An emerging ‘Job Creation Law’ in Indonesia seeks to reduce unemployment and boost GDP by deregulating investments and encouraging entrepreneurialism. This budding pro-business landscape promises new opportunities and challenges for REDD+ [reducing emissions from deforestation and degradation], as well as a stronger legal basis for social forestry.
In a 2022 brief, scientists from the Center for International Forestry Research and World Agroforestry (CIFOR-ICRAF) examine the law’s possible implications. For example, the overarching regulatory changes could affect land management, tenure and decide who is responsible for forest-fire prevention, among other things. The government officially released the Government Regulation in Lieu of Law Number 2 at the end of 2022, encouraging actors to work together to balance economic development with environmental objectives.
“Balancing business and carbon emissions is an ongoing process,” said CIFOR Senior Research Officer, Bimo Dwisatrio. “Time has shown us that the state benefits from cooperating financially with the private sector to fund projects that help Indonesia meet its NDCs [Nationally Determined Contributions]. Under the Job Creation Law, we are interested to know which land areas will be set apart for NDCs via REDD+ and which will be converted for the business sector.”
Dwisatrio is referencing a part of the proposed law that could convert degraded land areas — which were designated as REDD+ monitoring areas (WPKs) in 2010 — into agricultural land or “food estates.” The reasoning would be that while these WPKs were once valuable for results-based carbon payments, they no longer are and would therefore better serve the private sector. However, the law has not gone into effect yet and future research is needed to understand what the requirements will be to remain a WPK under REDD+ (e.g. how much canopy cover or what biodiversity index).
One projected benefit of the Job Creation Law is its emphasis on generating rural ‘green’ jobs by making it easier for communities to obtain land permits. Creating a stronger legal basis for social forestry could help spark environmentally friendly entrepreneurialism because allows the communities to take ownership and manage sustainably for long-term benefits.
Having a permit does not guarantee community members will choose to start a ‘green’ business at home, cautions Dwisatrio. They may choose to migrate to cities where they can earn money directly, especially if they don’t have enough capital to start and sustain a local business. As with REDD+ projects, local buy-in hinges on whether benefits are tailored to people’s needs on the ground, he believes. If people can manage their land sustainably while earning money and meeting their daily needs, they probably will.
“[To make ‘green’ jobs work through legislation] you need enabling conditions and inclusive decision-making processes,” agreed Pham Thu Thuy, CIFOR-ICRAF’s team lead for Climate change, energy & low-carbon development. “With the brief, we wanted to highlight the need for better cross-sectoral coordination and collaboration in addressing the very complex issue of this upcoming Job Creation Law.”
While the brief discusses the Job Creation Law’s impacts on REDD+, Indonesia has implemented many other strategies to help preserve the third largest tropical rainforest on Earth (behind the Congo Basin and the Amazon). This includes, most recently, the Long-Term Strategy for Low Carbon and Climate Resilience 2050 (LTS-LCCR). Its commitments to REDD+ began in 2010, and deforestation has declined since then. Despite the agreement ending in 2019, a second REDD+ contract (signed on 12 September 2022) signals ongoing commitment to tackle forest-related emissions alongside economic development.
“With the new REDD+ agreement, everyone is very hopeful that it will create a financial incentive and platform for Indonesia to continue mitigating and adapting to climate change through emissions reductions,” said Pham.
This work was carried out as part of the Center for International Forestry Research’s Global Comparative Study on REDD+ (GCS REDD+). The funding partners that have supported this research include the Norwegian Agency for Development Cooperation (Norad, Grant No. QZA-21/0124), International Climate Initiative (IKI) of the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU, Grant No. 20_III_108), and CGIAR Research Program on Forests, Trees and Agroforestry (CRP-FTA) with financial support from CGIAR Fund Donors.
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