The Rimba Raya Biodiversity Reserve REDD Project

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The model in Figure 48 represents the market for peat land bothbefore and after REDD in a basic supply and demand framework.Notice the initial supply curve (denoted ST) is completely vertical.This represents the fixed amount of agricultural (and to beconverted to agricultural) land available in Indonesia. The initialdemand curve (denoted DT) represents current demand foragricultural (and to be converted to agricultural) land inIndonesia.Figure 47. Hotellings Equilibrium Price and Quality Trajectoriesfor Non-‐Renewable ResourcesIn Kalimantan the amount of peat land is declining at a rate of5.42% per year (Wetlands International, 2002). If REDD is enactedthe total store of land will be reduced further and competition forland will increase significantly engaging not only palm oilproducers, but also those looking to capitalize on the carbonstore in the peat land with the intention of selling credits. Thislevel of heightened scarcity will have significant impacts oncurrent and future land use plans. The market responsesassociated with this new, more limited quantity of available landwill likely follow basic market principles, assuming limitedgovernment involvement in market functionality withappropriate enforcement of land use regulations and propertyrights.Figure 48. Peat Land Market Supply and Price Equilibrium219
The intersection of the hypothetical demand and supply curvesyields the market clearing equilibrium price for peat land inIndonesia, (denoted PT), where P stands for price (throughoutthe example) and subtext T represents the present time period(i.e. prior to REDD). If REDD were to be enacted, the total supplyof available land demanded by palm oil farmers and carbon creditcompanies would be reduced based on REDD guidelines, which isindicated by the leftward shift in the supply curve (denotedST+1). Independent of any changes in demand, the marketclearing price would be bid up as a result of the diminished stockof available land (denoted PT+1), where subtext T+1 representsthe subsequent time period after period T. Empirical evidence(Othman, 2003) suggests that the elasticity of demand for palmoil and other edible oils is very high (i.e. highly substitutable).The resulting impact on demand for peat land to be used forpalm oil would be diminished by palm oil producers as a result ofthe relatively higher input costs associated with the increasingpeat land prices. Palm oil producers would be able to either: 1)compete for the land, 2) move to other less competitive non-‐peatland or 3) transition productive endeavors to other industries.One likely outcome would be activity shifting due to the fact thatthe input costs would increase (discussed in more detail below)and the transaction costs associated with redirecting industrialproduction into an alternative industry would likely besignificantly high enough to inhibit a substitution.The reason for this competitive adjustment is that carbon creditcompanies have moved on to peat land (or conversion forests) inorder to capitalize on the expected value of the carbon storedwithin the peat, effectively bidding up the price of the landpreviously demanded by palm oil companies. This is the impetusthrough which palm oil producers move to marginalized non-‐peatlands, which are not directly impacted by REDD, in order tomaintain competitive cost structure within their palm productionoperations.The short term impact on the carbon credit market is anincreased supply of available credits (see Figure 49) due to thevalue added to stored carbon by the implementation of REDD.We see current market equilibrium price and quantity (PT andQT) at intersection of initial pre-‐REDD supply and demand curves(DT and ST). The initial increase in carbon credits will shift thesupply curve to the right (to ST+1). In the longer term, assumingcountries, firms and individuals adopt the policies required byREDD, the demand for the carbon credits will increase (to ST+!)yielding an increase in the longer term horizon of equilibriumprice and quantity (intersection of DT+1 and ST+1).The longer term impact of added carbon store profitabilityexhibits a multi-‐stage effect as policy implementation and landuse enforcement are crucial. Specifically, the time in which ittakes for users of the carbon credits to create the market breadthin order to see significant market traction will occur over time asthe industry expands. At this juncture government regulation iscrucial as indicated by Othman (2003), higher supply elasticitiesexist, wherein governmental organizations fail to enforce policies,this failure enables higher risk activities to persist, which couldultimately result in no significant additionality as palm oilproducers could recapture peat land or other land gazzeted foragricultural use. In other words, higher levels of profitability toone use reduce the elasticity of supply to other uses.220
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The Rimba Raya Biodiversity Reserve
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AcknowledgementsWith Special Recogn
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ContentsContents ..................
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BIODIVERSITY SECTION ..............
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GLOSSARY OF PROJECT SPECIFIC TERMSC
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REDD, which is necessarily conserva
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Rehabilitation Center (OFI), home t
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estricted-‐range, or otherwise
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HydrologyWatersheds in the Project
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SoilA soil map for the Project Zone
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ClimateRainfall in the Project Zone
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Compositionally, freshwater swamps
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selective logging, intensive loggin
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G1.3. Boundaries of the Project Are
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Communities in the Project ZoneThe
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Delineation of the Project Zone. To
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the project and recommending that t
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During the ground surveys, aerial s
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Stratification by Peat Distribution
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G1.5. Description of Project Zone C
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Only a few of the communities have
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livelihoods, providing protection f
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Similar to the other villages along
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company. On average, farmers and fi
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categories: housing, office, agricu
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Table 6. Current Community Conflict
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and six are Vulnerable (VU). CR spe
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eight are listed as Vulnerable. Eig
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2004). These losses highlight the i
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small mammal species richness decli
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even fewer forest species than plan
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Other threats to biodiversityAdditi
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HCV1.1Table 8. Preliminary evaluati
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of water supplies and prevention of
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ladang agriculture, scrub, short se
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Table 11. Critically Endangered Hig
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d. areas that support significant c
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G1.8.2. Significant Large Landscape
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It is possible that a degree of per
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The revised Toolkit for Indonesia i
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the assessment area; and second, an
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HCV 4.3HCV 4.3 aims to identify and
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Within the Project Area and neighbo
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G1.8.6. Areas Critical for Traditio
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In 2004, five oil palm estates were
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Figure 23. Comparison of the new dr
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Table 15. Extent of Overlap w/ Oil
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Baseline analysis: LandcoverIn orde
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All survey data has been entered in
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For a complete report on the Carbon
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Identification of Baseline Scenario
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Under Indonesian legislation, Law (
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drained due to the realization that
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conversion for urban, rural, and in
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to 2002. Furthermore, deforestation
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Local Perspective. Tanjung Puting N
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Table 17. 2000-‐2008 Palm Oil E
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Provincial Government Targets Rimba
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to recovery from past disturbance,
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StratumTable 20. Calculations of CO
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Year ofProjectArea loggedyr-‐1T
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GHG removals from oil palm sequestr
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Year ofProjectArea burnedyr-‐1T
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Year ofProjectArea burnedyr-‐1T
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Yr ofProjectTable 26. Net baseline
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environmental impacts and the need
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triggered by palm-‐oil companie
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G3. Project Design and GoalsG3.1. S
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elements and an assessment of the P
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habitat in terms of canopy and food
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Funding of OFI activitiesTanjung Pu
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interventions can improve the poor
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Community Agro-‐Forestry. In ke
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The only requirement is to pump the
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The Rimba Raya project proponents i
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www.kiva.org as highly reputable fi
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purchases more than $24 million dol
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The comparative analysis will be us
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G3.4. Project Lifetime, Accounting
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Table 28. Rimba Raya Implementation
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2-‐Establishment ofRimba RayaRe
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6-‐Development ofSocial Buffer2
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7-‐Outreach andEducation3-‐
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Pembuang Hulu and Tanjung Hanau reg
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.7. Determination of the need for s
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elationship with oil palm companies
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capital.” In order to ensure that
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G3.8. Stakeholder Identification an
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Page 179 and 180: Community Involvement during Projec
Page 181 and 182: 31 26/12/08 Burhanudin Merchant Des
Page 183 and 184: Table 31. Rimba Raya Project Proces
Page 185 and 186: G3.9. CCBA Public Comment PeriodDes
Page 187 and 188: In some contexts, for example where
Page 189 and 190: Table 32. Required Skill Sets , Key
Page 191 and 192: Develop areforestationprogramaround
Page 193 and 194: Figure 38 PT Rimba Raya Conservatio
Page 195 and 196: Figure 40. Project Organizational C
Page 197 and 198: manipulated to serve someone’s pe
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Page 201 and 202: also provide training in the skills
Page 203 and 204: Communitycenters &librariesWater fi
Page 205 and 206: C102 - Social Security (Minimum Sta
Page 207 and 208: G5.2. Documentation of Project Appr
Page 209 and 210: Figure 42. Official Land Area Verif
Page 211 and 212: Figure 44. Original Letter from Gov
Page 213 and 214: Figure 45. Original Minister’s De
Page 215 and 216: Encroachment by Palm Oil Plantation
Page 217 and 218: CLIMATE SECTIONCL1. Net Positive Cl
Page 219 and 220: CL1.5. Double Counting of Emissions
Page 221 and 222: Negative leakage is the unanticipat
Page 223 and 224: undervalued. Moreover, the argument
Page 225 and 226: et. al., 2005). However the long te
Page 227: edistributed such that the most eff
Page 231 and 232: dedicated to bio-‐fuel producti
Page 233 and 234: Without project activities are disp
Page 235 and 236: Table 36. Assessment of risk factor
Page 237 and 238: Table 36. ...continuedRiskFactorLik
Page 239 and 240: Table 37. ...continuedRisk Factor %
Page 241 and 242: degraded portions of the Project Ar
Page 243 and 244: CL2.4. Leakage and non-CO2 GasesNon
Page 245 and 246: Monitoring of the boundary of the p
Page 247 and 248: Monitoring will be conducted by a p
Page 249 and 250: Table 38. InfiniteSUSTAINABILITY Ma
Page 251 and 252: Phinisi FloatingClinicMicro-Finance
Page 253 and 254: Table 39. Threats and management re
Page 255 and 256: Hunting - Communities in the Projec
Page 257 and 258: All five of these capital assets ar
Page 259 and 260: Hygiene improvesProportion of house
Page 261 and 262: LARASITAProject proponents will wor
Page 263 and 264: B1.2. Impact of Project Activities
Page 265 and 266: HCV 1.1 Support Function to Protect
Page 267 and 268: further losses. Protection of non-
Page 269 and 270: five are listed as Endangered by IU
Page 271 and 272: HCV 2.3 Areas that Contain Populati
Page 273 and 274: Table 42. Species to be used for Ri
Page 275 and 276: negative. In this scenario, net bio
Page 277 and 278: permanent 10-‐20 km transects s
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high resolution imagery) and field
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e present in the Seruyan River insi
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The Rimba Raya Project is located i
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intentionally or unintentionally, f
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GL3. Exceptional Biodiversity Benef
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Table 44. Endangered & Critically E
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GL3.2.2. Species with Large but Clu
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BIBLIOGRAPHYAnderson, J.A.R. (1972)
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Gibbs, H., (2008) Carbon payback ti
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Nicolas, Marc V.J. and Grant S. Bee
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Islands]. In Press.Susilo, H.D. (19
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The Rimba Raya Biodiversity Reserve REDD Project

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