers stop local farmers in Madagascar from burning up a rain forest filled with lemurs and other life found nowhere else in the world?    

The New York-based Wildlife Conservation Society is working with the government of Madagascar to sell about 9.5 million tonnes of carbon credits to help save the Makira Forest, which contains 22 species of lemurs, hundreds of bird species and thousands of plants. Many of those species are found nowhere else on the planet. 

 ”We want to create incentives so people don’t deforest,” Ray Victurine, the finance expert at WCS, told me. 

The 9.5 million tonnes is the amount of carbon dioxide stored in existing trees WSC and Madagascar estimate can be saved over 30 years by stopping people from chopping them down.

Victurine said money raised by the credits could encourage farmers to stop slash and burn agriculture through investments in rice cultivation or in taking advantage of cloud formations in the forest to improve irrigation.

In Madagascar about 100,000 hectares (386 square miles) of forest are lost each year by agricultural burning, according to WCS.

The burning of forests by farmers accounts for 20 percent of world greenhouse gas emissions. An agreement at a 190-nation UN conference last year agreed to work on ways to reward countries for slowing deforestation.

Credits in a global climate trade system could generate $2 billion to $14 billion for developing countries, according to a study by EcoSecurities and the University of British Colombia. 

The WCS and Madagascar are hoping to sell their credits in the rapidly developing voluntary credit market. Later, they could adapt them for any post-Kyoto global trading system if the world agrees such credits would save forests in a fair way.  

Victurine said they are working with the Voluntary Carbon Standard and the Climate, Community and Biodiversity Alliance to ensure the credits would be high quality and would pay for actions to save the forest that would not have occurred otherwise.

The higher the perceived quality of the credits, the higher price they may fetch. In today’s prices at the EU’s compliance carbon market the 9.5 million tonnes would be worth about $291 million, though carbon prices are volatile. In voluntary, unregulated carbon markets the tonnes would be worth closer to $62 million. 

All of which leads to a question.  Are financial instruments the best way to change human behavior and save the planet?

Greens are seeing red this week after the World Bank approved partial financing for a $4.2 billion coal-fired power station in India.

   The 4,000 MW plant will provide crucial power for millions of Indians, prove a much-needed boost for industry and use “super-critical” technology that will make it India’s most-efficient coal-fired plant.

   The Bank’s board approved $450 million in loans through its International Finance Corp for the Tata Mundra project and the IFC said it looked at many alternative ideas, including wind and solar, but found the giant coal power station was the best solution.

   The volume of emissions from the plant will be about 40 percent less than existing coal-fired plants in India but it will still produce up to 23 million tonnes of carbon emissions each year.

   And that’s angered environmental groups who say the World Bank is failing to help fight global warming by backing polluting projects. The Bank said using solar or wind for the project instead of coal would have been just too expensive to meet India’s vast appetite for electricity.

  Greens say much more investment and willingness needs to go into clean energy to help poor nations prevent the polluting mistakes of richer nations. Otherwise we’re all doomed to face a warmer world with rising seas and more chaotic weather.

  But who’s going to take that chance and start backing giant renewable projects in poorer states to wean them off coal and oil? Or will the sharp rise in coal and oil prices generate the needed political and financial shift anyway?

   No one disputes India’s right to develop. But should lenders such as the World Bank impose a ban on involvement in future coal plants as a way to focus global investment on clean energy? For the Tata Mundra project, the IFC said coal was the least expensive option and that using solar or wind would have required billions in subsidies.