(Reuters) - Norway plans to spend as much as $300 million to support a program in Peru to reduce greenhouse gas emissions from the destruction of the world’s fourth largest tropical forest, the two countries announced on Tuesday.
Norway pledged to pay for verified reductions in emissions generated by projects in Peru that succeed in cutting deforestation, consequently reducing the amounts of carbon dioxide currently being emitted.
The countries announced the program during the United Nations Climate Summit in New York.
It is one of the largest agreements so far on results-based payments for projects that reduce deforestation.
The deal runs up to 2021 and payments for emissions reductions are expected to start as of 2017.
In agreements to reduce greenhouse gas emission, the donor country typically measures the amount of avoided emissions in tonnes of carbon dioxide and sets a price per ton. The host country is then entitled to receive the payments, which it usually distributes to landowners working on the projects to stop deforestation.
No details were provided on the amount of emissions reductions to be included in the deal or the price to be paid per ton of carbon dioxide.
Many governments, multilateral organizations and climate experts consider financial rewards critical to keeping tropical forests standing and reduce heat-trapping emissions from deforestation.
Peruvian President Ollanta Humala, in announcing the agreement on Tuesday, said the program is “challenging.”
Peru is losing some 100,000 hectares of forest every year due to the conversion of land to agricultural use and for mining operations.
The South-American country still holds some 68 million hectares of forests, mostly in the biodiversity-rich Amazon region, neighboring Brazil.
Greenhouse gases from the destruction of forests worldwide account for around 15 percent of global emissions, or more than the entire transportation sector.
Germany and the Inter-American Development Bank are also taking part in the agreement, providing technical assistance and financing the institutional set up.
Germany said it would “consider further contributions on the basis of Peru’s delivery” when payments for emissions reductions start.
In the process, Peru has agreed to include 2 million hectares of areas controlled by indigenous communities in the system of payments.
Norway is also the key donor of the Amazon Fund, a $1 billion initiative to fight deforestation managed by Brazilian development bank BNDES.
Reporting by Marcelo Teixeira; Editing by Leslie Adler