November 19, 2011
Rainforest in Sumatra, Indonesia
Under the recently-signed Millennium Challenge Corporation (MCC) Compact for Indonesia, the Indonesian government will implement a $332.5 million "Green Prosperity Project" to "support environmentally sustainable economic growth through enhancing management of forests, peat lands, and other natural resources and deployment of renewable energy."
The initiative includes support for rainforest and peatland conservation, coral reef protection efforts, better fisheries and coastal management, and air quality programs.
The U.S. will contribute $6.9 million toward the Indonesia Climate Change Center (ICCC), which according to the State Department, will "focus on mapping and monitoring of carbon-rich peat lands and tropical forests with expertise from the U.S. Forest Service, bringing the best available science and analysis to policy leaders on key strategies and decisions to mitigate and adapt to climate change." Norway is providing matching funds for ICCC.
The State Department says it has initiated $58 million in new USAID programs in management of forests, marine resources, and clean energy under its existing $119 million SOLUSI partnership with Indonesia on low carbon development.
"The MCC compact with Indonesia will spur economic growth, reduce poverty, improve transparency and strengthen democracy by helping Indonesia make wiser, more sustainable natural resource decisions," said Nigel Purvis, President of Climate Advisers, a think tank, in a statement. "By recognizing the role that sustainable natural resource management plays in economic growth, and by insisting on measurable results, the MCC is helping to modernize U.S. foreign aid and to protect vital U.S. national interests."
The agreement will support Indonesian President Susilo Bambang Yudhoyono's 7/26 plan, which targets 7 percent annual economic growth with a 26 percent reduction in greenhouse gas emissions by 2020. The Indonesia President has made it a goal to end deforestation in Indonesian by the end of his term in 2014.
Research has shown that the industries driving the majority of deforestation and peatlands degradation in Indonesia — which generate roughly 80 percent of emissions — account for a decreasing share of the country's economy.
Environmental degradation also carries substantial costs for Indonesia in terms of air pollution from fires, soil erosion and siltation, damage from flooding downstream from deforested areas, and loss of renewable resources.