Decentralization helped Indonesian forest dwellers


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Indonesian President Suharto stepped down in 1998 after 32 years in office. During his authoritarian rule the central government maintained tight control over forests for the benefit of a small elite.

The following year Indonesia’s Parliament gave far-reaching powers over forests to district governments, as part of a move towards greater democracy. The districts began giving companies permits to harvest timber. To get a permit companies had to negotiate agreements with the affected communities.

The Ministry of Forestry felt the new permit system encouraged deforestation, illegal logging, and conflicts with existing concessions. They tried to stop it in 2000, but finally succeeded around 2004. Since then, there has been much debate on the pros and cons of decentralization, but little evidence on either side of the argument.

For Better or for Worse? Local Impacts from the Decentralization of Indonesia’s Forest Sector by Stefanie Engel and Charles Palmer provides such evidence. They surveyed 65 communities and 687 households in Malinau, Bulungan, and West Kutai districts in East Kalimantan in 2003-4. Sixty of these communities had logging both before and after decentralization, so they could compare the two. In those communities:

After decentralization an average of 94% of households received payments from companies, compared to only 1% before decentralization. For non-cash benefits, such as schools, the figures were 18% and 11% respectively. The average community received $3.67 per cubic meter of timber harvested in cash and other benefits in 2003-4.

The average percentage of households that thought forests belonged entirely to communities rose from 21% before decentralization to 82% after.

On average, 60-80% of households said logging increased flooding, and was bad for hunting and the quality of river water. However, they said that didn’t change significantly after decentralization, one way or the other.

A significant number of households reported logging caused fewer problems for farming and forest product collection after decentralization compared to before.

Nearly two-thirds of community agreements with companies included environmental provisions, such as replanting logged forests, respecting minimum diameters, and only logging certain species.

Companies frequently paid late or didn’t pay or failed to provide other promised benefits or to replant. However, most villages didn’t take that lying down. In response, they demonstrated, blocked roads, and confiscated equipment and timber, often with success.

This suggests decentralization benefited forest dwellers in East Kalimantan and gave them more control over local forests and raises doubts about claims it harmed the environment.


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Further reading

To request a free electronic copy of the paper you can write Charlie Palmer at:

To send comments or queries to the authors write Charlie Palmer at: or Stefanie Engel at:

The full reference of the article is: S. Engel and C. Palmer, 2006, For Better or Worse? Local Impacts from the Decentralization of Indonesia’s Forest Sector, processed.