This conference specifically talked about mechanisms to reduce emissions from deforestation and forest degradation in developing countries, commonly called REDD plus.

With its internationally recognized tropical rainforests, some of the richest in the world, Indonesia has a strategic position in the global efforts for addressing climate change through the preservation of its rainforest in concrete steps to overcome the problem of climate change, in which forests play the role of carbon sequesters.

By this function, the preserved forests can help reduce greenhouse gases, one trigger of climate change. Besides the role of Indonesia’s tropical rainforests in slowing global warming, Indonesia’s tropical rainforests are also one of world biodiversity treasures.

Collins et al (1991) as quoted by the report released by Friends of the Earth (2004) — a UK NGO — mentions that “Indonesia, which has covering area of approximately 1.3 percent of the total area of the earth, has forest which is home to approximately 10 percent of all flowering species, 17 percent of bird species,

12 percent of all mammal species, and 16 percent of all species of amphibians”.

These data clearly demonstrated that Indonesia’s tropical rainforests have a wealth of invaluable biodiversity. However, Indonesia also has one of the highest rates of forest destruction in the world.  Its biodiversity is presumably much smaller now than 20 years ago due to this continued destruction.

The high rate of deforestation in Indonesia, through both legal and illegal logging activities, is fueled by income from trade commodities such as timber and other forest products and land clearing for the expansion of palm oil plantations. As a developing country that is also facing serious problems of poverty and a high rate of unemployment, high economic growth and income from sales of forest commodities and palm oil is currently a necessity.

Indonesia is one of chief palm oil producers in the world. With the palm oil price ranging from $748 to 940  per ton in international markets, this commodity is extremely lucrative.

 These economic benefits come at a great cost though, with many parties fretting that the large scale conversion of forests for oil palm plantations will continue at an uncontrollable pace. These fears are not without reason.

A study conducted by Butler et al (2009) which was then quoted by Koh and Butler (2010) mentions that “palm operation could yield NPVs of $3835-$9630 per hectare as to NPVs of a REDD project in voluntary markets would range from $614 to $994 per hectare over a 30-year project time frame”. This highlights the difficulty REDD plus programs face in Indonesia, where REDD plus compensation may be almost an order of magnitude less than expected revenues from oil palm plantations.

With Norway’s $1 billion assistance, delivered over three phases ending in 2016, Indonesian President Susilo Bambang Yudhoyono has committed to a two year moratorium on rainforest logging. This commitment may include reducing the speed of forest and peat land conversion into oil palm plantation expansions. The implementation of moratorium commitment in halting forest and peat land conversion
will face challenges that have no easy solution.

There is no guarantee the government will be able to control the rate of forest conversion considering that palm oil is profitable commodity. Moreover, many local governments are tempted to pursue local budget revenue by giving permission to land clearing for oil palm plantations in their regions.

In the conflict between economic interest and forest preservation the government can find a middle road. One way to do this is to increase the per hectare productivity of plantations through research and development of high yielding varieties of oil palm. For example, Indonesia is lagging far behind Malaysia in productivity per hectare.

Indonesia already has an oil palm research center in Medan, North Sumatra. However, as typically occurs in Indonesia, support for research and development is minimal. Malaysia in fact now has a variety of high yielding varieties of oil palm which has a much higher productivity per hectare than Indonesia.

Another way is by employing information technology applications. So far, the efforts to increase production capacity are still carried out horizontally with land expansion as the main method.

In Malaysia, endeavors to increase production capacity have been supported by implementing enterprise resource planning. With the help of information technology in various line of production of Malaysia’s oil palm plantations, the efficiency and production leakage reduction in plantation can be monitored. If Indonesia was to optimize productivity of palm oil plantations vertically as Malaysia does, it is expected that they would no longer need to expand the plantation areas through forest clearing.

Therefore, utilization of funding assistance from Norway must be truly optimized for forest protection, abandoned land reforestation/afforestation, and forest restoration efforts. Ensuring involvement of local communities in these efforts is also important.

In addition, the government should set up accompanying funds to support research and technological development endeavors that could be applied to increase productivity of palm oil plantations and provide an incentive for the palm oil plantation business players to support the application of information technology to increase production capacity vertically.

By improving the “supply-side” aspects, Indonesia can save its priceless biodiversity assets and conserve its tropical rainforests by stopping further expansion of palm oil plantations.

The writer is a researcher at Economic Research Center, the Indonesian Institute of Sciences and Scholar at the University of Maryland at College Park, United States.

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