Efforts are now moving ahead from the readiness stage to making performance-based payments for REDD+ — the national scheme to reduce emissions from deforestation and forest degradation, with an emphasis on conservation and sustainable forest management.
The challenge now is to find a way to ensure that REDD+ payments, the financial incentives for reducing forestry emissions, reach the hands of the people managing those forests at the ground level. And judging by the experiences of REDD+ schemes elsewhere, local governments are likely to play a crucial role.
“Subnational governments will be crucial for REDD+ success in Indonesia,” says Shintia Arwida, a researcher for the Global Comparative Study on REDD+ (GCS-REDD+) led by the Center for International Forestry Research (CIFOR).
“REDD+ is a national policy, but it needs to be implemented at the subnational level. We would like to see how the national government will work together with subnational governments, and what kind of arrangement they will use to distribute funds from the national to the project level,” she adds.
Work on this has already begun, with the long-awaited establishment of a Climate Change Fund Management Agency (BPDI). It will operate under the newly passed Government Regulation on an Environmental Economic Instrument, involving several ministries, from finance to transportation, energy, public works and more.
The complex policy environment will be a further challenge for translating the national initiative to the local level. There is ongoing research collaboration between CIFOR and the government’s Center for Research and Development of Socio-economic and Climate Change Policy (P3SEKPI) to find solutions.
Their preliminary findings were presented in a Focus Group Discussion in Jakarta, involving stakeholders from research, government, donors, the private sector and funding mechanism institutions from the national to the local level.
A MOSAIC OF FUNDING
Researchers at P3SEPKI and CIFOR are still assessing the performance of existing institutions and mechanisms based on their efficiency, effectiveness and equity – what they call the ‘3Es’.
“The actors in REDD+ are very diverse,” says Deden Djaenudin, a researcher with P3SEPKI. “We have governments – national and subnational – business people, community groups, NGOs, universities and so on. We need to find solutions that work for everyone.”
Gustami, head of the Environmental Investment Analysis at BLU P3H, a Forest Development Financing Center, says REDD+ payments are likely to be stitched together from a “mosaic of funding” involving bodies or mechanisms such as intergovernmental transfer, like DID under the Ministry of Finance, and the Indonesia Climate Change Trust Fund (ICCTF), which operates under the National Planning Development Agency (Bappenas) and is partially funded by foreign donors, including a USD 1 billion Letter of Intent (LoI) from the Government of Norway.
“As an organization working in the forestry sector, we want to get a full picture of the future funding situation for forestry and environment with BPDI — how to access funds through it, and how to optimize what we already have,” Gustami says
Representatives of BLU P3H, DID and ICCTF compared notes during the discussion, and found that their systems were complementary, but could benefit from closer cooperation.
Dwi Setiyowati from the Ministry of Finance suggests lessons for BPDI from the DID mechanism already used by the government to channel funds for other initiatives.
“BPDI is hoping to incorporate positive aspects of DID, where DID has succeeded,” she says. “It could be really helpful because REDD+ funds are supposed to go directly to the people, and DID is already used to channel funds to subnational governments.”
Meanwhile, from the ICCTF, Eko Putranto says talks are underway with the government and donors for a new institution for climate change funds, offering a way for all funds to go through a single channel.
SUGAR AND ANTS
Aside from the efficiency and effectiveness of institutions, the matter of equity was also high on the agenda at the Jakarta discussion, as well as transparency in how and where funds are channeled.
In an opening speech, P3SEPKI head Syaiful Anwar brought up the Indonesian adage, “ada gula, ada semut” – “where there is sugar, there are ants”. One of the greatest challenges, he says, is to find a way to make sure payments eventually reach the hands of those implementing REDD+ on the ground in ways that motivate them to adopt and continue environmentally sound practices.
CIFOR researcher Arwida raised the problem of “elite capture” of funds before they reach communities.
“For example, if implementing organizations have high operational costs, and hire an expert every time they create a program, that can be a reason for a less than significant amount of money actually reaching the local community and having the desired impact,” she says.
“But on the other hand, we’ve also learned that expert intermediaries or facilitators can be crucial in cases where communities do not have the capacity to prepare proposals, calculate costs and conduct negotiations with the institutions that are distributing the money. Employing these experts costs money, so it’s a challenge to balance the aims of reducing operational costs and ensuring there is impact,” she adds.
Tenure is another issue to look out for, she warns.
“We have this national target but if it is not synchronized with subnational land-use plans, then it will be a total disaster. That’s another reason why coordination with subnational governments is crucial for REDD+.”
Coordination is also essential to avoid the trap of “double payments”, says Djaenudin from P3SEPKI.
“Think of REDD+ activities in national parks,” he says. “What should the funding mechanism be? National parks are managed by the central government. So would funds come from DID, BLU P3H and others? It would be as if the central government is paying itself! We haven’t resolved these kinds of issues yet.”
The researchers hope that the Jakarta dialogue helped to identify some of these gaps, and find a way forward.
“I think it’s very helpful to have people from the national level and subnational level together in one room, so we can start asking questions. Based on the explanations and perspectives of each we can immediately see where the gaps lie,” Arwida says.
“From there we can start to gather lessons learned, and make recommendations for better policy.”
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