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Where it is impossible to avoid disturbance of peatlands for industrial plantations, deep peat should be avoided. Because of the extent of recent losses to the peatlands
of Sumatra and Kalimantan the existing limitation on using peat over metres deep should be broadened to protect a greater range, by adopting, for example
the Ministry of Agriculture guideline of utilizing only peat with a depth of less than . m. Currently the Government of ndonesia under coordination of the
Ministry of Agriculture is working on imrpoving regulations concerning peatland management , including water table management and drainage of peat areas
following plantation establishment. n peatland areas that are already managed as plantations, REDD payments could be used to defray the costs of reducing
emissions through improved water management. 4.5.4.5 Implement land swaps where possible to retain high carbon value forest and
peats while allocating alternative land for new plantations.
Justification.
This strategy is based on a technical review of potential oil palm locations as the basis for a series of land swaps which might be negotiated with
the oil palm companies which hold concessions on forest with high carbon values. The rationalization of forest land planning, incorporating a new consideration of
the intrinsic value of carbon, implied in this action, has the potential to have the greatest impact on ndonesia s efforts in relation to containing carbon dioxide
emissions. The recommendation has previously been discussed outside the FCA process and
has attracted interest from provincial governments and companies who see it as an opportunity for a win-win solution.
REDD financing may be deployed to cover the opportunity costs lost from not converting forested lands and peat lands to oil palm. Assuming forested lands
have an average carbon stock of tons equivalent to
tonnes of carbon dioxide , valued at tonne CO , each hectare could generate ,
. Peat lands could generate several times that value.
4.5.5 Contribution to the Ministry of Forestry Long Term Development Plan 2006-2025
The strategic recommendations presented in section this chapter are based on the FCA analysis of the status of ndonesia s forests and their global ecological and
socio-economic context. t is not therefore surprising that they pick up on issues and themes that have been raised on many previous occasions. t is not the issues
that are complex to understand; but the practical options that exist to achieve a sustainable future where the remaining forests play their optimal part to secure
economic recovery while providing the environmental goods and services which must underpin opportunities for a better life for millions of people.
The commonality of views between the national and international experts which have contributed to the FCA studies and those within the Ministry of Forestry who
have contributed to this and other analyses, can be appreciated by reviewing the
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strategic recommendations in relation to the goals and objectives of the Ministry of Forestry Long Term Development Plan
- . This analysis is presented
in Table . Clearly the fit is not a word for word matching as the two documents were constructed in quite different ways. owever, the intention and theme of the
priorities have a strong commonality. The contribution that the REDD initiative can make to the realization of the
goals and objectives of the Long Term Development Plan are through providing a source of focused investment which will continue because it will be based on the
preservation of the stored carbon resource within the forest itself and not on a diminishing natural resource associated with non-sustainable forest management
practices.
Table 22.
ow the implementation of recommended REDD forest industry strategies can assist in the realization of the Ministry of Forestry Long Term Development Plan
-
Forestry Long Term Plan Goals and Objectives Recommended REDD Strategies
To create a strong institutional framework for forestry development
• Establish efficient, cost effective and accountable forest management institutions at all levels of
government and in civil society through emphasis on KP management units
• ncrease the human resources available for forest management with emphasis on competence and
professionalism • ncrease the role of civil society in forest management,
with emphasis on expanding synergy among stakeholders
• Review management practices in production forest units to optimize
REDD opportunities. • Development a professional and
sufficient management structure
through the establishment of a networked training and education
program linking ndonesian and international
forestry training
institutions
To increase the value and sustainable productivity of forest resources
• Guarantee the existence of the Forest Estate at an optimal size by:
• ncreasing the legal provisions • Decreasing forest degradation
• ncreasing plantation to increase forest area •
Optimize hydrological services of watersheds • Conserve biodiversity in KK and all other forest zones
• Optimize the value of forest resources for timber and non-timber products, recreation and environmental
services to impact on the level of poverty and contribute to national economy.
• Review the Production Forest unit zoning to accommodate changes
in the areas of forest vegetation in support of decentralized government
responsibilities. • Development a revised national
conservation strategy consistent with contemporary forest conditions
and decentralized governance. • Confirm boundaries of the Forest
Estate and the completion of the legal gazettal process
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Forestry Long Term Plan Goals and Objectives Recommended REDD Strategies
• Consolidate policy and approval criteria for releasing PK for oil palm
developments. • Capitalize on the opportunity of the
REDD Market instrument to realize planned strategic reform of the pulp
and paper industry to achieve a sustainable forest plantation sector
To develop forestry products and services that are environmentally friendly, competitive and have a high
added-value • ncrease forest component of GDP by X
levels by increasing plantation timber supply, non-timber
products, recreation and environmental services. • Achieve international benchmarking by applying new
technologies for value-added product development and increased supply of timber from plantation and
community forests. • Develop innovative new forest products from a
effective efficient and environmentally friendly management system.
• Require zero burning for land clearing for plantation and oil palm
development and work with local governments and international
assistance to develop a professional and decentralized forest fire
serviceRegulate and Restore water tables on peat lands
To improve the enabling environment for forest investment
• Promote a safe and profitable industry for investors and public
• Reduce the flow of illegal logs into the market
• ntensify production per unit of land for plantations and oil palm.
To Promote forestry products and services To promote an active role for society in supporting
responsible and equitable forest management • Guarantee increased revenue to community through
profit sharing system that is transparent and equitable.
• ncrease the independence of communities to manage forest areas on the Forest Estate through group
empowerment and multi-stakeholder participation • ncrease the area of independent and sustainable
community forests hutan rakyat . • Resolve social conflict related to forest management
to improve benefits flowing to community livelihoods • Build coordination and consistency
across government jurisdictions and sectors to
• control cross-boundary impacts of fire control of sources and control of
spread . • Review spatial plans to optimize
degraded lands • Regulate further conversion of
peatlands and revise and enforce rules for management of existing
peatland plantation sites. • mplement land swaps where
possible to retain high carbon value forest and peats while allocating
alternative land for new plantations.
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4.6 Opportunity Cost: concept and application
Strategic interventions to divert pressure on natural forests and reduce deforestation need to rest on reforms that would lead major actors - industry,
local communities, loggers and so on – to switch to economic uses of the land which favored carbon retention. The concept of opportunity cost provides an
economic instrument by which the value of preserved carbon can be compared with the value of using other forest resources such as the timber or the land on
which the forest is growing. Opportunity cost is defined as the cost incurred by choosing one option over the next best alternative. Assessing opportunity costs
is fundamental to assessing the true cost of any course of action. Box presents an example of how opportunity costs could be applied to demonstrate the value
of carbon versus the value of an alternative use. Managing a forest to preserve its carbon resource implies a sacrifice of benefits
that could have been materialized if REDD were not the management objective. For example to persuade loggers to abandon logging of natural forest, would
require offering them production options that would be at least as attractive as the benefits they sacrifice by not engaging in activities leading to deforestation.
Opportunity cost can also be calculated for other, broader decision-making purposes: for example, to determine the impact on the economy as a whole, of
reducing deforestation. n this case the sacrifice may include several economic dimensions not normally translated into financial equivalents. Land uses leading
to deforestation may generate local employment and the value of the social and economic impacts which need to be evaluated against a decision to change the
land use. This situation existed in Australia in the s when the decision was
taken to eliminate the timber industry from the Wet Tropics region of North East Queensland in favor of establishing a new development focus on tourism.
Provisional data derived from the literature on estimated opportunity costs of deforestation and equivalent breakeven values expressed as net present values
NPV, i.e. with future values discounted to the present under various land use options are presented in Table
. These values provide a comparative scale of magnitude of the cost to the country of stopping or reducing deforestation . f the
REDD initiatives generate international carbon credit payments that exceed these opportunity costs, ndonesia would have the financial incentive to adopt REDD.
Land uses that have the highest NPV are oil palm and timber plantations. Using a discount rate of over four rotations, spanning years, the estimated NPV s
of Acacia timber plantations, range from , on peat soils to ,
on mineral
]
The costs and benefit of an activity are normally distributed over several years, for example, an oil palm plantation has costs and benefits distribute over a year period, assuming that it is replanted after years.
The NPV basically yields the net value of the cash flow, which measures the difference between the future revenues and the costs of production. The NPV approach was also used in the Stern report to assess the potential
cost of avoiding emissions from deforestation.
]
The data presented in Table are provisional and do not fully represent the significant variation in economic returns from land uses and carbon stocks.
