Reducing deforestation associated with soy, beef, palm oil, cocoa, timber and pulp & paper supply chains is high on the agenda of front-running companies, as well as governments, donors, and civil-society organizations. Supported by the Dutch and Norwegian governments, IDH convenes public and private partners to incubate new approaches to address deforestation in 11 landscapes in seven countries. This impact theme closely relates to Sustainable Development Goal 13 and 15: protect the planet and life above water.
IDH aims to deliver 5.4 million hectares of farm and pasture land under sustainable land use, 300,000 hectares under land intensification leading to avoided deforestation, 150,000 hectares of forest restored, and 5 million hectares of sustainably managed forest.
Moving beyond certification towards Production-Protection-Inclusion at a landscape level
We are currently prototyping new types of multi-stakeholder landscape governance mechanisms called Production-Protection-Inclusion (PPI) compacts. Through PPI compacts, public, private and civil-society stakeholders agree to enhance productive land use and secure livelihoods in exchange for the protection of forest and other natural resources. Compacts help link agricultural production to forest protection. They are based on participatory land-use planning, whereby land for production, livelihoods and protection is clearly identified, and their related uses agreed on by the landscape stakeholders, and recognized by local and national government. PPI compacts include targets for each of the PPI components: a time-bound plan of action, clear definition of roles and responsibilities, and a budget for implementation.
By constantly exchanging experiences in different landscapes (and documenting them) we accelerate our understanding of how to enable and implement such approaches to halt deforestation associated with key commodity supply chains.
Deforestation: the case of palm oil, Indonesia
We are building PPI compacts in key oil palm and forestry production and sourcing areas in West Kalimantan, South Sumatra and Jambi and recently Aceh in Indonesia, where large forests and peatland areas are at risk. These PPI compacts are connected to European market demand and the deforestation-free commitments that companies have made.
Smallholder productivity is important to companies because smallholders are a significant part of their supply base.
We started our palm oil program focusing on improving the application of good agricultural practices, strengthening farmer organizations, certifying smallholders against RSPO criteria, and making productivity improvements. We soon realized that increasing smallholder productivity, without strengthening forest protection governance and enforcement, would make conversion of forest to oil palm plots even more attractive.
Smallholder productivity is important to companies because smallholders are a significant part of their supply base, so land-use intensification of smallholders plays an important role in any sustainable palm oil program. However, even when sourcing 100% sustainable palm oil from a specific supplier or mill, the impact on forest protection may remain low. Smallholder farmers outside the sustainable supply base but within the same landscape may still use illegal and/or unsustainable practices, such as slash-and-burn agriculture and expansion into forests, and sell to neighboring mills.
This demonstrates the need for building multi-stakeholder coalitions that design and prototype landscape-level projects that can have real impact on deforestation. Aligning definitions and approaches on the demand side can also help initiatives that are mobilizing that side of the supply chain. For example, the European Sustainable Palm Oil (ESPO) initiative facilitates dialogue on sustainable palm oil between the various stakeholders in Europe, including upstream and downstream industry and relevant NGOs.
It is critical that conservation areas are recognized by the government at national, provincial, and district levels.
Government support is critical to the success of multi-stakeholder coalitions and PPI compacts. Governments are in charge of developing, monitoring, and enforcing land-use planning and land tenure rights. Interestingly, significant remaining forest and peat areas in Indonesia are located on concessions which the government has given to private companies for plantation development. There is a risk that forest or peatland that is set aside by the concessionaries for protection will not be recognized by the government. These areas could be expelled from the concession and given to another company for plantation or mining activities. It is therefore critical that conservation areas are recognized by the government at national, provincial, and district levels, in order for companies to be able to set aside High Conservation Value (HCV) or High Carbon Stock (HCS) forest or peatland.
Fortunately, government regulation in Indonesia is changing and enabling the protection of HCV or HCS areas on private land. IDH supports provincial and district governments with developing governance structures to enable the establishment of Essential Ecosystem Zones (Kawasan Ekosistem Esensial, or KEE). This concept, backed up by the Indonesian Ministry of Environment and Forestry (MoEF) at the national level, allows for HCV areas outside national parks and nature reserves to be protected and managed jointly by public and private stakeholders. Different KEEs are expected to emerge in different landscapes.
Sub-national (i.e. provincial and district) government involvement is also crucial to solve practical, field-level issues, such as peat and forest fires and land legality, or to support the provision of extension services.
In IDH’s projects in West Kalimantan and South Sumatra, the trust of the local government was critical to help build coalitions and design interventions. The engagement of the Governors of South Sumatra and West Kalimantan has been instrumental in the development of provincial green growth plans, for example. The leadership of the two Governors has also accelerated effective convening, especially of Indonesian small- and medium-sized companies to be part of the coalition, alongside the bigger internationally-oriented companies. Such coalitions help create a critical mass when it comes to HCV, HCS or other forms of conservation and protection of forests and peatlands. They also ensure the connectivity of these within a particular landscape or PPI compact supported by concessionaires, communities, and local governments.
Building thriving landscapes in West Kalimantan and South Sumatra
In Kayong Utara district, West Kalimantan, we are working with palm oil company PT Pasifik Agro Sentosa to create a business model for benefitting financially from the 12,000 hectares of High Conservation Value (HCV) set-asides on their three concessions, on a total area of 43,000 hectares, by selling the carbon sequestered in the HCV area. If this succeeds, it could be a breakthrough that would allow scaling across the industry. We are also working with communities as well as adjacent plantations to make sure the HCV area is protected over the long term.
Uncertainty in land ownership by smallholders makes it difficult for them to have land titles, resulting in difficulties in accessing finance.
In Ketapang district, West Kalimantan, we are working with the oil palm plantation company Bumitama Agri Ltd., with support from Aidenvironment, to rehabilitate and manage a wildlife and green corridor for orangutans and other species between the two forest areas, while increasing smallholder productivity and enhancing community livelihoods. Forest encroachment, fires and illegal logging, partially driven by the low productivity of oil palm on smallholders’ land, have led to severe degradation of the forest corridor contiguous to Bumitama’s concessions. We center our approach on defining the economic development needs of villages, and then develop village-level land-use plans that will be integrated into the spatial plans of the district government. Bumitama will also provide support to improve smallholder productivity and the livelihoods of non-palm oil community members in alignment with these land-use plans.
Both projects with PT Pasifik Agro Sentosa and Bumitama have been used as the building blocks for developing PPI compacts in these districts with other companies and local government.
In Jambi and South Sumatra, we are working with a number of companies to get 10,000 smallholder farmers RSPO certified. We are doing this by addressing issues related to overlapping land concessions, which results in disputes over land claims. Uncertainty in land ownership by smallholders makes it difficult for them to have land titles, resulting in difficulties in accessing finance and investing to increase farm-level productivity.
In Musi Banyuasin district in South Sumatra, we are testing the concept of verified sourcing areas. These are defined areas or jurisdictions of which the performance on sustainability criteria related to good agricultural practices, forest and peat protection, and governance is verified at landscape level (rather than at an individual production unit level). Based on performance against these criteria, companies may choose to preferentially source commodities originating from these areas. Lalan sub-district in Musi Bayuasin is now one of the three jurisdictional pilots for RSPO certification worldwide. The target is to be certified by 2018.
Designing prototypes that deliver impact on the ground is complex. Forests are a source of income for people in developing economies.
Building project pipelines to attract investment
From 2016 onwards, these and other projects are being shaped to match the investment criteria of the so-called production, protection and inclusion fund. IDH is incorporator if this fund, that was recognized as key deliverable of the World Economic Forum when announced there early 2017. This gives us the exciting opportunity to develop our interventions from grant-driven projects into attractive financial deals. Every hectare of palm oil development requires at least €5,000, which can become a significant investment for communities that want to develop community oil palm. The Fund will deploy public climate funds to de-risk and leverage private-sector investments in sustainable agricultural production on the condition of strict forest and peatland protection measures.
Cooperation at the heart of success
Designing prototypes that deliver impact on the ground is complex. Forests are a source of income for people in developing economies. To move away from slash-and-burn agriculture, we need to ensure that the benefits forests provide are well understood, and link sustainable commodity production to forest protection. To make this work in the long run, our models need to be economically viable. Through our projects in South Sumatra and West Kalimantan, and in all our other landscapes, we hope to learn rapidly how we can build, learn, and adjust these models – as time is not on our side, and deforestation continues in tropical forests around the world.