Revisiting Constraints: Towards Cautious Reducing Emissions from Deforestation and Forest Degradation (REDD) Implementation in Indonesia

Contents

I. Introduction

II. Methodology
2.1. The Research Methodology: the Thematic Analysis
2.2. Data Collection Method and Analysis

III. Revisiting Issues of REDD Implementation
3.1. The ‘Leakage’ Issue
3.1.1 The macro-effect of forest and land-use policies
3.1.2. Commercialization of agro-industrial monoculture products
3.1.3. Unpredictable Impact of Traditional Use of Fire
3.1.4. Perverse Right to Deforest and Misuse of PES Funds
3.1.5. Determining the Right Beneficiaries
3.1.6. Efficient and Fair Payment Distribution Mechanism
3.2. Land Tenure Insecurity Issue
3.3. Carbon Credit Pricing Issue

IV. Conclusion and Recommendation

Reference

Appedix 1

Revisiting Constraints: Towards Cautious Reducing Emissions from Deforestation and Forest Degradation (REDD) Implementation in Indonesia¹

Abstract

As one amongst few countries with largest forest coverage, Indonesia puts a lot of hopes of benefitting from REDD Implementation, a program strongly believed as incentive for forest protection in developing countries. Yet, like many programs in the past offering similar incentives, some doubt that REDD will be smoothly implemented. This paper tries to revisit some of major obstacles put forward by scholars and practitioners. These include the issue of leakage and land tenure insecurity, as well as the issue of carbon pricing which are crucial in determining whether or not incentive offered by REDD is more attractive than incentives to deforest. Discussion about factors that contribute to leakage and land tenure insecurity is then followed by simple calculation to predict whether price of carbon credit per hectare offered at REDD Project in Ulumasen Forest is much more interesting than revenue obtained from logging that one hectare. This calculation indicated that incentive to forest logging surpassed incentive to conserve as a result of carbon credit. It is recommended that careful and transparent feasibility study prior to REDD implementation to avoid its inevitable marginalizing impacts particularly for forest-dependent people.

Keywords: Carbon Credit, Carbon Pricing, Ulumasen Forest

I. Introduction

Emission from deforestation and forest degradation in developing countries estimated to constitute 20 percent (20%) of the total global emission of greenhouse gases (GHG) annually (CIFOR, 2008). Although it contributes a small percentage compare to other sectors that contribute to global GHG emission such as transportation and industries, continual forest depletion in developing countries is considered different given the broad spectrum of other social-economic and environmental impacts it has created and will bring about.

A number of incentive mechanism to reward preservation for environment and services it provides have basically been formulated and in trial, such as Payment of Environmental Services (PES) and Clean Development Mechanism (CDM) under Kyoto Protocol. Recently, Reducing Emission from Deforestation and forest Degradation (REDD) mechanism was proposed and this is basically an advanced version of CDM aimed specifically at curbing deforestation and degradation of forests particularly in developing countries. It basically rewards every tons of carbon preserved in a particular forested areas as a result of preservation activities. The carbon trading deal under REDD mechanism can use non-voluntary mechanism as in those developed under Kyoto Protocol (state-controlled) or voluntary mechanism (free-trade mechanism).

In Indonesia, REDD is viewed as an effective economic incentive for forest conservation efforts and/or against deforestation and forest degradation since most cases of deforestation in Indonesia have been economically driven. In practical, however, this is certainly not straightforward and can be troublesome particularly in countries where deforestation is reflection poor natural resources governances which are underpinned by complex social- political factors and corruption.

This paper seeks to re-inform the government of some of the fundamental constraints that need to be taken into account constantly if REDD is to be implemented effectively and otherwise will create nothing but disincentive for the sustainability of forest management in Indonesia. It first discusses the issue of the leakage, especially how forest and land-use policies may contribute to the leakage issue, which includes natural occurrences such as forest fires. It then looks at potential misuse of funds and its potential in creating a sense to deforest which then extends up to the issues of determining the right beneficiaries and distribution mechanism of REDD fund. Subsequently, the paper continues to discuss the issue of land tenure security and carbon credit pricing. It then ends up with summaries of thoughts and recommendation. This paper argues that the REDD, like other environmental preservation-based credit scheme, is not a panache for forest degradation problems in Indonesia and the government needs to deal seriously with other fundamental causes of forest degradation before REDD can truly be an incentive for forest protection.

II. Methodology

2.1. The Research Methodology: the Thematic Analysis

Methodological approach used in this paper is thematic analysis. Thematic analysis is a method for identifying, analysing and reporting themes of patterns within data (Boyatzis, 1998, Joffe and Yardle, 2004, Braun and Clarke, 2006). Unlike its twin, the content analysis, that tends to describe numerically features of particular texts or images, thematic analysis explores more on qualitative aspects of material analysed (Joffe and Yardle, 2004). Thematic analysis used to be applied more in psychological and clinical trial researches but is increasingly used in others policy research topics (for example, see Agar, 1983).

2.2. Data Collection Method and Analysis

The data collection method used for this paper is mainly document study. Documents reviewed were secondary data and included scholarly publication such as peer-reviewed journals and articles, book chapters and the official government regulations and reports. The analysis was conducted manually, and involves reading the documents, taking notes and assessing them against official reports and government documents.

III. Revisiting Issues of REDD Implementation

3.1. The ‘Leakage’ Issue

Leakage is one of the fears frequently raised with respect to avoided deforestation. Leakage basically refers to “carbon benefits from a mitigation project being wholly or partially nullified by emission provoked by the project outside of its boundaries (including not only spatial boundaries, but also boundaries in term of time and in terms of conceptual framework) (Fearnside, 2008). The term ‘leakage’ used in the context of REDD, however, is argued as inappropriate as its definition is often made simplistic and only implies small-scale impact (Globel Forest Coalition, 2008). Nevertheless, it is sensible to say that any methodologies used to calculate green house gasses from reducing deforestation should take into account all forms of leakage both directly and indirectly. This means that such methodologies need to account underlying causes of deforestation and effects (counterproductive) that any forest and land use policies can potentially create themselves. Without doing so, any REDD policies and incentive schemes targeting particular forest areas will unavoidably lead to leakage. To do so, however, can be very difficult, particularly where deforestation is a matter of socio-economic and political complexities and overarching forest and land use policies often contribute to the deforestation processes themselves. The following are some of the leakage issues in Indonesia.

3.1.1. The macro-effect of forest and land-use policies

The macro-effects of forest policies can often trigger deforestation in other areas on a larger scale than that avoided in the specific protected areas. In Indonesia, this has been the case in the effort to reduce pressure over natural forests from illegal logging, which is one the most significant and consistent contributor to deforestation in the country (Sunderlin and Resosudarmo,1996; Obidzinski et al., 2007). Per se, illegal logging is primarily caused by inability of production forests to sustainably supply excessive timber and pulps demand and excessive installed capacities of existing wood-based processing industries, in addition to wide-spread corruption and weak law enforcement. The gap between timber demand and supply from 1980-2005 is illustrated in figure 2.1.

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Figure 2.1. Timber Consumption and Demand in Indonesia over the Period of 1980 - 2005

In order to deal minimize the gap and hopefully minimize pressure over natural forests from illegal logging, from 1985-1997 the government put in place log export ban (LEB) policy (which then reinforced in 2003). In its early phase of implementation, this policy had been proven to be very efficient as the frequency of logging operation decreased. Later on, it was realized that the LEB severely impacted on domestic logs price, decrease the value of tree stands in forest and subsequently encourage conversion of forest to more commercial non- forest use (Manurung, 2004). This is also precisely the case in the recent issue of trans- border illegal logging between Malaysia and Indonesia. Although the Government of Malaysia had put in place logs and sawn timber import ban from Indonesia, and the Government of Indonesia increased military operation for law enforcement along the border, the rate of illegal logging is still high (Obidzinski et al., 2007). This proves that policies to halt logging in one area often inevitably promote logging in other areas, unless overall timber consumption and logging and pulp processing capacities are diminished.

3.1.2. Commercialization of agro-industrial monoculture products

The expansion of large-scale, agro-industrial monocultures for food, fiber and energy production is an important cause of deforestation, both directly and indirectly. For example, Indonesia is currently the largest palm oil producer with 6.78 million hectares of plantation (12.3% annual growth). Policy incentive and economic incentive (market and profit gain) offered in this venture have underpinned the rapid growth of palm plantation in Indonesia (both in public and private domain). Figure 2.2 illustrate the development of palm-oil plantation in Indonesia from 1980-2007. .Enabling incentive for palm-oil plantation development has been Indonesian Government’s Policy that targets the establishment of 6.5 million hectare of sawit plantation throughout the country (mainly in Kalimantan, but now spread to Sulawesi and Papua), and provide conducive licensing mechanism for the development of plantation and processing plants (McCarthy, 2008). Economic incentive of attractive CPO price ($570/m3) encourages farmers to chop down tree stands on their farmland to be replaced by sawit (McCarthy, 2008). It is believed that there have been a large extent of productive home gardens of Dayak people (Indigenous Borneo) being converted into sawit plantation (World Rainforest Movement, 1998). Indonesia is obviously intended to maintain its domination in world palm oil market and this means continuos plantation expansion and possibly further forest conversion.

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¹ The first version of this paper was submitted as part a research essay towards the completion of Master of Forestry at Fenner School of Environment and Society, Australian National university.