Kemen G. Austin

Structuring economic incentives to reduce emissions from deforestation within Indonesia

We estimate and map the impacts that alternative national and subnational economic incentive structures for reducing emissions from deforestation (REDD+) in Indonesia would have had on greenhouse gas emissions and national and local revenue if they had been in place from 2000 to 2005. The impact of carbon payments on deforestation is calibrated econometrically from the pattern of observed deforestation and spatial variation in the benefits and costs of converting land to agriculture over that time period. We estimate that at an international carbon price of

Reductions in emissions from deforestation from Indonesia’s moratorium on new oil palm, timber, and logging concessions

10/tCO2e, a “mandatory incentive structure,” such as a cap-and-trade or symmetric tax-and-subsidy program, would have reduced emissions by 163–247 MtCO2e/y (20–31% below the without-REDD+ reference scenario), while generating a programmatic budget surplus. In contrast, a “basic voluntary incentive structure” modeled after a standard payment-for-environmental-services program would have reduced emissions nationally by only 45–76 MtCO2e/y (6–9%), while generating a programmatic budget shortfall. By making four policy improvements—paying for net emission reductions at the scale of an entire district rather than site-by-site; paying for reductions relative to reference levels that match business-as-usual levels; sharing a portion of district-level revenues with the national government; and sharing a portion of the national governments responsibility for costs with districts—an “improved voluntary incentive structure” would have been nearly as effective as a mandatory incentive structure, reducing emissions by 136–207 MtCO2e/y (17–26%) and generating a programmatic budget surplus.

Reconciling oil palm expansion and climate change mitigation in Kalimantan, Indonesia.

Significance Our paper is significant in a number of respects. First, we expand the literature on quasi-experimental evaluation of the causal impact of conservation measures to include agricultural concessions. Second, our report is rare in that we use panel data and techniques in a literature on spatially explicit land-use change econometrics that has necessarily relied upon cross-sectional analyses because of data-availability constraints. Third, our report is rare among land-use change scenario analyses in that we calibrate the effect of land-use designations empirically, rather than assuming idealized perfect effectiveness of conservation measures or complete conversion without such measures. Finally, we compare the effectiveness of place-based policies with alternative price-based instruments for climate-change mitigation within a globally significant landscape. To reduce greenhouse gas emissions from deforestation, Indonesia instituted a nationwide moratorium on new license areas (“concessions”) for oil palm plantations, timber plantations, and logging activity on primary forests and peat lands after May 2011. Here we indirectly evaluate the effectiveness of this policy using annual nationwide data on deforestation, concession licenses, and potential agricultural revenue from the decade preceding the moratorium. We estimate that on average granting a concession for oil palm, timber, or logging in Indonesia increased site-level deforestation rates by 17–127%, 44–129%, or 3.1–11.1%, respectively, above what would have occurred otherwise. We further estimate that if Indonesia’s moratorium had been in place from 2000 to 2010, then nationwide emissions from deforestation over that decade would have been 241–615 MtCO2e (2.8–7.2%) lower without leakage, or 213–545 MtCO2e (2.5–6.4%) lower with leakage. As a benchmark, an equivalent reduction in emissions could have been achieved using a carbon price-based instrument at a carbon price of

Shifting patterns of oil palm driven deforestation in Indonesia and implications for zero-deforestation commitments

3.30–7.50/tCO2e (mandatory) or

Indonesia’s moratorium on new forest concessions: Key findings and next steps

12.95–19.45/tCO2e (voluntary). For Indonesia to have achieved its target of reducing emissions by 26%, the geographic scope of the moratorium would have had to expand beyond new concessions (15.0% of emissions from deforestation and peat degradation) to also include existing concessions (21.1% of emissions) and address deforestation outside of concessions and protected areas (58.7% of emissions). Place-based policies, such as moratoria, may be best thought of as bridge strategies that can be implemented rapidly while the institutions necessary to enable carbon price-based instruments are developed.

An assessment of high carbon stock and high conservation value approaches to sustainable oil palm cultivation in Gabon

Our society faces the pressing challenge of increasing agricultural production while minimizing negative consequences on ecosystems and the global climate. Indonesia, which has pledged to reduce greenhouse gas (GHG) emissions from deforestation while doubling production of several major agricultural commodities, exemplifies this challenge. Here we focus on palm oil, the world’s most abundant vegetable oil and a commodity that has contributed significantly to Indonesia’s economy. Most oil palm expansion in the country has occurred at the expense of forests, resulting in significant GHG emissions. We examine the extent to which land management policies can resolve the apparently conflicting goals of oil palm expansion and GHG mitigation in Kalimantan, a major oil palm growing region of Indonesia. Using a logistic regression model to predict the locations of new oil palm between 2010 and 2020 we evaluate the impacts of six alternative policy scenarios on future emissions. We estimate net emissions of 128.4–211.4 MtCO2 yr-1 under business as usual expansion of oil palm plantations. The impact of diverting new plantations to low carbon stock land depends on the design of the policy. We estimate that emissions can be reduced by 9-10% by extending the current moratorium on new concessions in primary forests and peat lands, 35% by limiting expansion on all peat and forestlands, 46% by limiting expansion to areas with moderate carbon stocks, and 55–60% by limiting expansion to areas with low carbon stocks. Our results suggest that these policies would reduce oil palm profits only moderately but would vary greatly in terms of cost-effectiveness of emissions reductions. We conclude that a carefully designed and implemented oil palm expansion plan can contribute significantly towards Indonesia’s national emissions mitigation goal, while allowing oil palm area to double.