Study: Indonesia's forest-clearing moratorium underdelivered — but so did donors
An eight-year effort by Indonesia to protect its remaining forests contributed just 4% of its emissions reduction target, yet still yielded carbon savings worth far more than it was paid under a deal with Norway.
That’s the finding from a new study, which calls for better carbon pricing and financing at the global level that more fairly reflects the global benefits of mitigating climate change from reducing deforestation.
In 2011, then-President Susilo Bambang Yudhoyono instituted a moratorium on the clearing of primary forest and peatlands that hadn’t yet been allocated for plantation or logging concessions. The move was aimed at slowing the conversion of these forest types for palm oil, pulpwood and timber, which together are responsible for almost half of the country’s forest loss.
The moratorium was also part of Indonesia’s commitment under a deal signed with the Norwegian government in 2010, in which the latter pledged to pay $1 billion if the former could successfully slow its emissions from deforestation and land use change.
But between 2011 and 2018, the forest-clearing moratorium was largely ineffective, the study says: during that period, it managed to prevent just 150,089 hectares (370,878 acres) of deforestation in dryland forests covered by the moratorium compared to dryland forest outside of the eligible area. Avoided deforestation in peatlands during the same period were effectively null, it found.
In all, the study authors said, moratorium areas retained an average of 0.65% higher forest cover compared to non-moratorium areas. The total avoided deforestation as a result of the moratorium during the 2011-2018 period resulted in a reduction of up to 86.9 million tons of carbon dioxide equivalent (CO2e).
Study co-author Ben Groom, the Dragon Capital Chair in Biodiversity Economics at the University of Exeter Business School, U.K., called this figure “a small dent” in Indonesia’s overall commitment to mitigate climate change. In context, it represents just 4% of the 29% emissions reduction target by 2030 that Indonesia has committed to in its nationally determined contribution (NDC) to the Paris climate agreement.
“This is a problem because in Indonesia around 65% of emissions are from forest areas, so the forest sector is a very important place to stop emissions coming from if they’re going to meet their NDC commitments for the Paris Agreement,” Groom said.
‘Cost-effective carbon’
Yet even this relatively small reduction only earned Indonesia a fraction of what it should have gotten from Norway.
Under the deal, Indonesia should have earned $5 for each ton of CO2e it reduced through preventing deforestation, the same carbon price that Brazil gets under a similar agreement with Norway. That means the 86.9 million tons CO2e in avoided emissions that it achieved from 2011-2018 should have been worth $434.5 million.
But the only payout announced to date by Norway under the $1 billion scheme was in 2019, when it agreed to pay Indonesia $56.2 million for preventing the estimated emission of 11.23 million tons CO2e from avoided deforestation in 2017.
“We find that Norway should probably been paying a lot more because the impact starts much earlier,” Groom said. “From 2013 we estimate some modest but statistically significant changes, yet the payment was only calculated for 2017, with no proper counterfactual.”
With its $56.2 million, Norway effectively bought emissions reductions at a rate of less than $1 per ton. And while this represents value for money from Norway’s perspective, it could easily be seen as unfair from Indonesia’s perspective, the researchers said.
Groom noted that that carbon prices in other jurisdictions are much higher, such as the $50 per ton used by the U.S. government and $125 per ton used by the state of New York. And there’s a case to be made, he added, that prices should be higher still if the global benefits of mitigating climate change are accounted for — up to $200 per ton of CO2e.
“So while Norway got a good deal, and cost-effective carbon policy is important, it wasn’t necessarily fair from an Indonesian perspective not to get a greater share of the global benefits,” Groom said.
This, he said, might have contributed to Indonesia’s decision to terminate its agreement with Norway in September 2021. The Indonesian government cited delays in payment that were agreed by both parties as the reason for ending the agreement. It accused Norway of holding up payments by making fresh demands, such as requesting Indonesia show documentation for how the money would be spent and other operational details.
Money to keep trees standing
Besides the money required to protect its forests, such as for patrols, there’s also a significant opportunity cost to Indonesia since clearing forests for agriculture might yield greater financial returns than what donor countries offer to keep the trees standing. A fair carbon price would be one that at least covers this opportunity cost of using the forest for its most profitable, alternative use, which in Indonesia’s case is oil palm cultivation.
The researchers said they did some back-of-the-envelope calculations, based on palm oil profits and aboveground carbon stocks taken from published literature, and came up with a low-end estimate of around $120-130 per ton of CO2e for a fair carbon price for Indonesia.
A 2020 study estimates the average opportunity cost in Indonesia for avoiding oil palm-based deforestation is $24.42 per ton of CO2e — lower than Groom and his colleagues’ estimate, but still higher than what Norway promised or delivered.
Groom and colleagues said Indonesia’s remaining forests should be viewed as natural capital stocks with high global values.
“Indeed the loss of these forests would not only be catastrophic for the global climate but would also contribute significantly to the ongoing mass extinction event,” they said.
“Indonesia’s tropical forests remain of critical importance for the global climate and biodiversity,” they added. Read More…
