* Move may help stave off global pressure
* Lula says it's time to change deforestation habits
* 'We want to be reasonable'
By Stuart Grudgings and Brian Ellsworth
BRASILIA, June 19 (Reuters) - Brazil will pay small farmers to plant trees in deforested Amazon areas to slow rain forest degradation, President Luiz Inacio Lula da Silva said on Friday as he unveiled a broad plan to protect the region.
The effort may help stave off growing international pressure on Brazil to reduce deforestation that scientists say spurs global warming, providing alternative livelihoods to poor Amazon dwellers who live off timber exploitation.
"We need to think about how to make those people feel that they will make more money by planting trees than by cutting them down," Lula said in an interview after a ceremony to inaugurate the "Green Arch" program to protect the Amazon.
"The small (agricultural) producers that plant trees in areas that were degraded, we're going to pay them $51 per month." He did not offer further details on the program.
The proposal appears similar to schemes proposed by global conservation groups that Brazil has largely resisted that would pay rain forest residents to prevent deforestation that causes 20 percent of global greenhouse gas emissions.
Known as Reduced Emissions from Deforestation and Degradation, or REDD, such projects allow wealthy nations to reduce the cost of emissions reduction by paying to keep forests standing in poorer nations.
Lula, who has been criticized by environmentalists for putting development ahead of conservation, said Amazon residents had to change their old habits of deforestation due to mounting pressure from international markets.
"We have to say to people that there was a moment when we could deforest, but that it works against us now. It will hurt us in the future because international loans won't come," Lula said.
The Green Arch initiative launched on Friday boosts coordination between government agencies to prevent illegal logging and trains some 300 officials to prevent land-grabbing in municipalities with the highest levels of deforestation.
The effort follows growing awareness within Brazil about the problem. Top retail groups last week banned the purchase of beef coming from deforested areas after a report showed the beef industry was the largest driver of Amazon deforestation.
Brazil last year presented a plan to slash Amazon deforestation in half over 10 years and thereby avoid the release of 4.8 billion tonnes of carbon dioxide into the atmosphere -- an about-face after years of opposing setting targets.
Lula's government is focused largely on a proposed law to regularize Amazon land ownership that he calls a "small revolution" but that environmentalist and conservation groups charge will generate a new wave of land-grabbing.
The controversial bill would give 1.2 million people and numerous companies titles to a huge chunk of the sensitive environment to bring order to decades of chaotic land use and make policies easier to implement.
"We want to be reasonable so that no one can accuse Brazil of anything. That is why we are going to regulate," Lula said in a speech in the Amazon frontier town of Alta Floresta in Mato Grosso state.
He was flanked by Mato Grosso Governor Blairo Maggi, known as the "Soy King," who has drawn fierce criticism from environmentalists for heavy deforestation in the state.
Over three decades, settlers, farmers and speculators have occupied, stolen and sold state land they did not legally own, fueling the destruction of about a fifth of the world's largest rain forest. Land titles are often nonexistent or fake.
The government says the new bill will benefit impoverished peasants encouraged to settle the Amazon during the 1964-85 military dictatorship but never provided with legal support, public security or financial aid.
Conservationists are particularly outraged that the Senate, under pressure from the powerful farm lobby, included companies and large farmers as beneficiaries. The bill grants them special preferences, such as not having to occupy the land themselves and being able to claim several properties. (Editing by Peter Cooney)