OPPORTUNITY AND RISK of REDD+, GREEN ECONOMY, AND SUSTAINABLE DEVELOPMENT

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1 OPPORTUNITY AND RISK f REDD+, GREEN ECONOMY, AND SUSTAINABLE DEVELOPMENT Dr. Irfa Ampri Center f Climate Change Financing and Multilateral Plicy Fiscal Plicy Agency, Ministry f Finance Jakarta, 25 July 2012

2 Outline The Future Ecnmic and Develpment agenda New Business Opprtunities Challenges (Risk) Risk Mitigatin Cnclusins

3 The Future Ecnmic and Develpment Agenda REDD+ Rewarding actrs that maintain and prtect frests in bth the frest area and ther land use area (Area Penggunaan Lain - APL) cntribute significantly (85%) t achievement f natinal cmmitment (27/41) Green Ecnmy (GE) One that results in imprved human well-being and scial equity, while significantly reducing envirnmental and eclgical risks Sustainable develpment (SD) Develpment that meets the needs f the present withut cmprmising the ability f future generatins t meet their wn needs (Ecnmic Grwth, Envirnmental Aspect, Scial Aspect) REDD+ crrelates clsely t the effective implementatin f GE with later cntributing t the SD gals

4 New Business Opprtunity If managed prperly accrding t the cuntry s specific, REDD+ and GE will nt be the threats fr the achievement f natinal agenda (maintain high grwth and reduce pverty level) The issue is hw t effectively use the resurces availability in rder t cmpete with the traditinal ways On the cntrary, REDD+ and GE can prvide new ecnmic and business pprtunities while at the same time cnserve the envirnment and eclgy Business prviding added value and resurce efficiency New industries and clean and renewable energy will arise

5 Glbal ttal New investment in clean energy, ($bn) 5% 5% $260bn $247bn 31% 1% 22% $187bn $189bn 35% $153bn 51% $113bn 39% $54bn $0bn $75bn $0bn $0bn $0bn $0bn $0bn Nte: Includes crprate and gvernment R&D, and small distributed capacity. Adjusted fr re-invested equity. Des nt include prceeds frm acquisitin transactins Surce: Blmberg New Energy Finance

6 New Business Opprtunity (Indnesia Case) New ways f ding business in frest areas and APL will reduce carbn emissin t Millin Tn CO2e by Assuming carbn price f US$4 per tn CO2e, new business in frestry sectr will prduce revenues f USS 3.2 billins. 2% investment in green ecnmy in Indnesia will prvide 4,4-6,3 millin new jb pprtunity, in 5 years a head (reprt by Green and Decent Jb dari Internatinal Trade Unin Cnfederatin) Ecturism can create jbs and prvide revenue t supprt the cnservatin f natural capital. Ecturism in Indnesia is grwing by 8% per yea Banning in exprting raw rattan and ther frest raw materials will expand and create industries prviding value added with better price. At the same time, reduce the explitatin f frest and eclgy.

7 Opprtunity and Risk Attachment frestry.dcx N Activities/Targets Lcatin 1 Penataan Batas Kawasan Hutan sepanjang Km Seluruh prvinsi Estimate Carbn Emissin Reductin (Millin Tn CO2e) Carbn Credit Value (assume US$4 per tn CO2e) (US$ millin) HTI/HTR seluas 3 juta ha 26 prvinsi Lahan pertanian baru seluas ha Optimalisasi Lahan gambut terlantar dan lahan nn tanaman pangan seluas ha Hutan Kemasyarakatan (HKm)/Hutan Desa (HD) seluas ha Kemitraan usaha dalam hutan rakyat seluas ha 11 prvinsi prvinsi prvinsi prvinsi Kelapa sawit seluas ha 19 prvinsi Karet seluas ha 14 prvinsi Kaka seluas ha 16 prvinsi Rehabilitasi lahan kritis pada DAS priritas seluas ha Seluruh prvinsi kecuali DKI Jakarta Eksistem esensial sebagai 17 prvinsi penyangga kehidupan sebesar 10 % knservasi dan perlindungan hutan 12 prvinsi pada 12 prvinsi priritas prvinsi: REDD di kawasan knservasi Jambi dan (hutan gambut) Kalteng Ttal ,152.60

8 Challenges (Risk) REDD+ and GE will threat the achievement f natinal develpment gals f As develping Cuntry ---- Grw nw, clean up later (prefer shrt term achievement > lng term gal Sme studies shw that mratrium f new licenses fr lgging and plantatin brings negative ecnmic impacts t certain lcal cmmunities Sustainability f internatinal cmmitment is nt clear Grant, technlgy transfer, vluntary carbn market, and cuntries cmmitment in achieving emissin reductin gals Sustainability f Gvernment cmmitment: Mratrium, Financial supprt (BLU, K/L DIPA, grants), & Fiscal incentives Licensing fr carbn businesses

9 Challenges (Risk cntinue..) The limitatin f public funding Public funding t leverage private participatin Private business invlvement in green envirnment and frest sectrs are still limited Sustainability f lcal gvernment supprt: Mratrium, Licensing fr carbn businesses Benefit and incentives fr lcal ecnmy Mitigatin f tenure cnflict in degraded lands including peat lands Benefits and incentives fr lcal cmmunity Prtectin fr carbn businessmen The sustainability f carbn prices and participatin parties

10 Risk Mitigatin Change the culture frm the recipient t the wner f REDD+ 4 Pilllar f develpment strategy (pr grwth, pr pr, pr jb, pr envirntment) shuld wrk simultaneusly and equally Priritize educatin and R&D Manage apprpriate public finance supprt (budget, fiscal incentives, and reginal Transfer) Prvide a cmprehensive incentive supprt fr the participatin f private and financial sectrs New institutins in managing REDD+ (REDD+institutin and Dana Perwalian) shuld shw best practices and cncerted cllabratin with related parties Active participatin in multilateral fra shwing ur best examples in attracting ther cuntries increase cmmitment Dnrs assistance is still relevant in the area where Indnesia has the limitatin in implementing REDD+ and GE

11 Cnclusins REDD+ crrelates psitively with GE and SD REDD+ and GE will nt be the threats fr the achievement f natinal agenda (maintain high grwth and reduce pverty level) REDD+ and GE can prvide new ecnmic and business pprtunities while at the same time cnserve the envirnment and eclgy Challenges in effective implementatin f REDD+ and GE are abundant, and can be mitigated thrugh, amng thers, change the culture, educatin, sustainability f public finance, imprvement f investment climate fr private and financial institutin participatin, and active diplmacy in internatinal fra

12 THANK YOU