Rural communities in the world's poorest nations will be able to earn income by using their forests and agricultural land to sequester carbon dioxide, under a plan announced this week by the World Bank.

The BioCarbon Fund, launched on 5 November, will allow companies and public-sector organizations in the developed world to offset some of their carbon emissions by investing in projects in the developing world, such as tree-planting schemes, which absorb carbon from the atmosphere. Investors will earn credits that can be used to meet regulatory requirements or voluntary pledges to cut greenhouse-gas emissions.

The World Bank, which has set a target of US$100 million for the fund, will control how the money is spent. It says that the fund will be supported by the private and public sectors. Fourteen businesses, ranging from power utilities to insurance companies, have already indicated an interest.

Ian Noble, a World Bank official who is chief adviser to the fund, says that investment will be made according to three criteria: cutting greenhouse-gas emissions, benefiting the environment by promoting biodiversity, and reducing poverty by encouraging sustainable development. One project already submitted for consideration involves planting a buffer of native trees around a Ugandan conservation area that has been encroached upon by local people. Locals will also be able to collect non-timber products from this buffer area.

Action groups have long advocated the use of carbon trading for social benefits. Last month, for example, the Centre for International Forestry Research in Bogor, Indonesia, and Forest Trends, a think-tank based in Washington DC, released a report showing that small-scale forestry projects integrated with rural agriculture can provide a cheap and comparatively low-risk way for poorer nations to generate carbon credits.

The BioCarbon Fund has earned further praise by including projects that are not covered by the Kyoto Protocol, the international agreement on limiting greenhouse-gas emissions. Conserving or restoring existing forest cannot be used to earn credits under the protocol, for example. But such projects will be covered by the new fund.