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How to Change Legal Land Use Classifications to Support More Sustainable Palm Oil in Indonesia

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How to Change Legal Land Use Classifications to Support More Sustainable Palm Oil in Indonesia ISSUE BRIEF HOW TO CHANGE LEGAL LAND USE CLASSIFICATIONS TO SUPPORT MORE SUSTAINABLE PALM OIL IN INDONESIA ANNE ROSENBARGER, BETH GINGOLD, RAUF PRASODJO, ARIANA ALISJAHBANA, ANDIKA PUTRADITAMA, DEWI TRESYA Indonesia is the world’s leading producer of palm oil. Industry and government leaders have announced goals to expand production while avoiding forest loss and social conflict. Achieving those goals depends on establishing new plantations on suitable, non-forested land and respecting local rights. Land classification in Indonesia does not necessarily allow this, as many suitable areas are legally unavailable for development. This issue brief examines methods to change legal classification of land to support sustainable palm oil. WRI.ORG EXECUTIVE SUMMARY for changing legal land classifications in Indonesian law. Companies could CONTENTS Indonesia is the world’s leading use these methods to expand certi- producer and exporter of palm oil, 2 Executive Summary fied sustainable palm oil production with roughly 18 million metric tons in areas that were previously legally 3 Introduction of crude palm oil exports valued at unavailable. The methods could also 1 US $21.6 billion in 2012. The com- be used to facilitate the conservation 5 Methods for Changing modity plays a crucial role in the of forested areas currently legally Legally Allowable country’s economy. However, palm available for agricultural uses. Land Uses oil production is also closely linked to deforestation, social conflicts, and 10 Application: Testing This study identifies three types of other environmental impacts, as Methods in the Field methods for legally reclassifying land: large areas of Indonesia’s forests and 12 Discussion of Findings peatlands are cleared for conversion 1. Single reclassifications: Proce- 2 to oil palm plantations. dures that change the land-use 16 Recommendations classification of a single area. Palm oil industry and government 18 Endnotes leaders in Indonesia have announced 2. Multiple reclassifications: Proce- 21 References goals to expand palm oil produc- dures that change (or “swap”) the tion while avoiding forest loss and land-use classifications of mul- 22 Acknowledgments social conflicts. Achieving these goals tiple areas simultaneously. largely depends on where new oil palm plantations are established and 3. Local/special designations: Pro- whether local rights and interests cedures that change the allowable are respected during site selection land uses in a designated local processes. Site selection, in turn, area, without changing the land depends on government spatial use classifications. planning and permitting processes that determine where companies can In addition to the legal review, legally establish plantations. WRI carried out a land swap through a pilot project with Indonesian As of 2011, approximately 70 percent partner Sekala and PT Smart, one of of Indonesia’s total land area was the largest publically listed palm oil classified as “forest estate” (kawasan companies. PT Smart, which has com- 3 hutan) by the Ministry of Forestry. mitted to the standards of the Round- However, this and other classifica- table on Sustainable Palm Oil,5 held tions may not conform to the physi- a license for forested peatland that cal reality of the land cover: many was classified as “nonforest estate” forest estate lands are settled or and was willing to seek an alternative degraded, and many nonforest estate site on degraded land. In 2009, WRI lands host rich primary forests and and Sekala identified nearby suitable extensive peatlands. A study by the degraded land, where the local com- World Resources Institute found munity had a strong interest in palm that 5.3 million hectares of suitable oil development. However, despite land are part of the forest estate, and this interest, the plan has not been are therefore legally unavailable for approved by the national government, 4 agricultural development. and has stalled because of the com- plexity and cost of the legal process. Based on a desktop legal review, this issue brief found multiple methods 2 | How to Change Legal Land Use Classifications to Support More Sustainable Palm Oil in Indonesia Companies, project developers, and INTRODUCTION communities seeking to change legal Whether these goals are achieved classifications in a manner that is Indonesia has rapidly expanded its will depend largely on where new consistent with sustainability stan- palm oil production over the past oil palm plantations are established dards face substantial legal chal- several decades to become the top and how local rights and interests are lenges, namely the length and costs producer of palm oil worldwide, with respected during site selection pro- of the processes, lack of legal clarity, crude palm oil exports valued at US$ cesses.10 Site selection in turn is highly 6 and lack of consistency with goals to 21.6 billion in 2012. However, the dependent on government spatial avoid forest loss and social conflicts. growth of the palm oil industry has planning and permitting processes, not been without consequences. Con- which determine where companies This study offers several recommen- version of forests to oil palm planta- can legally establish plantations. dations for palm oil companies to tions is a major driver of forest loss, help address these challenges, such affecting biodiversity, greenhouse gas Both industry and Indonesian 7 as understanding the legal reclassifi- emissions, and local livelihoods. government standards for certified cation procedure options and sharing sustainable palm oil include provi- implementation experience, going To address these concerns, indus- sions designed to contribute to these beyond legal compliance to follow try and government leaders have goals. The Roundtable on Sustain- best practices, and engaging with announced goals to expand palm able Palm Oil (RSPO), a multistake- initiatives such as the Roundtable on oil production while avoiding forest holder organization, has developed a 8 Sustainable Palm Oil and Indone- loss and social conflicts. Realiz- voluntary, market-based certification sian Sustainable Palm Oil to sup- ing these goals could contribute to standard that includes requirements port land-use classification policies. economic growth and job creation, to maintain “high conservation Recommendations are also outlined enhance the competiveness of the value” areas and to obtain the “free, for Indonesian policymakers, includ- Indonesian palm oil industry in the prior, and informed consent” (FPIC) ing clarifying the objectives and growing global market for more sus- of local people.11 definitions associated with land swap tainable palm oil, and contribute to policies, simplifying procedures, national ambitions to reduce green- 9 incorporating biophysical and social house gas emissions. factors into legal classifications, and making data and procedures publi- cally available and easily accessible. Industry and government leaders have Addressing these challenges will help announced goals to expand palm oil Indonesian companies, governments, and communities use land more production while avoiding forest loss efficiently, preserve valuable forests, and expand business prospects. With and social conflict. Whether these goals global demand for sustainable palm oil and other commodities on the are achieved will depend on where new rise, land swaps can help position Indonesia to meet market demands plantations are established and how while using land sustainably. local rights and interests are respected during site selection. ISSUE BRIEF | October 2013 | 3 The Indonesian Sustainable Palm an area identified as suitable for a oil palm plantations (Table 1).18 In Oil certification system, a recently plantation under sustainability stan- some instances, the government has developed legal standard, includes dards is also legally eligible for the already issued permits to companies provisions for avoiding social conflicts permits required for the proposed to begin plantation development in and loss of natural forest and biodi- new land use.16 In Kalimantan, the these areas. For example, in the Proj- versity. These provisions are based on Indonesian portion of the island of ect POTICO pilot field site in West concepts in Indonesian regulations.12 Borneo, a Project POTICO desktop Kalimantan, a palm oil company was study identified 14.6 million hectares issued a permit in a heavily forested Companies can get a head start on as potentially suitable for palm oil peat swamp on land legally classified meeting these standards by iden- expansion, but 5.3 million hectares for plantation development. Con- tifying potentially suitable areas of this total were not legally classi- versely, a nearby area of degraded for expansion using an approach fied to allow for plantation devel- land that met Project POTICO developed by the World Resources opment (Table 1).17 Although field suitability criteria was legally off- Institute (WRI) and Sekala13 under assessments are necessary to reject limits for plantation development.19 the Sustainable Palm on Low Carbon or confirm the suitability of each This Project POTICO pilot site is Degraded Land or POTICO Project site, this analysis suggests that large described in “Application: Testing (Box 1). This approach14 consists of a potentially suitable areas are not Methods in the Field,” below. desktop study and field assessments eligible for development because of and includes economic, environmen- their legal classification. The government has
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