By Ed Davies

JAKARTA, March 23 (Reuters) - A major U.N. conference on global warming in December should target setting up a system to pay developing nations such as Indonesia and Brazil to keep their forests, an influential climate change expert said on Friday.

In the short term, up to $15 billion extra a year should be set aside by richer nations to preserve forests, which help soak up carbon dioxide from the atmosphere, Nicholas Stern, author of an acclaimed report published last year, told a forum.

The resort island of Bali will host climate change talks in December likely to launch formal negotiations about extending the Kyoto Protocol after its first period ends in 2012.

The pact is the main U.N. plan for curbing global warming and the annual gathering will attract government officials and non-governmental organisations from around the globe.

"I believe that one of the goals for the Bali conference should be to design a supply side for emissions reduction from developing countries that can really work on a big scale," said Stern, whose report in October argued it would be much cheaper for the world to take action now on climate change than to delay.

His comments are likely to add to a push by an alliance of developing nations, including Papua New Guinea, which has called at past Kyoto gatherings for rich nations to pay to save rainforests.

The former World Bank chief economist said such a mechanism was "so that a country like Indonesia or a country like Brazil can contract as a country to reduce emissions from deforestation and be paid as a country for that work".

"We all benefit from reductions in emissions and we should all contribute to the cost of doing that," Stern told the forum on global climate change and Indonesia. He is now an adviser to the British government on global warming.

Indonesian Environment Minister Rachmat Witoelar, who attended Friday's forum, said in January that Jakarta would table a proposal in Bali on paying developing nations to keep forests.

GOING, GOING...

About 10 percent of the world's remaining tropical forest is found in Indonesia, which has a total forest area of more than 225 million acres (91 million hectares), according to Rainforestweb.org, a portal on rainforests (www.rainforestweb.org).

It said Indonesia has already lost an estimated 72 percent of its original frontier forest, and half of what remains is threatened.

About a fifth of Indonesia's forests are protected, but conservation groups say not enough is being done and illegal logging and deliberately lit fires are wiping out the fragile habitat.

Indonesia is the world's third largest greenhouse gas polluter behind the United States and China, mainly due to carbon dioxide emissions from deforestation, according to a report published by the World Bank and the British government.

"So what I hope will happen over these coming months and years is that the world which has already deforested, and much of that is the rich world of course, will provide much stronger support for the resources necessary in (fighting) deforestation," Stern told a news conference after the forum.

"I would guess that for around $10 to $15 billion (extra a year) you cut emissions from deforestation by around a half."

He gave a stark warning that unchecked climate change was likely to mean more disasters in poorer countries such as Indonesia, particularly given its geography.

"Island states are very vulnerable to sea level rise and very vulnerable to storms. Indonesia with 17,000 islands of course is particularly vulnerable."

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