Can we realize a ‘sustainable landscape’?

By Fitrian Ardiansyah, published in Coal Asia, 25 January – 25 February 2015, page 142-144

for the pdf version (584kb), please see: Coal Asia 51_Fitrian Ardiansyah_ISLA_143-144_Jan-Feb2015

Coal Asia 51

The global population and the demand for food, fiber and fuel are sharply on the rise. As a consequence, there is a constant question whether our human civilization can meet such demand while ensuring that our resources, landscape and ecosystems can be sustainably managed for the long-term.

In Indonesia alone, the Agriculture Ministry projects that there are 23.3 million tons of rice needed in 2015 and 28.1 million in 2030 to meet the demand of 255 million and 308 million people in the corresponding years. It is clear that threats to food security will grow as the population continues to soar and economic activities develop, while land availability becomes more limited.

Indonesia’s primary energy supply and demand per capita show that the country remains relatively strong in the context of energy security issues, indicated by a sufficient energy provision per capita. Data in 2013, however, show that the average growth of supply was only 3.5%, below the average growth of demand at 4%. Without proper interventions and measures, Indonesia is likely to have an energy security issue in the future.

Development of Indonesia’s land and resources is also driven by the global demand. Palm oil is a prime example of this. The skyrocketing global demand for vegetable oils has pushed land development all over the tropics including in Indonesia. Currently, this commodity is grown on 16.4 million hectares worldwide and more than majority of the production is in Indonesia and Malaysia.

Global and domestic demand for coal, to some extent to compensate the shift from oil dependency, has dramatically increased the production of coal. This is indicated by a persistent growth of production of coal, with the proportion of export reaching above 90% in the period of 2007-2009, as reported by the Energy and Mineral Resources Ministry in 2012.

Meeting such demand would require Indonesia to continue exploiting its resources and land. These development activities would certainly impact on local communities and our remaining fragile ecosystems.

The development agricultural, forestry and energy sectors contribute to the country’s economy but at the same time, as a result, water, land and other natural resources are becoming scarcer.

The use of water for agriculture, mining and industry means increased competition among cities, industrial estates and farmers. Concerns are also growing about the large-scale overdraft of groundwater and water contamination from agricultural runoff, and industrial and mining waste.

The increased use of land, the conversion of forests and the extraction of natural resources, mean continuous deforestation, and ecosystems and land degradation. In addition to direct forest or ecosystem conversion, poor soil management practices, frequent use of heavy machinery and improper use of technology lead to a significant reduction in the productive capacity of land.

Furthermore, the growth of land use and land use change can create disputes over land rights and ownership leading to conflicts, with other land users, local and indigenous communities.

Deforestation and the expansion of land for agricultural, industrial and mining use also exacerbates climate change, contributing to greenhouse gas emissions, from draining peat lands and clearing natural forests.

Based on the above situation and future trends, initiatives to address land and water issues in the context of landscapes are urgently needed to be developed and realized. Such initiatives ought to be inclusive and more importantly acknowledging the role of agricultural, industrial and mining production as contributors to problems as well as solutions.

There are an increasing number of commodity companies, linking to international market, that have developed initiatives to mitigate their direct impacts on land and water through supply chain management initiatives. There are also mining companies and associations that produce best management practices and industrial codes regarding land, forest and water management.

These sustainability standard attempt to incorporate indicators that impact social, land and water parameters beyond the production area. But these standards primarily regulate practices in farming, forest and mining concessions so that these concessions or firms can be certified. Areas outside the concessions, including important ecosystems in the buffer zone, wildlife corridors, and land utilized for indigenous communities may not be incorporated or supported.

In the context of a landscape, these corporate sustainability standards contribute to the betterment of environmental management, but only in concession areas. Such standards may leave huge gaps and still lead to undesirable environmental and social impacts for a particular landscape.

Landscapes are patchworks of interlinked pieces of land, ecosystems, water and species (including human). It is, therefore, important for the existing sustainability standards and corporations that are involved in such standards to invite and work together with other corporations, government bodies, organizations and communities to realize a better environmentally managed landscape.

Realizing a healthy mosaic landscape requires a challenging multi-stakeholder approach. This is because ownership of, responsibility for, and impact on a landscape lie in the hands of a multitude of stakeholders.

Also, different stakeholder groups (such as local and regional governments, companies from various sectors, local farmers and communities) can have very different perspectives and thus different incentives to want to look beyond their own direct interest.

Front-runners of sustainability, both from corporations, government bodies and civil society groups, need to join forces so that an initiative to promote sustainability at a landscape level can be realized firmly.

They can act as ‘movers and shakers’ in convening different stakeholders and garnering support from them, building public-private-NGOs-community partnerships as a way to transform agribusiness and energy markets to sustainability, from a bottom-up landscape level.

At a landscape level, for such movement to be successful, a shared-vision and model of sustainable land and water management need to be formulated and agreed by different stakeholders. These vision and model are crucial to be used as the basis for addressing issues and finding solutions at the landscape level.

Government regulations and relevant legal framework and innovative incentives are also imperative to ensure that this landscape initiative can be sustained in a longer term and land users can be supported.

If a sustainable landscape initiative can be matched with existing sustainability standards at the global and national levels, learning, innovation and improvement can be generated and desirable environmental and social impacts can be achieved.

If this is the case, a viable governance model from the landscape to global level that supports sustainable practices is not only considered feasible but may well be one of key solutions that many stakeholders involved in land-related development sectors have been searching for.

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The writer is climate and sustainability specialist, and the new Indonesia Country Director for IDH-The Sustainable Trade Initiative since March 2015. He can be reached at Ardiansyah@idhsustainabletrade.com

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The effectiveness of the ‘marriage’ of environmental and forestry ministry

By Fitrian Ardiansyah, published in Coal Asia, December 17 2014 – January 17, 2015, page 78-79

for the pdf version (508kb), please see: Coal Asia 50_Fitrian Ardiansyah_78-79_Dec2014_Jan2015_KLHK

Coal Asia 50

 

Reducing deforestation and protecting the fragile environment while promoting forest production have been proved to be a challenging task for the previous forestry ministry. The merger of the environmental and forestry ministries into one agency is expected to at least ease the level of deforestation that is relatively high in Indonesia.

There are a number of challenges to achieve such an objective.

Traditionally, the forestry ministry has duties and functions to formulate and implement any government affairs in the field of forestry, including the designation, management and monitoring of the national forest estates, covering approximately 134 million hectares (70 percent of Indonesia’s land surface) in 2011.

In the same year, however, it was reported that only 98 million hectares of these national forest areas were still forested (52 percent of the land surface).

Other sectors and activities such as agricultural plantations and mining have been blamed for such massive forest loss but since the forestry ministry has also been pushing to continuously perform by increasing Indonesia’s export of timber related products, including plywood and pulp and paper, the ministry is also significantly responsible for continuous deforestation.

Several regulations, used as a regulatory framework to support the forestry ministry, clearly facilitate and support individuals, cooperatives, corporations and other entities to harvest and exploit timber and other forest products in the remaining forest areas.

These, among others, are Government Regulation (GR) No. 7 of 1990 on Industrial Timber Plantations, GR No. 51 of 1998 on Forest Resource Rent Provision, GR No. 3 of 2008 on Revision of GR No. 6 of 2007 on Forest Planning and Formulation of Forest Management and Utilization Plan, Minister of Forestry Regulation (MoFR) No. 35 of 2008 on Permits for Primary Forest Industrial Activity, and MoFR No. 50 of 2010 on Granting Licenses for Timber Production in Natural Production Forest.

In contrast, the environmental ministry has the government’s duties to protect and sustainable manage the environment, including the formulation and implementation of national policy and program, the regulation of environmental impact assessment processes, and the collection of relevant environmental data. This ministry has a big stake to support forest protection and conservation.

Unlike the forestry ministry, the environmental ministry has no direct control over particular forest areas, although they can conduct environmental monitoring. This ministry also had limited budget and personnel.

In some cases, the environmental ministry has proved to be effective in monitoring environmental protection as well as prosecuting those suspected to be violating environmental regulations.

One of recently few successful cases is the local court’s ruling in Aceh in January 2014 that found a palm oil company, guilty of illegally burning forests within the Tripa peat swamps, considered as part of the protected fragile Leuser Ecosystem, and has to pay a fine of approximately US$9 million as compensation and US$21 million for restoration activities of the affected forests.

In this situation, the environmental ministry was seen as an instrumental part in ensuring law enforcement in the land use and forest sectors.

The combination of environmental and forestry ministry, if both capacity and capability can be effectively utilized and coordinated, can lead to better law enforcement activities, signaling the seriousness of the current administration to uphold and execute the law and regulations.

This combination, however, can undermine forest protection and conservation, and sustainable forest management, and lead to further deforestation, if exploitative nature of forest and similar industries appears to be dominantly coloring the decision of the combined ministry.

The environmental ministry, according to Law No. 32 of 2009 on Environmental Protection and Management, for instance, has been given a slightly greater control over monitoring and reviewing other governments’ policies and permits, especially if these have potential environmental risks.

Such authority to review other government’s policies and permits can be strengthened within the combined ministry especially with the fact that the current combined ministry has presumably more human resources and budget.

The combined ministry can, however, undermine the role of the previous environmental ministry to review and monitor and, to some extent, control environmental management and protection, in the case of forest and land management, if decisions have been made internally to prefer forest exploitation.

When it comes to laws and regulations on environmental and forest protection, the combined ministry at least now has a more than sufficient legal umbrella, including Law No. 5 of 1990 on Conservation of Biodiversity and Ecosystems, GR No. 60 of 2009 on Revision of GR No. 45 of 2004 on Forest Protection, in addition to Law No. 32 of 2009.

To show that the combined ministry has become better in promoting environmental and forest protection, the ministry can use specific regulations previously utilized by the forestry ministry to deal with few upcoming challenges, including the recent Aceh provincial spatial plan (Qanun No. 19 of 2014) that does not mention the world renowned Leuser ecosystem, and the importance of its protection.

The home affairs ministry has responded to this plan and mentioned that there are 27 points needing to be corrected or revised by the provincial government.

The new environmental and forestry ministry can assist the home affairs ministry and the provincial government by showing that there are regulations such as PD No. 33 of 1998 on Leuser Ecosystem Area Management and Presidential Instruction (PI) No. 5 of 2001 on Eliminating Illegal Logging and the Illegal Timber Trade in the Leuser Ecosystem and Tanjung Puting National Park that need to be followed by the provincial government and incorporated as a regulatory framework of the provincial spatial plan.

The combined ministry can assist the provincial government and other sub-national governments to develop their respective areas by basing on the principles of sustainable development and green economies.

The combined ministry can further work together with relevant ministries, including the finance ministry, to develop further incentives so that other government’s ministries and local governments to mainstream and implement such principles.

The current administration has decided to combine environmental and forestry ministries. Only with the actual outcomes on the ground, such as reduced deforestation, that this administration will be considered successful compared to the previous one.

The combined ministry now has the chance to prove to the general public that combining both ministries is the right decision for the sustainability of Indonesia.

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The writer is climate and sustainability specialist, a doctoral candidate at the Australian National University, and the recipient of Australian Leadership Award and Allison Sudradjat Award. He can be reached at fitrian.ardiansyah@anu.edu.au

New government, old challenges in natural resource management

By Fitrian Ardiansyah, published in Coal Asia, August 17 – September 20, 2014, page 142-143

for the pdf version (9.8MB), please see: Opinion Fitrian Ardiansyah_CoalAsia_AugSep2014

 

CoalAsia_AugSep2014_New Government

The General Elections Commission of Indonesia confirmed Joko Widodo as the winner of the presidential race winner a month ago, paving the way for the creation of a new government that will run for the next five years and address a huge challenge in managing the country’s natural resources.

Although his opponent, Prabowo Subianto, refuses to admit defeat, many scholars and observers believe that Joko Widodo, or ‘Jokowi’ as he is popularly known, will be sworn in as the seventh president later this year.

Officially, the Constitutional Court has to declare Jokowi as the country’s elected president. Nevertheless, whoever the Indonesian next president is, he needs to hit the ground running, taking responsibility for forming a government that can deal with difficult issues such as balancing the country’s economic development, social welfare and environmental protection.

One immediate challenge, that the new president and his cabinet need to address, is regarding fossil fuel and energy subsidies.

High energy subsidies create significant costs for Indonesia and its people, impacting on the economy, the environment and Indonesia’s energy security.

Indonesia-Investment reports that the government allocated IDR300 trillion (US$26.3 billion) on energy subsidies in 2013 (mostly on fuels and electricity), and this year the government will spend at least IDR282 trillion (US$24.7 billion).

In general, such subsidies hinder Indonesia’s sector development, including in poverty alleviation, education and healthcare. In a 2014 report for the International Institute
for Sustainable Development, Ari A. Perdana argues that fossil fuel and energy subsidies do not support low-income households very efficiently and can effectively ‘crowd out’ government spending on alternative policies.

The relatively high subsidies also inhibit the development of indigenous renewable energy sources such as geothermal, biomass, bioenergy and micro-hydro. In 2009, Agus Purnomo, the special advisor on climate change to Indonesia’s president, argued that cutting fossil fuel subsidies is the key to bolstering the renewable energy sector’s
competitiveness.

The new president, therefore, not only has to lay out a policy to cut fuel subsidies immediately but also to develop programs and appoint energy and finance ministers who can use the fund shifted from the subsidies, to help seed investment in
renewable energy development, enabling Indonesia to secure its future energy supply and move toward a sustainable energy growth path.

Jusuf Kalla, the running mate of Jokowi, told Reuters a month ago that a priority program in their first 100 days in office will include the reduction of fuel subsidies. This is likely to be the first big test for the new government since the issue of fuel subsidy reduction is a politically sensitive one.

If the new government is successful to approach and address this, including to convince a ‘divided parliament’ and the general public, the new president and his cabinet have a good platform to create incentives for boosting Indonesia’s economic development, creating incentives for saving energy and finding renewable sources, and eventually reducing the country greenhouse gas emissions.

Another key challenge for the new government in managing the country’s natural resources is to formulate the future development platform of Indonesia, particularly whether the country will still depend heavily on natural resource exploitation.

Continuous natural resource exploitation has contributed significantly to Indonesia’s economic strength but, at the same time, this has led to resource depletion, and environmental degradation and related disasters.

The National Agency for Disaster Management (BNPB) reveals that for the period of 1815-2014, environmental and climate related disaster events have been prevalent, including floods (38 percent), strong wind (21), landslides (16), and drought (12). A study published by the United Nations Environment Program, for example, estimates that in the period of 2010-2013, flood events in Kalimantan have inundated more than 190,000 houses and displaced more than 700,000 people, resulting in significant social and economic costs.

Such disasters reflect on the past and current natural resource management regime of Indonesia as a country, particularly in the management of (or lack of management of) its forests, agriculture, land and key natural resources. Such disasters cost and will eventually shake the very foundations of Indonesia’s economy.

To date, Indonesia has one of the world’s largest rainforest areas but the Indonesian Forestry Ministry and the Center for International Forestry Research show that roughly only one-third of these forest areas are covered by primary forests, one-third by logged-over areas and one-third by vegetation other than forests.

Some scholars argue that forests in Indonesia are still disappearing fast. An article published in the 2014 journal Nature Climate Change suggests that the annual deforestation rate of Indonesia is twice the rate reported by the Indonesian government.

To address this issue, the new government needs to adopt a policy that ensures that halting deforestation and peat land loss is the center of Indonesia’s development policies and programs.

The current president, Susilo Bambang Yudhoyono, and his cabinet have managed to introduce forest and peat land conversion moratorium as well as establish a national REDD+ (reducing emissions from deforestation and forest degradation) agency.

Such a policy and new agency, however, have already been confronted by a huge task, particularly in being seen to be inclusive, taking into account the voices and interests of various ministries, sectors, layers of governments, and groups of stakeholders such as from local communities and the private sector.

The new government needs to realize that in a big, democratic and decentralized country such as Indonesia, any policy formulated or institution set-up needs all the support it can get to ensure that the desired changes can take place on the ground.

The new government, therefore, needs to rethink its future cabinet structure that allows good coordination among key ministries, such as development planning, forestry, agriculture, energy and the environment, and key agencies, such as the national climate change council and the REDD+ agency.

The new government will be judged by its selection of these ministers and heads of these agencies, and whether these leaders are those representing big businesses or willing to see Indonesia achieving sustainable development outcomes.

In addition, the new president should be much firmer in showing his leadership so that any decision would be followed and applied by those ministries and agencies accordingly.

Fred Stolle of the World Resources Institute, for instance, highlights this issue by stating that Indonesia has relatively good policies on forestry but the biggest challenge of all is to follow up the policies with effective implementation and law enforcement.

This first 100 days of the new government, therefore, would serve as the period for Indonesians to scrutinize the selection of ministers and formulation of key policies of their elected president and vice president.

In general, Indonesian citizens during this period, and even before, have to voice out and remind the elected government about the needs for significant transformation of the country’s current natural resource development, pushing for more efficient and sustainable use of natural resources.

For the elected president and vice presidents, they have to show that they can lead Indonesia, by formulating and implementing their vision, policies and programs that bring about the country’s sustainable development outcomes.

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The author is acting executive director of Pelangi Indonesia, a doctoral candidate at the Australian National University, and the recipient of Australian Leadership Award and Allison Sudradjat Award. He can be reached at fitrian.ardiansyah@anu.edu.au.

Climate change and Indonesia’s key resources

By Fitrian Ardiansyah, published in Coal Asia, February 22 – March 22, 2014, page 150-151

for the pdf version, please see Opinion Fitrian Ardiansyah_CoalAsia_FebMar2014

Climate change and Indonesia ke resources

In his speech on a recent visit to Jakarta, the US Secretary of State John Kerry calls the world to pursue actions on climate change. This has propelled climate change back on the global news headlines.

With the current negotiation on climate change at the UN level converging toward Paris in 2015, expectedly resulting in a global climate change treaty agreed by all nations, the statement made by John Kerry is like a breath of fresh air since many countries have been waiting for the US examples and leadership in this issue.

A bilateral agreement between China and the US – reached a day before his visit to Indonesia – to cooperate more closely on combating climate change may potentially lead to wider and stronger commitments to curb greenhouse gases (GHG) by both and other big countries.

Any positive movement and actions coming out from the two superpowers are significant steps toward reaching a global commitment.

For Indonesia, actions from the two superpowers and wider global actions, including an agreed treaty, will definitely help and strengthen the country’s existing policies and programs on climate change.

As an archipelagic nation, Indonesia has started to experience climate change impacts, and if not seriously dealt with, these could further put pressure on the country’s economy, society and natural environment, which include extreme and unseasonal weather, droughts, flooding and trans-boundary haze.

At the same time, stronger actions on climate change at the global level are likely to provide a platform for Indonesia to decouple its economy from GHG emissions. Global agreed actions, particularly that include stronger commitments in terms of GHG emissions reduction, can in turn provide economic incentives for both state and corporate actors to reduce their emissions.

Without such incentives, it will be challenging for an emerging economy like Indonesia that has a high and relatively steady economic growth, a huge natural resources base and projected population expansion, to reduce the growth of its GHG emissions.

Sufficient economic incentives added with appropriate policies and programs can assist Indonesia to achieve balanced development – development that ensures economic growth and climate change mitigation.

To be able to attain this, however, the government of Indonesia may require specific interventions at the national and sub-national levels in key sectors such as energy (with key commodities including coal, gas and renewables) and agriculture (with key commodities including palm oil).

In the energy sector, Indonesia has significant resources and reserves of coal and gas, producing more this type of energy sources, not only for domestic consumption but also for meeting theexport demand. The 2012 data of the Energy and Mineral Resources Ministry indicate a persistent growth of production of coal, with the proportion of export reaching above 90 percent in the period of 2007-2009.

The increased domestic use of coal means that emissions from coal, which was minor contribution in 1980s and remained below 10 percent until late 1990s, have spiked in the last ten years. In 2009, according to the Energy and Mineral Resources Ministry, the contribution of emissions from coal was almost 40 percent.

The use of fossil fuels – i.e. coal, gas and oil – appears to continue playing an important role in the country’s energy mix in the future. Yet, to achieve a strong economic growth while ensuring the reduction of GHG emissions, Indonesia needs to dramatically boost investment in renewable energy and energy conservation (e.g. clean technology, eco-efficiency, eco-designs, etc.).

Boosting and attracting investments require policy reforms, especially which relate to energy subsidies and fundamental institutional changes. Many economists believe that huge energy subsidies have hindered the development of Indonesia’s renewable energy and can lead to energy security issues in the future.

In the agriculture sector, Indonesia has a challenging future in terms of providing food for its population. Several projections, for example, reveal that Indonesia’s rice consumption would exceed its production in 2020 and beyond. One of the possible factors causing this is likely to be the issue of land availability.

If climate change impacts are taken into consideration, the agricultural production may fall below these current projected figures. Climate change not only could lead to the reduction of the volume of agriculture commodities produced but may also result in other related damages and costs.

It is crucial, therefore, for the government to formulate policies and programs which ensure that the agriculture sector can cope with climate change challenges.

The current programs initiated by the Agriculture Ministry including by developing crop varieties which can cope with climate challenges (i.e. resilience to drought, flooding and diseases) and improving farmers field education on climate change and
variability, need to be further supported, especially at local level (i.e. ensuring farmers to have support so that they can increase their adaptive capacity).

Such programs and the lessons-learnt resulting from these not only can help Indonesia to develop climate change adaptation in the agriculture sector but also contribute to the negotiation of global adaptation programs and funds.

When it comes to discussing the agriculture sector, palm oil is undeniably one of the most important commodities for Indonesia.

With the skyrocketing demand for palm oil over the past 25 years, the challenge of climate change (both in terms of the future demand for biofuel and issues associated with deforestation) and the increase in capability to produce more, world production of palm oil, including in Indonesia, is expected to nearly double by 2020.

The amount of land given over to oil palms that has multiplied since the mid-1970s would even dramatically increase in the future.

Such increase in palm oil production leads to challenges and opportunities for Indonesia. Immediate and future opportunities for Indonesia, among others, are to show good cases that the country can meet the domestic and global demand by promoting sustainable palm oil production.

Key challenges include applying better land management, including no conversion forest and peat lands as well as the implementation of zero burning activities, and other GHG saving activities, including the use of POME (palm oil mill effluent) for energy and other uses.

The speech made by the US Secretary of State serves as a good reminder for the US itself, China and other big countries, including Indonesia, that all nations have responsibilities toward addressing climate change albeit with different capabilities.

When it comes to Indonesia’s domestic capability, the country needs to focus on its key sectors, resources and commodities. These sectors are both contributors to GHG missions and potentially affected by climate change impacts.

Strategically focusing on these sectors and resources means a further burden for a developing country like Indonesia because it requires huge financial, institutional and social investments.

It, nevertheless, also presents a good opportunity for the country not only to safeguard it against the threat climate change poses to development but also seize the economic opportunity that climate change presents.

Let us hope the current and future governments choose their options wisely.

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The author is climate and sustainability specialist, a doctoral candidate at the Australian National University, the recipient of Australian Leadership Award and Allison Sudradjat Award, and Program Development Director of Pelangi Indonesia.

Challenges for better natural resources management beyond 2014

By Fitrian Ardiansyah, published in Coal Asia, December 20, 2013 – January 20, 2014, page 144-145

for the pdf version, please see Opinion Fitrian Ardiansyah_CoalAsia_Dec13Jan2014

CoalAsia_Dec13Jan2014_BetterNRM2014

With the 2014 general election on the horizon in Indonesia, one may wonder whether the issues of better natural resource management and environmental protection would be in the mainstream debate among political parties and presidential candidates.

To date, Indonesia has experienced a stable growth since its economy recovered from financial crisis in the late 1990s and maintained its real growth performance at average above 5 percent in the period of 2000-2011, as reported by the World Bank.

The 2012 McKinsey Global Institute Report states that Indonesia is the 16th largest economy in the world.

The strength of Indonesia’s economy has been helped by its strong exports of natural resources, such as oil, gas, coal and crude palm oil (CPO), making up around 50 percent of Indonesia’s exports, as argued by the Global Edge of Michigan State University.

Indonesia has abundant resources and reserves of coal and gas, and has pushed the production of this type of energy sources in recent years, not only for domestic consumption but also for meeting the export demand. The Energy and Mineral Resources Ministry (MEMR) records that the proportion of coal export reaching above 90 percent in the period of 2007-2009.

With regard to palm oil, Indonesia in 2009 surpassed Malaysia to become the biggest producer this commodity in the world. Indonesia’s CPO exports and resultant revenues have increased dramatically over the last several decades, from 3.8 million tons (valued at US$1 billion) in 1999 to 21 million tons in 2013 (US$22.40 billion).

Commodities from forests and oceans also contribute to Indonesia’s economy. The 2011 International Trade Strategies (ITS) Report showed that various forest commodities contributed roughly 3 percent to the country’s GDP (gross domestic product).

Furthermore, natural resources and commodities have contributed significantly to the country’s employment, energy supply and food security.

The forest related sectors, for instance, employed a combined total of 3.76 million people or 4 percent of Indonesia’s working population, according to the 2011 ITS Report. While in 2010, 38.3 percent was reported by the World Bank as the figure of employment in agriculture (percent of total employment) in Indonesia.

A big question remains whether the country can retain its strong growth and support the livelihood of its population when these resources are extremely degraded or depleted.

In the general context of economic growth and GDP, resource depletion may not create immediate negative impacts. The McKinsey reveals that currently and to a large extent, Indonesia’s economic growth is propelled by its domestic consumption rather than export of natural resources.

The report further suggests that the resource sector’s share of the economy has fallen since 2000, with mining, oil and gas accounting for only 11 percent of Indonesia’s nominal GDP.

In the mid to long-run, however, resource depletion may shake the very foundation of Indonesia’s exports and eventually its economy. With the global demand for commodities likely continuing if not increasing, especially in fast-growing emerging markets, export growth from Indonesia can only remain buoyant if the country manages its resources wisely.

Resource depletion will also hurt the country’s economy domestically. In fact, it has done some damages if oil subsidy is used as a case.

Indonesia has become a net importer of both crude oil and refined products since 2004. Oil consumption has been heavily subsidized as part of energy subsidies and this has cost the government Rp306.5 trillion (US $31.5 billion) in 2012, a figure much higher than that in 2010 (Rp139.9 trillion or US $14.4 billion), according to Directorate General of Treasury of the Finance Ministry.

To address this issue, in mid-2013, the Indonesian government and parliament approved a government budget that increased the price of a liter of petrol by 44 percent and diesel by 22 percent. This intervention may have helped the government’s budget deficit but even after the price rises, as stated in the Economist, the deficit is still expected to reach 2.4 percent of GDP, up from 1.8 percent in 2012.

The same fate of resource depletion can happen to gas, coal and other mineral commodities especially if these resources are not managed carefully, which in turns may hit back at the country’s economy.

In 2012, for example, the Vice Minister of the MEMR stated that high energy consumption has caused and could accelerate the imbalance between the exploitation of fossil energy resources (such as oil, gas and coal) and the speed of inventing new reserves, leading to a depletion of Indonesia’s reserves and increasing dependency on imported energy.

Moreover, resources depletion often brings about other economic costs in the forms of environmental degradation.

Destructive, illegal and uncontrolled resources extraction in forestry, agriculture, mining and fishery sectors have usually led to deforestation and forest degradation, and depletion of fish stock which eventually created environmental related disasters such as floods, landslides, fires and haze, land, air and water pollutions, and biodiversity extinction.

Some of these impacts and disasters may not be easily reflected in the GDP of the country.

The loss of natural resources and the associated environmental impacts will surely be felt by Indonesian people and affect their daily livelihoods.

Droughts, floods and landslides, for example, often adversely affect agricultural production, in which the impacts are felt both on the level of the local economy and in the balance of trade and the current account, potentially upsetting a country’s macroeconomic equilibrium.

According to the Agriculture Ministry, more than a million hectares of the country’s paddy fields and more than 100,000 hectares of corn fields have been impacted by diseases, floods and drought in the period of 2007-2011. Out of these areas, approximately 140,000 hectares of paddy fields and 18,000 hectares of corn fields have suffered from crop failures.

If such production losses are not dealt with seriously, Indonesia may face difficulties in reaching its goal to ensure food security for its people. Even if such losses are compensated through imports, similar imbalances may surface in other areas, which include putting further dependencies of the country’s economy on foreign agriculture commodities.

Therefore, it is undoubtedly important to continue reforming the management of Indonesia’s natural resources and put this as one of the country’s development priorities.

Potential Indonesian presidential candidates and political parties should be reminded that Indonesia’s economy could be in jeopardy if its current and future economic platforms will only lead to further resource depletion and environmental degradation.

Indonesian people may need to see the track records of their candidates toward 2014 with regard to resource management and environmental protection, and identify and only support leaders who have had commitments and actions in transforming Indonesia’s natural resource management for the better.

The upcoming election once again brings an opportunity as well as challenge for us, the public, to contribute to an important decision-making process for the future of our economy and livelihoods.

It is time to demand for better natural resource management and environmental protection from our politicians and leaders.

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The author is climate and sustainability specialist, a doctoral candidate at the Australian National University, and the recipient of Australian Leadership Award and Allison Sudradjat Award.

Meaningful partnerships to manage our resources wisely

By Fitrian Ardiansyah, published in Coal Asia, November 23 – December 15, 2013, page 142-143

for the pdf version, please see Opinion Fitrian Ardiansyah_CoalAsia_NovDec2013

CoalAsia_NovDec2013_Meaningful partnership

With the alarming global challenges in the forms of climate change, natural resources depletion, environmental degradation, financial crisis, extreme poverty and social inequality, it is more than relevant now for countries and institutions around the world to find new and innovative solutions.

Some scholars have calculated that if human and industrial activities are set to continue with their current trend, the associated impacts resulting from respected activities may push our planet close to its ‘tipping point’, and if particular key environmental factors are measured, the impacts can move the present situation beyond the globally known ‘planetary boundaries’.

The planetary boundaries, as defined by reputable scientists like Professors Dave Griggs and Will Steffen, are a safe operating space for humanity, which are identified and quantified so that human activities can move forward without causing unacceptable environmental changes.

These boundaries include biodiversity loss, atmospheric aerosol loading, chemical pollution, climate change, ocean acidification, stratospheric ozone depletion, nitrogen and phosphorous cycles, global freshwater use and change in land use.

Since most changes in ecosystems are asymmetrical in nature, as defined in these planetary boundaries, once the impacts push our planet to reach its ‘tipping point’, it may be too late for humanity to formulate and implement actions to address these challenges.

One clear example is the anthropogenic climate change that has affected and will continue to affect the global world. A recent report by the Nobel Prize winning Intergovernmental Panel on Climate Change projects that small-island and archipelagic nations, including countries in Southeast Asia, and their communities and ecosystems are among the most vulnerable.

Some scholars argue that we have witnessed the early signs of this change including a significant increase in climate related disasters such as extreme weather events, flooding, land sliding, drought, and fires and haze.

Such disasters will put further pressures to our already degraded environment due to decades of natural resources overexploitation and environmental degradation, among others, as a result of destructive and illegal logging, expansion of infrastructure and agriculture, and mining extraction activities.

Therefore, to find new and innovative solutions may require us to substantially reform our current development paths, for instance, by rethinking the overall economic growth, advancing social equity and ensuring environmental protection at all levels.

It is clear that to undertake such reforms, both industrial and developing countries need to come up with additional and adequate financial and technological resources. A country or an institution cannot do these reforms individually. Existing partnerships have to be strengthened and new and creative platforms of partnerships need to be explored and promoted.

With the current global economic and financial situation, no individual countries have sufficient financial muscles to address the global environmental challenges, without other countries to complement their actions.

In fact, hundreds of multinational corporations may have financial capitals which are more than the gross domestic products of most nations in the world.

This means that when it comes to addressing environmental issues and promoting sustainable management of our remaining natural resources, global partnerships need to be forged not only between the developed and developing nations, among developing countries, but also between state and non-state actors, more particularly with the private sector and key communities.

Such partnerships, if based on common but differentiated responsibilities and respective capabilities, can open doors of new opportunities which are crucial to address global environmental challenges and eventually achieve the goals of green economy and sustainable development.

From the region of Southeast Asia, the Heart of Borneo (HoB) initiative can be considered as one of the platforms which can be a good test for the countries who support it – i.e. Indonesia, Malaysia and Brunei – to show that conserving and sustainably managing 22 million hectares of important forest and terrestrial ecosystems are not only possible but also economically and socially beneficial.

The three countries in this region which share the same island of Borneo and its remaining valuable terrestrial resources agree that no single country can deal with difficult environmental problems, such as large scale and widespread deforestation and forest degradation, and bring about sustainable solution in this island.

As a result, pledges and commitments have been announced by these countries and stipulated in key documents including the HoB Strategic Plan of Action.

Civil society groups have also taken part in this initiative by supporting some programs and efforts such as through on the ground conservation actions and community empowerment.

Although driven by the three governments and assisted by non-governmental organizations (NGOs), it appears that the HoB initiative can only work properly and achieve its goal if the private sector takes a major part in this initiative.

With mining exploitation and exploration, logging concessions and plantation development as key sectors influencing the development of the island, the involvement of actors from this sector as deemed crucial.

A recent initiative taken by the Government of Sabah State in Malaysia in launching its Forever Sabah initiative to support the HoB can be seen as an effort to promote a wide-range of partnership among key stakeholders influential in land use management in the HoB’s part of that state.

This effort, for instance, has brought together an energy company, that has a plan to increase renewable energy intake which could lead to further protection of forests, along with an award winning community based eco-tourism cooperative that will benefit from further conservation of fragile ecosystems, and plantation companies that try to restore forest important for wildlife corridors as an encouraged under the Roundtable on Sustainable Palm Oil.

An NGO focusing on empowering indigenous and local communities through a model of kampong universities that provides useful knowledge and skills for natural resource management, and other key stakeholders, also have made strategic contributions to this initiative.

Similar efforts have taken place in the Indonesian part of the HoB, including in West Kalimantan province, particularly in Kapuas Hulu district, and in East Kalimantan province (Kutai Barat district). Both areas are striving to achieve an ideal goal of green economic development at local level by promoting a platform of collaborative actions among different stakeholders.

In another part of the world, such as the Amazon region, a multi-partners work that launched a 10-year initiative to preserve 12 percent, or 60 million hectares, of the Brazilian Amazon under the Amazon Region Protected Area can be used as a showcase. Other similar efforts in the Amazon have now ensured further protection and improved management of 80 percent of the Amazon’s original forest and establishing hundreds of millions of conservation fund.

Promoting such partnership at that large-scale requires not only political willingness but also concrete incentives and practical solutions on the ground. Otherwise, key actors and stakeholders may not necessarily have the ownership and be willing to support the agenda coming from the partnership.

It is of course still a long way to go for these partnership models to shine.

The involvement of non-state actors, in the government led initiative, however, displays that different actors’ efforts can complement each other.

The private sector and civil society, for example, can be actively involved in addressing the challenge in changing the unsustainable production and consumption patterns, while the governments can provide and improve enabling conditions, namely good economic policies and governance.

If such partnerships can be maintained, enhanced and magnified, one can dream and hope about the bright future of our human civilization.

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The author is climate and sustainability specialist, a doctoral candidate at the Australian National University, and the recipient of Australian Leadership Award and Allison Sudradjat Award.

Can Indonesia balance its development?

By Fitrian Ardiansyah, published in Coal Asia, October 21 – November 21, 2013, page 148-149

for the pdf version, please see Opinion Fitrian Ardiansyah for Coalasia 36th_OctNov2013

Can IndonesiaMany people have acknowledged Indonesia as one of the world’s mega-centers of biological diversity. The ecosystems of this archipelagic nation, however, are being increasingly degraded, leading to natural resources depletion, impacting on people’s livelihoods and causing significant environmental damages.

As part of its coastal and marine areas, for instance, Indonesia harbors a huge portion of the world’s center of marine life otherwise known as the Coral Triangle (CT), which is home to 30 percent of the world’s coral reefs, more than 35 percent of its coral reef fish species and much of the tuna eaten around the world.

Located along the equator at the confluence of the Western Pacific and Indian Ocean, not only the CT comprises valuable marine environments but also is a much sought-after tourist destination, providing a daily income to hundreds of millions of people as well as generating revenues for businesses and governments in Indonesia and neighboring countries.

A 2008 study led by Professor Ainsworth from the University of South Florida reveals that the coastal and marine ecosystems in the CT are already under extreme pressures such as from declining water quality, resource extraction, destructive fishing practices and overfishing. If the destruction continues, this will disrupt the multi-billion dollar economic activities associated with the tuna, tourism and coral reef ecosystems, disturbing one of the planet’s economic hubs.

A similar situation occurs in Indonesia’s forest ecosystems. The majority of the country’s forests such as those in Sumatra, Kalimantan, Sulawesi and Papua are recognized in the Global 200 Ecoregions — nature regions, landscapes or seascapes that are
exceptionally important and symbolic for the survival of rich biodiversity features.

As with the country’s marine ecosystems, forests on many islands of Indonesia have come under the constant threat of destructive and illegal logging activities, expansion of agriculture and pulp plantations, destructive mining activities, as well as infrastructure development.

In some cases, even the supposedly ‘safe places’ such as protected areas are diminishing in conservation value as poorly planned and unsustainable development leads to poaching, encroachment, habitat fragmentation and forest fires.

Such problems affecting both terrestrial and marine ecosystems have been building for decades, dated back from the New Order regime. Economic development objectives focusing so much on natural resources exploitation have led to promising economic growth but with serious collateral consequences, including seasons of floods and landslides, droughts, fires and haze, and coral bleaching.

In recent years, the government of Indonesia appears to be increasingly proactive in trying to advance its environmental protection agenda along with its economic development targets.

There have been pledges and written commitments issued by the government, such as the famous pledge at the G20 meeting in 2009 announced by the president to cut the country’s greenhouse gas (GHG) emissions, or the forest and peat land conversion moratorium, and other initiatives including the Coral Triangle Initiative and the Heart of Borneo.

In many of his speeches, the Indonesian president re-affirmed the importance of environmental protection along with economic development and poverty alleviation.

Also, the country has equipped itself with new regulations concerning environmental protection and management, and sustainability. As an example, in October 2009, the government adopted Law No. 32 of 2009 on Environmental Protection and Management, replacing Law No. 23 of 1997 on Environmental Management which was deemed to be no longer sufficient in handling new environmental challenges.

With the above mentioned policy actions committed and carried out by the government, one big question remains as to whether such actions are sufficient for Indonesia to have effective environmental governance resulting in better environmental outcomes and balanced development.

Balanced development, or globally known as sustainable development, emphasizes a holistic, equitable and forward-looking approach to decision making at all levels — not just focusing on economic performance but also on the environmental and social aspects of development, including intra-generational and inter-generational equity.

Commitments to protect the country’s environment and achieve sustainable development are arguably ambitious. These require tremendous support from different layers of governments and different spectrums of society, including from the private sector
and the general public.

Albeit very slowly, platforms formulated and supported by civil society groups and the private sector to promote best practices in sustainable development (e.g. in forest management, fishery and agriculture) have emerged and some progress resulting from these platforms is being accomplished.

In the case of forest management, prior to 2009, only 1.1 million hectares of forests were certified under the FSC (Forest Stewardship Council) amounting to 2 per cent of the country’s production forests. To date, approximately 26 companies with a total 2.6 million hectares of forests are undertaking a rigorous process for FSC certification.

As of 2011, there are also at least 1.8 million hectares of certified forests under the Indonesian Ecolabeling Institute (LEI). In addition to voluntary timber certification, the government introduced the Timber Legality Verification System (SVLK), which aims to verify the legality of all traded Indonesian timber products.

Both timber verification and forest certification is seeing Indonesia gradually move toward more responsible forestry practices. Yet, as those forests certified under FSC and LEI still make up only a small proportion of Indonesia’s total forests, achieving sustainability in this sector is still an enormous challenge.

Progress has also been made in fishery management indicated by the works carried out by the Marine Stewardship Council (MSC) in Indonesia, in collaboration with the Indonesian government and national NGOs.

Such works in promoting collaborative sustainable natural resource management further requires not only political willingness but also concrete incentives and practical solutions on the ground.

Innovative designs of financial and fiscal mechanisms that can support sustainable practices seemingly are still far behind. Without the provision of appropriate and adequate incentives, it will be challenging to address threats to sustainable development and conservation, especially those coming from business activities and capital investment.

A 2011 study conducted by the Indonesian Corruption Watch shows that as a result of deforestation in a year, the country has lost about Rp14 trillion (US$1.6 billion). During the period of 2005-2009, the same study calculated an equivalent of Rp71.28 trillion as the costs of deforestation.

Therefore, balanced development can only be achieved if the country can combine their measured policies on sustainable development and environmental protection with strong economic incentives, and further mainstream these into the overall
government’s development agenda.

In brief, to achieve sustainability that ensures economic growth and environmental protection, Indonesia and its people have a massive challenge to transform and adjust their current development approach.

As a developing country, Indonesia has enormous potential and a good model to show that the country can protect,
maintain and even enhance its natural capital for current and future generations.

More importantly, this commitment should not be used as merely a ‘mantra’. It needs to be shaped as continuous progress and coloring the daily life of the nation.

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The author is climate and sustainability specialist, a doctoral candidate at the Australian National University, and the recipient of Australian Leadership Award and Allison Sudradjat Award.