DR. DODIK RIDHO NURROCHMATINSTITUTE OF FOREST POLICY & ECONOMICSFACULTY OF FORESTRYBOGOR AGRICULTURAL UNIVERSITY

KOICA-FORDA-CIFOR REDD+ WORKSHOP:“FINDING EFFECTIVE WAYS TO IMPLEMENT REDD+ IN LOMBOK”21-22 June, 2011 ,The SantosaVillas and Resort, Senggigi, Lombok

ROAD TO LOW EMISSION DEVELOPMENT

2005

• MONTREAL

• COP-11

2007

• BALI

• COP-13

2009

• COPENHAGEN

• COP-15

2010

• CANCUN

• COP-16

LOW EMISSION SCHEMES?

2012END OF KYOTO

PROTOCOL

RED

REDD

CDM

REDD+

REDD++� included forest conversion

(agriculture, estate, mining, etc.)

Source: adapted from Lasco, RD in Rodel (2009); DNPI (2010)

FORESTS & CARBON SCHEMESFORESTS & CARBON SCHEMES

Changing Actions Actions

� PES (PAYMENT FOR ENVIRONMENTAL SERVICES)

� LR (LIABILITY RULES), PPP (POLLUTERS PAY PRINCIPLE)

� PDR (PURCHASING DEVELOPMENT RIGHT)

Payment Environmental Services (PES):� (a) a voluntary transaction where� (b) a well-defined environmental service� (c) is being “bought” by a service buyer� (d) from a service provider� (e) if and only if the service provider secures

service provision

Wunder (2005) in Engel et al. (2008)

KEYWORD: ENVIRONMENTAL SERVICES

CONVERSIONVALUE

CONSERVATIONVALUE

CONSERVATIONVALUE + PES

Sources: Pagiola & Platais (2007): Engel et al. (2008)

� Liability Rule related to the rule of payment by responsible party. This rule has been widely accepted and in industrial communities this concept are often called as “polluter pays principle (PPP)”.

KEYWORD: POLLUTER PAYS

Method of Protection of Entitlement

Property Rule Liability Rule

Holder of Entitlem

ent

Plaintiff [1]

Injunction Against Pollution

[2] Pollution Allowed,

Compensation Awarded to Plaintiff

Defen

dan

t [3] Pollution Allowed, No Compensation

Awarded

[4] Injunction Against

Pollution, Compensation Awarded to Defendant

CARBON OFFSET

REDD

Adapted from Krauss (1999)

� PDR programs might be suggested when government (or

other parties) alarmed at the loss of certain function of lands

(forests, farms, etc.) and the government (or other parties)

funded the acquisition and retirement of development rights

in order to preserve those lands in perpetuity.

� Through PDR programs, the government (public, or other

parties) provides a cash payment to a landowner for the value

of the development rights associated with a land parcel. The

owner still owns the land, but is compensated for

relinquishing the right to develop it.Source: Stein et al. (2001)

KEYWORD: DEVELOPMENT RIGHT

� The cost for preservation,� Development pressures on the land,� Productivity for agricultural and other economic

uses,� The condition of the land in general,� Environmental and cultural benefits of

preservation,� Proximity to other preserved lands,� Amount and value of preserved lands� Leverage of matching funds coming from other

funding entities.Source: Stein et al. (2001)

1. ACTORS & PROPONENTS2. SALE & PURCHASE TERMS3. PROJECT DEVELOPMENT &

IMPLEMENTATION4. COSTS & TAXES5. DEFAULTS & REMEDIES6. GENERAL PROVISIONS

� Seller� Buyer� Location� Type of schemes (i.e. AR-CDM, REDD, etc.)� Other parties (related stakeholders and their

positions)

Source: ERPA, UNDP

� Volume� Delivery date(s)� Transfer of legal title = VERY IMPORTANT� Length and number of Verification Periods � Payment (timing and method) = VERY

IMPORTANT� Currency� Option to purchase additional creditsSource: ERPA, UNDP

� Responsibility for project implementation (validation, registration)

� Monitoring of emission reductions / removals � Verification / Certification

(Source: ERPA, UNDP)

VERY IMPORTANT!Current situation in Indonesia: poor implementation due to lack of practical regulations.

� Responsibility for costs of validation, registration, verification / certification

� Responsibility for international taxes and local taxes(Source: ERPA, UNDP)

VERY IMPORTANT!

� Delivery shortfall provisions� Events of default� Time period to cure default� Remedies� Termination

(Source: ERPA, UNDP)

VERY IMPORTANT!

� Governing laws� Assignment� Amendments� Force Majeure� Representations & warranties� Compatibility to national & UNFCC policies

(Adapted from ERPA, UNDP)

VERY IMPORTANT!

� AMBIGUITY OF AUTHORITIES� Central and regional (province & regency)

� Inter-sectoral (cross-ministeriums)

� Intra-sectoral (cross-divisions) : area location, forest function, and activities.

� LACK OF TECHNICAL DETAILS� Detail required documents, e.g. funding guarantee,

legality of area, etc.

� Detail of technical implementation, e.g. institutional schemes (IUPJL, IUPHHK restorasi, HKm, etc.), profit sharing mechanisms, etc.

DA Applicant Forestry Minister WG on Climate Change

Application documents:

•DA design

•Funding guarantee

•Contractual agreement with other

party (ies)

Forestry Minister Approval

DA-REDD Implementation

Receiving application documents

Formulating Criteria & Indicators for

DA-feasibility

Forestry Minister Approval:

•Site & area of DA

•Period (max. 5 years)

•Risk and benefit sharing Letter draft: Approval or Rejection

Valuation:

Feasibility of DA

REDD Developer Governor District Head/Major

Application

documents:

•Legality of area

•Location

•Plan

Application letter

Approved/rejected

Recommendation of Regional

Government

Result

Application letter

Evaluation:

Land status, spatial plan

(RTRW), fit to REDD

criteria, dev. priority,

poverty alleviation

Forestry Minister REDD Comission

Evaluation

Approval

Implementation

Max. 14 days

14 days

No LicenseProfit Distribution

Government Community Developer

1. Forest Concession (HPH) 20% 20% 60%

2. Forest Plantation (HTI) 20% 20% 60%

3. Ecosystem Restoration (HPH Restorasi) 20% 20% 60%

4. Community Forestry Plantation (HTR) 20% 50% 30%

5. Community Forest (Hutan Rakyat) 10% 70% 20%

6. Community Forestry (HKm) 20% 50% 30%

7. Costumary Forest (Hutan Adat) 10% 70% 20%

8. Village Forest (Hutan Desa) 20% 50% 30%

9. Forest Management Unit (KPH) 30% 20% 50%

10. Special Purpose Forest (KHDTK) 50% 20% 30%

11. Protection Forest (HL) 50% 20% 30%

� MINIMUM LEAKAGES� RESPECTS & BENEFITS COMMUNITY� CARBON PRICE IS EQUAL OR HIGHER THAN

THE OTHER ALTERNATIVES OF ECONOMIC USE

� REDD+ HAS TO CREATE ADDED VALUE IN TERMS OF:1) GDP2) LINKAGES (forward & backward linkages)

3) MULTIPLIER EFFECTS (output, income, & employment)

THANK YOU