Indonesia Extends its Moratorium on "Deforestation"

Photo from Jakarta Globe.  Used without permission.  

Two years ago Indonesian president Susilo Bambang Yudhoyono (SBY) signed Presidential Instruction (Inpres) 10/2011, which imposed a moratorium on the issuance of new licenses for converting primary forests and peatlands into other uses, including oil palm plantations.  Yesterday (May 15, 2013), SBY signed an extension of the moratorium which would keep it in place in its current form for an additional two years.  The original moratorium was put in place in May of 2011 as part of an agreement between the governments of Indonesia and Norway whereby the latter would provide US$1 billion to help reduce deforestation.  In return the Indonesian government would take steps to establish a nationwide conservation strategy aimed at reducing carbon emissions.  The deal was part of a commitment on the part of SBY that Indonesia, currently the #3 emitter of greenhouse gasses, would voluntarily reduce its emissions by 26% by 2020.  In this post I'll apply the tools of geography and political ecology to explain the obstacles which would need to be overcome to make the moratorium an effective policy tool.

 Has the Moratorium Been Effective?

The idea behind the moratorium is that it would give planners and policymakers time to develop better mechanisms of forest governance.  Thus the presidential instruction was directed at the heads of three ministries, five cabinet-level offices, and all of the nation's governors and district heads, since they all have a role in the granting of forest concessions.  One of the most important things to recognize about the inpres though is that it is not a legislative document; rather it is more of a strategy blueprint or set of guidelines to be followed.  Consequently there were questions as to the effectiveness of the inpres as well as its interpretation at the various levels of government.  Moreover, observers also raised questions as to how much land was actually protected by the new document.  Different estimates were released by different government offices, varying by as much as 50%.  Analysis by the Center for International Forestry Research (CIFOR), an influential think tank, showed that a significant portion of the land covered by the map contained in the inpres was already protected in national parks and other conservation areas, and so the moratorium extended protection to a mere 22.5 million hectares of forest, rather than the 72 million claimed by the Ministry of Forestry (Murdiyarso et al 2012).  Most observers noted that the failure to include secondary forests and forests that had been logged already constituted a significant weakness, since these areas constitute more than 50% of the nation's total land area and are highly susceptible to conversion to other uses, included oil palm or fiber plantations.  

Additionally, a number of exceptions in the moratorium undermine its overall effectiveness.

From Murdiyarso et al (see references).  Used without permission.

The first exception covers applications for concessions that had already been approved by the Ministry of Forestry.  Secondly, land deemed strategically important for national projects such as geothermal and petroleum development is exempted.  These exceptions (along with a couple of others) created a significant amount of "wiggle room" and left the provisions of the moratorium open to interpretation on a number of levels. And much like the original moratorium, the current extension has drawn fire from critics.  Some of the most vociferous opposition to extending the moratorium has come from Indonesia's palm oil growers.  A major trade group, the Association of Indonesian Palm Oil Producers (GAPSI) argued that the moratorium was bad for the economy because it prevents the expansion of oil palm cultivation, which, according to the trade groups, creates jobs and brings foreign exchange.

"We firmly reject any proposal to extend this moratorium because we stand to lose more than we gain from it", said Topan, a spokesperson for GAPSI (1).

Challenges at Every Level...

To really understand why the moratorium likely won't be as effective as conservationists would hope we have to examine the actors, institutions, and processes operating at various scales.  This is a topic I've discussed in this blog in the past as well.  At the risk of oversimplification, scale refers not only to the physical location of actors and institutions, but also to the scope and extent of their power and influence (2), especially as it relates to other scales.  In this analysis I'll be discussing the global, national, regional, and individual scales as they relate to this moratorium.  These scales aren't merely nested units; they interact with one another and influence once another.  And just because one "level" might seem to be "higher" than another (e.g. the global and the regional), this does not mean that it has more influence.  It is also important to understand that these scales are not monolithic; i.e. at each scale there are lots of different interests and viewpoints, and sometimes these differing perspectives come into conflict with one another.  For example, planners and policy makers in Indonesia want to take advantage of its resource wealth to improve the lives of the nation's people.  I have described in this blog various aspects of this resource wealth, which includes mineral and petroleum deposits as well as rich volcanic soils, and so one of the easiest pathways to material improvement, at least in the short run, is through exploitation of these resources.  But at the same time there are national-scale "actors" interested in sustainable development and ensuring that the environment is not degraded and that ecosystem services are not compromised for future generations.  There is also a significant amount of corruption at the national level.  Thus we can easily see how there might be conflict in the public policy sphere at the national level.

At the global scale can think about this in terms of the wider world economy.  In the past Indonesia has used its competitive advantage in cheap labor to advance its industrial sector, but most manufacturing employment is limited to the island of Java.  The population density on Java extremely high and there is little room for agricultural expansion, and most land is fairly intensively used.  This is not the case on most of Indonesia's "outer islands", though.  Sumatra, Kalimantan, Sulawesi, and Papua are all much less densely populated and have far greater land, which is seen as a potential resource.  Moreover, the economies of these areas are mainly based on agricultural activity.  To illustrate this I've selected four provinces on Sumatra (3) and three from Java and listed the percentage of labor employed in the agricultural and manufacturing sectors in the table below (4).  As you can see, a far greater percentage of the labor force is employed in manufacturing in the Java provinces, and much more people are employed in agriculture on Sumatra.  Not only that, but the populations of Central and West Java dwarf the populations of the Sumatran provinces, and so in terms of absolute numbers there are way more employed in manufacturing on Java.

	Agriculture	Manufacturing
Bengkulu	63.27	3.46
West Sumatra	39.3	7.39
South Sumatra	57.12	4.53
Jambi	57.95	2.57
Central Java	34	19.1
West Java	21	20.5
Banten	13.9	25.2

This is important because it illustrates diverging economic development trajectories.  Java is densely populated, heavily urban, and because land is all but used up the manufacturing and service sectors are the engines of economic growth.  Sumatra, like Kalimantan, Papua, and several other large outer islands, is rich in natural resources and still has a significant amount of land that has not been cultivated.  Thus the exploitation of natural resources as well as agricultural expansion figures prominently in economic development planning, and district and provincial governments very actively court domestic and international investors that can help extract, process, and market resources.  Unfortunately, though, much of the aforementioned land is forested, and many resource deposits (including large amounts of coal and gold) are located in national parks and other protected areas.  So there is significant pressure to convert land from forests to plantations.  Moreover, most of the commodities that are the engines of growth on the outer islands (palm oil, rubber, coal) are not for domestic consumption; rather they are produced for export, and so the dynamics of the international marketplace come into play.  For example, the Bukit Barisan mountains, which run practically the full length of the island of Sumatra, are filled with coal.  In recent years there has been a coal mining boom on the island driven in part by demand from China, which is rapidly expanding its electricity generating capacity mainly through the construction of coal-burning powerplants.  China is also driving rising demand for rubber, since the population is so large and incomes are rising.  More and more people want to buy cars, and cars need tires, which require rubber.  Lastly there is huge global demand for palm oil, which is a key ingredient in thousands of food and hygiene products.  Cheap palm oil allows for the production of cheap food and cosmetics, which are the stock and trade of "big box" chains like Walmart, Tesco, and Carrefour, which are expanding their global reach and thus driving demand.

Expanding agricultural production on the outer islands is part of a coordinated, national strategy for economic growth.  For example, in 2009 the central government introduced a plan to expand agricultural production in an effort not only to enhance food security domestically but also to increase exports.  The commodities included in the plan included corn, sugar, soybeans, rice, palm oil, tea, coffee, cocoa, tuna, and shrimp.  Several of these I've discussed previously in this blog; these are tree crops that are generally grown on large plantations on Sumatra.  The plan involved significant increases in land given over to oil palm cultivation.  More recently the heavily-publicized Master Plan for Acceleration and Expansion of Indonesian Economic Development (MP3EI), which lays out Indonesia's economic development strategy for the next quarter-century, places tree crops such as palm oil and rubber at the center of Sumatra's role in the future (intensive rubber development is indicated in areas shaded orange in the map, whereas palm oil is shaded green).

This national strategy is consistent with the interests of regional (provincial and district) leaders throughout the country as well.  As I've mentioned in previous posts, Indonesia embarked upon ambitious decentralization and democratization reforms following the fall of longtime strongman ruler Suharto in 1998.  District and provincial governments gained a great deal of power and autonomy, whereas previously they had essentially been part of a top-down, centrally-directed authoritarian system.  On the outer island regional leaders inherited two things from the previous regime: a history of overreliance on primary sector activity and relatively underdeveloped infrastructure (when compared to Java).  Thus the obvious way forward from the perspective of regional governments, is through extensification of plantation crops like rubber and palm oil and the expansion of mining activities.  The way the current system is set up, district and provincial governments get to keep a high percentage (80%) of taxes and other revenues generated from these types of activities, which provides funds for "economic development".  Although many regional governments seek to expand their manufacturing sectors, they lack the experience and expertise to develop policies to encourage growth in the industrial sector.  Moreover they are often at a disadvantage not only to other countries like China, but also to other islands (Java) within Indonesia.

Lastly, when we look at the "individual" scale we can learn a lot as well.  Individuals make land use decisions, and they vote for their leaders, and so the aspirations of individuals are important in regional (and national) elections and hence policy.  In rural Sumatra virtually everyone is in favor of oil palm expansion, even many conservationists.  They see it as a way to lift people out of poverty and improve standards of living.  If oil palm plantations are operated on the basis of equity, where local farmers and the larger plantation company have fair shares in the profits, it is argued that returns on oil palms are far greater than any other land use.  This is borne out by Feintrenie et al (2010; see references), who conducted research spanning more than a decade in several villages in the vicinity of Sumatra's Kerinci Seblat National Park.  They show farmers are very much in favor of oil palm expansion, and even when there are conflicts with oil palm companies, local farmers still prefer oil palm to other crops.  They point to two main reasons: 1) high profitability and return on investment  and 2) ease of management and less labor when compared to other crops.  These researchers also argue that oil palm has increased economic development and has brought new economic opportunities.

In the End....

So when we think about the moratorium in the grand scheme of things, we can see that there are big hurdles to success.  In the short run, at least, virtually no one in Indonesia benefits from the moratorium, and there are very strong actors and interests arrayed against it.  Thus even if the lobbying efforts of industry groups have failed to prevent the extension of the moratorium, its content and coverage has been watered down to the point where it likely will have no effect on broader currents in the agricultural sector, because these are driven by larger macroeconomic trends.  And since the moratorium is seen as contrary to the interests of regional governments and individual farmers, enforcement ad compliance is not likely to be a high priority at these levels.  But what I hope is clear from this post is that it's not greed or careless disregard for the environment and atmosphere on the part of farmers that leads to the failure and ineffectiveness of initiatives like the moratorium.  It's rather in the way the world works as actors, institutions, interests, and economic currents operating at various scales come together to drive deforestation.

Notes

(1)  Quoted in Jakarta Globe "Palm Oil Planters..."

(2)  There is a very rich and sometimes frustratingly esoteric literature on scale in geography.  Geographers now tend to accept that scale is "socially constructed", which means that scales are not pre-existing containers of human activity, but rather grow and evolve over time.  Thus the influence of a particular scale may change.  

(3)  These are the four provinces that surround Kerinci Seblat National Park, where I did my PhD fieldwork.

(4)  All of the data in this table are taken from statistical yearbooks published annually by the provinces.  The data here is from the 2012 yearbooks, with the exception of Bengkulu province, which comes from the 2010 yearbook.

References and For Further Reading

Austin, Kemen, Stuart Sheppard, and Fred Stolle.  2012.  "Indonesia's Moratorium on New Forest Concessions: Key Findings and Next Steps".  WRI Working Paper.  World Resources Institute, Washington DC.  Available online here.

Feintrenie, Laurene, Wan Kian Chong, and Patrice Levang.  2010.  "Why do Farmers Prefer Oil Palm?  Lessons Learnt from Bungo District, Indonesia".  Small-Scale Forestry 9, pp379-396.

Indonesia Pledges to 'Feed the World'.  Erwida Maulia, Jakarta Post January 30, 2010.  Available online here.

Murdiyarso, Daniel, Sonya Dewi, Deborah Lawrence, and Frances Seymour.  2012.  "Indonesia's Forest Moratorium: A Stepping Stone to Better Forest Governance?"  Bogor, Indonesia: CIFOR.  Available online here.  

Palm Oil Planters Bid to End Deforestation Moratorium.  Jakarta Globe May 10 2013.  Available online here.

What is Palm Oil and Where Does it Come From?

Oil palms on school ground in Bengkulu Utara.  Even
the area around the mosque is used for oil palms.

I remember flying into Kuala Lumpur International Airport a few years ago to begin the year of research funded by my first Fulbright award.  From around 25,000 feet the Malay Peninsula appears to be covered by a blanket of what you would assume to be lush, tropical rainforest.  As you descend for landing though, you notice that it's not primeval rainforest, but rather kilometer upon kilometer of a certain type of palm tree which extends as far as the eye can see in all directions.  As you ride away from the airport you notice that the trees are spaced in neat, exact grids, and beneath them grows nothing at all.  This was my first look at the oil palm (Elaeis guineensis).  Last week when I traveled to Bengkulu province on the southwest coast of Sumatra I saw another oil palm-dominated landscape.  Since palm oil grows well in tropical lowlands, the coastal regions around Sumatra have gone over to the tree crop in a big way. 

Palm Oil: The Basics

Photo from FAO oil palm page

Elaeis guineensis originally comes from West Africa, where the fruit of the plant has been used for thousands of years.  During the Age of Exploration (15th-17th centuries) the plant made its way to the New World and from there on to Southeast Asia, where it thrived.  In 1960s Malaysia's Department of Agriculture started doing research on the tree crop which led to widespread cultivation on the Malay peninsula.  Oil palms are mainly grown for their fruit, which yields palm oil.  The tree itself yields 10-40 kilogram bunches of small fruits that kind of look like dates.  Palm oil has a lot of saturated fat, but not nearly as much as coconut oil, which comes from another type of palm.  It's used mainly by the food industry (82.3%) and according to the Rain Forest Action Network it's "used in 50% of all consumer goods, from lipstick and packaged food to body lotion and biofuels" (1).

According to the Food and Agriculture Organization (FAO), by 2008 there were more than 13 million hectares of palm oil in the tropics, a 300% increase since 1961.  Indonesia and Malaysia are the world's leading producers of palm oil (together they produce about 85% of the world's palm oil), and in both of those countries palm oil is on the increase.  It's estimated that since 1990 more than half of the huge increase in palm oil has come at the expense of forests.

What's driving the expansion?  Well, palm oil is extremely profitable, and the prices have increased rapidly over the years.  In 2006 crude palm oil (CPO) fetched $478 per ton, but by 2008 the price had more than doubled to $1,196 per ton.  Palm oil is harvested twice a month after the third year after planting, and so it provides a ready source of cash to villagers that cultivate it, but most oil palms are grown on huge estates operated by large companies using high-yielding clones and efficient processing techniques.  The market for palm oil is tied to other vegetable oils, and so global trends and events directly and indirectly affect the price.  For instance, a substitute for palm oil is soybean oil, which is a major crop in the US.  However, in the mid-to-late 2000s, much soybean land in the US was given over to production of other crops to be used in ethanol (soybeans are used in a lot of foods), and so the demand and hence the price of palm oil increased dramatically.  Increasing incomes in South, East, and Southeast Asia are also driving palm oil production, since most of it is exported (the major importers are China, Europe, and India) for the food processing industries of emerging countries.

Can't See the Forest for the Oil Palms...

As I mentioned in a previous post, palm oil is the crop of choice in the districts of Mukomuko and Bengkulu Utara in Bengkulu province.  I described some of the environmental impacts of the oil palms themselves, including the fact that they are very thirsty trees, and are thought to be lowering the water table in the region due to their high water demands.  This in turn makes the coastal regions more susceptible to erosion, which is a big problem in the region.  But there are also problems with the palm oil business; most of the land in these districts has been granted to big companies, and the local people, who are mainly farmers, are forced to grow their crops further away from the coast in the direction of the mountains.  Though most of them also choose to grow oil palms, the price they can get is lower because the condition of the roads and the distance to market cuts into their profits. 

I started thinking about this a bit more today as I was doing some background reading for a project I might be working on in the near future.  The project is related to the REDD+ (Reducing Emissions from Deforestation and Forest Degradation) framework which aims to reduce greenhouse gas emissions by addressing forest clearance, which is said to account for about 18% of all carbon dioxide emissions.  In theory REDD programs provide support (money) directly to local communities in an effort to get them to stop cutting and burning trees.  The idea is to help them to find alternative livelihoods and enlist them as partners in the fight against global warming.

Anyway, REDD is really big in Indonesia now, and there are a lot of international organizations interested in getting REDD programs going in Indonesia.  Some of these efforts are aimed at slowing the spread of oil palm cultivation, since oil palms, though they are trees, sequester about one-tenth the amount of carbon as an equivalent area of rain forest (26 megagrams of carbon per hectare as opposed to 225 megagrams for an average hectare of rain forest).  The objective of many REDD programs is to alter the cost-benefit calculations of farmers since it's assumed that they make their decisions based on how much money they can make for a particular activity.  Thus in order to convince a farmer not to convert forest to oil palms, you have to make the forest more valuable to him in terms of cash money.  One of the studies I read, though, found that under the current REDD framework, given the way the programs are implemented and funded, it will always be in the farmer's best interest to convert forests to oil palms.  This is pretty discouraging.  You can see accumulated profitability curves in the graph below.  

However, the authors of the study brought up some exceptions.  REDD could be more profitable if the soil is bad, thus limiting the productivity of the oil palms.  Or if the infrastructure (roads) are so bad that they increase the costs of production for the farmers so that it's actually better to join a REDD program.  I immediately began thinking of Bengkulu Utara and Mukomuko, since my rear end still hurts from riding my motorcycle across tens of kilometers of bumpy, gravelly roads.  The people in these districts deal with these conditions all the time, and they complain that it really makes it difficult to make a living.  Nevertheless, villagers are still converting forests to oil palm.  So why not target these areas for REDD projects?  It seems to make more sense in these areas where the economics support the project rather than some other places where you're swimming against the tide.  And if villagers opted to participate in REDD initiatives, it would decrease the pressure on the district government to provide roads to new plantation areas (though it would not relieve the district government of its responsibility to improve the roads to the villages themselves, an area in which they've been terribly remiss).  

I'll likely write more on REDD in the coming weeks if I get more involved in it.  Since it seems to be "the next big thing", there's a lot to talk about.  

Notes

(1) Take this with a grain of salt because the Rainforest Action Network is sometimes wrong about stuff.

References and For Further Reading

There's a lot of information out there on palm oil, but the study I cited in this post is

Butler, Rhett A, Lian Pin Koh, and Jaboury Ghazoul.  2009.  REDD in the Red: Palm Oil Could Undermine Carbon Payment Schemes.  Conservation Letters 2, pp67-73.