UNDERSTANDING THE DRIVERS OF DEFORESTATION AND THE POLICIES INCENTIVIZING FOREST CONVERSION IN FOREST AND PEATLAND IN THE LEUSER LANDSCAPE FEBRUARY 14, 2019 This publication was produced for review by the United States Agency for International Development. It was prepared by Tetra Tech ARD. This publication was prepared for review by the United States Agency for International Development under Contract # AID-497-TO-15-00005. The period of this contract is from July 2015 to July 2020. Implemented by: Tetra Tech P.O. Box 1397 Burlington, VT 05402 Tetra Tech Contacts: Reed Merrill, Chief of Party [email protected] Rod Snider, Project Manager [email protected] Cover: Palm oil plantation at the border of Rawa Singkil Wildlife Reserve in Le Meudama Village, Trumon, Aceh Selatan. USAID LESTARI Understanding the Drivers of Deforestation and the Policies Incentivizing Forest Conversion in Forest and Peatland in the Leuser Landscape Page | ii UNDERSTANDING THE DRIVERS OF DEFORESTATION AND THE POLICIES INCENTIVIZING FOREST CONVERSION IN FOREST AND PEATLAND IN THE LEUSER LANDSCAPE FEBRUARY 14, 2019 DISCLAIMER This publication is made possible by the support of the American People through the United States Agency for International Development (USAID). The contents of this publication are the sole responsibility of Tetra Tech ARD and do not necessarily reflect the views of USAID or the United States Government. USAID LESTARI Understanding the Drivers of Deforestation and the Policies Incentivizing Forest Conversion in Forest and Peatland in the Leuser Landscape Page | 1 TABLE OF CONTENTS LIST OF FIGURES AND TABLES .......................................................................................... 3 LIST OF ABBREVIATIONS AND ACRONYMS ..................................................................... 4 EXECUTIVE SUMMARY ......................................................................................................... 5 RINGKASAN EKSEKUTIF .................................................................................................... 10 INTRODUCTION ................................................................................................................... 15 METHODOLOGY .................................................................................................................. 17 RAWA SINGKIL WILDLIFE RESERVE ................................................................................ 19 DEFORESTATION IN THE RAWA SINGKIL WILDLIFE RESERVE ................................... 21 ILLEGAL LOGGING ........................................................................................................... 22 OIL PALM EXPANSION INTO RAWA SINGKIL WR ......................................................... 23 OPPORTUNITIES FOR ENGAGEMENT WITH PALM OIL SUPPLY CHAIN STAKEHOLDERS ................................................................................................................. 28 POLICIES INCENTIVIZING FOREST CONVERSION IN THE RAWA SINGKIL WILDLIFE RESERVE .......................................................................................................................... 30 CONCLUSION AND RECOMMENDATIONS ....................................................................... 33 REFERENCES ...................................................................................................................... 38 USAID LESTARI Understanding the Drivers of Deforestation and the Policies Incentivizing Forest Conversion in Forest and Peatland in the Leuser Landscape Page | 2 LIST OF FIGURES AND TABLES Tables Table 1. Mills at risk of sourcing FFB from within Rawa Singkil WR. .................................... 26 Table 2. Overview of company sustainability policies and relevant policy components for the major buyers sourcing from mills in the Singkil landscape .................................................... 28 Figures Figure 1. Distribution of forested area in the Rawa Singkil WR with ID,2017 ........................ 17 Figure 2. Rawa Singkil Wildlife Reserve ................................................................................ 20 Figure 3. Endemic species in Rawa Singkil WR. From left to right: Sumatran elephant (Elephas maximus sumatrensis), Sumatran orangutan (Pongo abelii), and helmeted hornbills (Rhinoplax vigil). Source: KPHK Rawa Singkil (elephant and hornbill) and Lubis Mohammad (orangutan) ............................................................................................................................ 20 Figure 4. Deforestation in Rawa Singkil WR from 2000 - 2017 ............................................. 22 Figure 5. Beams from Rawa Singkil WR ............................................................................... 23 Figure 6. Smallholder oil palm plantation in the Rawa Singkil WR at Keude Village ............. 24 Figure 7. Distribution of smallholder oil palm plantations on the eastern to southern part of Rawa Singkil WR ................................................................................................................... 24 Figure 8. Oil palm production inside the Singkil WR and buffer zone .................................... 25 Figure 9. Palm oil supply chain in the Singkil landscape ....................................................... 25 Figure 10. CPO mill data showing proportion of FFB sourcing from own vs third parties ('Pihak Ketiga') ....................................................................................................................... 27 Figure 11. CPO from PT. Perkebunan Lembah Bhakti 2 will be transported ........................ 27 USAID LESTARI Understanding the Drivers of Deforestation and the Policies Incentivizing Forest Conversion in Forest and Peatland in the Leuser Landscape Page | 3 LIST OF ABBREVIATIONS AND ACRONYMS Bappeda Badan Perencanaan Pembangunan Daerah Bappenas Badan Perencanaan Pembangunan Nasional BKSDA Balai Konservasi Sumber Daya Alam BPKH Balai Pemantapan Kawasan Hutan BTN Balai Taman Nasional BBKSDA Balai Besar Konservasi Sumber Daya Alam BBTN Balai Besar Taman Nasional CA Cagar Alam CPO Crude Palm Oil FAO Food and Agricultural Organization FFB Fresh Fruit Bunches GAP Good Agricultural Practices GAR Golden Agri-Resources GDP Gross Domestic Product GHG Greenhouse gas GRK Gas rumah kaca KPHK Kesatuan Pengelolaan Hutan Konservasi LSM Lembaga Swadaya Masyarakat MoEF Ministry of Environment and Forestry NDC Nationally Determined Contribution PP Peraturan Pemerintah RPJMN Rencana Pembangunan Jangka Menengah RSPO Roundtable on Sustainable Oil Palm SM Suaka Margasatwa/Wildlife Reserve SMART Spatial Monitoring and Reporting Tool USAID United States Agency for International Development WCS-IP Wildlife Conservation Society – Indonesia Program WR Wildlife Reserve USAID LESTARI Understanding the Drivers of Deforestation and the Policies Incentivizing Forest Conversion in Forest and Peatland in the Leuser Landscape Page | 4 EXECUTIVE SUMMARY This report provides an analysis of encroachment and the drivers of deforestation and peatland conversion in the Leuser Landscape, with a focus on Rawa Singkil Wildlife Reserve (WR). This builds on an initial situation analysis conducted by USAID LESTARI on the crucial role of peatland ecosystems in Aceh Province and the recommended steps to addressing the gaps in existing efforts to safeguard Rawa Singkil WR. This report recommends approaches for tackling deforestation and protecting the integrity of the peatland ecosystem, including through mitigating the conversion pressures associated with palm oil production. The findings lay out a vision for the long-term sustainability of the reserve. These approaches are consistent with USAID LESTARI’s technical scope in supporting the Government of Indonesia to reduce greenhouse gas (GHG) emissions and conserve biodiversity in carbon rich and biologically significant forest and mangrove ecosystems and build on its existing support for the Leuser Landscape. Rawa Singkil WR, spanning three districts in Aceh province1, is designated as a Natural Conservation Area2 and Conservation Forest Management Unit3. The reserve is Aceh’s largest remaining intact peatland and comprises the following main ecosystem types: tropical forest, peat swamp, river and coastal area. These unique and fragile ecosystems provide important habitat for endangered wildlife, notably the Critically Endangered Sumatran orangutan (Pongo abelii)4. They also provide important environmental services both locally and globally; such as through hydrological regulation, which prevents surrounding communities from flooding during the rainy season, and by providing vital carbon storage and preventing methane (CH4) emissions into the atmosphere. The area is threatened by encroachment and oil palm development along the border, which threatens the integrity of the ecosystem and negatively impacts wildlife and local livelihoods alike. To further understand these risks and the opportunities to mitigate them, the Wildlife Conservation Society (WCS), under USAID LESTARI, assessed the major threats facing the Rawa Singkil WR and surrounding landscape, including the main causes of deforestation and the connections to commodity supply chains. This report provides an analysis of encroachment and deforestation patterns, including for oil palm, in Rawa Singkil WR, using satellite imagery and field research data conducted between January 2017 and August 2018. The analysis found that the rate of deforestation in the reserve’s buffer zone was 1.26%