November 10, 2010 / 3:10 PM / 10 years ago

Brazil opens fund to cut agriculture deforestation

* State development bank BNDES creates $588 mln fund

* Loans to go toward reducing agribusiness emissions

RIO DE JANEIRO, Nov 10 (Reuters) - Brazil’s state development bank BNDES on Wednesday said it opened a fund worth 1 billion reais ($588 million) that will finance projects to reduce deforestation associated with the nation’s booming agricultural sector.

The fund will provide low interest loans for rural businesses and cooperatives to invest in recovering degraded land or creating links between existing forests and land used for agriculture, the bank said in a statement.

The project is part of a broader plan for Brazil to reduce its carbon dioxide emissions, which currently come mostly from deforestation, by as much as 39 percent from the levels projected for 2020.

Rapid expansion of agriculture in Brazil, which is quickly becoming a bread-basket for the world, has been seen as a key driver of deforestation in recent years.

Brazil’s government last month said it has cut greenhouse gas emissions by 34 percent over the last five years as a result of reductions in the deforestation of the Amazon rainforest, which emits carbon as trees decompose or burn.

The government of President Luiz Inacio Lula da Silva is expected to use this reduction to pressure developed nations for greater commitment to cutting emissions at the climate talks in Cancun, Mexico, that begin at the end of November. (Reporting by Brian Ellsworth; editing by Jim Marshall)

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