Conservation news

Fighting deforestation—and corruption—in Indonesia

The challenge of trying to save Indonesia’s forests

The basic premise of the Reducing Emissions from Deforestation and Degradation (REDD+) program seems simple: rich nations pay tropical countries for preserving their forests. Yet the program has made relatively limited progress on the ground since 2007, when the concept got tentative go-ahead during U.N. climate talks in Bali. The reasons for the stagnation are myriad, but despite the simplicity of the idea, implementing REDD+ is extraordinarily complex.

Still the last few years have provided lessons for new pilot projects by testing what does and doesn’t work. Today a number of countries have REDD+ projects, some of which are even generating carbon credits in voluntary markets. By supporting credibly certified projects, companies and individuals can claim to “offset” their emissions by keeping forests standing.

However one of the countries expected to benefit most from REDD+ has been largely on the sidelines. Indonesia’s REDD+ program has been held up by numerous factors, including concerns about benefits distribution, unclear land rights, political and bureaucratic infighting, complex governance issues, and opposition from a variety of stakeholders, including strong business-as-usual interests. But perhaps the biggest challenge for REDD+ in Indonesia is corruption.

Conversion of peat forest in Central Kalimantan for an oil palm plantation. Taken by Rhett A. Butler in March 2013.

Transparency International ranks Indonesia 118 on its corruption scale, putting the nation in the lower half of its rankings. But while corruption is a challenge for anyone trying to do business in Indonesia, it is especially a problem in the forestry sector, which has been called “a source of unlimited corruption” by an official with Indonesia’s Corruption Eradication Commission (KPK). Like any other forest-based enterprise, REDD+ projects have to operate in an environment where bribery and kickbacks are the norm in acquiring forest concessions.

But in this muddy environment one REDD+ project developer is attempting to take an ethical approach to getting his project off the ground. The process has proved to be a long one for Dharsono Hartono, an Indonesian who left a job on Wall Street to pursue a project he hoped would generate profit while at the same time helping save the planet. Nearly five years after starting the permit process for a project that aims to protect and restore an area of peatland in Central Kalimantan, Dharsono still doesn’t have a license for the project despite getting more than 350 initials and signatures from officials from various levels of government.

“The journey started in May 2008. If you read everything carefully, you should get everything done in one year, max,” he said, speaking last November at the TEDxJakSel conference in Jakarta.

“We thought the application process would take a year, then we’d be selling credits and helping save the world,” he told “But that proved to be quite wrong.”

Dharsono Hartono’s “Business without Bribery” talk at TEDx JakSel 2012

Dharsono’s efforts have turned into an unheralded crusade to do business without bribery in Indonesia’s forestry sector. It hasn’t been easy.

Over the past five years, Dharsono often found himself spending hours or even days in offices trying to get a bureaucrat’s attention. Once an official realized Dharsono wasn’t going to bring him an envelope full of cash, the real waiting game began. But eventually Dharsono’s persistence would wear down even the most apathetic official, who, he says, would sign his papers just to get him out of his sight.

His perseverance appears to finally be paying off. Dharsono needs only one more signature — that of the Forest Minister — for the application to be approved. But there’s a catch — Dharsono must first show that there is indeed a market for the carbon credits that his project is going to produce. If the Ministry of Forestry doesn’t believe the project will be economically viable — that investors, companies, and consumers will buy carbon offsets from a forest conservation project — it could well carve up the forest for logging concessions or grant local authorities the right to convert sections of the 200,000-hectare peat forest for oil palm plantations resulting in huge carbon emissions. At the same time, potential buyers of credits are shying away because the project hasn’t been approved. The difficult situation is symbolic of the overall hurdles REDD+ has faced in Indonesia.

Meanwhile the forest continues to fall. During a March 2013 visit, Mongabay observed widespread illegal logging in the Katingan Peat Restoration Project area. Despite the provincial government’s pledge to reduce greenhouse gas emissions from land use, it continues to dig new transportation canals that will drain the peat swamp as a result. Palm oil companies are pressing local district heads hard for plantation concessions in the forest block. Without the project, Katingan seems fated to end up like nearby peat lands that have been drained and converted for plantations or logged, burned, and left for scrub.

But, Dharsono is continuing his patient fight, still undeterred. As he waits for approval, his team continues to establish close to 200 sampling plots for carbon measurements throughout the concessions required for the certification process. But more importantly, his team has also been consulting with local communities that depend on the forest as a healthy, functioning ecosystem for their livelihoods. To date they’ve identified several small-scale activities – rattan, salvage timber, and small-holder fruit production – that could generate income without destroying the forest. But the big payday for communities — and Dharsono’s company PT Rimba Makmur Utama — would only come if the project is approved and allowed to sell carbon credits. If this day comes, Dharsono’s efforts may be seen as a model for moving forward; if not, then Indonesia’s famed corruption could doom efforts to save its vanishing forests and irreplaceable biodiversity.

Dharsono Hartono. Photo by Toto SB/TEDxJakSel.


Dharsono Hartono: I have an engineering background. I was fortunate enough to go to university in the US and managed to get both my Bachelor degree in Operation Research and Industrial Engineering and a Master of Engineering degree in Financial Engineering from Cornell University What led you to leave Wall Street to go save a swamp in Borneo?

Dharsono Hartono: When I came back to Indonesia in 2004 after spending 6 years working in New York and the last three years at JP Morgan I met up again with Rezal Kusumaatmadja in early November 2007 who was my college mate in Cornell. He introduced me the idea of carbon trading in forestry sector. It was just a few weeks before the Bali COP 13 and the event become our learning ground for understanding REDD. We believe that environment will be a new asset class that will have value due to the climate change problem that we are facing. We learnt that peat forest contained significant amount of carbon that would be released to the atmosphere if we are not conserving it. What is the Katingan project?

Dharsono Hartono: The Katingan Peatland Restoration and Conservation Project (Katingan Project) aims to restore and conserve 203,570 hectares of peat swamp forest through a reducing emissions from deforestation and degradation plus conservation, sustainable forest management and carbon stock enhancement (REDD+) scheme in the districts of Kotawaringin Timur and Katingan located in Central Kalimantan, Indonesia. The project also seeks to promote alternative livelihoods development, community resilience and biodiversity conservation in the project zone.

Canal built by the provincial government in 2012. Peatland drainage is a huge source of greenhouse gas emissions. Taken by Rhett A. Butler in March 2013.

The Katingan Project is to be managed through an ecosystem restoration concession (ERC or IUPHHK-RE), one of the land-use permits issued by the Government of Indonesia. The concession area provides forest dependent communities with access to a variety of natural resources including timber and non-timber forest products and fish. Further, it is home to large populations of many endangered and high conservation value (HCV) species including Bornean orangutans, gibbons, clouded leopards, and proboscis monkeys.

The project seeks to reduce greenhouse gas emissions within the ERC area by avoiding previously planned deforestation from forested land conversion and restoring and conserving peat swamp forests, while safeguarding community and biodiversity benefits. The table below highlights planned activities.

i. Ecosystem restoration

1. Water system management

2. Monitoring and measurement of sampling plots

3. Reforestation in non-forest areas

4. Enrichment planting in disturbed areas

ii. Forest resources conservation

5. Protection and enforcement

6. Forest fire prevention and control

7. Habitat conservation and management

iii. Research and development

8. Knowledge management

iv. Livelihood development

9. Non-timber forest products

10. Agroforestry

11. Ecotourism

12. Salvaged wood production

13. Aquaculture and sustainable fisheries

v. Community resilience

14. Microfinance institutions and enterprises

15. Efficient energy use and production

16. Mother and child health care

17. Clean water and sanitation

18. Basic education support

These activities will be managed and implemented through a multi-stakeholder partnership, including with government, the private sector, national and international NGOs, peat scientists, civil society, and most importantly, local communities. What are the biggest threats in the area?

Dharsono Hartono: The main drivers of deforestation around the Katingan Project area are land conversion to plantation forest, mining and/or oil palm plantations. These are identified based on previous active concessions in the project area that are not active anymore. Thus, the most appropriate future scenario is that, in the absence of the Katingan Project, part or all of the forest area will be degraded and converted to plantation forest or non-forest at some point in the future.

Unplanned deforestation due to illegal logging and peat fires is also present in the project area. What are the biggest challenges you’ve faced in establishing the project and moving it forward?

Dharsono Hartono: The biggest challenges that we had faced are getting the concession approved because it involves many branches of the government and its bureaucracy. We sent an application for the concession in November 2008 and was designated as the prospective concession holder in May 2009. The process was stuck for almost two years because the district government wants to convert partial of our area to palm oil while the central government insists on keeping it as forest area.

Other challenge includes getting the project validated by Verified Carbon Standards. We need to write a new methodology because currently there isn’t any valid peat methodology out there. Our methodology has gone through first validation and currently going through the second validation before its final approval.

I guess these are the types of challenges that are commonly faced by first movers in a frontier industry. But in my case, it is especially difficult because the nature of the business is also vastly different from the business as usual practice. We are restoring and protecting the forest ecosystem as opposed to converting them into other uses. We are doing so by working together with local communities based on common long term objectivesand interests.I knew from the beginning that my whole approach had to be different than the business as usual approach.

What I did not expect was that the forest carbon market would not be ready by now. I guess in the pre-Copenhagen era, people were feeling very optimistic. Even the US House of Representatives passed a climate bill in 2009. Do you have a timeline for when the project will be approved?

Dharsono Hartono: We are in the final stage of the concession process so hopefully the Minister of Forestry would sign it in the next 6 months. I think approval is forthcoming because we have done everything according to the rules and regulations. However, I cannot guess what’s in the Minister of Forestry’s mind that causes him to delay the approval.

Peat forest. Taken by Rhett A. Butler in March 2013. What’s your outlook for REDD in Indonesia? Globally?

Dharsono Hartono: I think the outlook for REDD in Indonesia is positive but we still have lots of homework that need to be done. The fact that we’re still around is a proof that some people still want us to succeed. If I am pessimistic about REDD, I can’t imagine who will be optimistic. I think the time will come when people realize that we have to pay to protect our forests. My job here is to provide the proof of concept so that others can follow hopefully sooner than later. Do you have any words of wisdom for anyone trying to follow in your footsteps?

Dharsono Hartono: I think in whatever you do, you need to have passion and put all your efforts into it. Given what we are doing considered as early mover, we need to have lots of perseverance because it is not easy to compete with the “business as usual” practice.You also have to be able to communicate effectively so that you can garner support from all kinds of people.

Special thanks to Rumi Naito of Starling Resources and community members Desmon and Franky for helping coordinate the logistics of the visit to Katingan project area

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