In the recent past rising temperatures, declining precipitation, ever rising sea level, shrinking ozone layer etc manifest adverse impact on survival of mankind. As it is evident from the diagrammatic presentations.

The UNO organised "Rio Summit" (Earth Summit) in 1992 to draw the attention towards climate change. The summit enunciated "United Nations Framework Convention on Climate Change" (UNFCC). The Conference of Parties (COP) held annual round of negotiations for this purpose and Kyoto Protocol was conceptualised in 1997. India signed Kyoto protocol in 2002.

The Article-253 of the Indian Constitution provides that the international protocol, conventions and treaties signed by the Union of India are implemented in the States, about 31 international protocols related to environment, forest, biodiversity, wildlife, pollution free environment and combating desertification have been signed. The legal provisions of these international protocols are implementable in the States, but given the complicated nature of Centre-State relations not much is known about this aspect of governance.

Virtually nothing has been done as-far-as "policy analysis" of the impact of these protocols is concerned. This is the reason why we are ignorant about the negative and positive aspects of these international conventions.

The Kyoto protocol stipulates that the Annexure-I countries are required to reduce their GHGs by 5.2 per cent below their 1990 emission level by the first Budget period of 2008-2012. The signatory countries have been divided into three categories:

* Annexure-I: Mainly comprised of developed countries, including members of OECD.

* Annexure-II: Mainly developing countries and those classified as "Economies in Transition" (EIT).

* Non Annexure-I: This category includes developing countries. India has been placed in this group. It also includes 48 undeveloped countries of Africa and Asia, and given their special requirement for development, the mandatory provisions have been relaxed.

The main components of protocol are:

* Clean Development Mechanism (Article-17)

* Joint implementation (Article-6)

* International trade of GHGs (Article-12)

The CDM provides two pronged strategy - development of eco-friendly techniques for sustainable environment and "Afforestation and Reforestation Projects" for carbon sequestration of CO2 already emitted in the environment. The protocol provides that if developed countries are unable to reduce their GHGs level then they can establish or finance CDM / A&R Projects in developing and undeveloped countries, the developed countries also get "Certified Emission Rights (CERs)", (one CER is equal to one tonne CO2 sequestrated / saved). These CERs can be traded on Bonn Stock Exchange. Though the first Budget period (2008-2012) is yet to begin but most of the developed countries have already started acquiring CERs.

Madhya Pradesh is implementing an innovative scheme of sustainable management of private forest stands situated in "non-forest" areas under provision of MP Lokvaniki Act, 2001 and rules framed in 2002. According to a guesstimate approximately 6,000 sq km of non-forest land is available in the State with approximately 50,000 farmers. Not only that lands of PSUs, Army can be utilised for carbon sequestration purposes by raising high-density forestry and horticulture plantations (areas are very well protected).

Designs and modules can be developed by synthesis of forestry and horticulture species for sustainable economic return with sufficiently high IRR.

The mandatory provisions of Kyoto Protocol, registration of projects with Executive Board, project formulation and understanding of baseline methodologies, listing of CERs, mid-term review etc are very complicated in nature and consequently beyond the reach of common person, entrepreneur, project proponent, investors and financial institutions.

This problem can be solved by forming an association (or federation) for constituting "bundle project(s)". This body can obtain registration, carry out carbon trading on behalf of members on stock exchange / carbon fund. The participating members shall retain their rights over forest produce and lands, but the carbon sequestrated shall be tradable by the entity.

The financial benefit accrued by carbon trading can be distributed among members on pro-rata basis after deducting administrative expenditure, taxes and other levies etc. The protocol also provides penalty for not observing contractual obligations or "carbon leakage" from the project area. Though the penalty is quite high but the entity can trade only 80-90% of its carbon sequestration potential to avoid penalties.

The A&R projects provide an excellent opportunity to carry out extension of forest cover through farm forestry, bio-diesel plantations and horticulture by attracting investments. If implemented properly A&R projects can provide ecological stability to declining water table in Nimar, Malwa, Bundelkhand and Baghelkhand regions.

For implementation of these provisions it is suggested that a "CDM Cell" may be constituted in Forest Department, so that Lok-vaniki farmers may be constituted into a bundle project(s). The registration of bundle project(s) can be obtained from Executive Board and CERs may be traded accordingly.

The carbon funds, national and international investors, financial institutions may be invited in a workshop to be organised in 2006. Additional incentive to investors may be provided by rationalizing stamp duty, FDC and taxes for attracting heavy investment in the State.

The market research provides that India can attract an FDI of about Rs 15,000 crore in A&R projects. The investors are required to be welcomed in a time bound manner since the time period available is very short.

RN Saxena is Addl PCCF Madhya Pradesh, Bhopal / Sangita Saxena is State Director, WWF, MP & Chhattisgarh