Report for the German Agency for Technical Cooperation (GTZ) - UMS

Bernaulus Saragih
REDD in East Kalimantan, the economic challenge: Potential and opportunity, who will pay
the cost?
Research rational and objective (in Brief)
Bali conference on climate change (COP 13) in December 2007 has issued many
international agreements on combating climate change and one of them is the reduction of
the carbon emission from deforestation and degradation.
Indonesia as a host of the conference wants to implement REDD policy following the
potential of reduction of the emission that could be released as an aim of preventing forest
from destruction and developing the economy of the forest dependent community.
Many seminars and meetings have been made following the high interest of local
government and forest stakeholders in East Kalimantan on the REDD program. But, these
seminars could not determine what is the potential cost and benefit that could be gained and
paid by the forest management. Who will pay the cost of being involved in REDD scheme,
where the benefit is coming from, will the benefit from REDD can compensate the lost of
opportunity to gain benefit from timber?
This research is made as an effort to get the answer of these questions, and based on this
answer further decision can be made whether forest manager, policy makers, and local
government will be interested in the implementation of RED
Research site and duration:
Research area is East Kalimantan, the research will be conducted for 3 years of 2009-2011.
Research will be conducted in some steps,
STEP ONE.
The research will be started with the determination of the potential cost dealing with the
process of being involved in REDD.program. Cost items will be listed consist of what is the
cost and how much? How the cost will be paid? And what is the source of cost?
next step is to determine the potential market and foreign buyers of the emission. What is the
process and how the agreement will be made and what is the benefit
then assessing the value of forest for the local people based on the local economic and
perspectives and valuate them in currency (Rupiah or Dollar). Valuation will be made on
hectare base. For this purpose the pilot research area will be selected on the basis of
community level
Results of step one is
The comparison of current forest economic value of gained by local community with the
potential benefit gained from the REDD program.
Output of step one
The willingness of local community to be part of the REDD program is identified
STEP TWO
Determine the benefit and cost of forest conservation and conversion for palm oil plantation.
Assess the cost of conservation and the benefit that could be gained from REDD. Assess the
cost of conversion and the benefit that could be gained from palm oil plantation. Preparing
two plot experiments one in proposed or conservation or forest protection, and the other one
is in the proposed conversion forest area for palm oil plantation
Result of step two
Return to investment of REDD PROGRAM compare with PALM OIL PLANTATION the
comparison of Nett present value (NPV), Internal rate of return (IRR), and the benefit cost
ratio (BCR) of REDD implementation and Palm oil plantation
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