Waving the REDD Flag in Indonesia’s Forests

As an archipelagic nation, Indonesia consists of around 17,000 islands with 98 million-hectare tropical forests, the third largest in the world after Brazil and Democratic Republic of Congo. Home to “twelve percent of all mammal species, 16% of reptile and amphibian species, and 17% of bird species,” Indonesia’s tropical forests are undoubtedly an important sanctuary and essential source of the world’s oxygen supply and carbon sink function.

The world, however, has been alerted that this lung of the earth is deteriorating, piece by piece, at a disturbing rate. One of Indonesia’s five big islands, Sumatra, for instance, has lost 85% of its forests. Meanwhile, another island, Borneo, experienced an average annual loss of 2.1 million acres of its forest area between 1985 and 2005. Although the nation has been lauded for its economic bounce after the devastating 1998 financial crisis with a 6% GDP growth on average over  8 years, it seems that Indonesia’s staggering economic growth is having an inverse trend to its environmental record.

The trade-off between two E’s: Economic development vs. Environmental degradation

Does the inverse trend of economic growth and forest degradation in Indonesia posit an outlier to the global trend? Apparently not, as this is the common case experienced by low-income and developing countries. Developing countries still largely depend on subsistence and natural resource economics that they often prioritize short-term profitability over long-term environmental sustainability.

Environmental Kuznets Curve

The trade-off between environment and per capita income is best captured by the environmental Kuznets curve. This famous downward-sloping economic curve illustrates how low and lower middle-income countries experience worsening environmental degradation and pollution until the trend eventually reverses once the countries reach a certain threshold of per capita income. It is believed that such a threshold lies at around $4,000 to $5,000 (1985 dollars). Another way to interpret this hypothesis is that high-income countries possess the necessary capital to undergo environmental preservation initiatives that can reduce the pollution rate. However, Indonesia, currently a middle-income country with around $3,495 per capita income, should not wait any longer to initiate significant efforts to reduce the degradation rate and preserve its valuable environmental resources.

Like many other developing countries, Indonesia also had to make the difficult choice of pursuing economic development over environmental preservation. This decision should not come as a surprise for a country endowed with an abundance of natural-resource as Indonesia. Over the last several decades, forest-based industries have risen to prominence and currently contribute for approximately $21 billion to Indonesia’s GDP, in which timber and oil palm plantations have make up the lion’s share.

Within the same period, unfortunately Indonesia has witnessed massive forest destruction at an exponential rate. This deforestation has mostly impacted local communities, particularly their food security, in which around eight million affected people live in Kalimantan alone. Furthermore, “it is estimated that 15% of all greenhouse gas emissions are the result of deforestation.” As a progressive economic power on the swing, it is important for the Indonesian government to improve their environmental record.

“Forest loss has also impacted the island’s thousands of plant and animal species, some found nowhere else on Earth.”

Patching the “lung”

“REDD, to which Norway has committed $1 billion in Indonesia, in essence pays developing countries not to chop down trees.” – The Economist

The initiative came as an external influx called REDD+. The United Nations’ Reducing Emissions from Deforestation and Forest Degradation (REDD+) program is an initiative that aims to respond to climate change by attempting to create a “financial value” as incentives for developing countries to reduce their emissions. The Indonesian program was launched in 2009, concluding Phase One in in late 2012. The initiative in Indonesia aims to preserve the “Rimba Raya”, an area equivalent to the size of Singapore, located in the heart of Borneo. Although the move deserves to be lauded, several issues remain.

First, an emphasis on community-based approaches is needed, as communities play an intrinsic role of ensuring that the program runs effectively and that such a focus will provide a direct channel for local communities to reap the benefits. The forest communities in Indonesia have long been the victims of forest destruction, directly impacting their livelihoods. This has also been complicated by local’s inability to attain legal recognition of their customary land rights .

imageFortunately, the Indonesian REDD+ Working Group has recognized this dire need to involve communities, as illustrated in the results of the Asia REDD+ Working Group Meeting in January 2013. The meeting was seen as a pivotal move as the group consisted of representatives from not only the governments of the developing countries, but also from the civil society organizations, pledged to incorporate REDD+ forest communities.

Rewarding communities for forest protection and management by recognizing their rights and providing them with technical and financial resources to manage local forests and watersheds effectively may be Indonesia’s best hope of ensuring that future generations will enjoy the nation’s rich forest endowment.” 

Second, related to the community-based approach, the working group can work with local and provincial governments, under the auspices of the national government, to develop mechanism in resolving land administration issue. As mentioned earlier, many of the forest communities have had difficulties in obtaining legal land rights, in which the communities believe that the forest land is their inheritance right, passed along from generation to generation. This will inadvertently result in claim disputes and may represent one of the greatest hurdles for the implementation of the REDD+ program. To complicate the matter, the government has the rights to lease the lands to companies.  When “carbon trading” is an integral part of REDD+, the question that arises then is who “owns the carbon” and will eventually be eligible to “sell the credits” and benefit from it?

Third, since the Suharto era, Indonesia’s forestry management has been infamously associated with rent-seeking activities. As REDD+ initiative provides an alluring potential emission trading of approximately $500 million dollars, a monitoring scheme needs to be carefully devised. Such a scheme should involve a public-private partnership that allows room for non-governmental organizations to voice their opinions and take an active role in ensuring non-discriminatory and non-corrupt practices. One renowned environmental advocacy group in Indonesia, WALHI, has been staunchly criticizing the initiative, in which they argue that REDD+ places too much emphasis on the commercial aspect of carbon trading. It is thus valuable for the REDD+ working group in Indonesia and other developing countries to foster public-private dialogues to both minimize possible frictions and more importantly to encourage bottom-up ideas and solutions.

Another additional point but nonetheless crucial is that the working group needs to proactively consider how to further engage companies in forest-based industries. The Indonesian government is faced with two options. The first is to increase the export tax, which has recently been raised to 9% from 7.5%, being the first tax hike in nine months. The second option is to provide financial reforestation incentives, which might include exemptions from property and inheritance taxes and special reforestation fund for companies that successfully carry out the reforestation initiative.

By and large, the enticement of profitable carbon trading should not overshadow the more dire need of reforestation and forest preservation.

Conclusively, despite ongoing arguments against the initiative, the REDD flag has already been raised in Indonesia and it is an important initial step towards what will hopefully be a more community-centric and collaborative effort at sustainable development. It is about time that all parties; the government, for-profit and non-profit private organizations, and the civil society, recognize the signaled urgency to collaborate and carry the “initiative flag” together, in a way that our future generations will not be rendered to say, “They have failed us.” 


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