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Testing for the future: a framework for the identification of Demonstration
Activities Projects and investment for REDD in Indonesia
6.1 Introduction
The purpose of this chapter is to present a framework under which ndonesia could test and develop its capacity to enter into, and to optimize international
financial support in favor of a sustainable forest management regime which preserves its forest carbon resources.
By preserving its forest carbon resources ndonesia will achieve its declared commitment to being a leader among tropical rainforest countries in climate
change mitigation. t will also preserve the ecological processes in the landscape which regulate water, maintain soil and soil fertility and conserve biodiversity. By
reversing trends in the loss of forest vegetation and forest degradation using the resources which REDD has the potential to provide, ndonesia will also preserve
its capacity to support the millions of its population that live in and around forested environments. t can explore alternative development pathways that
will provide economic opportunities to alleviate poverty and will provide for a cleaner and more healthy environment for those impoverished people who are
most exposed to the impacts of air and water pollution. The chapter addresses three issues:
. Principles for determining Demonstration Activities . Achieving Readiness for a post-
compliance market; and . nvesting in strategic forest sector reform for REDD
6.2 Principles for determining Demonstration Projects
6.2.1 The REDD Supply Chain and Demonstration Projects
The key principle around which these proposals for demonstration projects revolve is the need to test the challenges that go to producing tradable carbon
credits. The demonstration projects must examine as their primary purpose how a REDD carbon credit supply chain will operate in a range of circumstances
representing biophysical and administrative circumstances. n order for a REDD scheme to result in payments for carbon units traded, there
are a number of steps that must be fulfilled: These steps have been defined as the Supply Chain
and consist of:
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. The establishment of a Baseline . Reductions in carbon emissions achieved against the Business as Usual scenario
. Monitoring and verification of the reductions . The accounting of carbon trading units; and
. The distribution of the payments from the market to the agencies responsible for achieving the tradable carbon credits.
Pilot projects should test how these steps can be undertaken in a way which results in tradable carbon credits under the range of circumstances which this
large and complex country presents. The outcome of the demonstration projects will determine:
. Where gaps may lie in information or capacity to obtain information; . The practicality of implementing management options which reduce emissions
in each of the forest use sectors from a technical and economic perspective; . The practicality of implementing management options at different spatial and
administrative scales; . The quality and permanence of the carbon credits that can be achieved;
. Mechanisms which are just and transparent for the distribution of payments from the market transactions to the agencies government, business,
community or NGO responsible for the resource management changes. Because all steps in the supply chain need to be realised in order to achieve
an effective REDD trading scheme, pilot activities should be designed which incorporate all stages. For example there is no point in testing precision of
monitoring unless it is linked to the evaluation of carbon credits. The Supply Chain represents an integrated system which needs to be applied to demonstration
projects, and to the subsequent full implementation of a REDD scheme. t would be wise if guidelines for selecting proposals for demonstration activities
included a clause which emphasized the need for proposals to be holistic and mindful of testing the application of all stages in the supply chain.COP- decision
also provide indicative guidance for Demonstrationa Activities, which also need to be taken into account.
6.2.2 The Scale of Demonstration Projects
