East Kalimantan Environmentally Sustainable Development Strategy

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The technical maximum potential for CO2e reduction through zero burning could be as high as 26
MtCO2e annually if all fires set by oil palm growers in East Kalimantan were suppressed. However,
we recognize this would require large investments in infrastructure and fire prevention programs
across a very large and difficult terrain. Thus, this strategy uses a more conservative abatement
estimate of 15.6 MtCO2e, which could be achieved by focusing on the historical fire hot spots
within the province.
Using existing degraded lands for the expansion of palm oil plantations could result in
11.4 MtCO2e of abatement annually by 2030. East Kalimantan has large areas of land that
have been heavily degraded through previous deforestation, forest degradation, and the massive
fires of the 1980s and 1990s. As many as 1.4 million ha are categorized as very critical (sangat
kritis) and critical (kritis), with remaining tree cover of less than 10 percent and less than 30 percent
respectively. Large areas of very critical and critical land are covered with Imperata cylindrica
(alang-alang) and other weed species or bushes as their main vegetation with low carbon values.
These degraded lands require roughly equal amounts of fertilizer (primarily rock phosphate) as
forest lands and have approximately the same costs for development excluding any potential oneoff
revenues from selling cut timber on forested lands. Using degraded land for oil palm expansion
will not only prevent emissions, it could even result in a net sequestration of carbon as long as the
initial carbon levels are below 40 tCO2e per ha.
Only the larger plots of available degraded land are economically interesting for palm oil
plantations investments from the private sector. About 40 percent of the land categorized as
very critical and critical (approximately 550,500 ha of the total 1.4 million ha) consists of contiguous
fields of 500 ha and larger. The rule-of-thumb estimate for the area needed for an economically
attractive palm oil concession is 5,000 ha. We have focused on plots of degraded land of 500 ha
or greater as we believe that they are typically found close to one another and can be consolidated
with proper efforts. Thus, these areas could be used for oil palm cultivation and avoid deforestation
of equally sized forests. To enable the use of degraded land, a degraded land database has to be
developed that will identify the location, soil type, owner, and current land use. Degraded land must
also be included in the spatial planning process, and its use should be prioritized over forested
areas in the issuance of oil palm location permits (Izin Lokasi). In addition, financial incentives in the
form of subsidies for use of degraded land and/or high carbon taxes on forested land would help to
encourage the private sector to use degraded areas. This initiative will need to be linked to classical
REDD payments or reclassifications under the spatial plan to ensure the original forest concession
is not converted in the future by other activities.
DRAFT
Using degraded land is a relatively low cost opportunity to reduce emissions, with
societal costs 7 of less than USD 10 per abated tCO2e. The direct costs of cultivating oil palm
on degraded land are roughly equal to cultivation on forested land. Forest concessions do offer
a one-time revenue from the harvesting of the timber, which can cover the capital to establish
the plantation. However, this is not the biggest driver for palm oil companies; in fact, many report
that unless there is an associated timber company, they find it difficult to sell the timber or the
community will claim it. They report that the biggest cost of degraded land is the indirect time and
compensation needed to reach agreement with the larger number of settlers on these lands.
Emissions from decomposing peatland can be reduced through the implementation of
a water management system and peat rehabilitation efforts, which can yield 7.1 MtCO2e
in abatement. Water management limits the depth to which the peatlands are drained, from 100
cm to 70 cm for example. While best practices are still being researched, dam and canal systems
can better manage water tables in palm plantations. These need to be based on an assessment
of the entire hydrological conditions around a peat dome; as peat domes are integrated systems,
7 Societal cost doesn’t include transaction costs (e.g., compensation payments for land use rights of
communities), which could be significant, especially as a large number of smallholder communities would
be involved