John eckford experiences from papua

Amazonas Workshop: Readiness for REDD

Experiences from Papua, Indonesia

John EckfordSenior AnalystNew Forests Advisory Inc

Experiences from Papua, Indonesia

1

Wednesday, March 18, 2009South-South Collaboration Workshop

Amazonas, Brazil

New Forests Advisory [email protected]

Outline

1. Introduction to New Forests

2. Context for Papua Project2. Context for Papua Project

3. Papua project summary

4. Project characteristics

a) Governance

b) Baseline

c) Consultation / social

d) Link to national strategies

2

d) Link to national strategies

e) Distribution of benefits

f) Financing

5. Lessons learned & conclusions

1. New Forests

• Private for-profit forest investment management and advisory services firm

• Headquartered in Sydney, Australia, with offices in Washington, D.C., San Francisco and Kota Kinabalu, Malaysia

• Investments primarily in Australia, New Zealand and the Asia Pacific region

• REDD: began studying in 2007 and developing the Papua project in 2008; hope to achieve certification (Voluntary Carbon Standard) in 2009

• Developing other smaller REDD projects as part of larger

3

• Developing other smaller REDD projects as part of larger investments

2. Papua Project Context

4

2. Papua Project Context: Deforestation Drivers

5

• 90% of world’s palm oil exports come from Malaysia & Indonesia

• 300,000 ha converted per year globally

• Luxury products (cosmetics, shampoos, food) & biofuels

2. Papua Project Context: REDD Markets

Driver Scope

Mechanism

Project-Level

(“market”)

Country/State-Level

(“non-market”)

International CDM – Only Reforestation Forest Stock Change

Regulatory

International

(UNFCCC)

CDM – Only Reforestation

REDD post-2012 ?

Forest Stock Change

REDD post-2012 – ?

Domestic

(e.g. RGGI, WCI)

Reforestation

Forest Management

REDD – ?

Reforestation /

Deforestation

VoluntaryBusinesses /

Individuals

Reforestation

Forest Management

REDD

Not relevant

6

REDD

• Voluntary market projects can move the REDD market forward while complex regulatory mechanisms are negotiated

• Develop technical methodologies and new business models

• Ultimately, REDD will survive or fail in regulatory markets

3. Papua Project Summary

• Began with Memorandum of Understanding between Governor Suebu & New Forests, May 2008

• Government nominated 3 concession areas – 2 were

Mamberamo

prioritized after desktop review

• June 2008, site visits to begin feasibility and project design

7

Mimika


• Mamberamo

o REDD site is114,750 hectares

o 50% under risk of conversiono 50% under risk of conversion

o Mamberamo Basin (8M ha) is largest & least disturbed tropical humid forest in Asia Pacific

o Low population density (12,000 people in Basin)

o 95% forested – low deforestation rate

8


• Mimika

o REDD site is111,344 hectares

o 33% under risk of conversiono 33% under risk of conversion

o Borders the Freeport mine and Lorentz National Park

o Low population density (<1000 people)

o Limited road access but encroaching development in the regency

9


• Project framework

o Baseline assumes conversion to palm

o Approximately 28MtCO2e conserved under project scenarioo Approximately 28MtCO2e conserved under project scenario

o Voluntary carbon sales – Voluntary Carbon Standard (VCS) & Climate, Community & Biodiversity Alliance Standards (CCBA)

o Revenues to local foundation, government & investors

o Local partner with political & implementation experience

10

Still awake?

11

4a. Governance

• MOU for joint development of REDD project: “commercially sustainable model for forest conservation and community conservation and community development”

• Applying for provincial license that will grant carbon rights to New Forests

• Term sheet defines financial arrangements

• Regency and district governments provide local political and

Gov. Suebu signing MOU, May 2008

12

• Regency and district governments provide local political and logistical support

• Papua Carbon Foundation receives revenue from credit sales to fund community development & forest protection activities

o Governed by Advisory Committee with local stakeholders and relevant experts

4b. Baseline

Characteristic Baseline Assumption

Threat of Deforestation

Zoning for conversion (VCS: “Avoiding Planned Deforestation”) – palm oil developers already surveying areas & province has authority to surveying areas & province has authority to grant conversion licenses

Rate of Deforestation

Mamberamo: 60,000ha converted 2012-2022

Mimika: 37,000ha converted 2010-2020

Carbon Stock 792tCO2/ha (literature & field data)

Baseline Carbon Sequestration in growing palm plantation subtracted from project carbon stock

13

subtracted from project carbon stock

Leakage Monitoring total areas zoned for conversion, rate and likelihood of conversion

4b. Baseline

• No existing methodologies for Avoiding Planned Deforestation -areas with low rates of historical

deforestation require technical rigordeforestation require technical rigor

• Other areas of province have higher deforestation rates but causal “link” needs to be established

• Limited data and existing quantitative analysis of deforestation drivers

Where we are now:

• Understanding data requirements needed to establish biophysical and

14

• Understanding data requirements needed to establish biophysical and economic feasibility of conversion

• Understanding modeling requirements to demonstrate likely rates of deforestation

• Evaluating in-house capabilities and resource needs

4c. Consultation Process

• Dozens of small villages in both project areas – primarily small scale agriculture, sago palm harvesting, hunting & fishing

• Loosely organized through district & regency governments

• In June 2008 met with local governments and held village meetings in conjunction with local NGOs and met with dewan

adat (tribal council)

Village meeting in Bagusa, Mamberamo,

15

Village meeting in Bagusa, Mamberamo, June 2008

Meeting with regency & district government officials and village elders in Mimika, June 2008


• Initial feedback at all levels of was positive

• Written letter of support from head of dewan adat in head of dewan adat in Mamberamo

• However, questions remain regarding community development aspirations, project activities and socio-economic considerations relevant to project design and

Receiving letter from head of dewan adat in Casanoyagia, Mamberamo, June 2008

16

relevant to project design and implementation

• Free, Prior & Informed Consent crucial to ensure successful project and social & environmental outcomes


• Free, Prior & Informed Consent

o Limited guidance & standards

o Work with best experts with field experience in community engagement for forestry in Papua and Indonesiaengagement for forestry in Papua and Indonesia

o Intention to provide full information about the project and potential outcomes & risks

o Decisions and debate at the community level to accept or reject the project

• Help shape the objectives and management plan for the Papua Carbon Foundation

17

• Further establish channels of communication between impacted communities and government

4d. Link to National Strategies

• Indonesia is extremely active in REDD

o More than 20 REDD projects in development in the country

o Participant in the UN-REDD Programme and the World Bank Forest Carbon Partnership FacilityForest Carbon Partnership Facility

o Bilateral agreements with Germany (Forest and Climate Change Program) and Australia (Forest Carbon Partnership)

o Governors of Aceh & Papua (and several Brazilian states) have signed an MOU with US governors for inclusion of REDD credits in emerging carbon schemes

• Unclear how these activities will interact on a technical level (i.e. carbon accounting)

18

(i.e. carbon accounting)

• However, biggest questions now are legal and financial…

4d. Link to National Strategies

• Draft legislation issued in mid-2008 required national government approval for all projects and 30% of credits transferred to a newly established government commission

o Unclear whether this applied to private projects outside o Unclear whether this applied to private projects outside national-level REDD demonstration activities

o Unclear revenue distribution and approvals through layers of government

• The national government is now working to revise and finalize legislation – June 2009

• Papua is exploring provincial licensing for REDD under Special Autonomy Law and provincial forestry regulations

19

Special Autonomy Law and provincial forestry regulations

o As yet unclear how this interacts with national activities

o Remains a project risk

4e. Distribution of Benefits

• Beneficiaries at village, district, province and national level

• Private investment necessitates returns

• Primary distribution channel is the Papua Carbon FoundationFoundation

o annual disbursements to fund community development and forest protection activities – determined by FPIC process

o Advisory Board comprising representatives of community stakeholders and relevant experts

• Remaining revenue: government, investors & project managers

20New Forests & Emerald Planet staff with provincial Forestry Department staff and

government officials in Mamberamo, June 2008

4e. Distribution of Benefits

Investor Market

Papua

Foundation

Government(National, Provincial

Regency)

Project Entity

Carbon revenues

Investment capital

Carbon revenues

Carbon revenues

Carbon rights

$

Carbon credits

21

Local distribution

4f. Project Financing

• New Forests represents private investors interested in financial and environmental returns

• Skilled in monetizing • Skilled in monetizing environmental assets associated with forestry investment

• Well aligned with Papua’s objectives and project parameters

• Returns delivered through Managing Directors of New Forests and Emerald

22

• Returns delivered through credit sales over time

Managing Directors of New Forests and Emerald Planet meeting with Governor Suebu, May 2008

c

• Upfront costs shared among project partners

• Long-term commitment to sustainable resource use in Indonesia

5. Lessons Learned

• RISKS

o Projects in areas with low rates of deforestation have high hurdle to establish evidence-based baselines

o Area, such as Papua, where this is limited data availability o Area, such as Papua, where this is limited data availability make this even harder

o Legal uncertainty for REDD projects outside national-level demonstration activities – right to transact credits?

o Also face technical uncertainty – project vs. national level baselines?

o FPIC is time consuming and requires dedicated resources –lack of standardized guidance

23

lack of standardized guidance

Difficult to get early project financing where there

is no established legal & methodological

frameworks

8. Conclusions

• Private investment can play pivotal role in more challenging REDD areas that attract less public & multilateral funding

• Will take on the risks as long as there is some certainty on fundamental issues:fundamental issues:

o Legal right to transact in carbon

o Legal arrangements for revenue sharing among government agencies/levels

o Legal recognition of project

24

activities within national-level activities

• Donor / grant / multilateral finance remains important for information gathering, data analysis and FPIC/community engagement

Arial view of Mimika site, June 2008

25

www.newforests.com.au

Documents

John eckford experiences from papua