New report documents billions of dollars in losses from Indonesia’s reforestation fund between 1989 and 2009.
The Indonesian government squandered billions of dollars in funds set aside for reforestation through corruption and mismanagement in the 1990s, raising important questions as the country prepares for the influx of money from a proposed climate change mitigation scheme known as REDD+ (reduced emissions from deforestation and degradation), warns a new report released Tuesday by the Center for International Forestry Research (CIFOR), a forest policy research group.
The report, titled Financial governance and Indonesia’s Reforestation Fund during the Soeharto and post-Soeharto periods, 1989–2009: A political economic analysis of lessons for REDD+, and funded by the World Bank, the European Commission, and AusAID, says that unless major reforms are enacted, including oversight mechanisms, REDD+ runs the risk of befalling the same fate as the failed reforestation fund.
 Peat forest conversion in Kalimantan, Indonesian Borneo.  Oil palm plantation and forest in North Sumatra |
A political economic analysis of lessons for REDD+ concludes that funding from REDD+ must “strengthen financial management and revenue administration; deal with corruption, fraud, and loss of state assets; monitor, report, and verify financial transactions; remove misaligned and perverse incentives; ensure accountability and mitigate moral hazard; and distribute benefits equitably.”
“In readiness for REDD+, countries are already building capacity in land use planning and carbon accounting,” states the report. Indonesia’s experience with the Reforestation Fund shows that it is just as important to start building capacity in budgeting, accounting, fiscal management and other aspects of administering REDD+ funds. Building capacity for financial governance across all levels of government will take commitment, resources and time. But fostering transparency and good governance is a win–win strategy, not only for managing a nation’s forest resources and generating new revenue flows from REDD+, but for all state endeavors.”
By some estimates Indonesia could earn billions of dollars from REDD+. Last week the government unveiled an ambitious plan to restore and replant millions of hectares of forest that have been damaged and destroyed over the past 20 years.
Barr, C., Dermawan, A., Purnomo, H. and Komarudin, H. 2010 Financial governance and Indonesia’s Reforestation Fund during the Soeharto and post-Soeharto periods, 1989–2009: A political economic analysis of lessons for REDD+. Occasional paper 52. CIFOR, Bogor, Indonesia.