‘We help businesses put money into protecting forests’
1 September 2008
published by The Jakarta Post
Indonesia — Indonesia, home to the world’s third largest forest covering 120 million hectares, has been struggling to cope with deforestation due to lack of preservation incentives. The country’s forest stores billions of tons of carbon. No formal mechanism has been put in place worldwide, as anticipated at the upcoming 2009 climate change summit, to reap real financial gain from forest carbon trading. Nigel Turvey, chair of KeeptheHabitat, talked to The Jakarta Post’s Adianto Simamora and Dwi Atmanta recently about his newly launched carbon trade project in Mamuju, West Sulawesi, and prospects for a global carbon market.
Question: What kind of business is KeeptheHabitat?
Answer: The project promotes sustainable forests working with businesses and the community. We have developed a conservation model for businesses because we work with business people. We are not an NGO.
Our first project is with a state forestry enterprise, Inhutani I in Mamuju, West Sulawesi, because we have set up a good partnership with that business. We have negotiated with Inhutani I and the Forestry Ministry over the past 12 months to get the project up and running.
There are so many forested areas across Indonesia that require a system to protect and rehabilitate them in order to make them sustainable.
Our business model is based on a principle called REDD, or reducing emissions from deforestation and degradation. REDD starts with the idea that carbon contained in the trees and plant life in the forest must be protected. Any company which needs to fulfill its corporate social responsibility (CSR) can sponsor a forest habitat and, in return, receive data on how much carbon emission they have saved. Funds raised from sponsors will be used to rehabilitate the forest and help nearby communities.
Are you working with consultants?
No, we don’t bring in foreign experts at all. We rely and build on expertise in Indonesia. Our local business people will be responsible for overseeing implementation which Inhutani I will carry out. As a forestry expert, I have been involved in several previous models for protecting the forest. I know what does and does not work. This model is very different from the previous ones which only sent in consultants and nothing happened.
With our model, we work with the premise that the expertise is here in Indonesia and forestry expertise in Inhutani I. What they lack is sufficient resources to do what’s necessary. We provide resources so they can better ensure that forests are protected and we provide money so they can increase the size of protected forest. We provide education and funds to the community so they can rehabilitate their local areas.
Do we really need an official carbon trade scheme?
Discussions are going on now, but we have to do something before any official plan starts. There have been many government-level discussions — the Bali meeting last year and the Copenhagen conference last December — but not much action. So, what we can do for businesses is provide informal carbon credits. We can help businesses put money into protecting forest.
How much carbon could be saved with the Mamuju project?
We are starting with 30,000 hectares. We will save about 333.000 tons of carbon dioxide emissions (CO2e) per year. The effective price of carbon for this sponsor is US$18 per ton. But this is more than carbon. The price is a little higher than other market prices. We say, we will give the money so you can run your business but the money must circulate back into the community.
Our carbon price is based on the value of timber. There is no carbon trading in Indonesia; Inhutani, with all its holders of forest concessions, does not trade directly in carbon either, they trade timber. In this business model, we say, if we want to stop logging and rehabilitate the forest, we have to pay the timber prices, the carbon price does not make any sense.
If Inhutani I stops logging, they will lose money. We say to them, here is the money for that timber to compensate you for not harvesting. With this money you can change your business to stress protection, increase rehabilitation and involve the community as well. If we estimate the average timber prices across all protected forest, the carbon price is $18 per ton.
How do companies benefit from sponsoring forest protection?
Each sponsor has a carbon footprint which they want to reduce. They know how much carbon they are expending in normal business. In the West, we can estimate how much carbon we are using in our daily lives.
We can’t offer sponsors certified tradable carbon credits because there is no carbon trade in Indonesia as yet. It is a voluntary market. The sponsor can put it in its CSR report and annually report that they contribute to saving the forest and cutting carbon emissions. That is the benefit.
How can local residents living near or in forests benefit from such a project?
Our model is very strongly community based. Our detailed contract with Inhutani I spells out that 50 percent of the money raised from sponsorship is to go to communities for rehabilitation; it may be used for community infrastructure like schools and roads but also help microfinance programs for small businesses which want to be part of the rehabilitation process.
We set aside 30 percent of the sponsorship for forest protection, so a lot of money would go to forest protection and community education because conservation can’t work through policing alone, it requires cooperation with the community. We have to make sure people understand where the money comes from and that the money flows into their community because they are protecting the forest.
Sixteen percent of the fund would go to administer the project. We provide international auditors because people are obviously concerned about corruption in Indonesia.