How Norwegian Money Will Save Indonesian Rainforest

Late last year Indonesia made global headlines with a bold pledge to reduce deforestation, which claimed nearly 28 million hectares (108,000 square miles) of forest between 1990 and 2005 and is the source of about 80 percent of the country’s greenhouse gas emissions. President Susilo Bambang Yudhoyono said Indonesia would voluntarily cut emissions 26 percent — and up to 41 percent with sufficient international support — from a projected baseline by 2020.

Last month, Indonesia began to finally detail its plan, which includes a two-year moratorium on new forestry concession on rainforest lands and peat swamps and will be supported over the next five years by a one billion dollar contribution by Norway, under the Scandinavian nation’s International Climate and Forests Initiative. But while money is starting to come into place for the scheme, daunting challenges remain in the battle to reduce deforestation.

Powerful interests—especially in the forestry sector—have little desire to alter the status quo by bringing transparency to the system that enriched them. Meanwhile corruption remains pervasive, enforcement of existing environmental law is rare and inconsistently applied, and the system for establish and managing land tenure is a political and legal minefield in some parts of the archipelago. While optimists say the influx of carbon finance could create political will to change the system, pessimists argue the money could end up being wasted, even being used to finance conversion of natural forests for industrial-scale oil palm and timber plantations.

Nevertheless there is a lot at stake. Indonesia is the world’s third largest greenhouse gas emitter, trailing only China and the United States, which unlike Indonesia are industrial superpowers. Indonesia’s emissions are almost entirely from its agricultural and forestry sector, which generate a small proportion of the country’s total economic activity (a 2007 estimated the benefit to Indonesia of the sector at $0.34 cents per ton of CO2, or a fraction of the value seen in Europe’s carbon market).

Furthermore, forests provide food, water, and livelihoods for tens of millions of Indonesians. Destruction of forests puts these resources and opportunities at risk, but payments for forest conservation could help ensure sustainable use and provide economic incentives for shifting plantation development to the millions of hectares of abandoned and degraded non-forest land that lie across the Indonesia archipelago.

The Plan for Norway’s Money
Indonesia intends to use Norway’s billion dollar commitment over the next five years in three phases. The first, which runs from now through the end of the year, will support “readiness” activities including the development of a national REDD (Reducing emissions from deforestation and forest degradation [including peatlands]) strategy; the selection of sites for pilot projects (candidates include forests in Papua, Sumatra, and Kalimantan); the establishment of a independent monitoring, reporting, and verification (MRV) agency for tracking progress on reducing deforestation; the establishment of a national REDD office that reports directly to the president; and determination of a long-term funding instrument for the program.

Phase two, which would run from January 2011 through the end of 2013, would operationalize the long-term funding mechanism; launch the first pilot project; enforce the two year moratorium on new concessions; establish a degraded lands database; launch of a second pilot project (by early 2012); and set up a more advanced MRV system. Phase three, which would begin in January 2014 and continue beyond, would help Indonesia expand its emission reductions programs and possibly integrate these into a future climate framework that may supplant the Kyoto Protocol when it expires in 2012.

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