The Finance Ministry has asked the Forestry Ministry to revise the existing decree on benefit sharing, which the former said was against the Constitution.

“We have sent a letter to the forestry ministry to revise the decree,” Singgih Riphat, head of the working group on fiscal policy for climate change at the Finance Ministry told a Copenhagen follow-up seminar on Indonesian forests on Tuesday.

He said the Finance Ministry should be involved in determining the allocation and benefits distribution mechanisms of the reducing emissions from deforestation and forest degradation (REDD) scheme to forest stakeholders.

“We will formulate types of payment flows, groups entitled to payments and distribution,” he said.

Singgih said benefit sharing should take into account fairness between central government, provinces and regencies.

 “We also need to consider the form of local community and indigenous people’s involvement in the REDD projects,” he said.

In his paper, Singgih urged the  definitions of local communities and indigenous peoples should be made clear in relation to REDD projects.

The 2009 decree by Forestry Ministry says the government, community and project developers were the parties eligible to receive financial incentives from REDD projects.

If an REDD project was conducted in customary forest, the community would receive 70 percent of financial benefit while 20 percent would be given to the project developer with the remaining share to the government.

It says if the REDD project related to forest timber products in natural forest, then 60 percent of benefit sharing would be for the project developer and both government and local community would receive 20 percent each.

Singgih said that his office would send a second letter to remind the Forestry Ministry to do the revision.

The REDD schemes are expected to be an alternative to emission cuts from forestry, which contribute about 20 percent of global emissions.

Under the program, countries that protect their forests can receive financial incentives through carbon trading with rich nations.

Chairman of the climate change working group at the Forestry Ministry, Wandojo Siswanto said that the money from the REDD scheme might be pooled at the Finance Ministry.

“But it is not clear yet whether the money from REDD would be state revenue or not,” he said.

Director of the climate and energy unit at WWF Indonesia Fitrian Ardiyansah said that policy on REDD benefit sharing should be made at a  higher level.

“It will be better if the allocation of REDD financial incentive was made at the level of government regulations to bind the governors or regencies,” he said.

Indonesia is the world’s third largest forested nation with 120 million hectares of forest.

But Wandojo said that the office had yet to calculate if the carbon trading scheme would give more profit than selling trees from forest areas.

Indonesia is the first developing nations declaring its readiness to  host demonstration activities for the REDD scheme. REDD pilot projects funded by foreign countries are under way in the forests of Central Kalimantan, East Java and West Nusa Tenggara.

A number of local administrations, namely the Central Kalimantan, South Sumatra and Aceh have also set up working group on  REDD to facilitate projects.

“But no cent of the money from the REDD pilot projects goes to the Aceh budget,” Wandojo said.

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