SINGAPORE, Dec 5 (Reuters) - Indonesia on Wednesday approved a rainforest conservation project that sets aside an area roughly the size of Singapore and rewards investors with tradable carbon credits in the first of its kind to win formal backing in the country.
Four years in the making, the Rimba Raya Biodiversity Reserve will protect nearly 80,000 hectares (200,000 acres), much of it carbon-rich peat swamp forest at risk of being felled for palm oil plantations.
Russian energy giant Gazprom and German insurance firm Allianz are backers of the project, the world's first on deep peat.
A senior Indonesian official announced the approval on the sidelines of U.N. climate talks in Doha, Qatar. Forestry Minister Zulkifli Hasan signed a letter last week saying the project had passed all the key steps. Reuters has seen a copy.
"We hope projects like Rimba Raya will lead the way in proving that conservation can address the rural development needs of the communities and also preserve our forests for generations to come," Hasan said in a statement.
The project challenges Indonesia's often poor conservation record and lax enforcement where national parks are illegally logged. Indonesia has the world's third-largest expanse of tropical forests but these are disappearing quickly in the rush to grow more food and exploit timber and mineral wealth. Forest clearance is a major source of greenhouse gases.
By saving the forest and locking away planet-warming carbon, investors such as Gazprom will receive carbon credits they can sell for profit or use to cut their own emissions. Money from credit sales will also fund local livelihood projects.
The project area, in Central Kalimantan province on Borneo island, is brimming with rare animal species and adjoins a national park. It is designed to be a sanctuary for endangered orangutans.
Rimba Raya is part of a U.N.-led scheme called reducing emissions from deforestation and degradation (REDD). The aim is to show forests can pay for themselves and compete with powerful palm oil, mining and timber interests.