Shimla, May 23 (IANS): The Himachal Pradesh government Sunday inked a green pact with the World Bank to allow the hill state to secure carbon credits through carbon sequestration under the Clean Development Mechanism.

Carbon credits provide a way to reduce greenhouse gas emissions by giving them a monetary value. A credit gives the owner the right to emit one tonne of carbon dioxide. Credits can be exchanged between businesses or bought and sold in the international market at current market prices.

A government spokesperson told IANS that under the Rs.365-crore Mid-Himalayan Watershed Development Project, the agreement was signed between Additional Chief Secretary (Forests) Sudipto Roy and Deputy Country Director (World Bank) Hubert Nove Josserand here.

Chief Minister Prem Kumar Dhumal and World Bank task team leader Ranjan Samantaray were also present, among others. The agreement would be operative till December 2018.

The spokesperson said the project, country's first public sector afforestation scheme, would cover 177 gram panchayats in 10 districts, covering 4,000 hectares. "The aim is to protect watersheds, improve livelihoods and generate carbon revenue for the local communities," he added.

Under the Emission Reductions Purchase Agreement, the World Bank would buy 3.5 lakh temporary certified emission reductions (tCERs) for plantations raised over 4,000 hectares.

With the signing of the agreement, the process of physical verification of the plantations to ascertain the growth of biomass will be started and the exact rate for the purchase of carbon credits will be fixed on its basis.

While the exact rate of purchase of carbon credits will determined on the growth of biomass, the normal range is between $4.5 and $5 per tCER and accordingly the locals covered under the project will receive at least Rs.2,000 per hectare annually as per conservative estimates.

Josserand said the World Bank has entered into agreement for similar projects in 17 countries and this hill state has the largest area to be covered under the project.

As per the State Forest Report of 2005 published by the Forest Survey of India, Himachal Pradesh has 14,752 sq km forest area out of which 1,097 sq km is very dense forest.