Indonesia’s forestry department is allocating millions of hectares of land to a new scheme aimed at increasing the supply for wood for the pulp and timber industries, as well as tackling poverty. But serious flaws with the ‘peoples plantations’ programme are raising concerns that the scheme could do more harm than good.
Indonesia’s forestry department announced target figures for ‘Peoples Plantations’ (Hutan Tanaman Rakyat - HTR) in February this year. A total area of 5.4 million hectares in eight provinces in Sumatra and Kalimantan, consisting of ‘non-productive production forest’ has been identified for the scheme. Production forests are one of Indonesia’s three main forest classifications alongside protection/conservation and conversion forests. These have been severely depleted by destructive logging since the 1970s to the extent that Indonesia has been identified as the country with the highest rate of deforestation (see DTE 73:9, http://dte.gn.apc.org/73for.htm) At least 32 million hectares of ’state forest’ have no forest cover, including nearly 15 million ha zoned as production forest. It is not clear how the target area for HTR has been selected from this total.
The HTR programme will involve 360,000 families, each allocated 15 hectares to manage for a maximum of 100 years. Individuals can form co-operatives which are allowed to apply for a larger area. The target is to complete land allocation by 2010, at an average rate of 1.4 million hectares per year.
Three models of HTR have been devised: ‘independent’, ‘partnership’ and ‘developer’ models, which involve varying levels of private sector or state participation. In the ‘partnership’ model, the partners are to be ‘facilitated by the government’. In the ‘developer mode, the plantation is set up by a private or state-owned enterprise that later hands over the HTR to an individual which has requested a permit.
HTR licence-holders, which may be individuals or local people’s cooperatives, qualify for a loan worth Rp 8 million (around USD900) from the state Reforestation Fund, for land allocated by the forestry minister, assistance with applications, low interest rates, assistance with institutional strengthening from the local district head (Bupati) and for price protection when the timber is ready to harvest.
The total budget is Rp 43.2 trillion (USD4.8 billion), and the programme is scheduled to start this year.
A government regulation, passed in January 2007 (PP 6/2007) sets out further details of the scheme:
* Every five years the licences will be evaluated by the forestry minister;
* The licence for HTR (called IUPHHK) can only be issued once and cannot be extended, resold or bequeathed;
* IUPHHKs for HTR are issued by the forestry minister, but can be delegated to provincial governor;
* HTR licence holders are obliged to supply the wood industry and to plant at least 50% of their plantation area;
* They must prepare a long-term workplan within a year of receiving the licence, to be agreed with the district head or other indicated official;
* They must prepare annual workplans;
* They must submit periodic performance reports to the forestry minister.
The HTR programme is part of a wider effort aimed at developing plantations on 9 million hectares of land identified as non-productive by the government, thereby increasing the supply of raw materials and revitalising Indonesia’s forestry industry. The goal is to re-establish forestry as a major player in the national economy as well as reduce poverty by providing jobs, land and credit. Forestry sector revitalisation is, in turn, part of the government’s ‘RPPK’ (Revitalisation of Farming, Fisheries and Forestry) agenda announced in early 2006. It is also intended to create clearer tenure arrangements and therefore reduce land conflict (although within the existing paradigm of state land ownership).
Concerns
Destructive logging in Indonesia is a grave threat to the sustainability of local communities, biodiversity, and local and national economies. It also has global knock-on effects, as deforestation is a major contributor to global warming (see separate article, page 1). However, there are questions over whether HTR can be part of the solution and whether the dual goals of increasing wood supply and poverty reduction are compatible or contradictory. These questions include:
Whose land? The land targeted for HTR is allocated by the Department of Forestry on ‘land not subject to rights’ (lahan tidak dibebani hak) in locations close to timber processing units). According to forestry department data, such land covers 12.3 million hectares. The question immediately arises: which rights are included here? Past forestry policies and land classification regimes are well-known for their failure to include the customary rights over land and resources held by indigenous peoples (wilayah adat). Legal recognition of adat land remains very difficult under current national laws and, in forest areas, is almost without exception limited to access rights, rather than full ownership rights. Since HTR is targeted for forest areas controlled by the state, it must be assumed that adat rights will hardly enter into the picture. Moreover, since land allocation will be under the central control of the forestry minister, the potential for accommodating adat access or ownership rights which are recognised under local laws, is restricted. Yet it is likely that customary rights cover many of the very areas targeted by HTR. An indication of this is given in a new report published by the World Agroforestry Centre, which looked at one area in North Sumatra. The authors show that over half of areas indicated by the forestry department for HTR were classified by the national land agency (BPN) as ‘adat land’ (see box for more details of this report).
Who participates? Given the extremely weak legal status of indigenous land rights, the door appears to be open to the takeover of adat areas in the name of HTR. Participants of the various models include private and state-owned companies, and/or individuals and cooperatives. There appear to be no guarantees that local indigenous communities will be the ones to secure the HTR permits, if they choose to use the opportunity to gain a level of recognition over their adat areas. Or, if they choose not to, that there is any means of keeping adat land out of the scheme. The possibility of adat land being handed over for 100-year periods to individuals or cooperatives in partnership with companies, puts the HTR scheme on a similar level to other plantation development schemes, where indigenous communities have ended up marginalised, with loss of control over their customary land and resources.
World Agroforestry Center report
When announcing the HTR land allocation figures, the forestry department stated that ‘clarification of the actual conditions in the field’ would be done before implementing the programme. Strong evidence that this is indeed a necessity is presented in a new report by the World Agroforestry Center, Is Hutan Tanaman Rakyat a new paradigm in community based tree planting in Indonesia? The report’s authors compared maps prepared by the forestry ministry which indicated areas where HTR rules could be applied, with data from its geographic data system for one area in North Sumatra where it had conducted recent field work. The comparison found a large gap between the reality on the ground and what an HTR area is supposed to look like, according to government perceptions. For example, HTR is intended for ‘non-productive production forests’ but according to the report, only 29% of the area indicated for HTR is actually classified as production forest. Moreover, only 3% of the area does not currently have a productive tree cover, agricultural use, or is a settlement. A further dataset showed that 52% of the indicated area was classified as ‘adat’ land by the national land agency (BPN).
The authors conclude:
[t]his is only one ’sample’, where we had ‘ground truth’ data from recent fieldwork. But it is at least suggestive that the existing ‘indicative’ HTR maps are not a reliable and sufficient basis to develop policies.
The study also found that tree species suggested as suitable for the local soil and climate, had omitted three of the most favoured ‘peoples trees’ (durian, Kemenyan and Para Rubber). This points to the problem of what to prioritise: the interests of the wood industry or those of the farmers who will grow the trees. The two could well be incompatible.
Is Hutan Tanaman Rakyat a new paradigm in community based tree planting in Indonesia? by Meine van Noordwijk, S Suyanto, Suseno Budidarsono, Niken Sakuntaladewi, James M Roshetko, Hesti L Tata, Gamma Galudra and Chip Fay, ICRAF Working Paper 45, ICRAF Southeast Asia 2007, World Agroforestry Centre, is at:
http://www.worldagroforestrycentre.org/downloads/publications/PDFs/wp14965.pdf
What to plant? Regulation 6/2007 puts HTR participants under the obligation to supply the wood industry, but gives them the choice of planting monocultures or mixed species. While allowing for some freedom of decision-making - an improvement on some past schemes where participants were instructed to grow a single tree species - this still limits choice. The current plans will not allow traditional multi-species agroforestry plots with mixed crops of fruit, coffee and timber species. (A forestry department document on HTR points to 28 recommended species for Kalimantan and Sumatra, but, in one area at least, this has omitted some favourite local tree species - see box). How free will the farmers be not to follow the recommendations? Should increasing supply to the wood industry (rather than tackling overcapacity by closing mills and not building new ones) take precedence over farmer choice according to local markets for fruit, resins, construction wood and other products which may not be related to the wood industries?
What price? Regulation 6/2007 says that the forestry minister will fix the price of harvested timber. What are the guarantees that this will be fair and that participants will be able to repay credit, or that their profits are not eroded by corruption?
What is the priority? All the signs are that the main purpose of HTR is to increase timber production for the wood processing industry: rural livelihoods and forest conservation are very much secondary goals. Several questions arise here:
* How will control and profit-sharing be determined in community-company partnerships - for example between pulp producer Sinar Mas and its outgrowers?
* Where are the plans for capacity-building for individual or HTR permit holders? Unless they can deal with negotiating with local government, drawing up business plans, and getting technical assistance on growing and marketing, this scheme will simply turn participating ’small-holder’ communities into cheap labour for companies as has happened in the oil palm plantation sector.
* How will families (and their businesses) survive for the eight years or more that the trees will take to grow? Will they have to borrow money in addition to the loans from the Reforestation Fund for planting tree seedlings?
* What happens if the HTR holder dies? If the rights last for 100 years and are not transferable, the family could be left with debts while the licence reverts to the state.
* How are environmental and socio-economic development issues to be dealt with when district authorities do not have the capacity or experience to balance these needs? (Under PP6/07 the district head is expected to do this by ratifying the annual work plans for all the HTR plans within a district.)
* How will conflicts or opportunities for corruption be avoided where two groups apply for the same HTR plot?
* There is no indication of how HTR will fit in with climate control measures, including tree planting for carbon trading credits (see first article, this issue).
Further concerns have been raised about the forestry department’s legal right to allocate land (since so little land claimed by the department has actually been legalised as such); the potential for violating the principle of free, prior and informed consent of indigenous peoples whose areas are targeted, and the credit arrangements for participants. Experience from the past shows that top-down, centrally-planned and controlled, large-scale programmes often end in social and environmental disaster. The transmigration programme (which included a tree-crop element), the nucleus-estate / smallholder (PIR) plantation model and the attempt to convert a million hectares of Central Kalimantan peatland into ricefields are clear examples of such schemes. It remains to be seen how far the lessons from these hugely damaging and costly mega-projects have been learned.
(Sources: Forestry Department Press Release S 51/II/PIK-1/2007, 21/Feb/07 and S 525/II/PIK-1/2006, 3/Oct/06; Dirjen Bina Produksi Kehutanan Pembangunan Hutan Tanaman Rakyat (HTR) [no date]; Risalah Pertemuan Working Group Tenure (WG-T) dan Working Group Persiapan Percepatan Pembangunan Hutanan Tanaman Rakyat (WG-PPPHTR) 21 July 2006; Strategic Options for Forest Assistance in Indonesia, IBRD/the World Bank, Dec 2006. For further background on transmigration, PIR and the Central Kalimantan mega-project see for example DTE’s 2001 report on transmigration at http://dte.gn.apc.org/ctrans.htm)
NGOs reject HTR
A statement by a group of leading Indonesian environmental NGOs has criticised the World Bank’s role in pushing HTR to supply the wood-based industries, including pulp. The NGOs rejected the Bank’s new strategy for Indonesia’s forestry sector. “We reject the strategy of involving communities in restructuring the forestry industry under timber plantation or HTR models, because the concepts and models used will trap people in a cycle of dependency on large companies, while failing to address the problems of poverty.”
(CAPPA, Yayasan Hakiki, WALHI Kalsel, WALHI Eknas, Yayasan Setara: Tidak ada lagi hutang dan liberalisasi di sektor kehutanan, received 29/May/07)
Separate targets for Java
In October 2006 the forestry department made an announcement to counter rumours that it was about to reduce the area classified as forest in Java and divide it between communities. Instead, access (not ownership) is to be given to local communities in a target area of 1.8 million hectares of poorly-managed production forest. This is to be planted, cultivated and harvested with increased community participation, according to sustainable forestry practices. The status of these areas will remain state forest, under the management of the state-owned forestry company Perhutani.
Perhutani has an extremely poor record on relations with local communities, and on addressing conflicting claims over land and forest resources. The company has been accused of sanctioning the use of violence, torture and intimidation to try to suppress conflicts over land - see for example cases outlined in DTE 66:12, http://dte.gn.apc.org/66la2.htm and DTE 60:9, http://dte.gn.apc.org/60LET.htm.
New website on pulp
The NGO Urgewald has set up a new website: www.pulpmillwatch.org, to document the problems caused by the pulp industry’s operations around the world. The website will inform the public, financiers and decision makers about upcoming pulp projects and the problems associated with these projects.
Urgewald’s new report Banks, Pulp and People can be downloaded from the site.
Source: Cambridge Forecast
Kamis, 09 Oktober 2008
Climate change, ‘Avoided Deforestation’ and Indonesia
Mounting global concern over climate change and the link to deforestation has refocused international attention on the need to protect the world’s forests. Rampant forest and peatland destruction in Indonesia means that the country is one of the world’s top three emitters of carbon dioxide, a major contributor to global warming.
As countries prepare for negotiations on a post-Kyoto climate agreement, there is much interest in ‘Avoided Deforestation’ - international funding to protect forests and reduce carbon emissions. The World Bank is taking the lead. What are the implications for Indonesia, its forests and its forest-dependent peoples?
There is no question that deforestation in Indonesia is having a serious impact at international as well as at national and local levels. Destructive logging, out-of-control fires, forest clearance for plantations, mining, fossil fuel extraction, transmigration sites, aquaculture, and road-building have long been linked with negative social and economic impacts for local indigenous and forest-dependent communities, and enormous financial losses for communities and the state.
A new study has now highlighted the global picture, which shows Indonesia both as a major contributor to climate change, as well as highly vulnerable to its impacts. Forest destruction, peatland degradation and forest fires are mostly to blame for Indonesia’s ranking as third biggest emitter of greenhouse gases after the USA and China.
Based on data from 2000, Indonesia’s annual emissions from forestry and land use change are calculated at 2,563 megatonnes of carbon dioxide equivalent (MtCO2e), dwarfing the yearly amount from energy, agriculture and waste which amount to 451 MtCO2e. The total emissions - 3,014 MtCO2e compare with China’s total of 5,017 and the US’ of 6,005 MtCO2e.
The study, Indonesia and Climate Change: Current Status and Policies, was sponsored by the World Bank and the UK’s Department for International Development to inform the next world summit on climate change in December in Bali. Following on from a Wetlands International alert in November 2006 and Sir Nicholas Stern’s visit to Indonesia in March 2007 (see box, below), the report highlights the important role that peatland destruction plays in the total emission figures: on average, around 600 Mt of CO2e are released from the decomposition of dry peat each year, with a further 1,400 Mt released in peatland forests fires that may burn for months at a time.
The report, launched in May 2007, also points out that emissions from Indonesia’s energy sector are small, but growing very rapidly and that its emissions from agriculture and waste are small.
Predicted impacts
The report points to some of the impacts Indonesia can expect from climate change. They include:
* a modest temperature increase - since 1990, annual mean temperatures have increased by around 0.3 degrees Celsius during all seasons;
* more intense rainfall - 2-3% more rainfall annually is expected across the country, in shorter periods, increasing the risk of flooding significantly;
* threats to food security due to the effects of climate change on agriculture;
* sea level rises - these will inundate productive coastal zones, affecting farming and coastal livelihoods, including fish and shrimp farms, rice and maize production;
* warmer ocean water - affecting marine biodiversity and putting further pressure on already threatened coral reefs;
* intensification of water and vector-borne diseases - such as malaria and dengue fever.
The Stern Review
Ex-World Bank chief economist, Sir Nicholas Stern was commissioned by the UK government’s treasury to carry out a study on climate change in the run-up to the next UN climate change conference. The Stern Review on Climate Change, released in October 2006, drew international attention to climate change and the potential of forests to mitigate global warming. He proposed that ‘avoided deforestation’ measures should be part of any post-Kyoto climate agreement and that pilot schemes should start as soon as possible.
Sir Nicholas’ four-day visit to Indonesia in late March 2007 ensured that climate change was placed firmly on the Indonesian government’s political agenda. In addition to addressing President SBY and his cabinet and several commissions of Indonesia’s parliament, he had meetings with students and conservation organisations. He also visited Jambi - a province which has been badly affected by forest fires and large-scale oil palm plantations. Only one million ha of Jambi’s 5.3 million ha is still forested, according to conservation NGO Warsi.
A summary of the Stern Review is available at http://www.hm-treasury.gov.uk./independent_reviews/
stern_review_economics_climate_change/sternreview_summary.cfm
(Sources: http://www.britishembassy.gov.uk; Tempointeraktif 30/Jan/07)
Controversially, the report also states that Indonesia’s forestry policies and legislation are ‘good’, but that implementation and enforcement are weak. This conflicts with the view that forestry policies and legislation are in dire need of reform, to correct, among other things, the failure to recognise indigenous rights to forests and forest resources.
The report also highlights the link between deforestation and the demand for oil palm products (including European demand for oil palm as biofuel), the policy to expand coal production, and the failure to encourage the development of renewable energy sources.
Indonesia’s peat swamp forests and climate change
Indonesia’s 21 million hectares of peat swamps - 60% of the world’s total - are high on international policy makers’ agenda to reduce greenhouse gas emissions.
Peat swamps are 50-60% carbon which rapidly oxidises to release CO2 if exposed to the air. Around 9 million hectares of this endangered habitat have been destroyed in Indonesia due to over-logging, drainage and burning in order to set up pulpwood or oil palm plantations. A report commissioned by Wetlands International estimates that 2 billion tonnes of carbon are released each year from Indonesia’s peatlands.
WALHI claims that paper pulp giant APRIL destroyed 50,000 ha of swamp forest in the province of Riau in 2003-4 alone to establish fastwood plantations.
(Sources: Peatland Degradation Fuels Climate Change, Wetlands International, November 2006, see http://www.wetlands.org/publication.aspx?ID=d67b5c30-2b07-435c-9366-c20aa597839b;
www.walhi.or.id/kampanye/hutan/strukturisasi/join_10092004
Avoided deforestation - will it work?
What can be done to stop the peatland and forest destruction and reduce the greenhouse gas emissions that are driving climate change? ‘Avoided deforestation’ is one of the major initiatives to emerge over the past few years, but has received little critical attention from civil society until now.
A key tool for understanding avoided deforestation and its potential problems is a paper published in June this year by UK-based NGO Forest Peoples Programme, Seeing “RED”? “Avoided deforestation” and the rights of Indigenous Peoples and local communities. The following is extracted from this document, with some minor additions by DTE.
What is avoided deforestation?
The term ‘avoided deforestation’, as it is currently being used in development circles, refers to the prevention or reduction of forest loss in order to reduce emissions of global warming gases. Land use change, especially forest loss in the tropics, is believed to contribute between 18 and 20% of all annual emissions of carbon dioxide (CO2), so there is a growing international push to seek a reduction in deforestation as a means of combating climate change.
Some countries want avoided deforestation schemes to include restoration of degraded forest areas (so-called Reduced Emissions from Deforestation and Forest Degradation - REDD), not just protection of existing forests. Not surprisingly, Indonesia supports this option, which favours countries with large areas of severely damaged forests due to unsustainable industrial logging. Others want to restrict schemes to avoided deforestation only (RED), arguing that measuring degradation, and therefore assessing the benefit of restoration efforts, is too difficult.
How will it be carried out?
Proposals for avoided deforestation fall into two main groups:
* market-based approaches - linking schemes to reduce deforestation to a global carbon trading system. The Coalition for Rainforest Nations, most conservation NGOs and carbon finance businesses are pushing for schemes in which forested countries get carbon emission reduction credits for not cutting their forests. These credits can then be sold on the international carbon market to countries with carbon-emitting industries which need the credits to continue operating. This is ethically problematic as countries and companies can buy the rights to continue polluting the planet’s atmosphere.
* public funding approaches - using aid from rich countries to pay forest-rich countries in the South to reduce forest clearance. The aid is to be collected through voluntary contributions from industrialised countries or through taxes. Indonesia and Brazil favour this option. Whether the payments are annual or at other regular intervals and whether they are ‘up front’ or ‘on delivery’ is still a matter for negotiation.
Where is the money coming from?
The World Bank has become a lead player in proposals to finance schemes that seek to reduce emissions from deforestation. At the G8 meeting in Germany in June, it secured high-level political backing for a new ‘Forest Carbon Partnership Facility’ (FCPF) that will ‘test the feasibility’ of different approaches to funding RED/REDD. FSC (Forest Stewardship Council) certification is to play a key part in this.
The Bank promotes a mixed approach (market-based and public funding), but favours carbon trading. Bank economists stress that only markets will deliver enough funds to tackle climate change. They predict that carbon finance projects could grow to over US$1 bn by 2015. The Bank is scheduled to make final decisions on the US$250 scheme in September.
The Bank proposes that the FCPF will be part of a huge new donor and private sector funded Global Forest Alliance (GFA), announced at the 7th UN Forum on Forests in April. The Bank is already part of an initiative with WWF - also referred to as the Global Forest Alliance - to reduce deforestation and curb illegal logging. In Indonesia, the WWF/GFA has been working with timber companies to identify so-called High Conservation Value Forests and create market links to promote wood from well-managed forests. To add confusion, The Nature Conservancy and WWF also established a Forest Alliance in 2002 with several private sector enterprises including major timber retailers.
Countries who have committed funds to avoided deforestation schemes include Australia, which this July announced a US$160 million fund for both avoided deforestation and reforestation in the Asia-Pacific region.
The costs of avoided deforestation, as estimated by the World Bank are high: reducing the annual rate of deforestation in developing countries by 20% through avoided deforestation would cost US$2 - 20 billion a year. On the other hand, Bank experts reckon that US$100 bn could stop deforestation completely.
Who gets the money?
The Bank says that compensation payments for reducing deforestation could range from US$200 - 10,000 per hectare of forest for as long as it remains intact. Who actually would receive the money in the countries where the avoided deforestation is being carried out, is not clear in the proposed schemes. Most sources imply that payments will be nationally-based or directed at government agencies. Proposals by the Indonesian government suggest that funds could be distributed among protected area authorities, ‘certified’ logging companies engaged in sustainable forest management, initiatives to tackle illegal logging, payment for environmental services (PES) schemes, and community-based forest management.
Kyoto and Bali
The UN Framework Convention on Climate Change (UNFCCC) was one of the achievements of the 1992 Earth Summit in Rio. The Kyoto Protocol set the targets for industrialised countries to reduce greenhouse gas emissions and established the Clean Development Mechanism (CDM). This helps fund projects that reduce carbon emissions and established a carbon market for trading ‘Certified Emission Reduction’ credits. Indonesia signed the Kyoto Protocol in 1998 and ratified it in 2004.
Only afforestation or reforestation projects are eligible for CDM funding under the existing Kyoto Protocol, but not initiatives to stop damage to remaining forests, including swamp forests. Indonesia currently has no forest CDM projects. Indonesia’s Ministry of the Environment is currently taking the lead on the country’s policy on climate change.
Representatives of 189 countries are expected to gather for the 13th Conference of the Parties (COP) of the climate change convention in Bali in December. A report on ‘Reduced Emissions from Deforestation’ will be presented as the basis for discussions about climate change controls after the Kyoto Protocol ends in 2012. Finance ministers from around the world will also be meeting in Bali to agree the financial terms for making forest conservation profitable.
See http://unfccc.int/files/essential_background/kyoto_protocol/application/pdf/kpstats.pdf
Proposed scheme in Indonesia
There are very few existing avoided deforestation schemes in the world and most of these are pilot voluntary initiatives financed by conservation and development NGOs, which have not yet been critically assessed by social justice NGOs or grassroots organisations.
However, the international impetus to develop more schemes is growing. The World Bank is proposing FCPF pilot projects in Papua New Guinea, Costa Rica, Indonesia, Brazil and the Democratic Republic of Congo. The proposal is for these countries to limit carbon emissions from deforestation by 2009 or 2010 in return for US$250 million investment.
Viewed cynically, avoided deforestation projects could simply become a lucrative mechanism for Indonesia’s flagging forestry industry to attract more capital and expertise. On the other hand, REDD payments could make conservation more financially attractive than logging. Suddenly, keeping Indonesia’s forest cover intact has become an attractive policy option. Environment minister Witoelar enthusiastically told the press that “We are ready. We have a grand plan to identify and restore or conserve our forest areas. We have also prepared the financial side of the deal.”1
Avoided deforestation could attract massive funding. A targeted area of 1 million ha of mature pristine forest, with an average carbon stock of 600t CO2e per hectare, would produce 600 million tonnes of carbon credits. If the agreed price of 1 tonne of CO2e was US$5, this would generate US$3bn in compensation. Indonesia has over 18 million ha of protected forest according to official data. Gross revenues to the government from forest operations in 1997/8 only totalled US$1.1bn.2
Indonesia has another incentive in addition to the potential financial returns from REDD. The government would find it hard to negotiate increases in carbon emissions from industry and domestic sources linked to economic growth when its emissions due to land use change are so high.
Following Australia’s April announcement of its Asia-Pacific fund, the governors of Aceh, Papua and ‘Papua Barat’3 published a statement expressing interest in avoided deforestation scheme and suggested they might put a moratorium on industrial logging if avoided deforestation funds could be secured. (Aceh has done this - see logging moratorium article, below.)
What are the main concerns?
There are clear risks, but also potential benefits to be gained by indigenous peoples and forest-dependent communities under avoided deforestation mechanisms. Most existing proposals mention the need for community ‘participation’ and local benefits for forest communities. The Aceh and Papua governors pledged that the rights of indigenous peoples and local communities would be respected in any avoided deforestation programmes in their provinces. But, in current proposals, there are scant details as to how people’s rights will be respected and how equitable and sustainable local benefits might be ensured.
The many concerns about avoided deforestation schemes include the following:
* Top-down and unsustainable? Past experience shows that top-down schemes devised without the full knowledge and agreement of forest peoples and local communities will fail, and that top-down schemes may reinforce the unequal status quo on forest politics. Most avoided deforestation proposals currently stem from the World Bank, governments and large conservation NGOs.
* Anti-people conservation? The concern is that funds for forest protection will be spent on equipment for forest guards and sustain an outdated anti-people approach to forest protection, which excludes local people from forests and reinforces state and private sector control over forests.
* Rights, conflict and unequal terms: In countries (like Indonesia) where the state fails to adequately recognise indigenous peoples’ customary rights over forests, decision-making over zoning for avoided deforestation and how the income is shared could marginalise or exclude indigenous communities. There is a high risk of their right to Free Prior and Informed Consent being ignored. Even if communities are able to negotiate direct benefits under avoided deforestation schemes, there is no guarantee that the terms of negotiation will be equal. Avoided deforestation schemes may also generate conflicts between communities included in benefit-sharing schemes and those excluded from them.
* Corruption: There is a risk of corruption where large sums of money are involved. This could mean that little of the benefits - even where these are secured by local communities - will actually reach the targets, due to capture by state agencies, local government and conservation NGOs. Also, payments for avoided carbon emissions must ensure sustained forest protection rather than quick fixes in order to get an easy profit.
For any scheme to work, there must be good quality data to determine baseline levels of deforestation in target countries plus measures to increase capacity to monitor and control forest management. An agreement on reliable independent verification is an essential element.
In the rush to get started with avoided deforestation, the main players involved have not dealt in detail with these and other serious social and ethical concerns. At worst, some promoters of avoided deforestation schemes see questions of rights as a ’side issue’ or even a ‘distraction’ from the core task of saving the planet, even when past experience shows that these are fundamental to achieving sustainable development and securing effective measures to sustainably managed forests. Governments and international agencies rushing to establish avoided deforestation schemes must be reminded that states have a legal obligation to uphold human rights and fulfil international commitments under environmental treaties. Supporters of avoided deforestation may use standards developed by agencies involved in forestry and PES schemes to demonstrate that they are paying attention to social and rights issues. However, these standards are mostly voluntary and non-enforceable. Also, some are based on rewarding future good practice, while ignoring current unacceptable practice.
To address the gaps in the avoided deforestation policy debate, it seems essential that indigenous peoples and forest movements worldwide start serious internal dialogue on the pros and cons of REDD schemes run by governments and the World Bank. Action is needed to ensure:
* Indigenous peoples and forest movements are directly engaged in the current international and national debates on avoided deforestation/REDD;
* Human rights, FPIC, respect for customary land and resource rights, land tenure and security, equitable benefit sharing and good governance are made central in discussions on avoided deforestation policy;
* Guarantees are forthcoming that customary rights will be recognised and respected;
* International and national avoided deforestation policies adopt a rights-based approach to sustainable forest conservation and forest management;
* Guarantees are secured that indigenous peoples will retain and recover control over their forests and receive support for genuine community-based forest management;
* Dialogue with avoided deforestation supporters is undertaken in good faith and addresses both potential benefits and risks;
* Any processes to identify national and local drivers of deforestation in tropical countries and decisions on tackling these must involve forest peoples and forest-dependent communities;
* Any proposed standard setting and rules for avoided deforestation schemes fully involve potentially affected indigenous peoples and local communities and require full conformity with international law.
Notes:
1.
www.planetark.com, accessed 2/Jul/07
2. All figures from Indonesia’s SBSTA submission, 2007
3. This is the new name for ‘Irian Jaya Barat’ province, created under the policy imposed by the Jakarta government, widely opposed in Papua itself, to split Papua into three provinces.
Information sources
Indonesia and Climate Change: Current Status and Policies, PT Pelangi Energi Abadi Citra Enviro (PEACE), May 2007. Press release: http://go.worldbank.org/5BZ6ZJU9T0,
The full report (English) is at http://siteresources.worldbank.org/INTINDONESIA/Resources/Environment/ClimateChange_Full_EN.pdf and (Indonesian) at http://siteresources.worldbank.org/INTINDONESIAINBAHASA/Resources/Environment/ClimateChange_Full_BH.pdf. Summaries are also available on the World Bank site - see http://go.worldbank.org/TB2AM3H2I0
Seeing “RED”? “Avoided deforestation” and the rights of Indigenous Peoples and local communities by Tom Griffiths, Forest Peoples Programme, June 2007. http://www.forestpeoples.org/documents/ifi_igo/avoided_deforestation_red_jun07_eng.pdf
Government of Indonesia (2007) Reducing emissions from deforestation in developing countries (REDD)
Paper submitted to UNFCCC SBSTA by the Government of Indonesia
http://www.cifor.cgiar.org/NR/rdonlyres/4E81DB28-410F-4885-ACB6-6CA802603A32/0/indonesia.pdf
The United Nations Framework Convention on Climate Change will hold its next meeting (COP 13) in Bali on 3-14 December 2007. For further details see http://unfccc.int/meetings/cop_13/items/4049.php
March 2007 workshop on Avoided Deforestation at UNFCCC
http://unfccc.int/methods_and_science/lulucf/items/3918.php
The World Bank’s strategy for Indonesia’s forests, 2006-2009, is available in English and Bahasa Indonesia: see http://siteresources.worldbank.org/INTINDONESIA/Resources/Publication/280016-1152870963030/IDForestStrategy.pdf?resourceurlname=IDForestStrategy.pdf
A World Bank PowerPoint Presentation on the Global Forest Alliance (GFA) and Forest Carbon Partnership Facility (FCPF), May 2007, is available at www.fire.uni-freiburg.de/sevilla-2007/groups/Worldbank.pdf
For more information on climate change, forests and the carbon trade see Sinks Watch at http://www.sinkswatch.org/, Fern at www.fern.org, and The Corner House at www.thecornerhouse.org.uk
Source: Cambridge Forecast
As countries prepare for negotiations on a post-Kyoto climate agreement, there is much interest in ‘Avoided Deforestation’ - international funding to protect forests and reduce carbon emissions. The World Bank is taking the lead. What are the implications for Indonesia, its forests and its forest-dependent peoples?
There is no question that deforestation in Indonesia is having a serious impact at international as well as at national and local levels. Destructive logging, out-of-control fires, forest clearance for plantations, mining, fossil fuel extraction, transmigration sites, aquaculture, and road-building have long been linked with negative social and economic impacts for local indigenous and forest-dependent communities, and enormous financial losses for communities and the state.
A new study has now highlighted the global picture, which shows Indonesia both as a major contributor to climate change, as well as highly vulnerable to its impacts. Forest destruction, peatland degradation and forest fires are mostly to blame for Indonesia’s ranking as third biggest emitter of greenhouse gases after the USA and China.
Based on data from 2000, Indonesia’s annual emissions from forestry and land use change are calculated at 2,563 megatonnes of carbon dioxide equivalent (MtCO2e), dwarfing the yearly amount from energy, agriculture and waste which amount to 451 MtCO2e. The total emissions - 3,014 MtCO2e compare with China’s total of 5,017 and the US’ of 6,005 MtCO2e.
The study, Indonesia and Climate Change: Current Status and Policies, was sponsored by the World Bank and the UK’s Department for International Development to inform the next world summit on climate change in December in Bali. Following on from a Wetlands International alert in November 2006 and Sir Nicholas Stern’s visit to Indonesia in March 2007 (see box, below), the report highlights the important role that peatland destruction plays in the total emission figures: on average, around 600 Mt of CO2e are released from the decomposition of dry peat each year, with a further 1,400 Mt released in peatland forests fires that may burn for months at a time.
The report, launched in May 2007, also points out that emissions from Indonesia’s energy sector are small, but growing very rapidly and that its emissions from agriculture and waste are small.
Predicted impacts
The report points to some of the impacts Indonesia can expect from climate change. They include:
* a modest temperature increase - since 1990, annual mean temperatures have increased by around 0.3 degrees Celsius during all seasons;
* more intense rainfall - 2-3% more rainfall annually is expected across the country, in shorter periods, increasing the risk of flooding significantly;
* threats to food security due to the effects of climate change on agriculture;
* sea level rises - these will inundate productive coastal zones, affecting farming and coastal livelihoods, including fish and shrimp farms, rice and maize production;
* warmer ocean water - affecting marine biodiversity and putting further pressure on already threatened coral reefs;
* intensification of water and vector-borne diseases - such as malaria and dengue fever.
The Stern Review
Ex-World Bank chief economist, Sir Nicholas Stern was commissioned by the UK government’s treasury to carry out a study on climate change in the run-up to the next UN climate change conference. The Stern Review on Climate Change, released in October 2006, drew international attention to climate change and the potential of forests to mitigate global warming. He proposed that ‘avoided deforestation’ measures should be part of any post-Kyoto climate agreement and that pilot schemes should start as soon as possible.
Sir Nicholas’ four-day visit to Indonesia in late March 2007 ensured that climate change was placed firmly on the Indonesian government’s political agenda. In addition to addressing President SBY and his cabinet and several commissions of Indonesia’s parliament, he had meetings with students and conservation organisations. He also visited Jambi - a province which has been badly affected by forest fires and large-scale oil palm plantations. Only one million ha of Jambi’s 5.3 million ha is still forested, according to conservation NGO Warsi.
A summary of the Stern Review is available at http://www.hm-treasury.gov.uk./independent_reviews/
stern_review_economics_climate_change/sternreview_summary.cfm
(Sources: http://www.britishembassy.gov.uk; Tempointeraktif 30/Jan/07)
Controversially, the report also states that Indonesia’s forestry policies and legislation are ‘good’, but that implementation and enforcement are weak. This conflicts with the view that forestry policies and legislation are in dire need of reform, to correct, among other things, the failure to recognise indigenous rights to forests and forest resources.
The report also highlights the link between deforestation and the demand for oil palm products (including European demand for oil palm as biofuel), the policy to expand coal production, and the failure to encourage the development of renewable energy sources.
Indonesia’s peat swamp forests and climate change
Indonesia’s 21 million hectares of peat swamps - 60% of the world’s total - are high on international policy makers’ agenda to reduce greenhouse gas emissions.
Peat swamps are 50-60% carbon which rapidly oxidises to release CO2 if exposed to the air. Around 9 million hectares of this endangered habitat have been destroyed in Indonesia due to over-logging, drainage and burning in order to set up pulpwood or oil palm plantations. A report commissioned by Wetlands International estimates that 2 billion tonnes of carbon are released each year from Indonesia’s peatlands.
WALHI claims that paper pulp giant APRIL destroyed 50,000 ha of swamp forest in the province of Riau in 2003-4 alone to establish fastwood plantations.
(Sources: Peatland Degradation Fuels Climate Change, Wetlands International, November 2006, see http://www.wetlands.org/publication.aspx?ID=d67b5c30-2b07-435c-9366-c20aa597839b;
www.walhi.or.id/kampanye/hutan/strukturisasi/join_10092004
Avoided deforestation - will it work?
What can be done to stop the peatland and forest destruction and reduce the greenhouse gas emissions that are driving climate change? ‘Avoided deforestation’ is one of the major initiatives to emerge over the past few years, but has received little critical attention from civil society until now.
A key tool for understanding avoided deforestation and its potential problems is a paper published in June this year by UK-based NGO Forest Peoples Programme, Seeing “RED”? “Avoided deforestation” and the rights of Indigenous Peoples and local communities. The following is extracted from this document, with some minor additions by DTE.
What is avoided deforestation?
The term ‘avoided deforestation’, as it is currently being used in development circles, refers to the prevention or reduction of forest loss in order to reduce emissions of global warming gases. Land use change, especially forest loss in the tropics, is believed to contribute between 18 and 20% of all annual emissions of carbon dioxide (CO2), so there is a growing international push to seek a reduction in deforestation as a means of combating climate change.
Some countries want avoided deforestation schemes to include restoration of degraded forest areas (so-called Reduced Emissions from Deforestation and Forest Degradation - REDD), not just protection of existing forests. Not surprisingly, Indonesia supports this option, which favours countries with large areas of severely damaged forests due to unsustainable industrial logging. Others want to restrict schemes to avoided deforestation only (RED), arguing that measuring degradation, and therefore assessing the benefit of restoration efforts, is too difficult.
How will it be carried out?
Proposals for avoided deforestation fall into two main groups:
* market-based approaches - linking schemes to reduce deforestation to a global carbon trading system. The Coalition for Rainforest Nations, most conservation NGOs and carbon finance businesses are pushing for schemes in which forested countries get carbon emission reduction credits for not cutting their forests. These credits can then be sold on the international carbon market to countries with carbon-emitting industries which need the credits to continue operating. This is ethically problematic as countries and companies can buy the rights to continue polluting the planet’s atmosphere.
* public funding approaches - using aid from rich countries to pay forest-rich countries in the South to reduce forest clearance. The aid is to be collected through voluntary contributions from industrialised countries or through taxes. Indonesia and Brazil favour this option. Whether the payments are annual or at other regular intervals and whether they are ‘up front’ or ‘on delivery’ is still a matter for negotiation.
Where is the money coming from?
The World Bank has become a lead player in proposals to finance schemes that seek to reduce emissions from deforestation. At the G8 meeting in Germany in June, it secured high-level political backing for a new ‘Forest Carbon Partnership Facility’ (FCPF) that will ‘test the feasibility’ of different approaches to funding RED/REDD. FSC (Forest Stewardship Council) certification is to play a key part in this.
The Bank promotes a mixed approach (market-based and public funding), but favours carbon trading. Bank economists stress that only markets will deliver enough funds to tackle climate change. They predict that carbon finance projects could grow to over US$1 bn by 2015. The Bank is scheduled to make final decisions on the US$250 scheme in September.
The Bank proposes that the FCPF will be part of a huge new donor and private sector funded Global Forest Alliance (GFA), announced at the 7th UN Forum on Forests in April. The Bank is already part of an initiative with WWF - also referred to as the Global Forest Alliance - to reduce deforestation and curb illegal logging. In Indonesia, the WWF/GFA has been working with timber companies to identify so-called High Conservation Value Forests and create market links to promote wood from well-managed forests. To add confusion, The Nature Conservancy and WWF also established a Forest Alliance in 2002 with several private sector enterprises including major timber retailers.
Countries who have committed funds to avoided deforestation schemes include Australia, which this July announced a US$160 million fund for both avoided deforestation and reforestation in the Asia-Pacific region.
The costs of avoided deforestation, as estimated by the World Bank are high: reducing the annual rate of deforestation in developing countries by 20% through avoided deforestation would cost US$2 - 20 billion a year. On the other hand, Bank experts reckon that US$100 bn could stop deforestation completely.
Who gets the money?
The Bank says that compensation payments for reducing deforestation could range from US$200 - 10,000 per hectare of forest for as long as it remains intact. Who actually would receive the money in the countries where the avoided deforestation is being carried out, is not clear in the proposed schemes. Most sources imply that payments will be nationally-based or directed at government agencies. Proposals by the Indonesian government suggest that funds could be distributed among protected area authorities, ‘certified’ logging companies engaged in sustainable forest management, initiatives to tackle illegal logging, payment for environmental services (PES) schemes, and community-based forest management.
Kyoto and Bali
The UN Framework Convention on Climate Change (UNFCCC) was one of the achievements of the 1992 Earth Summit in Rio. The Kyoto Protocol set the targets for industrialised countries to reduce greenhouse gas emissions and established the Clean Development Mechanism (CDM). This helps fund projects that reduce carbon emissions and established a carbon market for trading ‘Certified Emission Reduction’ credits. Indonesia signed the Kyoto Protocol in 1998 and ratified it in 2004.
Only afforestation or reforestation projects are eligible for CDM funding under the existing Kyoto Protocol, but not initiatives to stop damage to remaining forests, including swamp forests. Indonesia currently has no forest CDM projects. Indonesia’s Ministry of the Environment is currently taking the lead on the country’s policy on climate change.
Representatives of 189 countries are expected to gather for the 13th Conference of the Parties (COP) of the climate change convention in Bali in December. A report on ‘Reduced Emissions from Deforestation’ will be presented as the basis for discussions about climate change controls after the Kyoto Protocol ends in 2012. Finance ministers from around the world will also be meeting in Bali to agree the financial terms for making forest conservation profitable.
See http://unfccc.int/files/essential_background/kyoto_protocol/application/pdf/kpstats.pdf
Proposed scheme in Indonesia
There are very few existing avoided deforestation schemes in the world and most of these are pilot voluntary initiatives financed by conservation and development NGOs, which have not yet been critically assessed by social justice NGOs or grassroots organisations.
However, the international impetus to develop more schemes is growing. The World Bank is proposing FCPF pilot projects in Papua New Guinea, Costa Rica, Indonesia, Brazil and the Democratic Republic of Congo. The proposal is for these countries to limit carbon emissions from deforestation by 2009 or 2010 in return for US$250 million investment.
Viewed cynically, avoided deforestation projects could simply become a lucrative mechanism for Indonesia’s flagging forestry industry to attract more capital and expertise. On the other hand, REDD payments could make conservation more financially attractive than logging. Suddenly, keeping Indonesia’s forest cover intact has become an attractive policy option. Environment minister Witoelar enthusiastically told the press that “We are ready. We have a grand plan to identify and restore or conserve our forest areas. We have also prepared the financial side of the deal.”1
Avoided deforestation could attract massive funding. A targeted area of 1 million ha of mature pristine forest, with an average carbon stock of 600t CO2e per hectare, would produce 600 million tonnes of carbon credits. If the agreed price of 1 tonne of CO2e was US$5, this would generate US$3bn in compensation. Indonesia has over 18 million ha of protected forest according to official data. Gross revenues to the government from forest operations in 1997/8 only totalled US$1.1bn.2
Indonesia has another incentive in addition to the potential financial returns from REDD. The government would find it hard to negotiate increases in carbon emissions from industry and domestic sources linked to economic growth when its emissions due to land use change are so high.
Following Australia’s April announcement of its Asia-Pacific fund, the governors of Aceh, Papua and ‘Papua Barat’3 published a statement expressing interest in avoided deforestation scheme and suggested they might put a moratorium on industrial logging if avoided deforestation funds could be secured. (Aceh has done this - see logging moratorium article, below.)
What are the main concerns?
There are clear risks, but also potential benefits to be gained by indigenous peoples and forest-dependent communities under avoided deforestation mechanisms. Most existing proposals mention the need for community ‘participation’ and local benefits for forest communities. The Aceh and Papua governors pledged that the rights of indigenous peoples and local communities would be respected in any avoided deforestation programmes in their provinces. But, in current proposals, there are scant details as to how people’s rights will be respected and how equitable and sustainable local benefits might be ensured.
The many concerns about avoided deforestation schemes include the following:
* Top-down and unsustainable? Past experience shows that top-down schemes devised without the full knowledge and agreement of forest peoples and local communities will fail, and that top-down schemes may reinforce the unequal status quo on forest politics. Most avoided deforestation proposals currently stem from the World Bank, governments and large conservation NGOs.
* Anti-people conservation? The concern is that funds for forest protection will be spent on equipment for forest guards and sustain an outdated anti-people approach to forest protection, which excludes local people from forests and reinforces state and private sector control over forests.
* Rights, conflict and unequal terms: In countries (like Indonesia) where the state fails to adequately recognise indigenous peoples’ customary rights over forests, decision-making over zoning for avoided deforestation and how the income is shared could marginalise or exclude indigenous communities. There is a high risk of their right to Free Prior and Informed Consent being ignored. Even if communities are able to negotiate direct benefits under avoided deforestation schemes, there is no guarantee that the terms of negotiation will be equal. Avoided deforestation schemes may also generate conflicts between communities included in benefit-sharing schemes and those excluded from them.
* Corruption: There is a risk of corruption where large sums of money are involved. This could mean that little of the benefits - even where these are secured by local communities - will actually reach the targets, due to capture by state agencies, local government and conservation NGOs. Also, payments for avoided carbon emissions must ensure sustained forest protection rather than quick fixes in order to get an easy profit.
For any scheme to work, there must be good quality data to determine baseline levels of deforestation in target countries plus measures to increase capacity to monitor and control forest management. An agreement on reliable independent verification is an essential element.
In the rush to get started with avoided deforestation, the main players involved have not dealt in detail with these and other serious social and ethical concerns. At worst, some promoters of avoided deforestation schemes see questions of rights as a ’side issue’ or even a ‘distraction’ from the core task of saving the planet, even when past experience shows that these are fundamental to achieving sustainable development and securing effective measures to sustainably managed forests. Governments and international agencies rushing to establish avoided deforestation schemes must be reminded that states have a legal obligation to uphold human rights and fulfil international commitments under environmental treaties. Supporters of avoided deforestation may use standards developed by agencies involved in forestry and PES schemes to demonstrate that they are paying attention to social and rights issues. However, these standards are mostly voluntary and non-enforceable. Also, some are based on rewarding future good practice, while ignoring current unacceptable practice.
To address the gaps in the avoided deforestation policy debate, it seems essential that indigenous peoples and forest movements worldwide start serious internal dialogue on the pros and cons of REDD schemes run by governments and the World Bank. Action is needed to ensure:
* Indigenous peoples and forest movements are directly engaged in the current international and national debates on avoided deforestation/REDD;
* Human rights, FPIC, respect for customary land and resource rights, land tenure and security, equitable benefit sharing and good governance are made central in discussions on avoided deforestation policy;
* Guarantees are forthcoming that customary rights will be recognised and respected;
* International and national avoided deforestation policies adopt a rights-based approach to sustainable forest conservation and forest management;
* Guarantees are secured that indigenous peoples will retain and recover control over their forests and receive support for genuine community-based forest management;
* Dialogue with avoided deforestation supporters is undertaken in good faith and addresses both potential benefits and risks;
* Any processes to identify national and local drivers of deforestation in tropical countries and decisions on tackling these must involve forest peoples and forest-dependent communities;
* Any proposed standard setting and rules for avoided deforestation schemes fully involve potentially affected indigenous peoples and local communities and require full conformity with international law.
Notes:
1.
www.planetark.com, accessed 2/Jul/07
2. All figures from Indonesia’s SBSTA submission, 2007
3. This is the new name for ‘Irian Jaya Barat’ province, created under the policy imposed by the Jakarta government, widely opposed in Papua itself, to split Papua into three provinces.
Information sources
Indonesia and Climate Change: Current Status and Policies, PT Pelangi Energi Abadi Citra Enviro (PEACE), May 2007. Press release: http://go.worldbank.org/5BZ6ZJU9T0,
The full report (English) is at http://siteresources.worldbank.org/INTINDONESIA/Resources/Environment/ClimateChange_Full_EN.pdf and (Indonesian) at http://siteresources.worldbank.org/INTINDONESIAINBAHASA/Resources/Environment/ClimateChange_Full_BH.pdf. Summaries are also available on the World Bank site - see http://go.worldbank.org/TB2AM3H2I0
Seeing “RED”? “Avoided deforestation” and the rights of Indigenous Peoples and local communities by Tom Griffiths, Forest Peoples Programme, June 2007. http://www.forestpeoples.org/documents/ifi_igo/avoided_deforestation_red_jun07_eng.pdf
Government of Indonesia (2007) Reducing emissions from deforestation in developing countries (REDD)
Paper submitted to UNFCCC SBSTA by the Government of Indonesia
http://www.cifor.cgiar.org/NR/rdonlyres/4E81DB28-410F-4885-ACB6-6CA802603A32/0/indonesia.pdf
The United Nations Framework Convention on Climate Change will hold its next meeting (COP 13) in Bali on 3-14 December 2007. For further details see http://unfccc.int/meetings/cop_13/items/4049.php
March 2007 workshop on Avoided Deforestation at UNFCCC
http://unfccc.int/methods_and_science/lulucf/items/3918.php
The World Bank’s strategy for Indonesia’s forests, 2006-2009, is available in English and Bahasa Indonesia: see http://siteresources.worldbank.org/INTINDONESIA/Resources/Publication/280016-1152870963030/IDForestStrategy.pdf?resourceurlname=IDForestStrategy.pdf
A World Bank PowerPoint Presentation on the Global Forest Alliance (GFA) and Forest Carbon Partnership Facility (FCPF), May 2007, is available at www.fire.uni-freiburg.de/sevilla-2007/groups/Worldbank.pdf
For more information on climate change, forests and the carbon trade see Sinks Watch at http://www.sinkswatch.org/, Fern at www.fern.org, and The Corner House at www.thecornerhouse.org.uk
Source: Cambridge Forecast
Indonesia risks losing rain forests
Deforestation across the world is still of grave concern to environmentalists.
They warn that rain forests in countries such as Indonesia and Brazil could disappear within 20 years.
Illegal logging is a particular problem in Indonesia, according to Marco Tacconi, an economist at the Centre for International Forestry Research.
He blamed illegal logging primarily not on poverty, but corruption.
It is estimated that two-thirds of all logging in Indonesia is illegal.
Mr Tacconi maintained that people who lived in the forests did not have the financial resources to carryout such an activity.
Laws flouted
There are laws against illegal logging but they have little impact.
While the government has introduced curbs on exports, these are believed to have had little effect because much of the timber illegally collected is used domestically.
Mr Tacconi has never heard of anyone being jailed following the prosecution of people caught transporting or exporting logs.
"Everybody knows that the law enforcement is very weak," he said.
The Indonesian government's senior economic policy adviser, Mahendra Singer, admitted the legal process to prosecute the illegal loggers needed to improve.
"I'm not trying to give an excuse," he told the BBC's World Business Report.
"We have to understand the experience as well as the constraints and limitations that the present legal system can do."
He admitted that the government was only just beginning to pass laws which deterred illegal logging.
Source: thewe.cc
They warn that rain forests in countries such as Indonesia and Brazil could disappear within 20 years.
Illegal logging is a particular problem in Indonesia, according to Marco Tacconi, an economist at the Centre for International Forestry Research.
He blamed illegal logging primarily not on poverty, but corruption.
It is estimated that two-thirds of all logging in Indonesia is illegal.
Mr Tacconi maintained that people who lived in the forests did not have the financial resources to carryout such an activity.
Laws flouted
There are laws against illegal logging but they have little impact.
While the government has introduced curbs on exports, these are believed to have had little effect because much of the timber illegally collected is used domestically.
Mr Tacconi has never heard of anyone being jailed following the prosecution of people caught transporting or exporting logs.
"Everybody knows that the law enforcement is very weak," he said.
The Indonesian government's senior economic policy adviser, Mahendra Singer, admitted the legal process to prosecute the illegal loggers needed to improve.
"I'm not trying to give an excuse," he told the BBC's World Business Report.
"We have to understand the experience as well as the constraints and limitations that the present legal system can do."
He admitted that the government was only just beginning to pass laws which deterred illegal logging.
Source: thewe.cc
IF A TREE FALLS IN A FOREST, WHO HAS THE EXPORT RIGHTS?
MARCH 10, 1999--IF A TREE FALLS IN A FOREST, WHO HAS THE EXPORT RIGHTS? INDONESIAN FORESTRY REGULATIONS, 1999
SUMMARY
1. The economic turmoil of 1997 and 1998 and the end of the Soeharto government have forced fundamental changes on Indonesia's forestry industry. Indonesia's 1997 IMF agreement mandated the termination of many restrictive practices that protected favored conglomerates and distribution networks. As Indonesia works toward a replacement forestry sector policy, a new theme has emerged: the transfer of forestry resources to communities, collectives, and small enterprises. As the old system is being challenged, two concerns have arisen about the new: first, will the insertion of collectives prove viable? and, second, are environmental considerations being sidelined? How Indonesia addresses both issues will have important consequences for the long-term viability of Indonesia's forests and the efficacy of reforms. End Summary.
CONGLOMERATES DOMINATE FORESTRY SECTOR
2. The Indonesian constitution stipulates that all natural resources in the country are owned by the state and the Indonesian government thus controls the allocation of all such resources. The government began awarding twenty-year concessions for forest exploitation (Hak Pengusahaan Hutan or HPH) in 1971, but no clear regulations on the bidding process were ever put forward decision-making lay with President Soeharto. A few conglomerates ended up with the majority of the permits. Official figures show that as of 1998, 34 business groups controlled 50 percent of legal concessions, totalling nearly 25 million hectares.
3. Besides holding rights to the majority of timber concessions, conglomerates controlled the industry through vertical integration. For example, sawmills and other processors were obliged to sign a contract with a forest concession guaranteeing log purchases in order to receive operating licenses. The conglomerates also owned the roads and transshipment facilities required to get the sawn timber to factories and charged independent producers high fees for their use. The result was many smaller operators were squeezed out and the concessions ran most of the processing.
BAN ON EXPORTS THE KEY POLICY
4. The policy keystone of the New Order forestry policy was the ban on log exports, introduced in 1980 through Ministry of Forestry Decree No. 317/1980 but not put in
force until 1985. Up to that time, the industry had mostly involved the cutting and export of logs and timber. The ban aimed to create an integrated wood processing industry that would capture more value-added for domestic companies, create jobs, and ensure sound resource management. In May 1992, in order to comply with GATT regulations, the ban was revoked (Ministry of Finance Decree No. 534/1992) and replaced by a prohibitive export tax of between US$500 and $4,800 per cubic meter depending on the type of wood. Similar tariffs were applied to the export of sawn timber and other semi-finished products as well.
5. Exports of raw rattan were formally banned in 1979 and in 1982 minimally processed rattan was subjected to a 20 percent export tariff as well, but neither policy was fully enforced until 1986. As with logs and timber, these policies were designed to cultivate and protect a domestic downstream industry. In October 1986, Ministry of Industry and Trade Decree SK 274/1986 divided rattan products into three basic categories: raw, semi-processed, and finished. More products were categorized as raw and thus subject to the export ban. Semi-processed rattan was made subject to a 30 percent export tax that was replaced with a total export ban in 1989. Only products defined as finished were free of export restrictions. This policy remained until 1992, when these restrictions were lifted in favor of an export tax of $10-15 per kilogram for semi-finished and raw rattan, respectively.
CONCESSIONS SUBJECT TO LEVIES, PERFORMANCE REVIEWS
6. Concession holders were required to pay numerous levies as part of their agreements. These included a levy on forest products (Iuran Hasil Hutan, or IHH, based on the value of what they extracted from the concessions), reforestation fees, and other taxes. The fees were intended to finance replanting, forest maintenance, and government oversight. Additionally, performance of the concessions could be reviewed by the government at any time during the lease period. Firms whose productivity or adherence to environmental standards were judged to be too low could be fined, have their production quotas cut, or lose their concessions. Government statistics show that between 1988 and 1998, fines totalled tens of billions of rupiah and 86 concession holders had permits revoked.
INDUSTRY ASSOCIATIONS CONTROL THE MARKET
7. As part of the overall plan to control exports, the wood products industry was organized into industry organizations and marketing boards. Market access and exports were controlled by the boards, which allocated market share. Policy decisions were made by industry associations and approved by the relevant ministries. Membership in these organizations was mandatory and members were required to pay annual fees to finance the marketing boards' expenses and promotion efforts. All of the associations were controlled by Bob Hasan, a Soeharto business partner and owner of one of the largest forestry conglomerates. Hasan, who was an architect of the export-oriented system, through control of these organizations and ties to Soeharto, was for years the most powerful man in the industry.
POLICIES SUCCESSFUL, BUT AT A COST
8. The system did achieve its goal of reducing (legal) exports of unfinished wood and rattan to near zero and capturing more of the industry's value-added through the nurturing of downstream industries. While these policies assured the domestic woodworking industry a steady supply of cheap raw materials and encouraged the development of downstream industries, there were externalities. Sawn timber production generated higher value-added and more employment than plywood, but was marginalized by the export bans. Inefficient but favored companies with deep pockets and political influence ran their operations with little or no regulatory oversight. Trees were harvested as quickly and cheaply as possible with few environmental safeguards. Illegal logging flourished with the complicity of local officials. Additionally, Java, where the large companies have their headquarters and the furniture and rattan factories are concentrated, benefitted disproportionally at the expense of the outer provinces who produced the raw materials but lost much of the downstream processing.
THE IMF AGREEMENT STRIKES THE FIRST BLOW: THE END OF THE EXPORT TAXES
9. Under its 1997-2000 economic reform program supported by the IMF, Indonesia committed to change its forestry sector regime. A key provision called for phasing out the export tariffs on logs, sawn timber, and rattan. The export tax was reduced to 30 percent in an April 1998 Finance Ministry decree and was scheduled to go down to 20 percent as of December 31, 1998. However, the change has not yet taken place. Sources say the Ministry of Forestry has approved in principle and it is now up to the Ministry of Industry and Trade to approve the changes. The 20 percent rate is currently scheduled to go into effect in March. According to the schedule agreed to with the IMF, the export tax rates are slated to be reduced again to 15 percent by the end of 1999 and to 10 percent by the end of 2000.
OTHER EXPORTS RESTRICTIONS ALSO ELIMINATED
10. Although the export tax reduction scheduled for December 1998 remains in limbo, other export restrictions on forest products, including logs, timber, and rattan, have been officially eliminated. Minister of Forestry and Plantations Decree 510/1998, enacted in July, allows for the export of logs with a minimum diameter of 30 cm for most types of wood. Combined with the lifting of the export tax, this is expected to open new markets for the concession holders.
11. Industry representatives, both from downstream users and concessionaires, worry about a shortage of logs for the domestic industry. The government has said that, despite reduced demand for plywood and other finished products from Indonesia's Asian trading partners, processors are facing a shortage of logs. The Ministry of Forestry estimates that domestic processors' capacity is 57 million cubic meters of wood, but the country's supply last year was less than 46 million cubic meters.
12. Exports do not seem to be the problem, however. The distribution network for logs is underdeveloped and the Asian market is sluggish. Indonesia's reported log exports are small, 114,000 cubic meters for January and February 1999, and the government projects only 860,000 cubic meters in exports for the entire year. Rather, the Ministry of Forestry attributes the shortage of available timber to lower domestic production of timber resulting from bad weather and too many processing firms chasing too few resources. The result is sawmills are currently operating at less than 50 percent of capacity.
A NEW FOREST RESOURCES LEVY
13. A "Forest Resources Royalty" (PSDH) officially replaced the old levy system (IHH) in April 1998. The changes were enacted through Presidential Decree 67/1998, Government Decree 51/1998, and Decree of the Minister of Industry and Trade 258/1998, which set the royalty reference prices. Under the new system, the concession holders are responsible for paying a royalty on every log harvested. The royalty, which will be calculated every 3 to 6 months, is set at 1 to 6 percent of the international market prices for the logs. Logs with diameters in excess of 30 cm, tropical woods such as teak, ebony, and sandalwood, and large-diameter rattan are subject to the 6 percent rate. Pine, acacia, balsa and other woods from industrial forests will be assessed a 5 percent levy. The royalty on logs not otherwise specified with diameters less than 30 cm will be 1 percent of their value.
14. As of December 31, 1998, rights holders were to be required to put up performance bonds based on the assessed value of the concession to ensure they pay the new resources royalty. This new requirement has been delayed while the Ministry of Forestry drafts the implementing regulations. The hope is that requiring payment for each log cut, and holding a bond to guarantee the payment, will remove the economic incentive to maximize extraction and encourage sustainability and better resource allocation. Adherence by the concessions is to be verified though independent inspections.
MISUSE OF FORESTRY FEES UNDER INVESTIGATION
15. While tens of billions of rupiah were collected from concession holders for reforestation, much of the money is unaccounted for. The questionable use of these fees put them at the top of anti-corruption activists' list of irregularities to be investigated. In the most recent example, the Minister of Forests and Plantations, Muslimin Nasution, announced the withdrawal of two presidential decrees that granted reforestation funds valued at 250 billion rupiah ($33 million) to a paper company and a bank. As part of Indonesia's reform program agreed with the IMF, foreign auditors will examine the use of the reforestation funds and are scheduled to finish their work this June.
PLYWOOD MARKETING ORGANIZATION DECLAWED
16. Another major change is the removal of restrictive marketing arrangements for many forest products. Most notably, the privileges enjoyed by APKINDO, the plywood association, were removed by decrees of the Ministry of Industry and Trade. APKINDO, formerly the most powerful of the industry organizations, still exists, but under new leadership as a voluntary industry association with no formal powers. Its new functions include collecting industry statistics, representing producers in discussions with the government, and serving as a forum for marketing the industry abroad.
17. Plywood producers have been hurt by decreasing exports to other Asian nations, their largest customers, as a result of the current economic crisis. Recent reports on timber exports show that Indonesian plywood production fell by 37 percent from 1996 to 1997 and fell again, slightly, in 1998. Despite its difficulties, the industry still employs nearly half a million people and plywood accounts for around half of the value of Indonesia's forestry exports. Once the crisis abates, industry representatives expect demand from long-time Asian customers to recover quickly. Meanwhile they are seeking new markets for their exports.
RATTAN SLIPS IN IMPORTANCE
18. Producers of finished rattan are organized into a marketing group, known as ASMINDO, originally under the direction of Bob Hasan. It, too, has new leadership and has changed its role to one of traditional industry promotion and public relations.
19. Rattan, though, has other difficulties. Through the 1970's and early 1980's, Indonesia was the world's largest exporter of raw and semi-finished rattan, with approximately 80 percent of the world market. Rattan is grown largely in Sulawesi and Kalimantan by small, locally-based producers. Rattan plantations, the largest of which encompass fewer than 1000 hectares, are secondary producers. As plywood and other forest products became more important, traditional rattan growing areas were cleared for more valuable crops, including palm oil and timber. (In one notorious example that went on for years, the government planned to strip one million hectares of rattan-producing land in Central Kalimantan to set up a rice plantation on land that was universally assessed to be unsuitable for rice production. The transformation was recently halted after technical and financial problems arose.) Almost immediately after the export ban was implemented the Indonesian rattan industry saw its world market share decline as countries such as the Philippines filled the demand for raw and semi-processed rattan, much of which was smuggled in from Indonesia.
20. Today the Indonesian rattan industry, while still viable and responsible for a large percentage of the world's production of rattan furniture, is far less significant that it was twenty years ago. This is due to increased competition, lower prices on the world market, and higher value segments of the Indonesian wood-products industry which have taken resources away from rattan production.
NEW LIMITS ON SIZE OF FOREST CONCESSIONS
21. Along with the ending of export restrictions, other new regulations indicate that government support is swinging away from conglomerates. Such a transition would represent a seachange for the industry. One key regulation, published first in Decree of the Minister of Forestry and Plantations (SK Menhutbun) No. 728 of 1998 and then again in the new forestry regulation, Presidential Decree (PP) No. 6/1999, limits the size of forest concessions controlled by a single individual or conglomerate. The new restrictions, which are retroactive, limit permit-holders to 100,000 hectares in a given province, except for Irian Jaya where the maximum is 200,000, and to a total of 400,000 hectares across Indonesia. This decree could affect the fifteen largest forestry groups who control multiple concessions totalling over 500,000 hectares.
DOWNSTREAM USERS NOT TIED TO CONCESSION HOLDERS
22. Another regulation affecting the conglomerates addresses the access of downstream manufacturers to raw materials. In the past, the concession holders controlled much of the industry, from the plantations through sawing and export. Minister of Forests and Plantations Decree No. 620/1998, "The Form of Ownership and Interrelation of HPH and IPKH" replaced No. 684/1993, which mandated that processors have agreements with concessions in order to operate. Sawmills and factory owners are supportive of this new regulation, which will allow them to negotiate freely for raw materials in search of the best deal. The delinking of the sawmills and the concessions was one of the prerequisites for the disbursement of a World Bank loan.
OPEN BIDDING ON CONCESSIONS?
23. The new presidential decree, PP 6/1999, also opens concessions to competitive bidding. This decree begins the process of establishing new procedures for bidding on forestry concessions, including provision for opening bids to public tenders for the first time. This represents the first time forestry concessions have been truly open to multiple bidders and was a key criterion of the World Bank loan.
24. The government has indicated the first auction of concessions will take place in March 1999. The exact format of the auctions is still awaiting implementing regulations, but the Ministry of Forests and Plantations has outlined some of the proposed procedures. These include the bidders' demonstrating financial soundness, having expertise in forestry, and providing bank guarantees for their reforestation deposits. The government is using a scoring system to pick the winners that would favor companies with local employees in management positions.
QUESTIONS SURROUND THE NEW REGULATIONS
25. The new system is largely untested and uncertainties thus abound. Industry sources say there are potential problems with the new forest levy/performance bond system. They and independent sources claim that data collection in Indonesia is not good enough to calculate the value of a concession ahead of time and thus the tax burden and the size of the bond, which is linked to the concession's value, will be unknown until after a concession is auctioned. They also pointed out that tax collection, frequently negotiable in Indonesia, is based on net profits, which are often difficult for government officials to assess.
26. The government's commitment to opening up exports is also limited. Besides its tardiness in approving the scheduled reduction in the export tax, the Ministry of Industry and Trade has authorized the Ministry of Forestry and Plantations to set a national export limit on some forest products. These limits are designed to ensure a domestic supply of raw materials and protect national resources. Moreover, only concession rights holders are permitted to export.
27. There are also doubts related to the regulation freeing the downstream manufacturers from the concession holders. Experts in Indonesian forestry policy point out that the wording of the decree is vague and it is not clear what enforcement mechanisms the government will use to ensure the sawmills' independence from the HPH holders. Moreover, the sawmills are often geographically isolated, thus tied to the concessions they were built on or near. Roads linking them to different concessions, which would be necessary to bring in logs from outside, are limited and in poor condition. Given the vagaries of the law and simple logistics, it is difficult to guarantee downstream users and concession holders can be liberated by decree.
28. The new system also does little to address illegal logging, either in the form of overcutting by legal concession holders or extraction from protected areas by independent operators. The best estimates are that amount of timber illegally extracted is equal to the amount legally harvested. With little accurate data as to the actual makeup of a given concession, monitors will be hard-pressed to evaluate if a concession has been illegally logged. Moreover, if local officials are influenced to ignore the practice, the capture and prosecution of illegal loggers will continue to be almost impossible.
29. Reactions to the directive limiting conglomerate size have been mixed. The local press reports the chairman of the Association of Indonesian Forest Concessionaires as saying the move would allow common people to benefit from the resources and to reduce resentment toward the HPH holders. In an opposing view, the chairman of APKINDO was quoted as saying the wood-processing industry would suffer from a lack of logs as the concessions will no longer be industries of scale.
A representative of the Indonesian Sawmill and Woodworking Association said it is not concession size, but rather government restrictions on the amount that can be cut from each concession that determines the supply for downstream industries.
30. All the industry sources agree the process for breaking up the large holdings is unclear and questions abound. Who will decide what portion of the concessions will be taken away from the current rights holders? How will they make the decision? Will the current concession holders be allowed to maintain the rights to the land until their permits expire? These and other key details are yet to be worked out, leaving the industry in state of uncertainty.
COOPERATIVES TO FILL THE VOID
31. One new policy has been made eminently clear. To end the domination of the forestry industry by conglomerates, the government has stipulated that forestry resources be redistributed to local cooperatives. This is part of a broader movement promoting a "people's economy." With forestry products one of the largest industries in Indonesia, and the first natural-resource industry to be targeted, such policies may be indicative of how future reforms will proceed.
32. The most sweeping of the new cooperative-oriented regulations in the forestry industry was issued November 10, 1998 by Minister of Forestry, SK Menhutbun 732. Under this regulation, concession holders must give between 10 and 20 percent of their shares to cooperatives. Additionally, each year of the concession permit's validity the cooperatives will have the option of buying another 1 percent stake. With a 35-year lease on the land, this would give a cooperative the opportunity to control up to 55 percent of a concession. The cooperatives are not to utilize the shares by working the land independently, but rather to take a role in management and receive a percentage of the company's profits. The implementing regulations, with the specifics of how the redistribution will occur and the obligations of the parties, have not yet been issued.
NEW PROGRAM FOR COMMUNITY MANAGEMENT
33. Another recent pro-cooperative policy was the creation in October 1998 of a new type of forestry permit, the "Rights for Exploitation of Community Based Forests" (HPHKM) (SK Menhutbun NO. 677/1998). Under this regulation, a community, working through a local cooperative, may submit an application to the Provincial Office of the Ministry of Forestry and Plantations for exploitation rights of State forest areas "around their dwelling place(s)". The rights, once granted, are good for thirty-five years.
IS THE CO-OP MODEL VIABLE?
34. Reactions toward the shift in policy are mixed. Some observers of the industry say, if implemented properly, these policies could represent a real change in terms of local communities benefitting from natural resources in their area. A representative of the sawmill industry said his companies will not actively oppose this change because they have no choice in the matter; this is simply the direction in which things are headed and it must be dealt with. He was hopeful that acceptable agreements could be reached with the cooperatives.
35. In contrast, a representative of the concession holders was more resistant to the plan, pointing out that it would be difficult for investors to justify bidding on a concession in which they might eventually lose their majority stakes. This could lead to low auction values, reducing income to the Indonesian government. Likewise, some have questioned how cooperatives would get the funds to pay for such investments and what their actual role in management would be. Observers have pointed to the cooperatives' lack of a proven management track record and deficit in technical expertise. Others have raised questions about the cooperatives' independence, expressing concerns that they will function as holding companies for concessionaires seeking to skirt the 400,000 hectare limit. Despite such concerns, the government has emphasized its support for the cooperative model.
EFFECTIVE ENVIRONMENTAL MANAGEMENT STILL LACKING
36. With all the reforms that are taking place, the Indonesian government has taken little action recently to address environmental and sustainability concerns. The UN Intergovernmental Panel on Forests (IPF), which completed a report on Indonesia's forests and forestry industry in April 1998, concluded that there was a low level of professional management, a lack of awareness of sustainability, and in many cases short-term cash flow concerns that took priority over sustainability.
37. A separate study commissioned by the Indonesian National Development Planning Board (Bappenas) that was completed in October 1998 came to much the same conclusion. The study, entitled "Natural Resource Impacts of Indonesia's Financial Crisis", noted that official log extraction increased by about 10 percent in FY 97/98 to approximately 29 million cubic meters, whereas the level of sustainability was estimated at 22 million cubic meters. Unofficial estimates (i.e., numbers that include illegal cutting) put the real rate of log extraction at nearly double the government and industry figures.
EXPANDING PULP AND PAPER INDUSTRY ADDS TO CONCERNS
38. Lower cutting rates are nowhere in sight, either. Whereas plywood production may be down, log extraction for pulp and paper, a resource-intense industry, has doubled since 1994/95. Current industry projections indicate the pulp and paper industry may earn nearly 45 percent of all export earnings for the wood and wood products industry for 1998. The most recent expansion of the pulp supply took place in November of 1998, when the Ministry of Forestry and Plantations issued permits for the opening of 13 special industrial timber estates (HTI), covering 3.3 million hectares, exclusively for pulp production. There are additional concerns that non-industrial forests may be getting cut for pulp production, a trend that could further accelerate deforestation.
NEED FOR ADHERENCE TO ENVIRONMENTAL STANDARDS
39. Until recently the forest products industry was able to disregard calls for tighter environmental controls. Decreased demand from Asian customers has made the EU, North America, and Australia/New Zealand, where environmental awareness is high, relatively more important. The Indonesian government has taken some steps that begin to address environmental concerns and producers are now making moves toward modern environmental management.
CONCESSION LENGTH EXTENDED TO 35 YEARS
40. As part of the new forestry regulation (PP No.6/ 1999), the validity of concession rights was extended to 20 years plus 35 years for reforestation, for a total length of 55 years. Under the previous, flat 20-year system, the concession holders had no incentive to participate in reforestation schemes or limit log extraction, since there was no guarantee they would still have the concession when newly planted trees matured. It is hoped that 35-year rights will provide concessionaires an economic incentive to maintain the viability of their holdings.
DECENTRALIZATION AS AN ENVIRONMENTAL SAFEGUARD?
41. Another approach to environmental management may come under the guise of regional autonomy, an emerging trend in post-Soeharto Indonesia. Government regulation (PP) No. 62/1998 moves toward decentralizing administrative control of some forestry resources. This regulation authorizes the provincial and district (sub-provincial) governments to assume specific responsibilities from the central government. These new duties include land and air conservation, forestry protection, responsibility for some forest reserves, and management of non-wood forest crops. The hope is that, given their proximity to the communities that rely on the forests, provincial and district officials could prove more sensitive to environmental issues. NGO representatives stress the key issue will be accountability of the provincial governments. Without this, mismanagement could simply pass down to the provincial level.
ADHERENCE TO INTERNATIONAL STANDARDS
42. Adherence to internationally recognized environmental standards is an area Indonesia has started to address. Many countries now have ecolabeling requirements for forestry products and Indonesian producers risk losing market share, or even boycotts, if they do not move toward greater environmental protection. Industry sources have said they intend to be in compliance with the International Tropical Timber Organization guidelines on sustainability, signed in 1994, which commit Indonesia to meet specific standards by the year 2000. Additionally, there is an idea within the industry of creating an Indonesian environmental certification stringent enough to avoid environmentally-based sanctions or prohibitions on exports.
43. Local environmental sources worry that the economic crisis will reduce the chances of implementing stringent environmental controls. The weak market means the industry seeks to minimize costs while maximizing production, the government does not have the resources to pay for enforcement, and cooperatives do not have the necessary environmental expertise. Introducing and enforcing strict environmental standards is a process that could take years.
Source: us embassy
SUMMARY
1. The economic turmoil of 1997 and 1998 and the end of the Soeharto government have forced fundamental changes on Indonesia's forestry industry. Indonesia's 1997 IMF agreement mandated the termination of many restrictive practices that protected favored conglomerates and distribution networks. As Indonesia works toward a replacement forestry sector policy, a new theme has emerged: the transfer of forestry resources to communities, collectives, and small enterprises. As the old system is being challenged, two concerns have arisen about the new: first, will the insertion of collectives prove viable? and, second, are environmental considerations being sidelined? How Indonesia addresses both issues will have important consequences for the long-term viability of Indonesia's forests and the efficacy of reforms. End Summary.
CONGLOMERATES DOMINATE FORESTRY SECTOR
2. The Indonesian constitution stipulates that all natural resources in the country are owned by the state and the Indonesian government thus controls the allocation of all such resources. The government began awarding twenty-year concessions for forest exploitation (Hak Pengusahaan Hutan or HPH) in 1971, but no clear regulations on the bidding process were ever put forward decision-making lay with President Soeharto. A few conglomerates ended up with the majority of the permits. Official figures show that as of 1998, 34 business groups controlled 50 percent of legal concessions, totalling nearly 25 million hectares.
3. Besides holding rights to the majority of timber concessions, conglomerates controlled the industry through vertical integration. For example, sawmills and other processors were obliged to sign a contract with a forest concession guaranteeing log purchases in order to receive operating licenses. The conglomerates also owned the roads and transshipment facilities required to get the sawn timber to factories and charged independent producers high fees for their use. The result was many smaller operators were squeezed out and the concessions ran most of the processing.
BAN ON EXPORTS THE KEY POLICY
4. The policy keystone of the New Order forestry policy was the ban on log exports, introduced in 1980 through Ministry of Forestry Decree No. 317/1980 but not put in
force until 1985. Up to that time, the industry had mostly involved the cutting and export of logs and timber. The ban aimed to create an integrated wood processing industry that would capture more value-added for domestic companies, create jobs, and ensure sound resource management. In May 1992, in order to comply with GATT regulations, the ban was revoked (Ministry of Finance Decree No. 534/1992) and replaced by a prohibitive export tax of between US$500 and $4,800 per cubic meter depending on the type of wood. Similar tariffs were applied to the export of sawn timber and other semi-finished products as well.
5. Exports of raw rattan were formally banned in 1979 and in 1982 minimally processed rattan was subjected to a 20 percent export tariff as well, but neither policy was fully enforced until 1986. As with logs and timber, these policies were designed to cultivate and protect a domestic downstream industry. In October 1986, Ministry of Industry and Trade Decree SK 274/1986 divided rattan products into three basic categories: raw, semi-processed, and finished. More products were categorized as raw and thus subject to the export ban. Semi-processed rattan was made subject to a 30 percent export tax that was replaced with a total export ban in 1989. Only products defined as finished were free of export restrictions. This policy remained until 1992, when these restrictions were lifted in favor of an export tax of $10-15 per kilogram for semi-finished and raw rattan, respectively.
CONCESSIONS SUBJECT TO LEVIES, PERFORMANCE REVIEWS
6. Concession holders were required to pay numerous levies as part of their agreements. These included a levy on forest products (Iuran Hasil Hutan, or IHH, based on the value of what they extracted from the concessions), reforestation fees, and other taxes. The fees were intended to finance replanting, forest maintenance, and government oversight. Additionally, performance of the concessions could be reviewed by the government at any time during the lease period. Firms whose productivity or adherence to environmental standards were judged to be too low could be fined, have their production quotas cut, or lose their concessions. Government statistics show that between 1988 and 1998, fines totalled tens of billions of rupiah and 86 concession holders had permits revoked.
INDUSTRY ASSOCIATIONS CONTROL THE MARKET
7. As part of the overall plan to control exports, the wood products industry was organized into industry organizations and marketing boards. Market access and exports were controlled by the boards, which allocated market share. Policy decisions were made by industry associations and approved by the relevant ministries. Membership in these organizations was mandatory and members were required to pay annual fees to finance the marketing boards' expenses and promotion efforts. All of the associations were controlled by Bob Hasan, a Soeharto business partner and owner of one of the largest forestry conglomerates. Hasan, who was an architect of the export-oriented system, through control of these organizations and ties to Soeharto, was for years the most powerful man in the industry.
POLICIES SUCCESSFUL, BUT AT A COST
8. The system did achieve its goal of reducing (legal) exports of unfinished wood and rattan to near zero and capturing more of the industry's value-added through the nurturing of downstream industries. While these policies assured the domestic woodworking industry a steady supply of cheap raw materials and encouraged the development of downstream industries, there were externalities. Sawn timber production generated higher value-added and more employment than plywood, but was marginalized by the export bans. Inefficient but favored companies with deep pockets and political influence ran their operations with little or no regulatory oversight. Trees were harvested as quickly and cheaply as possible with few environmental safeguards. Illegal logging flourished with the complicity of local officials. Additionally, Java, where the large companies have their headquarters and the furniture and rattan factories are concentrated, benefitted disproportionally at the expense of the outer provinces who produced the raw materials but lost much of the downstream processing.
THE IMF AGREEMENT STRIKES THE FIRST BLOW: THE END OF THE EXPORT TAXES
9. Under its 1997-2000 economic reform program supported by the IMF, Indonesia committed to change its forestry sector regime. A key provision called for phasing out the export tariffs on logs, sawn timber, and rattan. The export tax was reduced to 30 percent in an April 1998 Finance Ministry decree and was scheduled to go down to 20 percent as of December 31, 1998. However, the change has not yet taken place. Sources say the Ministry of Forestry has approved in principle and it is now up to the Ministry of Industry and Trade to approve the changes. The 20 percent rate is currently scheduled to go into effect in March. According to the schedule agreed to with the IMF, the export tax rates are slated to be reduced again to 15 percent by the end of 1999 and to 10 percent by the end of 2000.
OTHER EXPORTS RESTRICTIONS ALSO ELIMINATED
10. Although the export tax reduction scheduled for December 1998 remains in limbo, other export restrictions on forest products, including logs, timber, and rattan, have been officially eliminated. Minister of Forestry and Plantations Decree 510/1998, enacted in July, allows for the export of logs with a minimum diameter of 30 cm for most types of wood. Combined with the lifting of the export tax, this is expected to open new markets for the concession holders.
11. Industry representatives, both from downstream users and concessionaires, worry about a shortage of logs for the domestic industry. The government has said that, despite reduced demand for plywood and other finished products from Indonesia's Asian trading partners, processors are facing a shortage of logs. The Ministry of Forestry estimates that domestic processors' capacity is 57 million cubic meters of wood, but the country's supply last year was less than 46 million cubic meters.
12. Exports do not seem to be the problem, however. The distribution network for logs is underdeveloped and the Asian market is sluggish. Indonesia's reported log exports are small, 114,000 cubic meters for January and February 1999, and the government projects only 860,000 cubic meters in exports for the entire year. Rather, the Ministry of Forestry attributes the shortage of available timber to lower domestic production of timber resulting from bad weather and too many processing firms chasing too few resources. The result is sawmills are currently operating at less than 50 percent of capacity.
A NEW FOREST RESOURCES LEVY
13. A "Forest Resources Royalty" (PSDH) officially replaced the old levy system (IHH) in April 1998. The changes were enacted through Presidential Decree 67/1998, Government Decree 51/1998, and Decree of the Minister of Industry and Trade 258/1998, which set the royalty reference prices. Under the new system, the concession holders are responsible for paying a royalty on every log harvested. The royalty, which will be calculated every 3 to 6 months, is set at 1 to 6 percent of the international market prices for the logs. Logs with diameters in excess of 30 cm, tropical woods such as teak, ebony, and sandalwood, and large-diameter rattan are subject to the 6 percent rate. Pine, acacia, balsa and other woods from industrial forests will be assessed a 5 percent levy. The royalty on logs not otherwise specified with diameters less than 30 cm will be 1 percent of their value.
14. As of December 31, 1998, rights holders were to be required to put up performance bonds based on the assessed value of the concession to ensure they pay the new resources royalty. This new requirement has been delayed while the Ministry of Forestry drafts the implementing regulations. The hope is that requiring payment for each log cut, and holding a bond to guarantee the payment, will remove the economic incentive to maximize extraction and encourage sustainability and better resource allocation. Adherence by the concessions is to be verified though independent inspections.
MISUSE OF FORESTRY FEES UNDER INVESTIGATION
15. While tens of billions of rupiah were collected from concession holders for reforestation, much of the money is unaccounted for. The questionable use of these fees put them at the top of anti-corruption activists' list of irregularities to be investigated. In the most recent example, the Minister of Forests and Plantations, Muslimin Nasution, announced the withdrawal of two presidential decrees that granted reforestation funds valued at 250 billion rupiah ($33 million) to a paper company and a bank. As part of Indonesia's reform program agreed with the IMF, foreign auditors will examine the use of the reforestation funds and are scheduled to finish their work this June.
PLYWOOD MARKETING ORGANIZATION DECLAWED
16. Another major change is the removal of restrictive marketing arrangements for many forest products. Most notably, the privileges enjoyed by APKINDO, the plywood association, were removed by decrees of the Ministry of Industry and Trade. APKINDO, formerly the most powerful of the industry organizations, still exists, but under new leadership as a voluntary industry association with no formal powers. Its new functions include collecting industry statistics, representing producers in discussions with the government, and serving as a forum for marketing the industry abroad.
17. Plywood producers have been hurt by decreasing exports to other Asian nations, their largest customers, as a result of the current economic crisis. Recent reports on timber exports show that Indonesian plywood production fell by 37 percent from 1996 to 1997 and fell again, slightly, in 1998. Despite its difficulties, the industry still employs nearly half a million people and plywood accounts for around half of the value of Indonesia's forestry exports. Once the crisis abates, industry representatives expect demand from long-time Asian customers to recover quickly. Meanwhile they are seeking new markets for their exports.
RATTAN SLIPS IN IMPORTANCE
18. Producers of finished rattan are organized into a marketing group, known as ASMINDO, originally under the direction of Bob Hasan. It, too, has new leadership and has changed its role to one of traditional industry promotion and public relations.
19. Rattan, though, has other difficulties. Through the 1970's and early 1980's, Indonesia was the world's largest exporter of raw and semi-finished rattan, with approximately 80 percent of the world market. Rattan is grown largely in Sulawesi and Kalimantan by small, locally-based producers. Rattan plantations, the largest of which encompass fewer than 1000 hectares, are secondary producers. As plywood and other forest products became more important, traditional rattan growing areas were cleared for more valuable crops, including palm oil and timber. (In one notorious example that went on for years, the government planned to strip one million hectares of rattan-producing land in Central Kalimantan to set up a rice plantation on land that was universally assessed to be unsuitable for rice production. The transformation was recently halted after technical and financial problems arose.) Almost immediately after the export ban was implemented the Indonesian rattan industry saw its world market share decline as countries such as the Philippines filled the demand for raw and semi-processed rattan, much of which was smuggled in from Indonesia.
20. Today the Indonesian rattan industry, while still viable and responsible for a large percentage of the world's production of rattan furniture, is far less significant that it was twenty years ago. This is due to increased competition, lower prices on the world market, and higher value segments of the Indonesian wood-products industry which have taken resources away from rattan production.
NEW LIMITS ON SIZE OF FOREST CONCESSIONS
21. Along with the ending of export restrictions, other new regulations indicate that government support is swinging away from conglomerates. Such a transition would represent a seachange for the industry. One key regulation, published first in Decree of the Minister of Forestry and Plantations (SK Menhutbun) No. 728 of 1998 and then again in the new forestry regulation, Presidential Decree (PP) No. 6/1999, limits the size of forest concessions controlled by a single individual or conglomerate. The new restrictions, which are retroactive, limit permit-holders to 100,000 hectares in a given province, except for Irian Jaya where the maximum is 200,000, and to a total of 400,000 hectares across Indonesia. This decree could affect the fifteen largest forestry groups who control multiple concessions totalling over 500,000 hectares.
DOWNSTREAM USERS NOT TIED TO CONCESSION HOLDERS
22. Another regulation affecting the conglomerates addresses the access of downstream manufacturers to raw materials. In the past, the concession holders controlled much of the industry, from the plantations through sawing and export. Minister of Forests and Plantations Decree No. 620/1998, "The Form of Ownership and Interrelation of HPH and IPKH" replaced No. 684/1993, which mandated that processors have agreements with concessions in order to operate. Sawmills and factory owners are supportive of this new regulation, which will allow them to negotiate freely for raw materials in search of the best deal. The delinking of the sawmills and the concessions was one of the prerequisites for the disbursement of a World Bank loan.
OPEN BIDDING ON CONCESSIONS?
23. The new presidential decree, PP 6/1999, also opens concessions to competitive bidding. This decree begins the process of establishing new procedures for bidding on forestry concessions, including provision for opening bids to public tenders for the first time. This represents the first time forestry concessions have been truly open to multiple bidders and was a key criterion of the World Bank loan.
24. The government has indicated the first auction of concessions will take place in March 1999. The exact format of the auctions is still awaiting implementing regulations, but the Ministry of Forests and Plantations has outlined some of the proposed procedures. These include the bidders' demonstrating financial soundness, having expertise in forestry, and providing bank guarantees for their reforestation deposits. The government is using a scoring system to pick the winners that would favor companies with local employees in management positions.
QUESTIONS SURROUND THE NEW REGULATIONS
25. The new system is largely untested and uncertainties thus abound. Industry sources say there are potential problems with the new forest levy/performance bond system. They and independent sources claim that data collection in Indonesia is not good enough to calculate the value of a concession ahead of time and thus the tax burden and the size of the bond, which is linked to the concession's value, will be unknown until after a concession is auctioned. They also pointed out that tax collection, frequently negotiable in Indonesia, is based on net profits, which are often difficult for government officials to assess.
26. The government's commitment to opening up exports is also limited. Besides its tardiness in approving the scheduled reduction in the export tax, the Ministry of Industry and Trade has authorized the Ministry of Forestry and Plantations to set a national export limit on some forest products. These limits are designed to ensure a domestic supply of raw materials and protect national resources. Moreover, only concession rights holders are permitted to export.
27. There are also doubts related to the regulation freeing the downstream manufacturers from the concession holders. Experts in Indonesian forestry policy point out that the wording of the decree is vague and it is not clear what enforcement mechanisms the government will use to ensure the sawmills' independence from the HPH holders. Moreover, the sawmills are often geographically isolated, thus tied to the concessions they were built on or near. Roads linking them to different concessions, which would be necessary to bring in logs from outside, are limited and in poor condition. Given the vagaries of the law and simple logistics, it is difficult to guarantee downstream users and concession holders can be liberated by decree.
28. The new system also does little to address illegal logging, either in the form of overcutting by legal concession holders or extraction from protected areas by independent operators. The best estimates are that amount of timber illegally extracted is equal to the amount legally harvested. With little accurate data as to the actual makeup of a given concession, monitors will be hard-pressed to evaluate if a concession has been illegally logged. Moreover, if local officials are influenced to ignore the practice, the capture and prosecution of illegal loggers will continue to be almost impossible.
29. Reactions to the directive limiting conglomerate size have been mixed. The local press reports the chairman of the Association of Indonesian Forest Concessionaires as saying the move would allow common people to benefit from the resources and to reduce resentment toward the HPH holders. In an opposing view, the chairman of APKINDO was quoted as saying the wood-processing industry would suffer from a lack of logs as the concessions will no longer be industries of scale.
A representative of the Indonesian Sawmill and Woodworking Association said it is not concession size, but rather government restrictions on the amount that can be cut from each concession that determines the supply for downstream industries.
30. All the industry sources agree the process for breaking up the large holdings is unclear and questions abound. Who will decide what portion of the concessions will be taken away from the current rights holders? How will they make the decision? Will the current concession holders be allowed to maintain the rights to the land until their permits expire? These and other key details are yet to be worked out, leaving the industry in state of uncertainty.
COOPERATIVES TO FILL THE VOID
31. One new policy has been made eminently clear. To end the domination of the forestry industry by conglomerates, the government has stipulated that forestry resources be redistributed to local cooperatives. This is part of a broader movement promoting a "people's economy." With forestry products one of the largest industries in Indonesia, and the first natural-resource industry to be targeted, such policies may be indicative of how future reforms will proceed.
32. The most sweeping of the new cooperative-oriented regulations in the forestry industry was issued November 10, 1998 by Minister of Forestry, SK Menhutbun 732. Under this regulation, concession holders must give between 10 and 20 percent of their shares to cooperatives. Additionally, each year of the concession permit's validity the cooperatives will have the option of buying another 1 percent stake. With a 35-year lease on the land, this would give a cooperative the opportunity to control up to 55 percent of a concession. The cooperatives are not to utilize the shares by working the land independently, but rather to take a role in management and receive a percentage of the company's profits. The implementing regulations, with the specifics of how the redistribution will occur and the obligations of the parties, have not yet been issued.
NEW PROGRAM FOR COMMUNITY MANAGEMENT
33. Another recent pro-cooperative policy was the creation in October 1998 of a new type of forestry permit, the "Rights for Exploitation of Community Based Forests" (HPHKM) (SK Menhutbun NO. 677/1998). Under this regulation, a community, working through a local cooperative, may submit an application to the Provincial Office of the Ministry of Forestry and Plantations for exploitation rights of State forest areas "around their dwelling place(s)". The rights, once granted, are good for thirty-five years.
IS THE CO-OP MODEL VIABLE?
34. Reactions toward the shift in policy are mixed. Some observers of the industry say, if implemented properly, these policies could represent a real change in terms of local communities benefitting from natural resources in their area. A representative of the sawmill industry said his companies will not actively oppose this change because they have no choice in the matter; this is simply the direction in which things are headed and it must be dealt with. He was hopeful that acceptable agreements could be reached with the cooperatives.
35. In contrast, a representative of the concession holders was more resistant to the plan, pointing out that it would be difficult for investors to justify bidding on a concession in which they might eventually lose their majority stakes. This could lead to low auction values, reducing income to the Indonesian government. Likewise, some have questioned how cooperatives would get the funds to pay for such investments and what their actual role in management would be. Observers have pointed to the cooperatives' lack of a proven management track record and deficit in technical expertise. Others have raised questions about the cooperatives' independence, expressing concerns that they will function as holding companies for concessionaires seeking to skirt the 400,000 hectare limit. Despite such concerns, the government has emphasized its support for the cooperative model.
EFFECTIVE ENVIRONMENTAL MANAGEMENT STILL LACKING
36. With all the reforms that are taking place, the Indonesian government has taken little action recently to address environmental and sustainability concerns. The UN Intergovernmental Panel on Forests (IPF), which completed a report on Indonesia's forests and forestry industry in April 1998, concluded that there was a low level of professional management, a lack of awareness of sustainability, and in many cases short-term cash flow concerns that took priority over sustainability.
37. A separate study commissioned by the Indonesian National Development Planning Board (Bappenas) that was completed in October 1998 came to much the same conclusion. The study, entitled "Natural Resource Impacts of Indonesia's Financial Crisis", noted that official log extraction increased by about 10 percent in FY 97/98 to approximately 29 million cubic meters, whereas the level of sustainability was estimated at 22 million cubic meters. Unofficial estimates (i.e., numbers that include illegal cutting) put the real rate of log extraction at nearly double the government and industry figures.
EXPANDING PULP AND PAPER INDUSTRY ADDS TO CONCERNS
38. Lower cutting rates are nowhere in sight, either. Whereas plywood production may be down, log extraction for pulp and paper, a resource-intense industry, has doubled since 1994/95. Current industry projections indicate the pulp and paper industry may earn nearly 45 percent of all export earnings for the wood and wood products industry for 1998. The most recent expansion of the pulp supply took place in November of 1998, when the Ministry of Forestry and Plantations issued permits for the opening of 13 special industrial timber estates (HTI), covering 3.3 million hectares, exclusively for pulp production. There are additional concerns that non-industrial forests may be getting cut for pulp production, a trend that could further accelerate deforestation.
NEED FOR ADHERENCE TO ENVIRONMENTAL STANDARDS
39. Until recently the forest products industry was able to disregard calls for tighter environmental controls. Decreased demand from Asian customers has made the EU, North America, and Australia/New Zealand, where environmental awareness is high, relatively more important. The Indonesian government has taken some steps that begin to address environmental concerns and producers are now making moves toward modern environmental management.
CONCESSION LENGTH EXTENDED TO 35 YEARS
40. As part of the new forestry regulation (PP No.6/ 1999), the validity of concession rights was extended to 20 years plus 35 years for reforestation, for a total length of 55 years. Under the previous, flat 20-year system, the concession holders had no incentive to participate in reforestation schemes or limit log extraction, since there was no guarantee they would still have the concession when newly planted trees matured. It is hoped that 35-year rights will provide concessionaires an economic incentive to maintain the viability of their holdings.
DECENTRALIZATION AS AN ENVIRONMENTAL SAFEGUARD?
41. Another approach to environmental management may come under the guise of regional autonomy, an emerging trend in post-Soeharto Indonesia. Government regulation (PP) No. 62/1998 moves toward decentralizing administrative control of some forestry resources. This regulation authorizes the provincial and district (sub-provincial) governments to assume specific responsibilities from the central government. These new duties include land and air conservation, forestry protection, responsibility for some forest reserves, and management of non-wood forest crops. The hope is that, given their proximity to the communities that rely on the forests, provincial and district officials could prove more sensitive to environmental issues. NGO representatives stress the key issue will be accountability of the provincial governments. Without this, mismanagement could simply pass down to the provincial level.
ADHERENCE TO INTERNATIONAL STANDARDS
42. Adherence to internationally recognized environmental standards is an area Indonesia has started to address. Many countries now have ecolabeling requirements for forestry products and Indonesian producers risk losing market share, or even boycotts, if they do not move toward greater environmental protection. Industry sources have said they intend to be in compliance with the International Tropical Timber Organization guidelines on sustainability, signed in 1994, which commit Indonesia to meet specific standards by the year 2000. Additionally, there is an idea within the industry of creating an Indonesian environmental certification stringent enough to avoid environmentally-based sanctions or prohibitions on exports.
43. Local environmental sources worry that the economic crisis will reduce the chances of implementing stringent environmental controls. The weak market means the industry seeks to minimize costs while maximizing production, the government does not have the resources to pay for enforcement, and cooperatives do not have the necessary environmental expertise. Introducing and enforcing strict environmental standards is a process that could take years.
Source: us embassy
Clock ticking for Indonesian rainforest
By Richard Galpin
BBC correspondent in Jakarta
The Indonesian island of Sumatra is the sixth largest island in the world and once boasted some of the most extensive and richest areas of tropical rainforest anywhere on the planet — but no longer.
It is estimated 60% of the total forest cover has been destroyed over the past 100 years, with the rate of destruction increasing rapidly in the 1970s and 80s under the authoritarian regime of former President Suharto.
His government was particularly keen on dividing up vast areas of the country's forests into concessions given to powerful businessmen to log and convert into rubber and palm-oil plantations.
This along with the resettlement of millions of people from over-crowded Java to islands such as Sumatra and Borneo, all of whom needed land to farm, saw deforestation reach unprecedented levels.
Today it is estimated around two million hectares (five million acres) of Indonesian forest are lost every year — an area equivalent to the size of Belgium. And the majority of the logging is believed to be illegal.
Race against time
In Sumatra environmentalists are now fighting a desperate battle to save the last substantial part of the lowland forest still standing.
The forest in Riau province is called Tesso Nilo and organisations such as the Worldwide Fund for Nature (WWF) believe it is critical it is turned into a special conservation area.
"This lowland forest is the prime habitat of the Sumatran tiger, elephants and other important species," said Nazir Foead of WWF Indonesia.
"If Tesso Nilo forest goes, then the chances of survival for these endangered species will be very, very slim."
Unparalleled diversity
On top of this, recent research commissioned by WWF discovered that Tesso Nilo has the highest level of biodiversity on earth.
Scientists found more than 200 vascular plant species in just 200 square metres of forest — far more even than in the Amazon.
But time is fast running out for the world's richest forest which presently occupies an area of just 1,500 square kilometres (579 square miles).
If the current rate of logging continues, it will have disappeared within the next four years.
Driving into the area it is easy to see why. A major road has been built through the forest making it easy to access the timber.
Every few minutes lorries laden with logs groan along the road belching diesel fumes into the atmosphere.
"Every day up to 350 lorries have been travelling along this road," said one WWF official who has been monitoring the logging here.
"I believe 100 of them contain illegal logs from Tesso Nilo."
Easy money
We drove further into the forest and soon could hear the sound of chainsaws in the distance.
The illegal loggers are a mixture of local villagers and gangs of people who have come from further afield, generally from other provinces in Sumatra.
What they have in common is poverty. The case of Kamarudin, a local villager, is typical. We followed him as he slashed his way deep into the forest, with his chainsaw balanced on his shoulder.
It did not take him long to find what he wanted — a large tropical hardwood tree called Meranti. The tree, which took decades to grow, came crashing to the ground within a couple of minutes.
"Chopping down trees like this hardwood Meranti, I can earn $60 a week," he said. "Much more than the rubber plantation where I used to work where the money wasn't enough to feed my family."
Local anger
We went back to Kamarudin's village in the middle of the forest — a desperately poor area.
More and more villagers have been turning to illegal logging over the last five years since the Asian economic crisis hit Indonesia.
According to the village head, Mohammed Hatta, it will not be long before more than half the families here are involved in chopping down wood.
Mr Hatta is actively encouraging this because he believes his people have the right to do so, as he says the land is theirs.
Such a direct challenge to the authorities would have been unthinkable under the repressive regime of former President Suharto. But since the advent of democracy in 1998 local communities have been asserting themselves much more.
Mr Hatta is angry that over the years the government has given the rights to the whole of Tesso Nilo forest to several logging and plantation companies.
"I will not ask my people to stop the logging," he said, "I will tell them to carry on, as long as these companies are getting our wood, then why should we stop?"
Massive operation
The scale of the main forestry industries in the area is breath-taking. We visited the Riau Andalan Pulp and Paper company (RAPP) on the outskirts of the forest, one of two such businesses based in the province.
It is a huge, hi-tech industrial complex housing the world's largest pulp mill. It produces almost two million tons of pulp every year, consuming eight million tons of wood in the process.
It is a non-stop operation. The mill operates 24-hours a day, with a never-ending convoy of trucks arriving at the factory to supply the wood.
Back in 1993 the government gave RAAP a concession of around 3,000 sq km which it could log and then re-plant with acacia trees.
Part of this concession lies within the Tesso Nilo forest itself.
No guarantees
A spokesman for the company told the BBC the forest it was given to convert to acacia plantations was already degraded — in other words had already been substantially logged.
But WWF says this is wrong, "RAPP is chopping down primary rain-forest," said Mr Foead.
The company is trying to promote itself as environment-friendly because it says within six years it will have planted enough acacia trees to provide a sustainable source of wood for the pulp mill.
Ironically it can only do this by first destroying swathes of Sumatran rain-forest.
Environmentalists also believe illegal logs from Tesso Nilo are being sold to RAPP. The capacity of the mill is so huge that around one-fifth of the wood supply is provided by outside contractors.
The company says there are stringent checks on the sources of logs provided by these contractors, but admits it cannot guarantee all the wood is legal.
WWF remains optimistic it can save Tesso Nilo from the loggers by persuading the government to turn it into a national park. But it will be an uphill struggle.
Indonesia's Forestry Minister Mohammad Prakosa told the BBC he could not simply revoke the licences given to the companies which had been given the right to log the area.
And even if Tesso Nilo did become a national park, it would still not be safe from the illegal loggers.
The experience in Indonesia's other national parks has been that illegal logging has continued unabated as law enforcement across the country is so weak, not least because the police and other officials are notoriously corrupt.
http://www.thewe.cc/weplanet/news/forests/clock_ticking_for_indonesian_rainforest.htm
BBC correspondent in Jakarta
The Indonesian island of Sumatra is the sixth largest island in the world and once boasted some of the most extensive and richest areas of tropical rainforest anywhere on the planet — but no longer.
It is estimated 60% of the total forest cover has been destroyed over the past 100 years, with the rate of destruction increasing rapidly in the 1970s and 80s under the authoritarian regime of former President Suharto.
His government was particularly keen on dividing up vast areas of the country's forests into concessions given to powerful businessmen to log and convert into rubber and palm-oil plantations.
This along with the resettlement of millions of people from over-crowded Java to islands such as Sumatra and Borneo, all of whom needed land to farm, saw deforestation reach unprecedented levels.
Today it is estimated around two million hectares (five million acres) of Indonesian forest are lost every year — an area equivalent to the size of Belgium. And the majority of the logging is believed to be illegal.
Race against time
In Sumatra environmentalists are now fighting a desperate battle to save the last substantial part of the lowland forest still standing.
The forest in Riau province is called Tesso Nilo and organisations such as the Worldwide Fund for Nature (WWF) believe it is critical it is turned into a special conservation area.
"This lowland forest is the prime habitat of the Sumatran tiger, elephants and other important species," said Nazir Foead of WWF Indonesia.
"If Tesso Nilo forest goes, then the chances of survival for these endangered species will be very, very slim."
Unparalleled diversity
On top of this, recent research commissioned by WWF discovered that Tesso Nilo has the highest level of biodiversity on earth.
Scientists found more than 200 vascular plant species in just 200 square metres of forest — far more even than in the Amazon.
But time is fast running out for the world's richest forest which presently occupies an area of just 1,500 square kilometres (579 square miles).
If the current rate of logging continues, it will have disappeared within the next four years.
Driving into the area it is easy to see why. A major road has been built through the forest making it easy to access the timber.
Every few minutes lorries laden with logs groan along the road belching diesel fumes into the atmosphere.
"Every day up to 350 lorries have been travelling along this road," said one WWF official who has been monitoring the logging here.
"I believe 100 of them contain illegal logs from Tesso Nilo."
Easy money
We drove further into the forest and soon could hear the sound of chainsaws in the distance.
The illegal loggers are a mixture of local villagers and gangs of people who have come from further afield, generally from other provinces in Sumatra.
What they have in common is poverty. The case of Kamarudin, a local villager, is typical. We followed him as he slashed his way deep into the forest, with his chainsaw balanced on his shoulder.
It did not take him long to find what he wanted — a large tropical hardwood tree called Meranti. The tree, which took decades to grow, came crashing to the ground within a couple of minutes.
"Chopping down trees like this hardwood Meranti, I can earn $60 a week," he said. "Much more than the rubber plantation where I used to work where the money wasn't enough to feed my family."
Local anger
We went back to Kamarudin's village in the middle of the forest — a desperately poor area.
More and more villagers have been turning to illegal logging over the last five years since the Asian economic crisis hit Indonesia.
According to the village head, Mohammed Hatta, it will not be long before more than half the families here are involved in chopping down wood.
Mr Hatta is actively encouraging this because he believes his people have the right to do so, as he says the land is theirs.
Such a direct challenge to the authorities would have been unthinkable under the repressive regime of former President Suharto. But since the advent of democracy in 1998 local communities have been asserting themselves much more.
Mr Hatta is angry that over the years the government has given the rights to the whole of Tesso Nilo forest to several logging and plantation companies.
"I will not ask my people to stop the logging," he said, "I will tell them to carry on, as long as these companies are getting our wood, then why should we stop?"
Massive operation
The scale of the main forestry industries in the area is breath-taking. We visited the Riau Andalan Pulp and Paper company (RAPP) on the outskirts of the forest, one of two such businesses based in the province.
It is a huge, hi-tech industrial complex housing the world's largest pulp mill. It produces almost two million tons of pulp every year, consuming eight million tons of wood in the process.
It is a non-stop operation. The mill operates 24-hours a day, with a never-ending convoy of trucks arriving at the factory to supply the wood.
Back in 1993 the government gave RAAP a concession of around 3,000 sq km which it could log and then re-plant with acacia trees.
Part of this concession lies within the Tesso Nilo forest itself.
No guarantees
A spokesman for the company told the BBC the forest it was given to convert to acacia plantations was already degraded — in other words had already been substantially logged.
But WWF says this is wrong, "RAPP is chopping down primary rain-forest," said Mr Foead.
The company is trying to promote itself as environment-friendly because it says within six years it will have planted enough acacia trees to provide a sustainable source of wood for the pulp mill.
Ironically it can only do this by first destroying swathes of Sumatran rain-forest.
Environmentalists also believe illegal logs from Tesso Nilo are being sold to RAPP. The capacity of the mill is so huge that around one-fifth of the wood supply is provided by outside contractors.
The company says there are stringent checks on the sources of logs provided by these contractors, but admits it cannot guarantee all the wood is legal.
WWF remains optimistic it can save Tesso Nilo from the loggers by persuading the government to turn it into a national park. But it will be an uphill struggle.
Indonesia's Forestry Minister Mohammad Prakosa told the BBC he could not simply revoke the licences given to the companies which had been given the right to log the area.
And even if Tesso Nilo did become a national park, it would still not be safe from the illegal loggers.
The experience in Indonesia's other national parks has been that illegal logging has continued unabated as law enforcement across the country is so weak, not least because the police and other officials are notoriously corrupt.
http://www.thewe.cc/weplanet/news/forests/clock_ticking_for_indonesian_rainforest.htm
Indonesian deforestation
In 2007, Greenpeace announced that Indonesia had ‘won’ the dubious distinction of having the world’s highest rate of deforestation. Across the archipelago, 72% of forest has been lost due to legal and illegal clearing, and agriculture-related arson.
Indonesia’s ‘award’ appears in the 2008 Guinness Book of World Records. According to Greenpeace, the text will read:
"Of the 44 countries which collectively account for 90% of the world's forests, the country which pursues the world's highest annual rate of deforestation is Indonesia with 1.8 million ha (4,447,896 acres) per year between 2000-2005 - a rate of 2 per cent annually or 51 square km (20 square miles) every day."
That’s an area of rainforest about the size of Manhattan being cleared on a daily basis.
Until 1950, Indonesia was still densely forested. In the following half century, 40% of extant forest was cleared, representing a drop from 162 million hectares to 98 million hectares. Throughout the 1980s, Indonesia cleared 1 million ha per year, which accelerated to 1.7 million ha per year by the early ‘90s. The rate is now set at over 1.8 million ha per year. The forests most at risk are the low-lying tropical rainforests and peat swamps, which are the most biodiverse and richest in resources.
During the primary period of deforestation (1950 - 2000), a strikingly high number of logging concessions were granted by President Suharto throughout his three-decade term (1967 - 1998). Many of the concessions were offered to individuals personally associated with the Suharto family.
Under his ‘New Order’ administration, Suharto maintained stability throughout a large and multiethnic nation (using an aggressive military-dominated approach), improved education, health, and welfare, and fostered significant industrialization and economic growth. However, the New Order’s ugly reputation for widespread corruption and authoritarianism caught up with it by 1998; when combined with the results of the Asian financial crisis, Suharto’s unpopularity was such that he was forced to resign. According to Transparency International, Suharto misappropriated more money than any other world leader in history with an estimated US $15–35 billion embezzlement during his administration. Following his presidency, attempts were made to charge Suharto with corruption and genocide, but these efforts came to an end with his death in January 2008.
The logging concessions granted by President Suharto represented more than half the country’s forest area. Numerous accounts exist of nepotism, collusion and cronyism relating to forest concessions, particularly throughout the 1970s. Huge land grants were made available to Suharto’s family members and to favoured companies in the logging, pulp and paper mill sectors. Their sole priority was personal financial gain, with forests regarded as a source of revenue to be exploited. No thought was given to long-term sustainability.
Now, nearly half of Indonesia’s remaining forests are fragmented by roads and development. Global Forest Watch [http://www.globalforestwatch.org] observes that “Massive expansion in the plywood, pulp, and paper production sectors over the past two decades means that demand for wood fibre now exceeds legal supplies by 35-40 million cubic meters per year”, creating a level of demand that is impossible to meet under sustainable forest management conditions.
The gap between supply and demand for timber products has germinated a flourishing illegal logging trade. Wood processing industries have openly acknowledged their dependence on illegal timber, which comprised approximately 65% of total supply in 2000. By definition, illegal logging can not be accurately measured, but a former senior official from Indonesia’s Forestry Ministry recently speculated that illegal logging has ruined over 10 million ha of forest.
The impact of clearing by small scale farmers is difficult to calculate, but plausible estimates from the ‘90s suggested that shifting cultivators could be responsible for the loss of 4 million ha between 1985 and 1997 – about 20% of forest loss.
The impact of industrial plantations is far greater, particularly since many of them have turned to fire as an expedient means of forest clearing. In the burning seasons during the El Niño periods of 1994 and 1997-8, deliberately lit fires devastated 5 million ha of forest each time.
As well as plywood, pulp and paper, natural forest has been cleared for industrial timber plantations, cash crop plantations (rubber, palm oil, etc) and transmigration-related development. In many cases the land was cleared in contradiction of legal requirements that such developments only occur only on degraded land or land previously established for conversion under the proper protocols.
Since President Suharto’s downfall in 1998 and the subsequently freer political atmosphere, environmental activists have been forthright in their demands for transparency and accountability from the government and corporate sectors. They have been moderately successful, but the worst excesses of private industry are still going unchecked.
Particularly after the United Nations’ Framework Convention on Climate Change (UNFCCC / “Kyoto Protocol”) was held in Bali in December 2007, the Indonesian government is under local and international pressure to reform its environmental policy. However, reforms are slow, and not all of them are going to be good for forests.
Decentralisation of power – i.e. the implementation of regional self-government, which takes some of the autonomy back from Jakarta – has been of benefit to the forest in provinces like Aceh, Papua and West Papua. These traditionally separatist areas are taking control of their forest resources and attempting to find innovative ways to preserve and manage them sustainably. However, lack of capital to manage long-term programs is an issue; and overseas investment is being sought.
Source: Indonesia Deforestration
Indonesia’s ‘award’ appears in the 2008 Guinness Book of World Records. According to Greenpeace, the text will read:
"Of the 44 countries which collectively account for 90% of the world's forests, the country which pursues the world's highest annual rate of deforestation is Indonesia with 1.8 million ha (4,447,896 acres) per year between 2000-2005 - a rate of 2 per cent annually or 51 square km (20 square miles) every day."
That’s an area of rainforest about the size of Manhattan being cleared on a daily basis.
Until 1950, Indonesia was still densely forested. In the following half century, 40% of extant forest was cleared, representing a drop from 162 million hectares to 98 million hectares. Throughout the 1980s, Indonesia cleared 1 million ha per year, which accelerated to 1.7 million ha per year by the early ‘90s. The rate is now set at over 1.8 million ha per year. The forests most at risk are the low-lying tropical rainforests and peat swamps, which are the most biodiverse and richest in resources.
During the primary period of deforestation (1950 - 2000), a strikingly high number of logging concessions were granted by President Suharto throughout his three-decade term (1967 - 1998). Many of the concessions were offered to individuals personally associated with the Suharto family.
Under his ‘New Order’ administration, Suharto maintained stability throughout a large and multiethnic nation (using an aggressive military-dominated approach), improved education, health, and welfare, and fostered significant industrialization and economic growth. However, the New Order’s ugly reputation for widespread corruption and authoritarianism caught up with it by 1998; when combined with the results of the Asian financial crisis, Suharto’s unpopularity was such that he was forced to resign. According to Transparency International, Suharto misappropriated more money than any other world leader in history with an estimated US $15–35 billion embezzlement during his administration. Following his presidency, attempts were made to charge Suharto with corruption and genocide, but these efforts came to an end with his death in January 2008.
The logging concessions granted by President Suharto represented more than half the country’s forest area. Numerous accounts exist of nepotism, collusion and cronyism relating to forest concessions, particularly throughout the 1970s. Huge land grants were made available to Suharto’s family members and to favoured companies in the logging, pulp and paper mill sectors. Their sole priority was personal financial gain, with forests regarded as a source of revenue to be exploited. No thought was given to long-term sustainability.
Now, nearly half of Indonesia’s remaining forests are fragmented by roads and development. Global Forest Watch [http://www.globalforestwatch.org] observes that “Massive expansion in the plywood, pulp, and paper production sectors over the past two decades means that demand for wood fibre now exceeds legal supplies by 35-40 million cubic meters per year”, creating a level of demand that is impossible to meet under sustainable forest management conditions.
The gap between supply and demand for timber products has germinated a flourishing illegal logging trade. Wood processing industries have openly acknowledged their dependence on illegal timber, which comprised approximately 65% of total supply in 2000. By definition, illegal logging can not be accurately measured, but a former senior official from Indonesia’s Forestry Ministry recently speculated that illegal logging has ruined over 10 million ha of forest.
The impact of clearing by small scale farmers is difficult to calculate, but plausible estimates from the ‘90s suggested that shifting cultivators could be responsible for the loss of 4 million ha between 1985 and 1997 – about 20% of forest loss.
The impact of industrial plantations is far greater, particularly since many of them have turned to fire as an expedient means of forest clearing. In the burning seasons during the El Niño periods of 1994 and 1997-8, deliberately lit fires devastated 5 million ha of forest each time.
As well as plywood, pulp and paper, natural forest has been cleared for industrial timber plantations, cash crop plantations (rubber, palm oil, etc) and transmigration-related development. In many cases the land was cleared in contradiction of legal requirements that such developments only occur only on degraded land or land previously established for conversion under the proper protocols.
Since President Suharto’s downfall in 1998 and the subsequently freer political atmosphere, environmental activists have been forthright in their demands for transparency and accountability from the government and corporate sectors. They have been moderately successful, but the worst excesses of private industry are still going unchecked.
Particularly after the United Nations’ Framework Convention on Climate Change (UNFCCC / “Kyoto Protocol”) was held in Bali in December 2007, the Indonesian government is under local and international pressure to reform its environmental policy. However, reforms are slow, and not all of them are going to be good for forests.
Decentralisation of power – i.e. the implementation of regional self-government, which takes some of the autonomy back from Jakarta – has been of benefit to the forest in provinces like Aceh, Papua and West Papua. These traditionally separatist areas are taking control of their forest resources and attempting to find innovative ways to preserve and manage them sustainably. However, lack of capital to manage long-term programs is an issue; and overseas investment is being sought.
Source: Indonesia Deforestration
Indonesia: Ongoing Initiatives
WRI/GFW's goal in Indonesia is to support legal and sustainable forest use through multi-stakeholder processes involving government, timber producers, timber exporters, national and international NGOs and the research community. Our databases and monitoring projects support forest policies in the following areas:
Forestry Sector Database
Since 2002, GFW is partnering with Forest Watch Indonesia (FWI) to compile data on forest industries. We have collected ownership and location data for all of Indonesia's concessions, and have made it available in Bahasa Indonesia (English version to come) in a web-based, interactive database on the FWI website, www.fwi.or.id. The database covers the entire archipelago and includes interactive maps, and allows users to view lists all logging companies, plantation companies and mills with their investors, owners, output volume, annual management plans, allowable cut and other characteristics. This project is supported by the U.S. Agency for International Development.
Monitoring Compliance in the forestry sector
Using satellite images, we are detecting illegal activities carried out by legal concessions. In a pilot area in the province of Central-Kalimantan, we (in collaboration with FWI) are monitoring concessionaire compliance with their annual management plans. This type of work has been used successfully by GFW in Central Africa. Funding has been provided by the U.S. Agency for International Development. Funding permitting, this work will be extended to other provinces in Indonesia and other countries in Southeast Asia.
Monitoring Forest-cover Change in Indonesia
Figures on forest extent and deforestation in Indonesia vary widely depending on the year reported and the group reporting, and accurate information that quantifies and locates deforestation is not available. Several large scale mapping projects on forests have been carried out in the last decade to fill this information gap. Unfortunately, these were one time projects so results from different projects and time periods, cannot be compared to develop accurate analyses of actual forest change. Some small scale deforestation figures (e.g. national parks) have been well documented, but cannot be applied to the entire archipelago. GFW, with World Bank support and in partnership with the Centre for International Forestry Research (CIFOR), is setting up a system that can detect forest-cover change over the entire archipelago of Indonesia. GFW is partnering with several universities to compare and work with different methods and satellite systems. We expect to make a decision on appropriate methodologies by the end of 2004. We envision updates in specific regions every six months to one year, with results published in data briefs available in a variety of hard copy and web-based formats.
Developing a Forest Information System for the Indonesian forest sector
GFW will combine the forestry sector data, compliance monitoring data, forest cover change data produced by the three initiatives described above with additional environmental and socio-economic data into a Forest Information System. The system will be useful for guiding forest development and investment and forest law enforcement and forest policy making. The World Bank will use the system to inform the implementation of their strategy for Indonesia, and has invited us to present it at their strategy rollout meeting in the Fall of 2004, that will be attended by the Ministry of Forestry and other important stakeholders. We hope to build support for a multi-stakeholder process that will collaborate to sustain the system and produce: 1) a yearly update of reliable and spatially explicit de- and reforestation statistics with maps of forest cover and forest cover change; 2) a yearly update of actual forest land allocation with maps of logging concessions, mining concessions and protected areas and maps of probable areas of illegal logging; 3) analyses that identify good management practices by verifying voluntarily provided information on forest operations.
Initiatives in Development
Oil palm
GFW, in collaboration with Conservation International, would like to increase the ability of the oil palm sector to contribute positively to regional development plans that balance needs of the private sector, government, local communities, and environmental interests. Land use decisions could be guided by social, environmental and economic data that will help industry members identify the true costs and benefits of plantation development and facilitate participation in integrated regional development plans led by government and non-governmental organizations. GFW proposes to create an interactive online tool that will enable users to access existing environmental, economic, and social data for specific geographic areas, analyze the risks of developing in these areas, and identify actions that should be considered to generate the greatest environmental, economic and social benefits. This project is not intended to be a substitute for environmental or social impact assessments already in use, but will provide maps and data that facilitate improved resource-use and land-management decision making. GFW is exploring partnership and funding opportunities to implement this work.
Forestry Sector Database
Since 2002, GFW is partnering with Forest Watch Indonesia (FWI) to compile data on forest industries. We have collected ownership and location data for all of Indonesia's concessions, and have made it available in Bahasa Indonesia (English version to come) in a web-based, interactive database on the FWI website, www.fwi.or.id. The database covers the entire archipelago and includes interactive maps, and allows users to view lists all logging companies, plantation companies and mills with their investors, owners, output volume, annual management plans, allowable cut and other characteristics. This project is supported by the U.S. Agency for International Development.
Monitoring Compliance in the forestry sector
Using satellite images, we are detecting illegal activities carried out by legal concessions. In a pilot area in the province of Central-Kalimantan, we (in collaboration with FWI) are monitoring concessionaire compliance with their annual management plans. This type of work has been used successfully by GFW in Central Africa. Funding has been provided by the U.S. Agency for International Development. Funding permitting, this work will be extended to other provinces in Indonesia and other countries in Southeast Asia.
Monitoring Forest-cover Change in Indonesia
Figures on forest extent and deforestation in Indonesia vary widely depending on the year reported and the group reporting, and accurate information that quantifies and locates deforestation is not available. Several large scale mapping projects on forests have been carried out in the last decade to fill this information gap. Unfortunately, these were one time projects so results from different projects and time periods, cannot be compared to develop accurate analyses of actual forest change. Some small scale deforestation figures (e.g. national parks) have been well documented, but cannot be applied to the entire archipelago. GFW, with World Bank support and in partnership with the Centre for International Forestry Research (CIFOR), is setting up a system that can detect forest-cover change over the entire archipelago of Indonesia. GFW is partnering with several universities to compare and work with different methods and satellite systems. We expect to make a decision on appropriate methodologies by the end of 2004. We envision updates in specific regions every six months to one year, with results published in data briefs available in a variety of hard copy and web-based formats.
Developing a Forest Information System for the Indonesian forest sector
GFW will combine the forestry sector data, compliance monitoring data, forest cover change data produced by the three initiatives described above with additional environmental and socio-economic data into a Forest Information System. The system will be useful for guiding forest development and investment and forest law enforcement and forest policy making. The World Bank will use the system to inform the implementation of their strategy for Indonesia, and has invited us to present it at their strategy rollout meeting in the Fall of 2004, that will be attended by the Ministry of Forestry and other important stakeholders. We hope to build support for a multi-stakeholder process that will collaborate to sustain the system and produce: 1) a yearly update of reliable and spatially explicit de- and reforestation statistics with maps of forest cover and forest cover change; 2) a yearly update of actual forest land allocation with maps of logging concessions, mining concessions and protected areas and maps of probable areas of illegal logging; 3) analyses that identify good management practices by verifying voluntarily provided information on forest operations.
Initiatives in Development
Oil palm
GFW, in collaboration with Conservation International, would like to increase the ability of the oil palm sector to contribute positively to regional development plans that balance needs of the private sector, government, local communities, and environmental interests. Land use decisions could be guided by social, environmental and economic data that will help industry members identify the true costs and benefits of plantation development and facilitate participation in integrated regional development plans led by government and non-governmental organizations. GFW proposes to create an interactive online tool that will enable users to access existing environmental, economic, and social data for specific geographic areas, analyze the risks of developing in these areas, and identify actions that should be considered to generate the greatest environmental, economic and social benefits. This project is not intended to be a substitute for environmental or social impact assessments already in use, but will provide maps and data that facilitate improved resource-use and land-management decision making. GFW is exploring partnership and funding opportunities to implement this work.
Effects of Indonesia Forest Fire 3
V. Environment Clusters
16. Environmental Problem Type:
Deforestation and Air
17. Describe the Habitat, Plants, and Animals in the Forest
Indonesia's rain forest is or rahter should be like others arounds the world. It should be filled with loud noises: sound of thousands of insects criketing, birds singing, monkeys calling, deer rustling/running around, leaves falling, wind weeping in through the trees, and etc. However, this is not the rain forest of Indonesia due to El Nino. The rain forest of Indonesia lacks water or humidity of any sort. The once habited by different animals, insects, birds, and trees is now filled with silence. Due to the fire, the habitants, such as orangutans have either fled or died. The other habitants would include the Sun Bear, Sumatran Tiger, Asian Elephant, and Javan Rhinoceros. All these species are in danger due to the fires.
18. Resource Impact and Effect:
There will be high impact in the long-run.
19. Urgency and Lifetime:
High urgency. The potential long term consequences of the fire is land loss, harvest collapse and economic disaster, which will lead to regional and global catastrophe.
20. Substitutes:
Educate the farmers in Indonesia of ways to clear land without the use of fires. Set forth fire quotas if fire must be used. Ban fires from occurring in particular areas.
VI. Other Factors
21. Culture:
No.
22. Trans-Boundary Issues:
Yes. The humes from the fire has been moving onto the neighboring countries like Malaysia and Singapore in the form of smog. Smog has caused not only air planes from landing, it has created major health problems for those who live in the region. Some have accessed that breathing the air is as though you are smoking over 80 cigarettes per day. South China Morning Post have reported that a rough calculation on long term effects on the death tally is a few hundred a day across the region, especially in Indonesia.
23. Human Rights:
Indirectly, this could be of issue, since much of the fire is caused by those who have no ties to the land. The indigenous people who live around the forest are becoming victims of this forest fire. Due to the Government giving much of the forest land to the retired generals as mentioned earlier, there is no human factor involved. The indigenous people have been living off of the forest land for many years, so these local people have respect and care for the forest, whereas, the new owners of the land only want to make money off the land in any way they can. And in the meanwhile, the indigenous people are not able to see the benefit of the forest. And instead, they acquire health problems, along with survival problems.
24. Relevant Literature
Angelsen, A. "Shifting Cultivation and 'Deforestation': A Study from Indonesia." World Development 23(10): 1713-1729.
Belcher, M. and A. Gennino. 1993. Southeast Asian Rainforests: A Resource Guide and Directory. Rainfores Action Network, San Francisco.
Dauvergne, P. 1994. "The Politics of Deforestation in Indonesia." Pacific Affairs 66(4):497-518.
Special Fact Sheet: Spcies Affected by the Fire in Indonesia. WWf Press Release. http://www.panda.org/news/press/news_153b.htm
Forest Fire News Archive. http://www.bosdata.nl/fire.htm
Effects of Indonesia Forest Fire 2
II. Legal Clusters
3. Discourse and Status:
The fires have caused conflicts with neighboring nations. As mentioned before, the practice of setting fires to clear lands have been illegal since 1994. Most people breathing the air would like for this particular law to be enforced. There has been many studies that have been done in Indonesia regarding the fires. Johann Goldammer, Chief of the Fire Ecology Research Group at Germany's Freiburg University started the only known study of Southeast Asian fires. He suggests the Indonesia set up a land-management system that protects the forest with proper satellite and radio communications to stop fires early, while educating farmers in good, controlled burning practices. He even goes further to suggest fire quotas for each farmer.
According to the umbrella law of forestry issued in 1967, all forest in Indonesia owned by the Government, the Government has the right to convert, to change the use, and to give its right to a private company. This means that the Government did not recognize the traditional law or traditional right of indigenous people on their forests. Then the New Order Government gave forest concession to some retired generals instead of to the local residents. This gave them the right to log the forest and all the indigenous people was gotten rid of their forests. Indigenous people have been prohibited to go inside the forest. Thus this created conflicts between the indigenous people and the concession companies.
It is widely agreed that there needs to be policies made to address this issue; however, the government has yet to step up.
4. Forum and Scope:
Although the fires are originating in Indonesia, the effects of the fire has been causing damages to the region which Indonesia is located. This will also affect other countries around the world who import palm oil as well.
5. Decision Breadth:
Currently, Indonesia, Malaysia, Singapore, and parts of Thailand, Hong Kong and the Philippines is affected by this fire. The regional tourism as well as health is at risk.
6. Legal Standing:
There has been studies which have been set up to measure the pollutant standard index (PSI). Indonesia has set up a task force to look into the fire problem. Indonesia did pass a law which makes clearing land through man-made fires illegal in 1994.
7. Geographic Cluster
a. Geographic Domain: Asia
b. Geographic Site: East Asia
c. Geographic Impact: Indonesia
8. Sub-National Factors:
There is a suggestion from some environmental groups to embargo any palm oil which may have come from lands which were cleared due to man-made fires. This has not been imposed on Indonesia. Rather, there has been a small grassroots movement to educate the consumer about this issue, so that the consumers would hesitate to buy palm oils produced by Indonesia.
9. Type of Habitat:Tropical
III. Trade Clusters
10. Type of Measure:
Currently, some people are working towards an import ban on any products produced on forest lands cleared illegally through fires.
11. Direct v. Indirect Impacts:
Direct: If the environmental organizations are able to help pass laws on what is an "acceptable" palm oil, as well as other industries tied to the forest land, there will be direct impact on the export side of the Indonesia economy. Indonesa with its economic situation at the moment is relying heavily on its ability to export, and majority of their high cost exports come from the forest lands. Indonesia is in need of foregin exchange to pay back its foreign debts, so it is crucial that Indonesia is able to export its products abroad.
12. Relation of Trade Measure to Environmental Impact
a. Directly Related to Product: Yes to Palm Oil.
b. Indirectly Related to Product: Yes to Trees (Wood).
c. Not Related to Product: No.
d. Related to Process: Yes to Deforestation.
13. Trade Product Identification:
Palm oil is a raw to intermediate product. Palm oil is used to make cooking oil, margarine, soaps, etc.
14. Economic Data
According to the Department of Agriculture's Foreign Agricultural Service, the US imported over $400 million in lumber last year (out of $11 billion worth of total wood imports). And this does not include wood products from other countries that contain components from Indonesian forests.
The demand for both palm oil and rubber has been growing. In 1996, the US imported over $900 million worth of rubber and latex from Indonesia, more than twice as much as timber, and nearly twice as much from just four years earlier.
Palm oil has been one of the fastest growing subsectors in Indonesia. In two decades, annual output grew from less than 400,000 tons to more than four million. The palm oil industry is continuing to enjoy its trmendous growth. Imports to the US more than doubled from 1995 to 1996, reaching nearly $78 million in value. The industry will continue its rapid growth--there are plans by the Government to double palm oil concessions by year 2000 to over 13 milion acres.
15. Impact of Trade Restriction:
The exports of palm oil could be cut and the price of palm oil could increase. With the current economic situation in Indonesia, if restrictions were to be put on any products from the forest, many would be out of jobs, contributing to the increasing number of poverty in Indonesia. Indonesia relies heavily on its ability to export. In 1994, approximately $41.3 billion worth wasw exported.
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