Indonesia ! ! ! ! ! ! ! ! ! ! ! Citation:!! United!Nations!Office!For!REDD!Coordination!In!Indonesia!(UNORCID),!2015.!Forest!Ecosystem!Valuation! Study:!Indonesia.!!
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FOREST ECOSYSTEM VALUATION STUDY Indonesia ! ! ! ! ! ! ! ! ! ! ! Citation:!! United!Nations!Office!for!REDD!Coordination!in!Indonesia!(UNORCID),!2015.!Forest!Ecosystem!Valuation! Study:!Indonesia.!! ! Editor!in!Chief:!Satya!S.!Tripathi!! Board!of!Editors:!Johan!Kieft,!Hideyuki!Kubo,!Felicity!Le!Quesne,!and!Brittany!Benson.! Peer!Reviewers:!Buyung!Airlangga,!Haripriya!Gundimeda,!Lalit!Kumar,!Johny!P.!Kusumo,!Meine!van! Noordwijk,!and!Pungky!Widiaryanto! ! Study!Leader:!Pavan!Sukhdev!! Report!Authors:!Andrea!Bassi,!Kaavya!Varma!and!Winnie!Toppo! Contributions!from:!Pierre!Dupuis,!Karishma!Bhuyan!and!Swapan!Mehra! ! ISBN:!978\1\942960\04\1 Copyright:!United!Nations!Office!for!REDD+!Coordination!in!Indonesia!(UNORCID)! ! This!publication!may!be!reproduced!in!whole!or!in!part!for!educational!or!non\profit!purposes!without! special!permissions!from!the!copyright!holder,!provided!acknowledgement!of!the!source!is!made.!UNORCID! would!appreciate!receiving!a!copy!of!any!publication!that!uses!this!publication!as!a!source.! No!use!of!this!publication!may!be!made!for!resale!or!for!any!other!commercial!purpose!whatsoever!without! prior!permission!in!writing!from!UNORCID.! ! ! ! 2! FOREST ECOSYSTEM VALUATION STUDY Indonesia !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ! ! ! Table!of!Contents! Foreword!....................................................................................................................................!8! Executive!Summary!.....................................................................................................................!9! Chapter!1.! Forest!Ecosystem!Valuation:!An!Overview!............................................................!13! 1.1! Why!value!ecosystem!services?!................................................................................................!13! 1.1.1! Significance!of!ecosystem!services!..........................................................................................!14! 1.2! Ecosystem!services!valuation!approaches!................................................................................!15! 1.3! Review!of!ecosystem!assessments!in!Indonesia!........................................................................!18! 1.4! Outline!of!the!Forest!Ecosystem!Valuation!Study!in!Indonesia!.................................................!19! 1.4.1! Methodology!...........................................................................................................................!20! 1.5! Indonesia!Green!Economy!Model!(IPGEM):!An!Overview!..........................................................!22! 1.5.1! Projecting!socio\economic!trends!to!reveal!added!benefits!and!avoided!costs!.....................!23! 1.5.2! Scenarios!for!cost!benefit!analysis!..........................................................................................!23! Chapter!2.! State!of!Forest!Cover,!Deforestation!and!Snapshot!of!Ecosystem!Services!Provided! by!Forests!in!Indonesia!..............................................................................................................!25! 2.1! Forest!cover!of!Indonesia!.........................................................................................................!25! 2.1.1! Deforestation!in!Indonesia!......................................................................................................!28! 2.2! Snapshot!of!forest!ecosystem!services!in!Indonesia!.................................................................!31! Chapter!3.! Outcomes!of!Forest!Ecosystem!Valuation!.............................................................!32! 3.1! Valuing!the!contribution!of!the!‘provisioning!services’!.............................................................!32! 3.1.1! The!significance!of!timber!for!Indonesia’s!economy!...............................................................!32! 3.1.2! Value!of!Non\Timber!Forest!Products!.....................................................................................!41! 3.1.3! Value!of!Taxes!from!the!Forestry!Sector!.................................................................................!50! 3.2! Valuing!the!contribution!of!‘regulating!services’!.......................................................................!53! 3.2.1.! Economic!Value!of!Soil!Erosion!Prevention!.............................................................................!54! 3.2.2.! Economic!Value!of!Carbon!Sequestered!and!Stored!...............................................................!55! 3.2.3.! Economic!Value!of!Differential!Water!Recharge!between!Forested!and!Non\Forested!Areas ! 56! 3.2.4.! Implications!of!valuing!the!contribution!of!regulating!services!..............................................!57! Chapter!4.! Scenario!Analysis!..................................................................................................!58! 4.1! Simulation!Results!....................................................................................................................!59! 4.1.1! Investment!required!................................................................................................................!59! 4.1.2! Forest!cover!.............................................................................................................................!59! 4.1.3! Forestry!production!.................................................................................................................!61! 4.1.4!Scope!for!employment!...................................................................................................................!62! Chapter!5.! Recommendations!for!REDD+!Implementation!and!Investments!..........................!65! 5.1.! REDD+!Context!in!Indonesia!.....................................................................................................!65! 5.2.! Recent!Legal!Changes!Affecting!REDD+!.....................................................................................!66! 5.3.! FMUs!and!Jurisdictional!and!Nested!REDD+!.............................................................................!67! 5.4.! Proposed!Option!for!JNR!for!Indonesia!.....................................................................................!70! Conclusions!...............................................................................................................................!71! Bibliography!..............................................................................................................................!72! ! 3! Annex!1.!Example!of!Domestic!Prices!of!Timber!in!Indonesia!.....................................................!80! Annex!2.!List!of!Wood!Products!Considered!for!Calculating!Export!Value!of!Wood!Products!......!81! ! ! ! ! 4! ! List%of%Figures% Figure'1:'Division'of'land'area'of'Indonesia!................................................................................................!25! Figure'2:'Percentage'of'forest'on'total'area'outside'forest'designation'by'MoF'for'some'island'groups,' 2012.!...............................................................................................................................................................!27! Figure'3:'Annual'deforestation'in'hectares!.................................................................................................!29! Figure'4:'Annual'deforestation'(in'ha)'in'Indonesia'by'7'major'islands'or'island'groups!.......................!29! Figure'5:'Percentage'of'logs'produced'based'on'production'source,'2011!..............................................!34! Figure'6:'Percentage'of'log'produced'based'on'production'source,'2012!................................................!34! Figure'7:'Production'trends'of'logs,'sawn'wood'and'plywood,'2002K2012!..............................................!35! Figure'8:'Importance'of'timber'products'to'the'economy'of'Indonesia,'2012!.........................................!38! Figure'9:'Production'trend'line'of'13'medicinal'plants,'2003'to'2013!......................................................!46! Figure'10:'Trend'of'taxes'collected'by'government!....................................................................................!52! Figure'11:'Trend'of'forest'revenue'share'from'total'revenue!....................................................................!52! Figure'12:'Causes'of'lost'forestry'taxes'2003K2006!...................................................................................!53! Figure'13:'Total'forest'cover'(left)'and'secondary'forest'area'(right)'under'the'BAU'and'GE'scenarios' (thousand'km2)!..............................................................................................................................................!60! Figure'14:'Protected'forest'and'secondary'forest'land,'under'BAU'and'GE'scenarios'(km2).!.................!60! Figure'15:'Annual'timber'production'in'million'cubic'meters'(left)'and'annual'timber'value'added'in' IDR'billion'(right)'under'BAU'and'GE'scenarios!.........................................................................................!61! Figure'16:'Annual'NTFP'production'in'thousand'tons'(left)'and'annual'NTFP'value'added'in'IDR'billion' (right)'under'BAU'and'GE'scenarios!............................................................................................................!62! Figure'17:'Annual'medicinal'herbs'production'in'thousand'tons'(left)'and'annual'medicinal'herbs' value'added'in'IDR'billion'(right)'under'BAU'and'GE'scenarios!................................................................!62!