East Kalimantan Environmentally Sustainable Development Strategy

114
Exhibit 75
Required financial support increases over time
Total estimated annual costs
USD millions per year (2010-2030)
30
20
SOURCE: Team analysis
120
75
270
175
2012 2015 2020
420
270
570
370
2025 2030
Aggressive estimate
Conservative estimate
Three types of costs are included:
• Technical costs which are the costs
to install the appropriate low-emission
technology for an initiative (e.g. fire
brigades, relocation costs to
degraded land)
• Implementation costs are the costs
needed to support implementation of
a specific initiative (e.g. mining
monitoring unit to enforce
reclamation, training on reduced
impact logging techniques)
• General enablers include the costs
that are not specific to any one
initiative but required for overall
readiness to implement the strategy
(e.g. enhanced spatial planning, MRV
baseline)
Financing for REDD+ (IWG-IFR) envisages a phased transition of funding, with REDD programs
initially relying on grants to build institutional readiness, followed by payments for reduced
emissions based on simple proxies (e.g., deforestation rates), and finally transitioning to an
advanced monitoring system that would allow a well-governed international carbon market to fund
verified emissions reductions.
DRAFT
The Ministry of Finance and the Ministry of Forestry, have already outlined some initial guidelines
for REDD projects. 25 In further developing the revenue-sharing model, some key design principles
should be considered:
• Ensure local individuals and communities are incentivized: In order to support the
behavioral change required for environmentally sustainable growth, communities concerned
must see clear benefits. In the Juma Sustainable Reserve in Brazil, for example, individuals
receive direct payments based on regular inspections of local forests (Box 16). 26 The payments
should include incentives linked to input-based metrics (e.g., for building dams, planting
trees), performance-based metrics (e.g., reducing fire outbreaks), and eventually outcomebased
metrics (linked directly to GHG emissions or proxies for emissions). As so much of the
decision-making power for land allocation currently resides at the district level and within local
communities, these groups must directly benefit from these payments. Local communities,
villages, and districts will need to be appropriately compensated to be willing to make the
changes needed for a more programmatic approach to low-carbon growth. The Amazon Fund,
25 In July 2009, the Indonesian Ministry of Forestry suggested a revenue-sharing model with allocations
depending on the type of forest ownership or permit, ranging from 10–50 percent for the government,
20–70 percent for local communities, and 20–60 percent for developers.
26 “The costs of REDD: lessons from Amazonas”, iIIED briefing paper, November 2009.