WASHINGTON — The World Bank's private sector agency has been lending to nature conservation projects with a view to laying the foundation for a market akin to carbon trading, the project head said Friday.

The International Finance Corp. unveiled a Web site this week to help industry avoid harming the ecosystems they work in as well as to entice new markets that reward biodiversity protection.

Biodiversity conservation markets are still at the conceptual stage and IFC officials met industry leaders in Brazil this week to brainstorm on how to make the leap from direct project financing to market-driven incentives.

"Can you develop biodiversity markets in the same way carbon markets are being developed?," asked Richard Caines, knowledge and innovation manager in the environment and social development department at the IFC.

Under the Kyoto Protocol, industries in developed countries offset carbon dioxide emissions by buying credits from projects that cut emissions in developing countries.

The Kyoto pact commits about 40 industrial countries including European Union nations, Russia and Japan to cut their emissions of heat-trapping gases by 5.2 percent below 1990 levels by 2008 to 2012.

Hedge funds are looking at investing more in carbon trading as European utilities opt to buy credits from developing countries until they switch to cleaner power generation.

Just as the cost of climate change is becoming a growing concern for governments and companies, so is the risk of losing wealth in the form of natural and biological resources.

"There's a shift going on. We clearly recognize that risk management is very important to our clients and it's not going to go away," Caines said in a phone interview from Brazil.

But the path to creating biodiversity markets is still in its infancy, IFC officials said, so conservation efforts run on direct funding until an incentives system is devised.

SUSTAINING NATURE

The early rewards, however, are tangible, Caines said.

Two years ago the IFC committed about a quarter of the funding to a $21.6 million marine aquarium protection project in the Philippines and Indonesia, countries which supply more than half the world's ornamental fish.

"The initiative is shifting the industry from cyanide fishing and coral blasting to sustainable techniques," he said.

In remote northeastern Brazil, the IFC has partly funded a project that involves a relatively new commercial crop that at the same time protects the ecosystem and is improving incomes.

"The business case for this palm fruit is that it's been the staple food in northeastern Brazil and become popular in the rest of Brazil recently, and now in the United States," the IFC's Juan Jose Dada said.

Sustainable harvesting of the palm fruit's acai berry has raised incomes of the 500 families who pick the fruit by 40 percent in recent years, Dada said.

The dark purple berry is rich in antioxidants, protein fiber and omega-6 and omega-9 fatty acids and is being marketed as the latest craze in the health food industry.

"This is a genuine business opportunity in biodiversity," Caines said.

The IFC's biodiversity Web site can be found at: http://www.ifc.org/BiodiversityGuide 

Source: Reuters