Institutional Mechanisms for REDD+ - Case Studies Working Paper

Community-company partnerships (kemitraan) were eventually introduced as a legal mechanism to mitigate
conflict between local communities and concession holders over access to forest land and resources. These
partnerships indirectly recognize community claims through the creation of a contract between impacted
communities and the concession-holder. Depending on the contract, communities may receive a share of the
concession‘s revenues, job opportunities, or inputs (e.g., seedlings) and land to manage for commercial
purposes. Among the key challenges facing community-company partnerships are direct recognition of
community tenure rights, fairness of the contract, capacity of community institutions to manage benefits, and
rent seeking within the community and company (Purnomo et al., 2007).
Based on the prevalence and long history of concession-style interventions in Indonesia‘s forest sector, it is
not surprising that the majority of current REDD+ projects are taking a similar approach. In particular, most
REDD+ project developers have applied for an Ecosystem Restoration Concession (ERC). The ERC
provides 162 long-term rights (60 years + 35 year extension) to conserve and restore the area, and to generate
revenues from the sale of environmental services. It is considered to be a favorable model among REDD+
project developers because it allots significant certainty and control over the project‘s future (Madeira, 2009).
The concession model does not explicitly recognize the rights of the local communities that inhabit or use the
forest. However, most REDD+ project developers acknowledge that regardless of legal tenure, local actors
often have de facto control over the forest (Madiera, 2009). Thus, engaging and reaching an agreement with
local communities will be critical to the sustainability and permanence of any REDD+ project. Ministry of
Forestry Decree Number 36 (2009) stipulates that communities should receive 20 percent of carbon revenues
generated by an ERC, to be managed in a community trust fund. However, a recent survey of 23 REDD+
demonstration projects in Indonesia revealed that only nine projects had plans to provide cash payments to
communities (Morgan, 2010). Instead they are providing non-cash benefits, such as education and health
services, gifts (e.g., laptops or improved cook stoves), employment, and support for developing alternative
livelihoods.
Government partnerships:
The Government of Indonesia is the statutory land owner within the forest estate. A REDD+ project
proponent may, therefore, enter into an agreement with the government to develop a REDD+ project and
share the resulting carbon credits. However, the project proponent does not establish its own legal rights to
the land or carbon. Similar to the concession model, proponent-government partnerships do not explicitly
recognize the forest tenure rights of local communities. However, there are some existing institutional
arrangements in Indonesia for channeling funds from the government to communities for development
activities, which may be adaptable for REDD+.
Most notably, the National Program for Community Empowerment (PNPM) channels block grants of
$120,000 to $360,000 US per year from the national budget to the sub-district level. Villages within a subdistrict
compete over access to the funds by engaging in a participatory planning and decision-making process
resulting in self-defined development needs and priorities. Awarded funds are managed by the village
government, with a strong emphasis on transparency and broad-based participation of community members.
Participation of women and poor households is particularly encouraged. Nonetheless, some problems with
elite capture of PNPM funds have been reported. 163 Most PNPM investment has been made in local
infrastructure and service provision. However, starting in 2008, a pilot ―green‖ version of the PNPM is also
being implemented in select locations on Sulawesi and Sumatra islands, focusing on investments in
sustainable natural resource management, conservation, and renewable energy.
162 Established under Ministry of Forestry Decree No. SK 159/Menhut-II/2004 on ―Ecosystem Restoration in Production Forests.‖
163 Interview Samsudin Molano (Head of Mantaya Sabrang Village), interview with Rezal Kusumaatmadja (Starling Resources), and ―Green PNPM:
Evaluation of Sub-Project Implementation Quality.‖ 2011. http://psflibrary.org/catalog/repository/Eval.%20Green%20PNPM%20Sub-
Project%20Implementation%20Quality_May%202011.pdf.
PRRGP INSTITUTIONAL MECHANISMS FOR REDD: CASE STUDIES – WORKING PAPER 97