Opinion: Mobilizing Domestic Funds is Crucial for Sustainable Forest Management in Indonesia

Ufroz Ayyub, Tetra Tech’s environment sector specialist based in Indonesia, analyzes the role domestic funding plays in ensuring sustainable forest management in Indonesia.

This post originally ran on Devex.

Home to the largest expanse of tropical rainforests in Asia, Indonesia’s ancient forests are of global importance, harboring unique biodiversity and providing livelihoods for millions of forest-dependent communities. Alongside the critically endangered orangutan, these livelihoods are severely threatened by one of the highest levels of deforestation and forest degradation in the world.

Since 2002, Indonesia has lost an average of 500,000 hectares per year, the equivalent of more than one soccer field each minute. A complex dynamic of economic, political, and institutional drivers has prioritized extractive industries over sustainable forest management, resulting in unchecked agricultural expansion, forest and land fires, and illegal logging—the leading causes of forest degradation.

Conflicting laws and regulations, coupled with a decentralized governance structure, make sound decision-making a real challenge. Funds are often allocated ineffectively and do not address the drivers of deforestation. Building capacity at all levels of government to leverage domestic funds and government resources is crucial to the long-term sustainability of Indonesia’s forests.

The government of Indonesia recognizes deforestation is an enormous challenge. With support from the U.S. Agency for International Development (USAID)-funded LESTARI—meaning “everlasting” in Bahasa Indonesian—project, implemented by Tetra Tech, the government has shown commitment to addressing its root causes through multi-stakeholder collaboration. The LESTARI has been supporting Indonesia’s Ministry of Environment and Forestry in Aceh, Central Kalimantan, and Papua provinces to achieve its goals and commitments for improved forest and biodiversity conservation since 2015.

Our environment experts have worked with provincial authorities and local stakeholders to successfully mobilize funds for local forest management agencies from within Indonesia’s own government budget resources, a vital approach for middle-income countries. Specific interventions include identifying models and best practices for sustainable forest management; conducting assessments of funding opportunities and submitting proposals; and navigating budget processes to implement and maintain their activities.

Leveraging government resources can provide long-term contributions to development solutions. In a middle-income country such as Indonesia, this approach makes sense. For example, a major challenge is not that the government has insufficient funding resources at its disposal, but rather that the money is often allocated and directed ineffectively. In part, this is because Indonesia has a complex bureaucracy and decentralized governance structure where provincial authorities hold significant autonomy in planning, funding, and implementing programs. These local agencies don’t often have the capacity to develop sound budget proposals based on local stakeholders’ needs and data-driven assessments or see them through the long budget allocation process. Additionally, they lack awareness to pursue funding options available to them from different national initiatives and programs. For the environmental sector, this means that in many instances the forestry agencies do not allocate funds and run programs to tackle the drivers of deforestation; instead, they often end up focusing simply on tree planting programs.

A highly lauded, market-based forest conservation project in the peatlands of southern Borneo is doing everything right—except making money.

To address this gap, the LESTARI team has been directly assisting local environment and forestry agencies in the provinces of Aceh, Central Kalimantan, and Papua by helping them navigate budget processes, conduct assessments of funding opportunities, identify models and best practices for sustainable forest management, and submit proposals for funding these approaches to provincial and national government agencies in charge of budget allocation.

Since 2015, the LESTARI project has helped successfully mobilize more than $22 million dollars for sustainable forest management, with the vast majority arising from national and subnational budgets and programs. These funds—secured for the environment and forestry agencies—are allocated to address pressing issues such as forest fire prevention, forest monitoring, strengthening forest management units, community empowerment through social forestry, and landscape rehabilitation. To ensure the sustainability of these activities, a series of comprehensive training for key forestry agency personnel was conducted, enabling them to develop sound budgets and programs independently in the next round of budgeting.

One innovative example facilitated by LESTARI has been the allocation of government reforestation funds in Central Kalimantan. Indonesia’s Reforestation Fund, a national forest fund financed by a volume-based timber levy to support reforestation and forest rehabilitation, has long been underused or misused as a result of poor financial management and a lack of accountability and transparency where funding allocations are dispersed.

National policy change now allows for the funds to be used for new purposes beyond tree planting. Recognizing the opportunity, LESTARI helped the Central Kalimantan Provincial Forestry Agency to identify, apply for, and secure $4.5 million from the fund in its 2019 budget to strengthen forest management units and advance community social forestry initiatives.

This is the first time that reforestation funds have been used for these purposes in Indonesia. Most significantly, it sets a precedent for other local agencies to follow suit and secure the funding needed to address the root causes of deforestation, thereby resulting in a more sustainable approach.

Local and national buy-in supporting Indonesia’s forest management is crucial for long-term sustainability, but it does not diminish the necessity for assistance from international donors such as USAID. With the global impact of the climate crisis, stakeholders worldwide, as well as in Indonesia, must take responsibility and conduct collaborative actions to curb deforestation.

For international donors, this means continuing to commit funds and technical expertise to ensure that these investments translate into impactful programs and outcomes for both the environment and local communities. Engaging the private sector through government-led initiatives also is necessary for halting destructive practices and committing to sustainable forest management. However, all these efforts should be led and coordinated by the government in order to be effective, scalable, and sustainable.

Tetra Tech has implemented initiatives across six project landscapes on the islands of Borneo, Sumatra, and Papua through a consortium of organizations and grantees. Activities include assisting local government partners to develop policies and development plans based on sustainable natural resource management, working with national park staff to improve monitoring and management practices in protected areas, and empowering communities through sustainable livelihoods development and improved market access for their products.

These on-the-ground interventions have yielded significant impact for communities and the environment and can be used as models to amplify impact to other districts and provinces.

LESTARI has proven that mobilization of domestic funding resources and close collaboration with the government of Indonesia strengthens local forestry agencies and serves as a model for government officials in other districts and provinces to plan, finance, and implement conservation initiatives in a more self-reliant manner.

The role of Indonesia’s forests in the health of our planet should not go unrecognized or undervalued on the global stage, and continued prioritization of improving their health will benefit many generations to come.