Indonesia — After years of screaming for funds to address the massive peatland loss in Indonesia, conservationists are finally getting noticed. The realisation that those annual peat fires not only contribute to hazy skies and respiratory ailments but are also accelerating global warming has attracted attention beyond the region.
Peatlands cover approximately 27 million hectares in South-East Asia and are assumed to store at least 42,000 million tonnes of soil carbon. This carbon is released into the atmosphere when peatlands are drained for cultivation and forests are logged. In the region, 12 million ha of peatlands are currently deforested and mostly drained for agriculture activities particularly oil palm plantation.
As anticipated, the Bali Road Map (the main outcome of the last climate summit) puts the carbon dioxide emissions from forest carbon stocks like peatlands on the agenda for a post-Kyoto climate treaty. And the good news is that the annual contribution of 2,000 million tonnes of carbon from degraded peat swamp, mainly in Kalimantan and Sumatra, can be avoided cost-effectively as demonstrated by several non-governmental organisation-led projects such as the Central Kalimantan Peatland Project (CKPP).
These initiatives largely funded by European governments are already outshining the respective national action plan against peat fire that Asean (Association of South-East Asia Nations) members has deliberated for years. The largest single source of carbon emission from the land-use sector is also attracting carbon traders looking for potential carbon offset projects which in turn provides a new avenue of funding like the Global Peatland Fund (GPF), launched at the climate meeting in Bali last December.
A partnership between Wetlands International and BioX Group of Netherlands (carbon reduction and emission trading project developer), the GPF aims to sell carbon credits through the voluntary market mechanism and earn Voluntary Emission Reductions (VERs).
The Fund will invest in peatland restoration and conservation projects. These projects will generate large volumes of VERs by avoiding carbon emissions at comparatively low costs. The sale of VERs will generate a good return for the investors while the remaining profits of the Funds operations will be invested into community development projects.
The target is to restore and protect approximately 500,000ha of peatlands by 2012. To realise this ambition, the GPF is seeking initial funding of at least Euro10mil for its first 50,000ha of development from one or more investors who receive a maximum return of 15% either through cash payments or off-take of VERs, said the Fund promoters.
Wetlands Internationals existing peatland restoration projects in Kalimantan including the CKPP will serve as a showcase and could be replicated in other degraded peatlands. Some 200,000ha were rehabilitated by blocking channels and replanting endemic plants.
Site co-ordinator Alue Dohong says the endemic jelutong tree produces valuable resin used in manufacturing chewing gum and this could generate income for the local communities in five years time.
The Fund will focus on the two most vulnerable peat swamp areas in Indonesia Kalimantan and Sumatra where studies have shown that of the 2,000 million tonnes of carbon dioxide emitted, 600 million tonnes are caused by decomposition of dry peat and 1,400 million tonnes are lost through the annual fires. This staggering figure is five times the carbon emission of the country from fossil fuel sources and makes Indonesia the third largest CO2 emitter in the world after the United States and China.
Jane Madgwick, chief executive officer of Wetlands International says the partnership provides the opportunity to scale up the work of restoring tropical peat swamps to benefit biodiversity and livelihoods while securing vital carbon sinks.
Current data from the existing Wetlands International project in Kalimantan illustrates the potential of peatland restoration for climate change mitigation. A peatland area of approximately 50,000ha can achieve a net carbon reduction of over two million tonnes of annual CO2 emissions against an overall infrastructure investment of ?20mil (RM100mil) and an annual maintenance and operation costs of ?5mil (RM25mil).
Compared to the value of carbon credits or measures taken in Annex I countries to reduce carbon dioxide emissions that cost tens of Euros per tonne, the attractiveness of cheap carbon credits from Indonesian peatlands is obvious.
The restoration projects identified so far are re-flooding previously drained and deforested peatlands by building dams in the drainage canals, reforestation using native species, protection of remaining peat forests from deforestation and fire prevention plan. For a start, the badly damaged peatlands in the ex-Mega Rice Project and the logged-over Sebangau National Park in Central Kalimantan and the Berbak National Park in Jambi province are being targeted.
BioXs sustainability manager Arjen Brinkmann says mechanisms of the Fund are currently being worked out and the first project is scheduled to startyear end. We have received significant interest from potential investors as well as potential VER buyers, he enthuses.
While the focus is on Indonesia, Malaysia which accounts for 1.6 million ha of the crucial wetlands in this region, could also benefit from similar projects. However, the pattern of destruction over here where oil palm plantations continue to carve up the peat dome makes it harder to plug the draining of the water-logged ecosystem.
Global Environment Centre director Faizal Parish points out the urgency to identify potential sites for restoration and stop the harmful landuse before more peat swamps become beyond redemption. He says a desirable plot will be between 5,000ha to 50,000ha. Parish explains that smaller sites would be subjected to continued drainage from activities surrounding it that quicken the decomposition rate. Such a scenario, says Parish, is prevailing in Sarawak which holds 1.12million ha, the bulk of the countrys peat swamps.
However, the situation in the states of Pahang, Selangor and Sabah offers some potential for Malaysia to tap into the growing carbon market. For example, peatlands in Klias Peninsula on the west coast of Sabah that was burnt a decade ago during the severe El Nino episode is still being drained.
State governments of Pahang, Selangor and Sabah should look at the potential of carbon market as a payment for preventing further global warming. Depending on the set up of the market mechanisms, they can derive higher revenues compared with plantations which pay a low land premium to the states, suggests Parish.
The three states are in good stead to incorporate sound peatland management after participating in the five-year United Nations Development Programme/Global Environment Facility funded project on peat swamp forest.
Pahang has agreed to gazette 20,000ha to connect the fragmented reserves in the south-east Pahang peat swamp forests, effectively creating a biodiversity corridor besides enlarging the buffer from 500m to 1km.
If they follow the management plan, they are in a viable position to be paid for carbon sequestration, says chief technical advisor Dr Efransjah.