The Himachal Pradesh government is ready with its wish list to greet the Finance Commission team when it comes visiting this week. The memorandum it has prepared for the Commission asks for a special financial package and benefits like special debt relief.

Apart from asking the Commission for certain concessions, the state is also looking at different ways of generating revenue. One of the proposals it is working on is ‘Payment for Environmental Services’ (PES). The idea is to charge neighbouring states for environmental benefits that are possible because of Himachal’s efforts.

“We want neighbouring states to have a stake in our forests, biological diversity and tree cover—benefits of which also flow to the downhill states. Himachal can be suitably compensated for protection and conservation of the environment, a concept already popular in countries like Costa Rica,” says Himachal Chief Minister Prem Kumar Dhumal. He is also trying to get states like Uttarakhand, Jammu and Kashmir and Madhya Pradesh to come together and approach the Centre with this proposal.

According to estimates drawn by Himachal, if this service payment was levied, Himachal could earn Rs 10,523 crore by 2015. The state claims it loses Rs 1,000 crore every year because of its ban on felling and other critical conservation projects.

The 13th Finance Commission will also deliberate on the issue of carbon credits as the Centre is still to put in place a legally binding carbon credit mechanism. This alone could generate an income of Rs 500 crore per annum for the state.

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