PAYMENT FOR ENVIRONMENTAL SERVICES FOR SUSTAINABLE WATER RESOURCE IN LOMBOK, INDONESIA

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1 Australian Water Association Conference Perth, 17 TH June 2016 PAYMENT FOR ENVIRONMENTAL SERVICES FOR SUSTAINABLE WATER RESOURCE IN LOMBOK, INDONESIA Diswandi Phd Candidate Murdoch University

2 Introduction Significant of Indonesian forest for climate change mitigation. Forest cover decrease continually. Regionally classified, the highest percentage of deforestation relative to forest cover occurs in Java and Bali-Nusa Tenggara. The small proportion of forests in Java and Bali-Nusa Tenggara region are important for environmental services since Lombok and Bali are rapidly growing tourism development areas which need a lot of water.

3 Lombok Island, located in West Nusa Tenggara Province, is the most threatened area in that region since 4.6 million people in the Island are heavily dependent upon the ecological benefits of the forests, especially for water supplies. The 137,431 hectares forest in Mount Rinjani is a significant catchment area for the supply of water to the island. More than 175 springs in the forest flow into the 10 main rivers of Lombok, which support the water needs of the island s households, agricultural land, and industries. However, the World Wildlife Fund for Nature (WWF) reports that 5% of Rinjani forest is deforested annually, leading to a critical water shortage in three quarters of the watersheds.

4 The forests are mainly managed by the local villagers through a community forestry scheme. Most of the villagers in the area are poor and do not own private land and are thus highly dependent upon the forest for their livelihood. This reliance on the forests resources threatens forest functions especially in regard to watershed management. Economic disparity between villagers, and water consumers in urban areas, evokes a conflict of interest related to forest governance. Poor villagers are encouraged to take part in the protection of the forest which conflicts with their economic activities in the forests. At the same time, the relatively prosperous communities in urban areas need water and are thus dependent on forest protection.

5 The limited government budget for forest conservation motivated the NGOs, World Wildlife Fund for Nature (WWF) and KONSEPSI, and academics in Lombok to propose a scheme to encourage urban water consumers to participate in funding the conservation of water catchment area through a Payment for Environmental Services (PES) program. The theoretical literature suggests that PES can be used as an incentive for forest users to manage the forests properly (Pagiola, 2006; Wunder, 2005), although there is debate over the ecological goals of PES programs.

6 Development of PES in Lombok The PES program in Lombok was primarily developed as a response to the threat of water shortages. To ensure that all environmental services users contribute, a compulsory payment method would be required through government intervention enforced by regional regulation. The West Lombok Regional Government Regulation (Peraturan Daerah, Perda) number 4/2007 was enacted in 2007 as the fundamental basis of the official PES program. Based on this regulation, the PES program goals are 1) to maintain water resource quality and quantity, 2) to improve the welfare of poor people around the forests and 3) to conserve the forest resources.

7 The Perda 4/2007 regulates the scheme of payment for any individual and commercial use of water resources. The payment will be used for environmental protection especially for conservation of the water catchment area. Water consumers in West Lombok district pay a PES 'contribution' of Rp 1,000 and Rp 2,000 (approximately AUD 1 and AUD 2) per month for domestic water and industrial water users respectively, in addition to their water bill.

8 Rupiah PES Payment 350,000, ,000, ,000, ,000, ,000, ,000,000 50,000, Households 31,755, ,164, ,301, ,021, ,473,000 Industries 2,530,000 16,330,000 17,702,000 19,490,000 21,168,500

9 Payment Delivery Scheme Since the PES program was designed to conserve the forest as well as to reduce poverty, an alternative way to achieve this goal is by integrating PES into community forestry practice that managed by community forest farmers groups (CFFGs). The PES payment is then used for funding trees planting at the community forest location. The community forestry management rule requires forest farmers to plant and maintain timber trees along with multi-purpose tree species (MPTS) and crops. MPTS (Multi-Purpose Tree Species) refers to tree species that have both ecological and economic benefits. They are good for water catchment and can produce yields that have economic benefits. Examples of MPTS are fruit trees, candlenut and palm trees.

10 Payments to CFFGs are made in cash. However, the spending of the money is subject to the policy of West Lombok government that requires the money be used for activities related to conservation and/or economic empowerment. Five years since PES in Lombok was implemented, Rp 1,051,810,500 (equal to approximately AUD 105,180) have been delivered to 22 CFFGs. The money was used to plant trees (mainly MPTS) on 405 hectares of critical forestland in West Lombok. Approximately 2.45% of 16,363 hectare of degraded forest in West Lombok have been restored.

11 Impact of PES on Water Resource Conservation PES program in West Lombok delivered significant impacts on forest conservation. The PES program was able to help forest farmers to obtain seeds for free, since the PES benefit is distributed to the farmers in the form of MPTS seeds. Farmers implied that they cannot afford to buy seed using their income. On the other hand, the Indonesian government does not have sufficient budget for tree planting.

12 Since the seeds are mainly MPTS, it can be an incentive for forest farmers to manage the forest properly since they will obtain economic benefit from the seeds in the future. 77% of respondents who were enrolled in the PES program had increased the number of trees on their community forestry land. The PES program has also able to increase quality of forest cover. About 81% of respondents stated that quantity and quality of trees was increasing, especially due to variety of seeds that were planted.

13 Fast growing trees species such as silk trees (Albizia chinensis) were among those chosen to be planted to achieve more rapid conservation results. As a result, significant increases in forest cover in the project location are evident. Data from Lombok Barat district forest agency demonstrates that the degraded forest land size in Sesaot forest was reduced from hectares in 2010 to hectares in However, as the PES budget is still limited, it can only be used for complementary aspects of the conservation program and cannot be used for mainstream schemes in forest resource governance.

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16 Monitoring system Monitoring of the water as the object of environmental service is done through the instalment of AWLR (Automatic Water Level Recorders). This tool monitors the amount of water flow that is generated as a result of conservation activities undertaken by the forest farmers. Unfortunately, since this tool was installed at the same time when this study was being conducted (June 2014), historical data from the beginning of PES implementation is not available.

17 Conclusion This study shows that the application of a PES program that was integrated with community forestry management can increase the forests cover, thus contribute to water production. The mandatory-based PES program in Lombok is a mutually beneficial compensating mechanism for upstream and downstream communities. PES is used as a tool for responsibility sharing of urban water consumers and rural forest users in protecting water catchment area.