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Borneo rainforest conservation banking on Indonesian debt

The United States government has written off a US$28.5 million debt by Indonesia in exchange for the preservation of some Borneo rainforest and the reduction of greenhouse gas emissions.

This is a project that will require careful oversight and cooperation among local communities, multiple NGOs and government agencies, said the international NGOs overseeing the programme.

Indonesia’s Ministry of Forestry, an official from the US embassy and non-government organisations WWF and The Nature Conservancy signed a memorandum of understanding (MoU) for the debt-for-nature swap in Jakarta on Thursday.

Part of the US government’s Tropical Forest Conservation Act, the debt-for-nature swap - a mechanism which allows developing nations to reduce debt by supporting projects that will conserve rainforest and reduce deforestation-induced climate change - is the second such aid agreement the US has made with Indonesia.

Three districts in Kalimantan, chosen for the commitment shown by their local governments for collaborative efforts on conservation, will host projects under the new programme. They are the Kapuas Hulu district in West Kalimantan and the Kutai Barat and Berau districts in East Kalimantan.

The projects targeted for the funding will be implemented not by the signatories of the agreement, but by members of the local communities who depend on the forests for survival, an approach that is gaining recognition as a more effective way of protecting forest than the more conventional methods that left local communities out of the decision-making process.

According to information provided to Eco-Business by WWF-Indonesia, eligible civil society groups – such as local NGOs and charities – will manage the projects after a grant application process, set to begin in January 2012.

“The swap will fund projects that benefit civil society as well as engage them as implementers of the programme in the Heart of Borneo, something that WWF is proud to promote,” said WWF-Indonesia’s chief executive, Dr Efransjah, in a statement.

WWF’s Heart of Borneo conservation project is a collaboration involving the governments of Indonesia, Malaysia and Brunei – the three countries encompassing the 22 million hectare region targeted for protection – as well as the businesses and communities that live and operate in the area.

The Borneo Rainforest is swiftly disappearing primarily due to the palm oil, mining and logging industries, as well as the spread of local communities engendered by those industries.

Nearly 90 per cent of the funding, to be paid in instalments by the Indonesian government into an independent account, will be disbursed directly to the civil society groups. The rest of the funding will pay for management costs and an independent administrator appointed by an oversight committee, which will include representatives from the Indonesian government, The Nature Conservancy (TNC), WWF-Indonesia, the US government and a civil society representative yet to be determined.

Ade Soekadis, acting director of TNC’s Indonesian forest programme, told Eco-Business in an e-mail interview that strong oversight and monitoring would be needed to ensure the funds were used properly. He added that success also depended on having a clear and solid work plan, such as the five year strategic and action plans that TNC has developed for its Borneo initiative.

Mr Soekadis noted the debt-for-nature swap would fund some of TNC’s existing projects in its Berau Forest Carbon Programme (BFCP), which he dubbed “the most comprehensive district-based REDD+ demonstration activity in Indonesia.”

REDD refers to ‘reducing emissions from deforestation and degradation’, a voluntary climate aid programme through which donor nations provide funding to developing nations to stop deforestation, which contributes about 20 per cent of global carbon emissions. The programme has been amended since inception to stress the role of good forestry management in preserving forests, hence the revised term ‘REDD+’.

The most notable Indonesian REDD+ commitment has been a US$1 billion agreement with the government of Norway. As part of the agreement, Indonesia signed a moratorium – after a six month delay – on the granting of new concessions for land-use permits in forested areas, and chose the Central Kalimantan district as a pilot area for projects.

Progress has hit a number of snags. Environmentalists have accused governments of watering down the moratorium by giving too many exemptions to big business interests, and indigenous communities have accused project managers of not involving them in the decision-making process and potentially depriving them of customary land rights.

Critics say the process is also marred by conflicting land-use permits and lack of clarity over both physical boundaries and jurisdiction.

TNC’s BFCP initiative, led by the Berau district government, was designed as a model to show how cooperation between local governments, NGOs, communities and businesses can lead to low-carbon development in forest areas despite those barriers.

“It is quite challenging to progress at pace most stakeholders would hope for,” admitted Mr Soekadis, adding that many issues were still unresolved, including less-than-desirable regulations, law enforcement and governance conditions.

But he is convinced Indonesia is making progress.

“There are indications that both local and national governments are gradually going in the right direction in term of improving their land management practices,” he said, referring to increased efforts to improve sustainability and transparency within the timber and palm oil industries.

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