Bogor, 21-22 October 2015
342
3. RESULT AND DISCUSSION 3.1 Potential of reducing CO
2
emission
In general, location of REDD+ demonstration activities covers an areaof approximately
24,000 hectares.
It is located at Production Forest Management Unit
PFMU Lalan
form of production forest areas
with peat
swamp forest
ecosystem . The area has potential carbon
contamed in forest biomass and peat soil that provide opportunities for C trading. In fact, this area is threatened by deforestation and degradation due to encroachment, illegal logging, etc.
The result of
the calculation of carbon
emissions is about 395.082 tCO
2
-eq per year MRPP, 2011. If MRPP conducts avoiding carbon emission activity, this activity would be feasible at
carbon price of US 5 per tCO
2
with some assumptions of discount
factor of 15 and
period of
activity for 30
years Djaenudin et .al, 2012.
3.2 Identification of risks
There are some challenges that will determine the success of REDD+ implementation at project level. However the main challenge is trade-off between economic and environment
interests. Economic interest means that the project should guarantee for local community’s
livelihood will not be disturbed. On the other hand, environmental interests, the project should its ability to reduce carbon emission. Therefore we can identify that there are two kinds
of risks in REDD+ implementation, namely:
3.2.1 Leakage
Leakage describes
situation where emissions
occurring outside the
boundaries of project
location . The presence of leakage
will reduce
the amount of carbon credits generated
. Therefore, recognizing of
source of leakage is very important to
establish a clear strategy
to address
the leakage
issue .
Based on the results of interviews conducted
at the site ,
leakage may
occur due to
: 1
The opening of new land elsewhere for plantations and agricultural crops. This encroachment activity may occur in other locations.
2 Encroachment or illegal logging activity. Illegal loggers will look for wood at the forest
that are not intended for REDD+ activities.
As previously described, MRPP is the project area
where community lives from the forests
and depends highly from the resource. Challenges faced by the projects could be divided into
two aspects, namely social-economic and nature. The socioeconomics aspects included s
hifting cultivation by
communities around the
site of MRPP.
People open
the area to make
rubber and
oil palm plantations. Other challenge comes from migrants who
establishspontaneous settlements who search
the wood into the
production forest
area Lalan.
Forest fires are
the biggest challenges in addition to
the conversion of peat forest
land where
peat forest areas
degraded and
damaged the water
system into
f lammable
. This challenge need a big effort and finance. As this forest fire occured, the feasibility of REDD+ would be
decline. In order to define the strategy, identification of the encroachment is needed. If the
encroachment occurred after implementation means there is a leakage. The second effort is identifying other measures that can be used to reduce the chances of encroachment activities
such as the provision of alternative livelihoods for people.
Bogor, 21-22 October 2015
343 3.2.2 Non-permanence
Non-permanence risk is
loss of carbon stock
in the future. Main source of non permanence
come from weak management commitment to REDD+
, which is characterized as a
situation where
the manager REDD+
reviewing its commitment
to reducing emission .
N on-
permanence risk may also happen
due to changing
status of forests that serve as the
forest. Another factor is the
absence of long-term financial
planning . It is no guarantee that the
project would receive new funding from donor, so it would be
insufficient funding to finance
REDD+ activities in the long term.
The non-permanence risks would increase due to returning of the encroachers
to REDD+
activities at the site
to conduct agricultural activities
and plantations. The economic value
of agriculture and situation of plantation
encourage deforestation
in the
REDD+ .
This growing can occur
also due to the in-effective distribution system
of incentives or
benefits of
REDD+ implementation
. This condition is
exacerbated by weak law enforcement.
Besides that, increased dependency of communities
on forest resources may came from lower
purchasing power
due to the absence of
alternative livelihoods for people
around the project site .
3.3 Uncertainties and risk assessment based on VCS standard
Assessment of the level of risk
in both locations
is highly dependon site conditions
and the
pressure of
public activities around
the site .
3.3.1 Risk assessment Explanation on
possible risks has been
described above that
, in line
with the uncertainties
and level
of risk in accordance
the VCS standard
, as outlined
in Appendix 1. This section describes
the assessment on level
of risk that
may occur
at the site of the implementation of REDD+
by considering the following factors, namely socio-economic
conditions, changes in
land use ,
the pressure on forest resources
, and
management of REDD+
. Land tenure
Land tenure is a key success
in the implementation of REDD+
. This is related to
business certainty
. The more
definite land
ownership in the management of
these activities , the lower
the risk. As described
in the previous section ,
the implementation
of REDD+ is managed
by forestry companies
engaged in
the field of conservation .
Permission granted
by the Ministry
of Forestry
to the company is
for the provision of business
services through the
production of
carbon in
forest ecosystem restoration
activities .
Based on the information received
that the
company has a long
and experienced in
conservation activities ,
so it is considered
a low-risk activity
. Developer’c capacity
The capacity of the developer
to determine the success of REDD+
activities , especially
in designing
and conducting
carbon business
services to
the carbon credit
benefits may
important roles on the succesfulness of the project. .
Project managers must be
able to guarantee the
people’s lives around the site,
so that the social and economic life
of the
community is not disrupted
. Developer of REDD+
in MRPP has already experienced in
conservation activities .
In addition, the carbon
business activity at this location
before the
DA REDD+
managed by GIZ
, which
during the course of the
GIZ has
developed a variety of
efforts to maintain a balance
between the interests of economic
, social and environmental
activities through
mentoring and
empowerment .
Also provided a wide range of
skills training for the community
so that the dependence
on the forest is reduced
. Under
these conditions it
can be said that
the risk at the site is
low.
Bogor, 21-22 October 2015
344 Infrastructure and natural resources availability
From the literature concluded
that the construction of
roads to
forest resources is one of
the causes of
deforestation as a result of
the opening of access
to the
forest resources .
Based on information obtained
, no
construction of access roads
to the site
and there are no
plans to
develop their road
. Thus, the level
of risk of
the road construction is
low. The presence of natural resources will determine the developer
’s commitment to sustain these activities. There are already natural resource-based activities surrounding the project such as
coal mining, oil and gas, it will threaten the sustainability of these activities. The government’s
commitment determine the permanence of activity, when the time will come to issue a policy to increase revenue from the mining sector, the implementation of the REDD+ becomes
permanent. In some locations there are utilization of coal mining. However, the company is a conservation group, the level of risk to the termination of
the company’s commitment to REDD+ is low-medium risk.
Local community pressure Based on the
assessment criteria of the level of
risk posed by the pressure of
population in the vicinity
of the project
is low - high
. The risk level
of population pressure is
said to be low if
the population density around the site
is less than 50
inhabitants per km2 ;
if the density
is less
than 150
inhabitants per km2
; and
high population density
greater than 150
inhabitants per km2
. By
the RAD Data
GHG South Sumatra province
, shows the population density in Musi
Banyuasin district ,
in 2015 is projected at
44 persons per
km2 ;
and in 2030
about 56 inhabitants
km2 .
By looking at the
population density and the
increase in population density
is relatively fast , the
level of risk as a result
of population pressure
is medium risk.
Evidence of crops harvesting failure Harvesting failure to be risk factors
determine the success of
REDD+ implementation .
It is associated with
a source of livelihood
in the vicinity .
If crop failure happen frequently
, then
the chances of people to
do the encroachment is higher
. In general,
the level of risk posed by
the crop failure
is low if
the incidence of crop failure
occurs less than one time in
10 years
, and
medium-high if the
incidence of crop harvesting failure
is greater than
one time in 10
years . In fact, t
he failure of agricultural and
plantations crops
in the district is rare. The local community commonly cultivates oil palm plantation that can
grow well in
peat .
So that the level
of risk is
low. Table 2: REDD+ Feasibility
PCO
2
= US 5 Achievement to emissions reduction target
100 90
80
Net benefit Rp 000 19.688.175
9.072.161,43 -1.543.851,76
BC rasio 1,22
1,10 0,98
IRR 23
19 14
Source: Djaenudin et al., 2012
Long-term finance The existence of
the project financing plan
becomes critical success
of REDD+ implementation
. It has not been
available long-term
financing plan for REDD+ implementation
. Nevertheless
the level of risk is
low. This is because
the developer is a
company that has
experienced in
conservation activities
and already
have a financing plan from
short-term to
the long-term plan
. The overall
level of risk faced
by the activity
was obtained
based on the highest
risk level that may occur
. There is great potential
in the vicinity
Bogor, 21-22 October 2015
345 of
the mine and the potential
benefits of lower carbon
from wood utilization
, density
and population growth
around the site, then the level
of risk based on the
VCS is
moderate .
Therefore, it can be concluded
that REDD+ with
moderate risk levels
would reduce the
amount of carbon credits
that can be traded at
10-30 .
Based on calculations using the
scenario of success in achieving the
emission reduction targets ,
in case of leakage
of up to 20 the
REDD+ activities are not feasible
Table 2 at the level
of the carbon
price per
tCO2- eq
US5 .
3.3.2 Risk alleviation strategies In
this section we explore strategies
for leakage and non-permanence prevention
based on the perception
of respondents .
Leakage prevention strategies Leakage
occurs where deforestation exists
outside the project site due to local community
activities .
The strategy developed
is to provide guidance to
the public about
the location and
the creation of alternative
jobs. To control encroachment activities
is very difficult to do
, due to community
movement and economic activities
around the site .
Therefore, measures
that are considered
effective in reducing
the risk of leakage is to
conduct economic empowerment
. Strategies that
can be applied to
overcome the perceived
encroachment of stakeholders
is presented in Figure
3 .
The first strategy is
to set up buffer area as a guarantee if there are
displacement activities .
The second strategy is provision of
incentives for companies
or REDD+
project developers for their efforts
in implementing sustainable forest
resource management
. The third strategy
is establishment of a binding
legal status ,
such as the application of changes the status of
project site as a protected area
. Next strategy is related to
REDD+ governance
improvements such as
a timber export ban .
It is based on experience
of ineffective prevention of
illegal logging and encroachment
because of weak law
enforcement .
According to the respondents perception that the risk of leakage is also caused by intense land conflicts. Sequence of strategies that can be used to reduce the risk of conflict is presented in
Figure 4. The first strategy is the recommended control binding REDD+ governance conducted by an
independent party. Thus, a conflict of interests among stakeholders in the implementation of REDD+ can be reduced. The second strategy is the recognition of the existence of the
community around the site and community empowerment through the mechanism of recognition of the role of local communities and the determination of the definition of clear
ownership and rights. Of the two strategies can be seen that the reduction in the risk of land conflicts require treatment very strict and binding.
Meanwhile, strategies such as funding for voluntary capacity building, governance control, and implementation of REDD+ safeguards are voluntary and were not effective in reducing the
risk of land conflicts.
Non-permanence prevention strategies Impact on non-permanence risk is low potential revenues received by the project developer
and the socioeconomic conditions around the project site. Increasing needs of the community around the project on the land to meeting their needs due to rising food prices, so that the
purchasing power is decreasing. This encourages people will go back to the site to cultivate the land.
Bogor, 21-22 October 2015
346 Figure 3: Strategy to reduce leakage risk due to encroachment
Figure 4: Strategy to reduce leakage risk due to land conflicts
Figure 5: Strategy to reduce non-permanence risk due to lower revenue from REDD+
Figure 6: Strategy to reduce non-permanence risk due to ineffectiveness of finance scheme
0.00 5.00
10.00 15.00
20.00 25.00
Mandatory regulation of REDD+ governance e.g prohibition of illegal logging
Voluntary regulation of REDD+ governance law enforcement, governance, trade, FLEGT
Mandatory punishment system Incentive for SFM practices
Setting up the buffer and insurance
16.00 17.00 18.00 19.00 20.00 21.00 22.00
Controlling binding forest governance e.g monitoring by third party
Controlling forest governance Voluntary funding for capacity building to
improve governance Implementation of REDD+ safeguards voluntarily
Implementation of FPIC and clear of rights and ownership definition
0.00 5.00
10.00 15.00
20.00 25.00
Aplication of binding negative incentive Setting up the buffer area and insurance
Providing adaptive financial scheme Additional funding thtough binding incentive
policy Additional funding thtough voluntary incentive
policy
5 10
15 20
25 30
Direct REDD+ funding from international REDD+ funding through government agent
Financial transfer with verification by third party Financial transfer with verification by government
National mechanism to cope with conflicts
Bogor, 21-22 October 2015
347 Improvement of the economic value of other businesses outside projects such as plantations,
mining and agriculture is an impetus for the non-permanence. Strategies to reduce the incidence of non-permanence risk is presented in Figure 5
. One strategy to
decrease the
risk level is to
increase the commitment of the
developer .
The steps
that can be done
through the implementation of a disincentive
for developers who are
not able to
guarantee the permanence
of activities .
The Government may issue
regulations to
change the status of the implementation of REDD+
project sites into a
protected area . In
this way the developer unlikely terminate the commitments.
Implementation of this strategy
encourages developers to
ensure the certainty of the amount of
carbon credits that can be
accepted by the
developer .
Alternative strategies that can
be used is to apply
adaptive payment scheme
. The
payment is received by
the developer in accordance
with changes in the
value of the opportunity
in the market
. Another strategy
is to optimize the management
and utilization of
co- benefits
that exist in
that location and to set the
provisioning area
to cover potential
losses. Strategies due to ineffective finance distribution
Implementation of REDD+
will run well when
the distribution of REDD+ funding
can be received
by the developer in an effective way
. Necessary strategy
is needed to improve the
effectiveness of the
funding distribution .
In general strategies that
can be selected are
presented in Figure 6
. From the discussion with the respondents, the first strategy considered effective in improving
the effectiveness of REDD+ funding is through government agencies. Carbon credit buyers can channel funds through government agencies national and sub-national, and then
distribute it to the government agency developers. The second strategy is the transfer of funding through financial institution which is verified by the national government. This
transfer mechanism requires the establishment of a financial institution first. The flow of funding from the buyer entry through the REDD+ institutions first and then be verified by
the central government and then distributed developers. The third strategy is the same with the second strategy, but the funds will be transferred into and should verified first by an
independent third party.
The third strategy is to implement mechanisms. The system runs the government budget allocation to ensure funding signals to pass through to the developer, assuming no leakage of
funds. The fourth strategy is the choice of the distribution mechanism directly from the buyer to the developer of the project with the hope of the transfer process will take place efficiently.
Nonetheless strict required control is because it associates with emission reduction achieved by the developers and the potential revenues from the trading of carbon credits.
4. CONCLUSION
