Transcript Carbon Finance and Forest Tenure: Updates from Indonesia

Carbon Finance and Forest Tenure: Updates from Indonesia
Conference on New Challenges for land Policy and Administration
February 14-15, 2008
The World Bank, Washington DC
Mario Boccucci
Senior Climate Change Specialist (Forestry) - EASRE
World Bank, Sustainable Development Department, East Asia and Pacific Region
[email protected]
Outline
• Climate Change and Forests
• REDD - a mechanism for the future
• FCPF - a new World Bank instrument
• Indonesia - REDD
• Indonesia - forestry, tenure and governance
• Emerging issues in the REDD-Tenure nexus
• Challenges and lessons learnt
Climate Change and Forests - Why
• Climate Change 101: GHG; temperature; sources;
mitigation; adaptation; Climate Change Convention;
Kyoto protocol; cap and trade
• There is more carbon in forests than in the atmosphere;
when forests are cut carbon is released: 20% of global
carbon emissions; 84% of Indonesia’s emissions
• Carbon emissions have to be reduced NOW … so why
not start from an “easy” source of carbon emissions
• Stern Report: reduce deforestation most economiceffective approach in the short term
• Impact also other environmental services, poverty
reduction, economic growth
REDD – a mechanism for the future
• REDD = Reducing Emissions from Deforestation and Forest
Degradation in Developing Countries
• Countries able to reduce deforestation against an agreed future
estimate would be compensated for the amount of resulting ER
• A country will have to determine how much forest it would loose in
a BAU situation, then measure actual forest loss and sell the
difference; non binding
• REDD was excluded from CDM; only A/R but high transaction
costs and limited impact
• Order of magnitude for Indonesia: deforestation: 1 – 2 Mha/yr;
potential total value 0.5 to 2B$/yr; global; market could reach
$15B/yr
• Forest carbon payments as “missing incentive” for forest
governance reforms and SFM
• Indonesia hosted COP13, and the resulting Bali Roadmap adopted
a resolution on REDD. It is happening!
10,000
Private Sector
Funding
Public Sector
Funding
$10 b
The Forest Carbon Partnership Facility
• WB experience with piloting carbon markets: Prototype Carbon
Fund (1999), BioCarbon Fund (2004); and experience in the
forestry sector,
• Building on this experience the bank has been working on the
establishment of a FCPF with a target of $300M
• Objective is to get countries ready for a forest carbon market, to
test approaches, incentives systems, institutional arrangements,
payments mechanisms; help setting the stage for a system of
positive incentives post-2012
• Two mechanisms: “readiness” for capacity building; carbon
finance for piloting performance-based payments
• The FCPF was officially launched in Bali last December by Mr
Zoellick; Initial pledges at $165M from 10 donor countries and
TNC; 32 tropical countries expressed an interest
Indonesia REDD - Context
• Indonesia’s forests are among the most diverse,
extensive and valuable in the world.
• Economic development, poverty reduction,
environmental services
• Annual deforestation peaked at 2M ha, 600M ton C
• Large emitter of GHG (80% LULUCF)
• Potential unprecedented incentives for sector reforms
• Increasingly leading the REDD global discussions
Indonesia REDD – Carbon Profile
Indonesia a significant emitter due to
forestry and land use change
Energy
emissions lower,
but growing fast
Source: PT P.E.A.C.E., 2007 compiled from IEA’s 2005 annual
statistics, US EPA 2006, and Houghton 2003. If EU included,
Indonesia stands 4th. Estimate subject to uncertainty.
Annual Emissions from Deforestation (538 MtCO2)
Conservation Areas
1%
Other
19%
Protection Forest
4%
Production Forest (excl. pulp
plantations)
42%
Oil Palm Plantations
17%
HTI Pulpwood Plantations
14%
Conversion Forest
3%
Planned losses (Conversion, Palm and Timber Plantations, Production) are high
relative to unplanned or unauthorized losses
Indonesia REDD – Value Chain
$
CO2
1
Baseline
2
Strategy
3
4
Monitoring
5
Market
Distribution
Reduce deforestation
Governance
Indonesia REDD- Integrated System
• No one element of this value chain can stand alone.
• A readiness system without reduced deforestation will not
generate funds
• Reducing deforestation without a readiness system in place
to turn this into a commodity will not generate funds
• Without a system to effectively distribute REDD revenues,
reduced deforestation and degradation will not occur
• Without addressing the underlying governance and tenure
issues affecting the sector, reduced deforestation controlled
leakage and permanence will not be achieved
• An ambitious set of objectives … a phased approach
Indonesia REDD Initiative
• June 07 GOI request Bank assistance to prepare for REDD and
present in Bali a paper on how REDD could work; July 07 Bank
AAA-TA approved a support package covering Methodology,
Strategy and Constituency building;
• Analysis: 9 studies on methodology (baseline, monitoring,
transaction and revenue sharing) and strategies for cost effective
reduction of deforestation in five different land uses;
• Teams include a Core Group of leading international and
Indonesian experts; Counterpart MoFr Experts and broader
Reference Group with relevant NGOs, private sector, other
agencies and international organization;
• Consultations: to involve key stakeholders in other GOI agencies,
NGOs, private sector, and at sub-national; level. Workshops took
place in Jakarta, Papua, Aceh Kalimantan and Sumatra.
• Within the bank we close engagement of Forestry Anchor
(Strategy), ENVCF (Methodology), LEGEN, PREM, EASRE
Indonesia REDD Initiative – Analysis
Baseline
• Historic vs modeling
• National, sub national, project
Monitoring
• Definition of deforestation and degradation
• Area change and carbon measurement
• Accuracy and reliability
Strategy
• 5 Land use changes covering key drivers of deforestations
• Past deforestation and predicted deforestation
• Interventions to reduce deforestation and opportunity costs
Market and revenue sharing
• Buyers and Sellers
• Registry and legal framework
• Payment distribution institutional and legal arrangements and governance measures
• Equity and incentives
Governance
• Forest Sector Law Enforcement and Governance:
• Systemic Governance
• Safeguarding carbon transaction
Indonesia Forest Tenure – Highlights
•
What is the situation: 70% of land classified as forest estate, less than
15% gazzetted, 37M ha deforested, disempowerment of IP of
customary rights …
•
How did it get there: evolution of the legal framework (constitution;
Agrarian Law, Basic Forestry Law; Forestry Act; Decentralization
Law); the forest zonation process (TGHK, RTRWP, Paduserasi); the
licensing system; a highly functional system …
•
Why did it get there: a governance perspective – state capture and
administrative corruption;
•
Forest resources are not contributing as they should to poverty
reduction
Disagreement over control of forest lands  conflict and uncertainty
•
•
Is there hope? Many argue for a wider rationalization of forest land
uses, control, and ownership TAP MPR (2001); PP6 (2007), MFP2 …
Forest, Population & Poverty Distribution
Indonesia Forest Area, Pop'n & Poverty
Yr 2000 Data, M. Boccucci & K. D. Muliastra (2005)
Indonesia Forest Area, Pop'n & Poverty
Yr 2000 Data, M. Boccucci & K. D. Muliastra (2005)
220
100%
200
90%
180
Non Forest Estate
140
Forest "Estate" Tree Cover
120
Forest "Estate" No Tree Cover
100
80
Shares of Total
Millions
160
80%
Non Forest Estate
70%
Forest "Estate" Tree Cover
Forest "Estate" No Tree Cover
60%
50%
40%
60
30%
40
20%
20
10%
0
0%
Area (M ha)
•
•
•
•
•
Pop'n (Millions)
Pop'n in Poverty
Area (M ha)
Pop'n (Millions) Pop'n in Poverty
50-60 M live in forest “estate:” ~ 25% of Indonesians
~ 20% of these are poor; ~ 80% are in areas with no tree cover
Poor in forest cover: low in #s: 3-6 M; high in prevalence: 22% vs 17% for all
Most smallholder growers are not living in forest estate with good tree cover
Subsistence livelihoods in forests: could be ~ 1 million families
Kawasan Indonesia
Land Area : 185,682,531 ha
Forest and Non Forest Cover 2000
Kawasan Hutan
Kawasan Hutan
Conservation
94,913,825 ha
37,338,525 ha
3,629,400 ha
Protection
5,832,725 ha
Production
43,395,344 ha
2%
Conversion
3%
10,307,694 ha
6%
23%
Production
17,568,706 ha
9%
ta
Plan
Plantation
Forest
1,753,001
Protection
2,1
1,97
tion
68 h
a
Non
Forest
ha
13%
24%
24,811,225 ha
Outside Kawasan
Hutan
8%
44,061,850 ha
6%
5%
Conservation
14,638,925 ha
Conversion
12,068,331 ha
Outside Kawasan
Hutan
9,368,331 ha
Note:
Kawasan Hutan = Forest Estate
Emerging issues in the REDD-Tenure nexus
• Legitimate level for a BAU reference level (what is the
deforestation entitlement of a those who have legitimate
claim to land): the historic vs modeled approach has
important ripercussions
• How to determine the reduction strategy … and the
importance of secure rights to deliver it and increase
permanence
• How to distribute the carbon compensations (so that they
reach the resource owner to offset their opportunity costs
and compensate for the environmental; service they
provided)
• Need of intensive consultations and participation in the
development of the REDD system
Challenges and LL
•
Still the same old game …REDD does not change the nature at the issues at stake. It provides additional
incentives and leverage to tackle serious forest reforms; it provides an entry point to engage in a
constructive discussion and scale up a policy dialogue that has been otherwise stagnating
•
The people the people the people …. Constituencies, participation and prior and informed consent are
crucial. A “culture shift” will not be simple; Empowered “Champions” will be crucial’
•
Move from rhetoric to action … identify strategic priorities, and use achievements on these as a measure
of real progress and commitment;
•
Time is of the essence … REDD failed already in 1998 as it was deemed to difficult. Havinf met the “Bali
Test” the next deadlines are in 2009 and 2012 … + deforestation is running fast;
•
Government (multi-agency); Civil Society; Private Sector …it’s a complex problem; requires concerted
reactions.
•
Tenure issues cannot be resolved in isolation from the broader governance challenges
•
“To maintain the status quo … we need to attempt to change everything” … take a phased approach;
need to agree and have convergence of a realistic but strategic number of priorities (for example: CB
timber plantations on deforested lands)
•
Starting from Spatial Planning (land use mapping and social survey to determine claims, uses opportunity
and risks …)
•
Identify quick wins: such as deforested areas which are prone to “rationalization”; with proper tenure they
could contribute to the REDD strategy; also build on positive experience
•
Forestry in Indonesia at a tipping point: there are still a lot of risks…but never before did we have this
level of leverage and champions. Potential is there to move from boutique interventions to major policy
reforms