Financial Times

April 25, 2007

Powerguda, an Indian village of about 200 tribal people of the Gond minority, has undergone dramatic change in recent years. A seven-hour drive from the southern city of Hyderabad, mobile phones receive no signal here. Some villagers speak only their tribal dialect and not even the regional language of Telugu, let alone Hindi or English.

On a recent afternoon in the post-harvest season, men and women busily cleared brush from the fringes the fields with their hands and small sickles. Six years ago Powerguda’s crop yields from the dry soil were so low that most of the villagers were forced to migrate in search of work. Alcoholism plagued the village. Prospects seemed bleak. But with help from government and international programmes launched in 2000, agricultural scientists introduced new water conservation techniques.

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A series of watershed measures helped boost crop yields dramatically. As a result of higher incomes, Powerguda’s thatch huts have been replaced by homes with solid walls, water pumps have been installed and very few villagers migrate for work. Cows and chickens wander sedately through paths winding among the clusters of houses. Average family incomes have more than doubled to Rs 32,910 last year from from Rs. 15,677 in 1999-2000.

Powerguda villagers also began using a local bank for the first time, which allowed them to leverage savings and loans. And new businesses are sprouting. Notably, villagers are growing a pongamia tree plantation.

Powerguda’s fledgling pongamia business received a boost from the World Bank, which gave Rs 30,000 (about $650) to Powerguda in 2003 to offset carbon emissions for participants flying to a conference in Washington. Pongamia, a leafy medium-sized tree native to India, is gaining prominence because oil can be extracted from its large brown seeds to run generators and farm equipment. If refined, it can be made into biodiesel to run vehicles.

Pongamia grows easily in degraded soil and does not need intensive water supply or maintenance. The World Bank’s gesture put Powerguda in the spotlight as an example of how money to offset carbon emissions can benefit people in developing countries.

Indeed, K. Subhadrabai, the village leader, proudly displays a framed certificate from the World Bank that documents the 2003 transaction. Seated on the packed dirt near the entrance of her house, 40-year-old Ms Subhadrabai adjusts her green sari and tucks her bare feet beneath her. She says Powerguda has only received carbon offset funds from the World Bank in 2003 and a charitable donation of Rs 33,306 from the Rotary Club of Bombay Sion last May. The latter donation was intended for the protection of 5,000 pongamia trees.

The villagers hope that the 10,000 pongamia trees planted on Powerguda farmland will bear financial fruit. Nearby, in Powerguda’s fields, young waist-high pongamia trees emerge from the dusty brown pre-monsoon soil.

A few taller trees spread their green leaves under the scorching sun. Some have begun bearing their first clusters of seeds, but because ponagmia trees take six to seven years to mature, these trees are still several away from regular yields. For now, the villagers travel to forests up to 50km away to gather seeds from wild pongamia trees. They bring back sacks of seeds that are crushed with an archaic-looking oil extraction machine housed in a large shed in the village. Inter-Tribal Development Authority, a government agency, financed the Rs 375,000 machine, which is prone to break-downs and has not been used for months.

Villagers are also cultivating thousands of pongamia seedlings in awning-covered nurseries to sell to the government and others involved in reforestation and pongamia cultivation. Powerguda sold 29,000 saplings last year and expect to sell up to 50,000 this year. But the majority of Powerguda’s recent progress comes from improved agricultural yield, not carbon offsets.

Behind a dusty glass frame, the faded certificate from the World Bank reads: “We guarantee purchase of indicated amount of verified emission reduction and their retirement for the benefit of the global climate by withdrawing them permanently from the market.”