Protecting peatland and business interests a fine balance

Indonesia's Peatland Restoration Agency wants companies to restore 2.3 million ha of peat, and to ban logging on 4.4 million ha of concession land. These targets could be counterproductive if they put companies out of business, say firms.

Indonesia, still reeling from last year’s record haze season, is taking steps to prevent a repeat disaster by asking government agencies and companies alike to restore millions of hectares of damaged peat on their concessions. 

The country in January this year set up a Peatland Restoration Agency (BRG) which is tasked with restoring 2 million hectares of peat by 2020. 

But while these measures have been welcomed by many in the environmental community, companies are concerned that this directive will undermine their economic survival. 

There are about 15.9 million hectares of peat in seven key Indonesian provinces—Riau, Jambi, South Sumatra, West Kalimantan, Central Kalimantan, South Kalimantan, and Papua.

Of these, 4.1 million hectares is in protected areas, and about 339,000 hectares need restoration, and the government is responsible for this. The other 11.8 million hectares is in concession areas. 

After initial study and ground checks, BRG recommends protecting the peat in these concession areas by restoring 2.3 million hectares of land, imposing a plantation development moratorium on 4.4 million hectares, and subjecting the remainder to protective measures including best management practices and rehabilitation.

These 2.3 million hectares are independent of BRG’s 2 million hectare target, as the agency is focused on restoring peat in non-concession areas in Central Kalimantan, South Sumatra, and Riau provinces.

The ownership of the 2.3 million hectares is a patchwork of private Industrial Production Forests (HTI), Forest Concession Rights (HPH) and oil palm plantations (about 1.2 million hectares), and another 1.1 million hectares is found on land which has unofficially been occupied by local villagers for many years without proper land certifications.

The agency’s planning and cooperation deputy director Budi Wardhana said at a recent press conference: “We are hoping that restoration in concessions areas and plantations can be done by the companies which operate there, under the supervision of the agency and ministry of environment and forestry.”

“We expect companies to restore peat located in their own concessions,” said Budi. This is in addition to the 4.4 million hectares of land that BRG says companies should be banned from clearing. 

Nazir Foead, the agency’s chief, said that if peat has been converted, companies have to rezone their concession areas and declare any areas of deep peats with water depth of more than 40 cma protected zone.

Based on BRG data, a total of 531 companies – 174 HTIs, 30 HPHs, and 327 palm oil companies – were granted permits in peatlands.

“The biggest challenge is to discuss the transition with companies, especially those which have already been granted development permits for 20 years, for instance,” Nazir said. 

He added: “How is the phase-out going to be? Is it going to be done in one day? Or, will it have to wait for the permit to expire?”

Steep cost

However, Nana Suprana, deputy chairman of the Association of Indonesia Forest Concession Holders (APHI), told Eco-Business in an interview that he is not in favour of another moratorium on peat, arguing that the current logging ban, which is based on an agreement with Norway, has yet to bring about improvements in Indonesia’s forests.

“It’s only a populist [policy]. I don’t see any improvement in those moratorium areas,” he said.

Instead, Nana recommended ways to reduce the impact of agribusiness without having to stop operations.

“I am sure it can be done without having to close down (areas)”, he said. “At least reduce the impacts of oil palm plantations towards the environment.”

Palm oil experts frequently cite measures such as improving the productivity of existing plantations and reducing the use of toxic pesticides as ways to reduce the environmental impact of the crop.

Nana added that for companies to be able to restore peatlands, they would need to keep their businesses running, so as to generate the income needed for restoration, and not be forced to close down areas during this period. 

“The obligation to restore needs to be balanced economically,” said Nana. “If the government is closing down cultivation lands and turning them into protected areas, how would we get the funding to restore and manage peatlands?”

If a third of a concession area was to be closed down, this would bring business to a standstill, and there would not be any improved peat management, he added.

“The average pulp factory receives at least 40 per cent of its raw materials from cultivation in peatlands. If it stops, it means closing down two pulp factories,” he said. “You cannot possibly imagine the economic impacts of that. We’re talking about local economic growth, employment, state revenue.”

Nana added that the association does not doubt the government’s data on which areas needed to be restored but he asked for assessments on the impacts of these policies before a new peat moratorium is declared.

The obligation to restore needs to be balanced economically. If the government is closing down cultivation lands and turning them into protected areas, how would we get the funding to restore and manage peatlands?

Nana Suprana, deputy chairman, Association of Indonesia Forest Concession Holders

Not a zero sum game

However, BRG’s Budi said that restoration and moratorium do not necessarily mean that there should not be any business activities in peatlands.

“It is allowed as long as it’s in line with government instructions such as no draining deep peats, no burning, ensuring water management and planting native species,” he said, adding that there are companies operating successfully in protected peat areas without destroying it.

One solution to balance their economic interests with peatland protection goals, Nazir said, was strengthening research on plant species suitable for cultivation on wet peat.

Nazir urged companies to come up with better technology breakthroughs if they still want to operate on peatlands, because current laws stipulate a certain water level of peatlands.

He also said his agency would consider the traditional practices of indigenous peoples who have been cultivating peatlands.

“We are fully aware that there are indigenous peoples who have been managing peatlands for generations, such as in Seram island, where its people harvested sago from peatlands,” he said. “We will respect that in the zoning process. It is natural for the state to respect customary ways which are sustainable.”

Furthermore, he said that the agency would set up pilot projects in Papua and Jambi provinces for a year to assess how people sustain their livelihoods and manage peatlands sustainably.

Meanwhile, some green groups dismiss the business sector’s concerns as “exaggerated”.  

Jefri Saragih of Sawit Watch, an NGO focusing on sustainable palm oil, for example, argues that the whole process of BRG proposing to restore peatlands is aimed at better forest management. 

“Companies usually skip the process of obtaining permits for forest development which is why there are so many conflicts arising from land use changes,” said Saragih.

In Indonesia, to obtain forestry permits, a company must first obtain a Forest Release Permit, and then other permits which must undergo four phases. Companies and ministries tend to bypass these phases, which results in overlapping areas.

In addition, he said that companies should have been aware of the international demands for sustainable palm oil and treat BRG’s directive as an opportunity to create better and sustainable products and gain more benefits.

“The Roundtable on Sustainable Palm Oil had already demanded no land expansion, especially in peatlands, since 2005,” he noted. 

“Companies shouldn’t look at the peatland restoration directive as a threat, but a chance to make improvements which are not only good for the environment, but for the economy too.”  

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