SVLK, a Pathway toward REDD+

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SVLK, a Pathway toward REDD+

Authors:

English Editor: Sigit Pramono - CITK Graphic Designer: Agus Sudaryono - CITK

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Initially published by Forest Governance and Multistakeholder Forestry Programme Gd. Manggala Wanabhakti Blok IV Lt 6 Wing B 615-616 Jl. Gatot Subroto, Jakarta Tlp.

: 021 – 570 3246 021- 570 3265 ext. 5397

Fax

: 021-570 4397

Email http

: [email protected] : //www.mfp.or.id

All rights reserved Citing and copying parts and the entire book's content without written permission from the publisher is against the law First Edition, April 2012 SVLK, a Pathway toward REDD+ Jakarta, Forest Governance and Multistakeholder Forestry Programme Pages Size ISBN

: 72 : 17,5 x 25,5 cm :

Cover Photo : Sigit Pramono - CITK

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Table of Content Preface

9

Chapter 1 Introduction

13

Chapter 2 SVLK as an Infrastructure of REDD+

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Chapter 3 An Empirical Study Pursuing a Strategic Issue of as an Infrastructure of REDD+

37

Chapter 4 A Synergy of SVLK and REDD+

55

Chapter 5 SVLK as a Part of Credit Payment in the REDD+ Funding Scheme

61

Closing Notes

68

Bibliography

69

Attachment

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Table of Figures 1. Figure 1: 27 The identification of the causes of deforestation and forest degradation using a fish bone analysis (BAPPENAS, 2010). 2. Figure 2: SVLK Concept in REDD+ Context.

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3. Figure 3: 29 The Connection between SVLK and REDD+ in supporting a sustainable forest governance. 4. Figure 4: 29 The relationship between SVLK, SFM, and the role of policy makers in avoiding a high transaction cost. 5. Figure 5: 56 The use of forestry land in Indonesia (by January 2011; the Ministry of Forestry, 2011). 6. Figure 6: 58 Five main prerequisites for climate change mitigation and its implications for the organization of the Ministry of Forestry and for the determination of strategic planning, programs, and activities. 7. Figure 7: 63 SVLK mechanism to supports implementation of REDD+. 8. Figure 8: 64 The sources of climate change international funding.

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Daftar Singkatan Amdal APBN

: Analisis Mengenai Dampak Lingkungan

Pemda

: Pemerintah Daerah

: Anggaran Pendapatan dan Belanja Negara

Pemkab

: Pemerintah Kabupaten

Pemkot

: Pemerintah Kota

Pemprov

: Pemerintah Povinsi

PHPL

: Pengelolaan Hutan Produksi Lestari

Bappenas

: Badan Perencanaan dan Pembangunan Nasional

BRIK

: Badan Revitalisasi Industri Kehutanan

PSDH

: Provinsi Sumberdaya Hutan

BUK

: Bina Usaha Kehutanan

REDD

CDM

: Clean Development Mechanism

: Reducing Emission from Deforestation and Forest Degradation

COP

: Conference of the Part

CPO

: Crude Palm Oil

DAS

: Daerah Aliran Sungai

DHH

: Daftar Hasil Hutan

Ditjen

: Direktorat Jenderal

DR

: Dana Reboisasi

FAKO

: Faktur Asal Kayu Olahan

GRK

: Gas Rumah Kaca

Renstra

: Rencana Strategis

RKL

: Rencana Kelola Lingkungan

SIUP

: Surat Izin Usaha Perdagangan

NPWP

: Nomer Pokok Wajib Pajak

ETPIK

: Eksportir Terdaftar Produk Industri Kehutanan

LMKB

: Laporan Mutasi Kayu Bulat

LMKBK

: Laporan Mutasi Kayu Bulat Kecil

GFG

: Good Forestry Governance

PEB

: Pemberitahuan Ekspor Barang

FAKB

: Faktur Angkutan Kayu Bulat

Permenhut

: Peraturan Menteri Kehutanan

FGD

: Focus Group Discussion

RPBBI

HA

: Hutan

: Rencana Pemenuhan Bahan Baku Industri

HD

: Hutan Desa

RTRW

: Rencana Tata Ruang Wilayah

HKm

: Hutan Kemasyarakatan

HT

: Hutan Tanaman

SDM

: Sumberdaya Manusia

SFM

: Sustainable Forest Management

SI-PIUHH

: Sistem Informasi Penatausahaan Hasil Hutan

HTI

: Hutan Tanaman Industri

HTR

: Hutan Tanaman Rakyat

ILS

: Izin Lainnya yang Sah

SKAU

: Surat Keterangan Asal Usul

IPCC

: Intergovernmental Panel on Climate Change

SKO

: Surat Keputusan Otorisasi

SK RKT

: Surat Keputusan-Rencana Kerja Tahunan

IPK

: Izin Pemanfaatan Kayu

IPPKH

: Izin Pinjam Pakai Kawasan Hutan

SKSHH

: Surat Keterangan Sahnya Hasil Hutan

IUI

: Izin Usaha Industri

SKSKB

IUPHHK

: Izin Usaha Pengelolaan Hasil Hutan Kayu

: Surat Keterangan Sah Kayu Bulat

SLK

: Sertifikasi Legalitas Kayu

KAN

: Komite Akreditasi Negara

SPP

: Surat Permintaan Pembayaran

Kemenhut

: Kementerian Kehutanan(dulu Departmen Kehutanan)

SVLK

: Sistem Verifikasi Legalitas Kayu

KPH

: Kesatuan Pengelolaan Hutan

TDP

: Tanda Daftar Perusahaan

LHP

: Laporan Hasil Penebangan

TLAS

: Timber Legality Assurance System

LP-VI

: Lembaga Penilai dan Verifikasi Independen

TPTI

: Tebang Pilih Tanam Indonesia

LV-LK

: Lembaga Verifikasi Legalitas Kayu

TUK

: Tata Usaha Kayu

UKL

Menhut

: Menteri Kehutanan

: Upaya Pengelolaan Lingkungan Hidup

MRV

: Monitoring/Measurement, Reporting, and Verification

UPL

: Upaya Pemantauan Lingkungan Hidup

PE

: Pungutan Ekspor

VLO

: Verification Legality of Origin

Photo: Sigit Pramono - CITK |7

Photo: Sigit Pramono - CITK

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Preface Forest plays an indispensable role in climate change. About 86 to 93 million hectares of Indonesia’s territory is wooded areas, comprising almost half of the country’s total territory. But the latest data in the Ministry of Forestry indicate that Indonesia has been losing some 1.18 million hectares of forest annually. is causes deforestation and the change of land use, including that of the enormous peat land, all of which triggers 60% emission. Forest degradation, coupled with international community’s pressure over countries which have huge forest areas, encourages Indonesia to declare a commitment to slowing the emission due to changes of land and forest use by 26% in 2020. To fulfill the target, Indonesia needs to curb emission caused by deforestation and forest degradation by implementing a scheme called Reducing Emission from Deforestation and Forest Degradation (REDD+). One of strategies that REDD+ implements is to apply an initiative to minimize, to cope with, and to prevent illegal logging. Experts perceive REDD+ to have potential to help fight illegal logging by providing financial incentive to endorse law enforcement, change of behavior, and reformation of forest governance. For the last three years, Multistakeholder Forestry Programme (MFP) II has been supporting the Government of Indonesia to fight illegal logging. rough multi-stakeholder forums, MFP II has developed a system of timber legality to fight illegal logging and illegal trade. MFP successfully persuades the Government of Indonesia to adopt a policy named the Timber Legality Verification System (SVLK) which applicable to all processed and traded forest products. SVLK helps assure that industry obtains raw materials of timber through legal means from sustainable forest management (SFM) by complying with legality aspects, transparent and accountable forest governance. Forestry experts believe that SVLK and REDD+ are instruments that may function to improve forest governance. Here, timber legality as an instrument to endorse SFM can be measured through REDD+ credit scheme in a national policy plan in the future. SVLK is an effort to fulfill SFM through an intervention of timber certification. is effort is meant to secure wooded areas from being logged illegally, which indirectly triggers loss of natural carbon stocks. Meanwhile, REDD+ is similarly a pathway to reach SFM through sustainable area development. REDD+ is meant to minimize carbon emission due to deforestation and forest degradation. For the last several months, MFP II developed studies to seek relation that lies between SVLK and REDD+. With the Centre for Agriculture and Rural Development (PSP3) of Bogor Intitute of Agriculture (IPB), MFP develops strategic frameworks to prepare SVLK as infrastructure of REDD+. is book is developed on the basis of such studies. We believe that information in this book is important for public at large to access. With the threat of climate change looming ahead, we are committed to ensuring that forest should be managed through good governance.

Warm regards,

Diah Raharjo Programme Director

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Photo: Sigit Pramono - CITK

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Chapter

Introduction

Deforestation and forest degradation in Indonesia is high. It poses threat towards forests resources and contributes to global climate changes. One of the reasons of the loss of forest resources is illegal logging. One effort to stop or at least slow down illegal logging is to curb illegal timber trade. Control over illegal timber transactions can be made by introducing labelling or certification of timber sources through a mechanism known as Timber Legality Verification System (Sistem Verifikasi Legalitas Kayu, SVLK) to timber industry. SVLK is expected to play its part in assuring timber legality to reach a long term sustainable forest management (SFM). SVLK is designated to curb illegal logging dan illegal timber trading, and at the same time to improve forestry management as an effort to achieve SFM. Control over illegal timber trade through SVLK in turn will slow down potential carbon loss in areas where the timber comes from. Hypothetically, SVLK will evoke negative incentive for business persons who run woodbased industries involving illegal timber. e negative incentive is projected to scale down intensity and area coverage of illegal logging, which will indirectly help accumulate the green-carbon stock in Indonesia’s forests.

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SVLK, a Pathway toward REDD+

But it is not always easy to adopt the SVLK. ere are obstacles, deviations, and problematic situations. e problems lie all through the chains of forest management and wood-based business. One of the problems is the stakeholders’ limited understanding about the SVLK. Even in the enabling condition level, there are flaws that may disrupt efforts in optimizing the SVLK. Different and conflicting understandings about SVLK among regional governments and other stakeholders also lend another problem. When implementing the SVLK, stakeholders in local and national levels also imply inaccuracy and disharmonious indicators. Being a regulatory instrument, the SVLK may help achieve SFM by providing incentives to stakeholders, including the wood-based industries. Once the SFM is achieved, there is a chance to curb global warming. In short, the SVLK helps curb illegal logging, and thus it also minimizes carbon emission due to deforestation and forest degradation. Similarly, a global program Reducing Deforestation and Forest Degradation (REDD+) can also serve as a mechanism to give incentives to stakeholders who get involved in securing forest carbon stock. REDD+ helps achieve a sustainable forest management to bring prosperity to beneficiaries, especially communities who live inside or around forest areas. However, there is still a gap between regional and national levels in adopting policies concerning REDD+. is is why REDD+ is not yet operational or it is operational but not optimally. e result is that many regions are not able to adopt the REDD+ in the effort to withhold carbon on the Earth. Lack of a compelling force to drive stakeholders, rationally and voluntarily, disrupts efforts to adopt REDD+. e question is, whether there is a compelling force that can be applied and can provide positive incentive to the stakeholders to adopt REDD+ to achieve SFM. is indicates that principally SVLK and REDD+ have similar goals. SVLK tries to achieve SFM by intervening in the timber business with timber certification. Meanwhile, REDD+ tries to achieve SFM through the development of sustainable areas— an area where many forest management and utilization concessions such as HPH, Forest Tenures, Protected Forests, Conservation Areas have been applied. REDD+ tries to rescue green carbon in a given area, whereas SVLK tries to protect forest from illegal logging that will indirectly deplete carbon reserve. erefore, SVLK and REDD+ supports each other. Both play the same role as a scheme of them are timber, carbon and forest resource rescue schemes. Still, there must be an argument to explain howo relate the two schemes with different standpoints and to implement them to save forests in Indonesia and improve people’s welfare. ere are discussions that this book will highlight to justify the importance of SVLK as an infrastructure to support REDD+. One discussion, for instance, will demonstrate how SVLK could serve as an element to assess REDD+. is idea springs from the mechanism that measurement of REDD+ is basically based on the extent of forest area. Forest is an area that produces timber and it may require SVLK as verification system. To implement REDD+, it may need SVLK to

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SVLK, Pathway toward REDD+

Photo: Sigit Pramono - CITK

guarantee timber legality to prevent deforestation and forest degradation— a condition about forest that REDD+ would also need to achieve. In REDD+ , carbon trade right from the very beginning will always consider the financial profit and loss. is commercial approach is especially favorable among stakeholders from private sector like timber trades and wood-based industry, as they should pay the costs that verification of timber legality implies. Any timber-based business which uses legal timber is eligible for REDD+ credit schemes from developed countries. is is a condition where SVLK can serve as a credible measure for beneficiaries to obtain REDD+ funding. e question is whether SVLK could also serve as a prerequisite for negotiation of REDD+ funds. SVLK applies on timber as forest product. It verifies timbers, which causes extra cost for the timber-based business and reduces companies’ profit. Meanwhile, REDD+ works to prevent carbon loss from forest ecosystem which is calculated from the size of the forest. If a company

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SVLK, a Pathway toward REDD+

operates within a forest area adopts a carbon-saving management, the company is eligible to receive a carbon credit scheme that will ensure a better wood productivity level. is means that the chance to obtain a better profit after REDD+ will be improved. e additional profit as a benefit of REDD+ is expected to cover the transaction costs, including the SVLK costs paid by the timber companies. us, both timber companies and the forest ecosystem receive benefits from the implementation of SVLK and REDD+. is book will seek an answer how large the actual benefit that timber companies will receive financial compensation from applying SVLK, and how large the additional quantity of carbon stock in forest could be retained. It probably will not easy to integrate SVLK and REDD+ because of the difference of their mechanism and operation. ings will even be more difficult if the enabling conditions are not quite ready to support SVLK or REDD+. is condition will in turn cause not only bad utilization management and trade of timber and forest. e bad condition of the enabling conditions owes to bad forest governance, the regional government, local institutions, timber company associations and other related parties. us, it is necessary to find out a how to strengthen these institutions forest governance capacity. ere are objectives that this book needs to reach. First, it needs to build a thought framework that relates the policy and execution of SVLK to REDD+. It also needs to formulate strategic options in turning SVLK into a policy and execution instrument of REDD+. is book will analyze whether there is possibility for SVLK to become one of the negotiating factors for scheme credit payment of REDD+. Eventually, this book will also find an effective methodology in strengthening the institutional managerial capacity in managing and utilizing timber and other forest resources.

Photo: Doc. JAUH, Sultra

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SVLK, Pathway toward REDD+

With such information and discussions in its content, this book is likely to have merits for stakeholders. e national Government, for example, will have a definite reference in taking into account of SVLK as an infrastructure of REDD+. At the same time, local governments will also have a better understanding about the importance of SVLK in line with SFM. Meanwhile, companies will have more accurate measure in counting the benefit and cost resulted from SVLK. People at large will also achieve understanding on how to harvest the timber correctly based on SFM principles. It is also hoped that discussions in this book will lead to a composition of scientific script about SVLK’s role as an infrastructure of REDD+, which comprise three elements. First, a framework of thought that connects SVLK policy and execution with REDD+ framework. Second, strategic options to make SVLK a policy instrument and implementation of REDD+ in Indonesia. ird, an analysis of the possibility to enhance SVLK to become one of negotiating factors in the REDD+ scheme credit payment. To achieve the goals and to give attention to the current problems and strategic issues, a strategy needed to execute some activities will go through two stages. First, an expert meeting that involves various stakeholders— academicians, practitioners, the Government and civil society— who have expertise and experience in SVLK, REDD+, and SFM. Second, a field study that aims to narrow the issue and identify the problems and strategic issues related to the implementation of SVLK and REDD+ in regional areas. e activities may include direct observation, in-depth interviews, and FGDs in local stakeholders. n

Photo: Sigit Pramono - CITK

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Photo: Sigit Pramono - CITK

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Chapter

SVLK as an Infrastructure of REDD+

What is timber certification? e implementation of SVLK refers to the Forestry Ministers Decree (Permenhut) P. 38/ Menhut II/2009 on e Standard and Guidelines of Sustainable Production Forest Management Performance Assessment and Timber Legality Verification towards License Holders or Forest Tenure (P.38/2009). In accordance to this bill, SVLK is defined as a prerequisite to obtain timber products based upon an agreement among forest stakeholders which comply with standards, criteria, indicators, verifiers, verifying methods, and assessment norms. Timber is considered legal if its origins, logging licenses, logging system and procedures, administration, shipping, processing, and trade or transfer documents fulfill all the current law. e P.38/2009 is applied as an effort towards Pengelolaan Hutan Produksi Lestari (Sustainable Production Forest Management, PHPL) and the implementation of forest management and prevention of illegal logging and trade of illegal timber.

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SVLK, a Pathway toward REDD+

A manual to verify the execution of the decree was then published. It was arranged through the Director General of Forestry Production Management (Ditjen BPK) No P.06/VI-Set/2009 on Sustainable Production Forest Management and Timber Legality Verification Assessment Standard and Guidelines (P.06/2009) and P.02/VI-BPHH/2010 pertaining to the Sustainable Production Forest Management and Timber Legality Verification Assessment Execution Guidelines (P.02/2010). According to P.02/2010, SVLK is meant to implement forest governance, law enforcement, and legal timber trade promotion, all of which constitute a timber tracking system. is is not a really new system, though. It has been developed long ago by the Timber Administration (Tata Usaha Kayu, TUK). In 2006 it was named e Forest Product Administration System (Sistem Penatausahaan Hasil Hutan, SIPUHH) as was arranged in Permenhut P.55/Menhut-II/2006 for timber originating from state-owned forests and P.51/Menhut-II/2006 and the derived regulations that regulate the usage of documents of origin (Surat Keterangan Asal-Usul, SKAU) for timber originating from community forests/community land as a tracking system to ensure timber legality. It basically controls forest management administration, starting from production planning, the production process, shipping, and the forest product inspection from upstream to downstream.

Photo: Een Nuraeni

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SVLK, Pathway toward REDD+

Photo: Sigit Pramono - CITK

e Principles, Criteria, Indicators, and Verifiers According to P.38/2009, P.06/2009 and P.02/2010, there are four target groups that are compelled to follow SVLK. First, the IUPHHK-HA/HPH, IUPHHK-HT/HTI and IUPHHK-RE; IUPHHKHTR, IUPHHK-HKm holders. Second, forest tenure owners. ird, IPK holders. Fourth, IUIPHHK and Advanced IUI holders. Each of these groups has different principles, criteria, indicators, and verifiers. ere are three principles that must be fulfilled by IUPHHK-HA/HPH, IUPHHK-HT/HTI, IUPHHK-RE; IUPHHK-HTR, IUPHHK-HKm holders in order to obtain the Timber Legality Certificate (Sertifikat Legalitas Kayu, SLK). First, to have area assurance and concession rights shown by SK IUPHHK documents and proof of payment of the Forest Utilization Activity Permit Fee. Second, to perform valid logging systems and procedures, proven by work chart (RKT, Bagan Kerja) documents, RKT maps (Peta RKT), logging block markers, RKUPHHK documents, timber utilization volume and location, equipment permits, LHP, SKSHH, PUHH markers, timber identity constancy, DHH, shipping invoices, SPP payment documents, PSDH and DR deposit proof and PSDH and DR tariff compatibility. ird, to fulfill the environmental and social aspects related to the logging shown by AMDAL, RKL and UPL documents, and proof of important impact management and monitoring activities. For owners of forest tenure, they may obtain SLK by proving that all their timber is legal. e legality proof comprises valid land ownership documents, a map of the forest tenure and its boundaries, SKAU documents or SKSKB with a KR seal, and transaction receipts.

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SVLK, a Pathway toward REDD+

For holders of Timber Utilization Permit (Izin Pemanfaatan Kayu, IPK), there are two requirements they must fulfill. First, other valid permits for utilizing timber forest products shown by an IPK/ILS and an IPK/ILS map appendix. Second, conformity to the logging and also timber shipping systems and procedures shown by IPK planning documents (potential survey), equipment permits, potential documents, LHP, PSDH and DR payment receipts, , FAKB, and SKSKB. For holders of IUIPHHK and advanced IUI, they must fulfill requirements as follow. First, timber forest product processing industry to support legal timber trade, shown by the company establishment official documents, SIUP, TDP, NPWP, AMDAL, UKL and UPL, IUI and TDI, RPBBI; plus ETPIK for exporters. Second, business unit should apply a timber tracing system that assures the tracebility of the timber to its origin, proven by sales documents and or raw material supplying contracts, timber exchange official reports, PIB for imported timber, SKSKB/FAKB/SKAU/FAKO/Nota/SAL, LMKB/LMKBK, RPBBI and SK RKT, raw material and production tally sheet, processing output reports, and the industry does not exceed its permitted production capacity. ird, the timber sales or exchange of processed wood should be legal, shown by PKAPT documents, ship identity documents, the ships identity must conform to the SKSKB/FAKB/SKAU/FAKO/Nota or Auction Shipping Documents (Surat Angkutan Lelang, SAL), log permanent identity, ETPIK, PEB, packing list, invoice, B/L, export fee payment receipts (PE), and Technical Endorsement and Verification Results. Judging by the proofs needed to obtain an SLK, it is clear that the documents include timber origin, business and production process, goods shipment validity documents and tax and nontax payment obedience documents. Aside from the tax and non-tax payment, all the documents required are a product of the Government’s effort to assure the legality of both the business and the products. erefore, SVLK may be understood as a compilation of legal documents issued by the Government and substantially, the legality and reliability depends on the quality of the government work units in issuing the mentioned documents above. Independent Assessment Mechanism In accordance to Permenhut P.38/2009, timber legality verification is practically mandated to the Independent Assessment and Verification Institution (lembaga penilai dan verifikasi independen, LP-VI). is could be a state-owned or private corporation that has been accredited to execute sustainable production forest firm assessment and or to verify timber legality. e State Accreditation Committee (Komite Akreditasi Negara, KAN) is assigned by the Director General of Forestry Production Management (Ditjen BUK) under the mandate of the Minister of Forestry. It is stated specifically in Perdirjen P.02/2010 that the Independent Assessment and Verification Institution (lembaga verifikasi legalitas kayu, LV-LK) is LP&VI which performs timber legality verification towards IUPHHK-HA/HPH or IUPHHK-HT/HTI or IUPHHK-RE or IUPHHK-HTR or IUPHHK-HKM holders or permit holders of forest tenure or IPK holders or IUIPHHK or advanced IUI. e verification is made by competent auditors consisting of one lead auditor and two auditors who have expertise in IUPHHK-HA/HT, HTR-HKm, forest tenure, and IPK and

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SVLK, Pathway toward REDD+

expertise in production, ecology, and sociology and IUIPHHK and advanced IUI expertise in forestry, industry, technology, engineering, mechanical technology. Timber legality verification is compulsory for all forestry business entities, from upstream (forest utilization) to downstream businesses (small, medium, and large industries). Management units that have obtained certificates of sustainable production forest management no longer need timber legality verification. Independent Monitoring e guidelines for independent monitoring are presented in Appendix 4 Perdirjen P. 02/2011. Independent monitors (pemantau independen, PI) perform the monitoring function related to public service in the forestry sector for the issuance of timber legality certificates (Sertifikat Legalitas Kayu, SLK). Institutions that may become PIs are forestry observer NGOs legally registered in Indonesia; communities living in or around areas permit holders or forest tenure owners operate; and other Indonesian citizens who are concerned with forestry sectors. Individuals or institutions that become PIs must not have any direct or indirect relationships with LP-VI. PI’s activity scope includes observing the LP-VI assessment process and results, decision-making process, issuing of PHPL/LK certificates, and monitoring development of the handling of objection reports both from LP-VI and KAN. Independent monitors may use and develop their own monitoring system that is capable of yielding reliable outputs. In carrying out the monitoring function, PIs may have access to information/public documents and may submit a written request to the information holders for other information/documents. Objection report contains items objections towards the process and or the result of LP-VI assessment of the permit holders. e report must be submitted with valid identification of the person who makes report and with reliable evidence. e objections must be a result of the previous one-year monitoring of LK verifications. e monitoring report must be submitted at the latest twenty calendar days subsequent to the announcement of the assessment result. If LP-VI is unable to resolve the objections, the monitoring report may be submitted to KAN. e findings may be reported by the PI as new monitoring results to the Ministry of Forestry in twenty calendar days after the announcement of the assessment results (certificate). Objection Resolving Institution e guidelines on how to file objection report and how to resolve are presented in Appendix 5 of Perdirjen P.02/2011. In these guidelines, objection is defined as a written statement of dissatisfaction from the objecting party by submitting its objection along with reliable evidence. e objections may come from permit holders and independent monitors (NGOs or civil societies in the forestry sectors). e objections may refer to the process or the results of the assessment certification done by the LP-VI.

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SVLK, a Pathway toward REDD+

e objections that can be responded are all the dissatisfactions by parties who come up with reliable evidence. Objections from permit holders must be submitted at the latest 10 calendar days after the results of the assessment by LP-VI are received by the permit holder. Objections from independent monitors must be submitted at the latest 20 calendar days after the announcement of the certificate issuance. If there are new findings by the independent monitor in 20 calendar days after the certificate is issued, they may be submitted to the Ministry of Forestry and the LP-VI. To resolve the objections, LP-VI establishes an ad hoc team. e team must be independent, in the sense that it represents the parties and experts to whom the objections concern. e team has to possess ability to assess the information contained in the objection materials; understand the LK Work Assessment Verification System; have ability to mediate conflict resolution; have interdisciplinary insight; and have high integrity and uphold objectivity in the process of objection solving. Normative Merits From the explanation above, normatively, SVLK has many merits. In order to guarantee independence and accountability, LK verification is executed by independent institutions, i.e. the Timber Legality Verification Institution (lembaga verifikasi legalitas kayu, LV-LK) and the LV-LK are compelled to develop a public consultation mechanism. Furthermore, an institution may become an LV-LK after receiving accreditation from the National Accreditation Committee (Komite Akreditasi Nasional, KAN) which is not an instrument of the Ministry of Forestry. On the other hand, in order to guarantee transparency, a system is developed by which the LVLK verification results are submitted to the auditee, the managerial unit being verified. ere is a mechanism to submit and resolve objections. NGOs or civil societies working in the forestry sector and the communities living around the location of the managerial unit being verified may become independent monitors (lembaga pemantau independen, LPI) and this LPI may submit objections to the parties given the mandate (LP-VI, KAN and the Ministry of Forestry) to resolve the objections. e SVLK system also develops an incentive scheme for managerial units i.e. exemption from the SVLK obligation if the managerial unit has received the PHPL certificate and the initial verification assessment period is funded by the Ministry of Forestry. Besides, managerial units that have received SLK may perform self-endorsement. Understanding REDD+ Sustainable forest managerial system and carbon absorption through REDD+ becomes one of the key decisions made by the parties signing the climate change convention, playing a role to curb emissions from deforestation and forest degradation and to enhance the role of conservation forests. REDD+ scheme was agreed upon due to the fact that emissions from deforestation and forest degradation, especially from developing and less developed countries, is considerably

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SVLK, Pathway toward REDD+

high. In the second national communication for climate change dispatched by the Indonesian government to the UN Headquarters for the UN’s Framework Climate Change Convention (UNFCCC), it was reported that the emission from this activity from 2000 to 2005 exceeded 50% higher than the total national emission, and it is projected to remain the dominant contributor of greenhouse gas (GHG) emission in Indonesia until 2020. e agreement upon the REDD+ scheme is hoped to help developing countries greatly improve their terrain and forest resource management to slow down the greenhouse gas emission from deforestation and forest degradation. us, a successful REDD+ implementation will be measured on how much it can reduce deforestation and forest degradation rate, how this can maintain the conservation forest’s role, how this can to implement sustainable forest management, how this can utilize terrain in increasing greenhouse gas absorption (carbon sink enhancement). In the CO13 Agreement in Bali, which was recorded in the Bali Road Map, developed countries were obliged to support developing countries in implementing REDD+. A successful implementation will give a positive incentive to the developing countries. In order to measure the success of the activities above, according to the agreement signed by climate change convention (COP), there are several steps that the Government and other stakeholders must follow. The steps are: 1. To determine the Reference Emission Level (REL) that will be used as a reference in calculating the decrease in emissions from deforestation and forest degradation. 2. To identify the driving factors that cause deforestation and forest degradation. 3. To determine a strategy and develop an implementation system to effectively control and decrease the driving factors of deforestation and forest degradation. 4. To develop a system to measure, report, and verify (MRV) the emission decrease generated by the REDD+ activities. 5. Develop a safeguard framework information system in the REDD+ program implementation, activities or steps. 6. Develop a transparent and just system to distribute the benefits and profits obtained through the REDD+ to all stakeholders.

e next sub-chapter will give a brief explanation about the six points above and their relevance to SVLK. Reference Emission Level (REL) Based on the guidelines, the decrease of emission from deforestation and forest degradation is measured from the reference emission level. e reference emission level is the amount of emission that is predicted to be produced in the future if deforestation and forest degradation remains unchecked due to no improvements in the management system. A strategy is required to reduce the emission. If the emission level after the implementation of the strategy is below the REL, then the difference between the REL and the actual emission level measured becomes a success indicator of the strategy.

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SVLK, a Pathway toward REDD+

e general guidance published and agreed on in the COP to determine a REL applies by utilizing historical information and data. It takes into account of the duration of the historical period being used in the determination, the year the calculation is begun and the reliability of the data and information used, and the national condition. In this light, it needs an approach where the REL can be calculated to determine how big the contribution SVLK may make in reducing illegal logging and forest degradation in the REDD+ implementation. Until this day, there is no agreement about methodology in determining the REL. Identifying the Drivers of Deforestation and Forest Degradation An important step in controlling deforestation and forest degradation is to have a good understanding of what drives the deforestation and forest degradation and external factors that influence those drivers. It is crucial to determining what strategy is needed to control them. Based on the multiple-party process (public consultation) done by the BAPPENAS, there are three major deforestation and forest degradation drivers. e three drivers comprise ineffective lay-out planning and weak tenure, ineffective forest management, and weak governance and law enforcement. How the three factors drive deforestation and forest degradation is presented in the following fishbone diagram (Figure 1). Since there are so many driving factors in deforestation and forest degradation, it takes a great deal of efforts to control the deforestation and forest degradation. is also requires a good strategy that may relate one factor to one another, a strategy that will not cause backlash and counter-productive effects. In the context of this study, the explanation will be focused on the implementation of SVLK as a strategy in reducing emissions from forest degradation due to illegal logging but with consideration to the other factors. Deforestation and Forest Degradation Control Strategy e implementation of SVLK is one of the strategies that is predicted to be effective to control illegal logging, and in turn this condition will reduce the forest degradation and emission of greenhouse gases. e fact that timber industry is obliged to obtain SVLK certificate will directly guarantee that the timber comes from legal sources. Once timber industry obtains this certificate, theoretically, the volume of wood from illegal sources will decrease significantly (Figure 2). MRV System In line with the agreement reached in COP, the developed countries’ success in reducing the emission from deforestation and forest degradation must be measurable, reportable and verifiable (MRV). Because of that, development of a system that can monitor changes in the forest carbon stock due to logging activities is necessary. In the SVLK context, the legal foundation for to establish this system exists in Permenhut P.55/Menhut-II/2006 pertaining to the administration of forest products originating from state-owned forest. is regulation serves as a timber tracking system which can ensure timber legality. It basically organizes the administration of forest products starting from the production planning, production process, shipping, to checking the forest products from upstream to downstream. is SIPUHH has been developed on-line, now known as SIPUHH On-line. 26 |

SVLK, Pathway toward REDD+

Figure 1. The identification of the causes of deforestation and forest degradation using a fish bone analysis (BAPPENAS, 2010).

Figure 2. SVLK Concept in REDD+ Context.

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SVLK, a Pathway toward REDD+

e development of the on-line SIPUHH system to trace the origin of timber from upstream to downstream is made at the light of the MRV REDD+ system. Safeguards e COP 16 compels the REDD+ implementing countries to build safeguard frameworks to ensure that the implementation of REDD+ complies with seven requirements. 1. Being consistent with the national forestry program objective. 2. Being transparent and effective. 3. Being respectful to traditional and local community rights. 4. Encompasses multiple parties. 5. Being consistent with forest conservation. 6. Being able to prevent reversals. 7. Include emission leakage reduction actions. e second last safeguard component demands that the reduction in emission because of the implementation of REDD+ be permanent should not merely temporary. So, the implementation of the REDD+ must not trigger more emission in other sectors. To ensure that the REDD+ implementation is permanent, this must respect the traditional and local community rights and be transparent. e steps taken in the process to obtain an SVLK certificate involve independent verifiers. Some safeguard components explained above have mostly been accommodated in the process of obtaining an SVLK certificate. Because of that, the government needs to develop a SIPUHH which includes safeguard components in its system. e Benefit Distribution To be eligible for financial compensation from developed countries, SVLK implementation should be reported and verified. To reduce the reversal risks as it has been explained in the sub-chapter od “Safeguards”, it is crucial to establish a transparent and just system in utilizing the payment. Mindframe SVLK may serve as one of the REDD+ strategies in controlling illegal logging to reach SFM. e schematic description of the connection between SVLK and REDD+ in supporting the sustainable forest governance is shown in Figure 3. Even so, the effort to reach SFM so far remains unsuccessful— that is characterized by high transaction costs and by the vague forest boundaries— because most regulations are not completely effective. What is worse, implementation of PUHH also faces similar problem. e problems that currently have been disrupting the efforts to accomplish both SFM and PUHH have become object for UKP4 to make surveillance in the framework of Ministry of Forestry through Inpres No 3/2010 and KPK in relation to corruption prevention programs (Figure 4). It shows that SVLK might imply a problem due to high transaction cost. is means that policy on

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SVLK, Pathway toward REDD+

SVLK implementation cannot stand on its own. is, instead, needs support from other complementing policies. A timber market should constantly demand the absence of illegal timber. at is is the key condition in implementing SVLK. us, in order to scale down illegal logging at the light of SVLK, it is crucial for all documents needed in timber legality verification to be truthfully issued and to comply with correct and respectable procedures. at is why the system developed in SVLK must be able to ensure the fact that the documents issued by the Government are sufficiently reliable. Evaluation system that employs a one step backwards only principle makes it difficult to verify the reliability of the documents. is condition explains why SVLK, which is aimed to improve the forest governance, needs good forestry governance itself. While in fact, when good

Figure 3. The Connection between SVLK and REDD+ in supporting a sustainable forest governance.

Figure 4. The relationship between SVLK, SFM, and the role of policy makers in avoiding a high transaction cost. | 29

SVLK, a Pathway toward REDD+

forestry governance—which serves as a prerequisite for the SVLK to be effectively implemented— is achieved, the function of SVLK can be taken over by SIPUHH. Ideally, once a timber business obtains a certificate of timber legality, the forestry officials, law enforcement officers, and other related officials must respect the certificate. us, all efforts in obtaining permits would go smoothly and the transaction costs in running the business could be reduced. However, experiences in pertaining to SFM certifications during various discussions in some regions implied that the condition is far from ideal. is indicates that there must be more serious attitude in implementing GFG. e above discussion shows that there are at least three focal points need highlighting in promoting SVLK to become an infrastructure of REDD+: determining the REL, developing the MRV system, and developing the benefit distribution system. Determining the REL e main indicator measured in gauging the success of the REDD+ program is the decrease in emission from the reference emission level (REL). ere is no agreed method in determining the REL, but generally the estimation of reference emission from deforestation and forest degradation can be obtained through historical data by identifying the starting year, the duration of the year used in determining the reference with the national condition in consideration, and the reliability of the historical data. SVLK is awarded to managerial units related to the upstream and downstream utilization of

Photo: Een Nuraeni

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SVLK, Pathway toward REDD+

The amounT of emission decrease in foresT degradaTion emission (re-d) using The firsT approach could be calculaTed using The following formula: re-d = an*[(cp-cb)/T – fK¬]n + ap*[(cTpTi-cb)/T – fK]p CP, CTPTI, and CB are carbon stocks of primary forests, primary TPTI-practicing production forests and the forests carbon stock during the baseline year. A is the size of the area. T is the length of the year used in determining the REL, and N and P are wooded areas not in and within wooded areas which have been given forest resource utilizations rights (HPH), respectively. FK is the abbreviation of Faktor Koreksi (Discount Factor) whose value depends on the increasing amount of carbon stock post baseline year. The FK value will be 0 if after the baseline year the increase in the carbon stock is equal to the secondary forest average growth where there is no illegal logging. If the value is smaller, the FK value is equal to the difference in the values. As an illustration, if CP, CTPTI and CB are 200, 140 and 65 TC/ha and the secondary forest protrusion where there is no timber theft 2 tC/ha/year (for simplification, the amount of CE and the growth in region N and P are assumed to be the same), but the value of T in region N and P are 30 and 25 years. Value of TN and TF are estimations of the length of the wood cutting period which causes the carbon stock decrease from the primary condition to the baseline year condition. If carbon stock in wooded areas does not change after baseline year condition, this means there is still a 2tC/ha timber theft after the baseline year. In this condition, the emission decrease is: re-d = an * [(200-80)/30 – 2] + ap* [(140 – 65)/25 – 2] tc/ha/year If after the baseline year there is a 2 tC/ha increase of carbon stock after the baseline year, it means that there is no longer any timber theft, so the FK value = 0, and the emission decrease is: re-d = an * [(200-80)/30] + ap* [(140 – 65)/25] tc/ha/year In the second approach, the baseline is the condition before the implementation of SVLK. If the implementation of SVLK could not be justified as a response to the REDD+ scheme, the baseline determining will become even more complex because the determination using the first approach does not fulfill the additional criterion. If the first method is applied, the decrease of emission from forest degradation (RED) resulted from the implementation of SVLK can be calculated by using the following equation: re-d = [(n-n)*(f*V*d*0.5)]b + [(n-n)*(f*V*d*0.5)]m-K (tc/ha/year) where Nand nare the total number of wood/timber industries and the number of indistries that have received SVLK, f the fraction of timber originating from illegal logging before SVLK was implemented,V the total timber volume processed per year per company, and B and M-K indicate large and mediumsmall businesses. If the SVLK policy was implemented before the implementation of the REDD+ policy, then what has been done becomes the baseline and what has been achieved at present cannot be claimed as a part of RE-D. If this is the condition is accepted and agreed upon, then the REL determination is done through a projection towards the value of n in the previous formula before and after the REDD+ policy. Therefore, the emission decrease from forest degradation is calculated using the following formula: re-d* = e-d- – e-d+ E-D- and are the emission rates calculated by using the RE-D formula where the value of n for E-D- is the number of companies that had received SVLK before the REDD+ policy and E-D+ is the number of companies receiving the SVLK after the REDD+ policy.

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SVLK, a Pathway toward REDD+

timber to ensure timber legality. If all timber managerial units obtain SVLK certificates, business units theoretically no longer use illegal timber. e use of illegal timber by business will directly encourage illegal logging which causes forest degradation. So far there is no accurate data about the amount of illegal timber being traded. Many studies only point out that there are scores of them as demands of timber for industrial purposes exceed the sustainable logging of natural forests and industrial crop forests can supply. Referring to the REL concept, it requires data of the volume of illegal timber circulating before the implementation of SVLK to determine the reference emission from illegal logging. However, it may be difficult to obtaining such data. So determining the REL to gauge the effectiveness of SVLK in reducing emission levels below the reference levels is an obstacle that must be overcome. is requires REL determining method in relation to SVLK. Apart from data collecting process, difficulties also come from classifying the causes behind the decrease in illegal logging activities. is is because there are too many programs – Inpres No.4/2005, forest protection programs of PHKA, KPH development— being developed to overcome illegal logging. is condition edges off efforts to promote SVLK as the single measure to deter illegal logging, unless there is an agreement to categorize such programs as effects of SVLK. ere are two approaches that could be developed in determining the REL in relation to SVLK. First, by measuring the carbon stock directly in forest areas. Second, by calculating the changes in the number of timber-based companies that have obtained SVLK. In the first approach, it is assumed that illegal logging takes place in all forest areas, not only in production forests under

Photo: Sigit Pramono - CITK

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SVLK, Pathway toward REDD+

HPH management but also in conservation forests and protected forests. In the second approach, it is assumed that timber-based industries that do not have an SVLK still use some portions of illegal timber. e proportion between legal and illegal timber which is used as a baseline is determined from surveys and interviews with stakeholders. In the second approach, the condition carbon stock at a certain point of time which is determined as baseline year serves as carbon stock baseline. For wooded areas within conservation forests, protected forests, and production forests for which any utilization permits have never been issued, the reference emission level is seen from the difference between the average primary forest carbon stock and the carbon stock during the baseline year. e decrease of the carbon stock in these wooded areas is regarded as result of illegal logging. For wooded areas within production forests where permits have been issued and are currently being applied, the reference emission level is measured from the difference between the average primary TPTI-practicing production forest carbon stock and the baseline carbon stock. rough this approach, the success of SVLK is gauged by the declining volume of carbon stock in wooded areas compared to the baseline carbon stock. is approach is relatively complex as it needs a carbon stock measurement in various forest areas and clear boundary defining between production forests where permits have never been issued and the ones where permits have been issued and also the choice of a control plots to monitor the change in carbon stock which represents the whole forest’s condition.

Photo: Sigit Pramono - CITK

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SVLK, a Pathway toward REDD+

For the first approach, if there is a decline of carbon stock in the wooded area after the baseline year, this means that illegal logging still happens. But if there is no decline, illegal logging has decreased or ceased altogether. Development of the MRV System e agreement between the parties that signed the convention of climate change requires that emission decrease must be real and measurable. e measured decrease must be reported and must be verifiable. e effect of SVLK has on the timber theft must be measurable. erefore, the indicators to be measured must also be defined. Based on the approach of REL determining above, the indicator that must be observed and measured is the change of carbon stock in forest areas if the first approach is used. If the second approach is used, the number of timber-based industries that have implemented SVLK is the indicator to be observed and measured. e results of the measurement are reported by the relevant and responsible institutions and are integrated with national MRV institution. e measurement results must be reported and verifiable by independent institutions to receive international acclaim. us, the normative merits can serve as an asset for independent, accountable, and transparent implementation of MRV.

Photo: Sigit Pramono - CITK

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SVLK, Pathway toward REDD+

e Development of a Benefit Distribution System Unlike CDM, REDD+ is not simply a project-based activity but a national commitment. e success of the implementation of REDD+ in the sub-national level (district, province, water catchment area, forest, and other units) in the form of emission decrease must be measurable at national level. A national approach will make carbon leakage no longer a problem. Carbon leakage is emission increase in a certain area due to an emission-reducing strategy implemented in another area. Since the measurement carried out at a national level, the emission increase in one area and the decrease in another is measured and calculated nationally. If the decrease in one area is lower than the decrease in another area as a direct or indirect result of the implementation of a strategy in that area, there will be no decrease in emission at the national level. e measurement of emission decrease as a result of the implementation of REDD+ is made at the national level. erefore, the incentive for the emission decrease is also paid at the national level. So, the benefit distribution system developed must be able to push the implementation of the strategy nationally. At present, the Government has been encouraging all timber-based industries, especially the small and medium scale businesses, to obtain SVLK by providing subsidies and incentive through the State Budget (APBN). So far, there are approximately 33 companies that have obtained SVLK. n

Photo: Sigit Pramono - CITK

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Photo: Syukur, MFP

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Chapter

An Empirical Study Pursuing a Strategic Issue of as an Infrastructure of REDD+ e Strategic Perspective in Performing a Field Study ere were activities that the authors took up during the field study. One the activities were a series of focus group discussions (FGD). During the activities, various strategic ideas emerged, at the light of efforts to find relation of the SVLK and REDD+. Based on the various ideas, the authors formulated a strategic perspective which influenced the discourse concerning the relation of SVLK and REDD+. is perspective later serves as a foundation in performing field studies to pursue strategic issues in the empirical level. e field study results complemented with the perspective in the context of SVLK in its relation with REDD+. e Central View: Carbon-Loss Problem and SVLK-REDD+ Challenges Implementation of SVLK and REDD+ in addressing various forestry problems receives miscellaneous responses from forestry stakeholders. Conflicting ideas are inevitable among stakeholders who have different perspectives about the presence and the effectiveness of SVLK and REDD+. But before discussing the stakeholders’ response, it is necessary to understand what real problems lie in forestry fields which need to be addressed, and how SVLK and REDD+ contribute to solve those problems. Stakeholders

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SVLK, a Pathway toward REDD+

see them as the same old problems, no matter what standpoint they have in perceiving SVLK and REDD+. e first problem is the extent of the natural forests that has been receding from 41 million hectares to 25 million hectares in 2010. is means the carbon stock also worsens nationally. And later on carbon emission is predicted to be uncontrollable. e decreasing extent of national forests clearly implies destruction of environment in the form of massive carbon loss. In this case, Indonesia, together with other the countries whose forests are also degraded, contribute to severer global warming. e disappearance of such a large amount of natural forest and carbon stock takes root in the vagueness of boundaries and the absence of forest area managerial units. ese conditions cause ineffective protection and security over forest area. is in turn attracts unlawful parties to commit illegal logging, which triggers the loss of carbon stock. Apart from causing depletion of carbon stock in natural forests, illegal logging also gives way to illegal timber trade by the industry and market. is is a critical situation where SVLK is expected to become a spearhead to control the downstream sector of forestry, trade, and industry. e second problem is that in the state-owned forest areas, only 10 percent of the total area has already had clear boundaries. Most of the forests are open access where anybody may enter, utilize, and deplete the natural resources within them unchecked. In this level, the problem of tenure security or definite claim over a certain area is the main cause of carbon loss in Indonesia’s natural forests.

Photo: Sigit Pramono - CITK

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SVLK, Pathway toward REDD+

Besides, there is also poor forestry governance where some manipulative actors willingly bypass regulations and policies, taking advantages from different interest among stakeholders. is condition is where the third problem lies, namely the carbon loss is clearly related to political economy which is manipulated by those who hold a decision-making authority in forest management to deplete the forest and the natural carbon reserves. Illegal timber harvest takes place in unaccountable ways, clearly causing problems in the legality of the timber which is later traded in the market. Illegal logging and illegal timber trade causes forest degradation and deforestation even worse. in general, there are three domains of improvement that should be done to handle all the problems above: 1. Domain of rules and law – this means that it needs improvement of regulations in the national level which will affect the regional areas, 2. Domain of governance – this means strengthening the regional areas by supplying a set of forest management policy instruments to align with the sustainable forest management (SFM) goal, 3. Domain of law domain to resolve the overlapping tenure problems that have caused claim and area conversion confusion case by case in the micro level.

e fourth problem is the poor institutional capacity in regional areas in the form of a weak ability in managing forest problems. e absence of ability leads to bad forest governance in Indonesia. e loss of carbon in the regional areas is partially caused by the chaotic forest governance in the regional areas. Forest conversion and forest’s function change takes place very fast as a result of unchecked decentralization or regional autonomy without adequate insight. e consequences of the handing-over of immense authority to the local governments while the forest area stabilization by the national government is slow is that during this era 15.6 million hectares are proposed to be converted for other purposes (area peruntukan lain, APL), including plantations and infrastructures. e very high rate of conversion of forest areas to other purposes has caused degradation and a depletion of the national carbon reserve. By discovering the roots of the forestry problems above, where the SVLK and REDD+ instruments (as a way to overcome the depletion of carbon reserves since the conversion of 15.6 million hectares of forest area) can take part effectively. ere is an expectation that forest and carbon reserve preservation and the governance improvements can be achieved if SVLK and REDD+ are effectively implemented as both of them aim to reach SFM. SVLK and REDD+ Challenge: Good Forest Governance Implementation e main problem in forestry is the conversion of forest areas, which triggers the depletion of carbon reserves due to the aggregate loss of forest area. SVLK and REDD+ are expected to solve this problem because both concepts are oriented towards the same SFM ideology. e difference is that SVLK applies in a rather downstream level (timber trade and industry), while RED+ applies in the forest area (upstream).

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SVLK, a Pathway toward REDD+

SVLK, as a part of the control system towards degradation and deforestation especially caused by illegal logging, is perceived in various different ways at the macro level. ere are different views in account of the SVLK ideology, concept, and implementation in the framework of sustainable forest development in Indonesia. When SVLK is related to REDD+, there are confliction views about the relation, as they both have difference work areas. Basically, SVLK is an approach to encourage good forest governance. It rises at the midst of the concerns about the bad administration of timber harvested from state-owned forest and traded either for export or domestic market. It is assumed that there are number of problems in an effort to improve good forestry governance. ere is always bad governance in almost every part. SVLK is expected to become a sort of timber administration policy instrument to rectify the bad governance. Initially, bad governance might only happen in the state-owned forest areas. It is marked by rampant illegal logging in those areas. But later on, bad forest governance also takes place in timber originating from privately-owned forest areas which was once regarded to be the most legal timber, especially timber from privately-owned wood areas in Java Island. Private-owned forest is developed on privately-owned land, raised and tended by personals, and illegal logging virtually never heard of in these wood areas. is problem causes complexity in the effort in rectifying the forestry administration. is problem basically rises from the Government’s weakness in monitoring and from its futile legal enforcement over wood areas under its jurisdiction, all of which in turn will pose burden to forest farmers. How critical is the bad forestry governance in trade of timber originating from state-owned forests in Indonesia? All timber originating from natural forests and being traded in the national and international market is difficult to trace. It takes extra efforts to find out where the timber is cut, whether the harvest adhered to sustainable forest management principles or not, whether or not it is the product of illegal logging, whether or not there are manipulations in permit issuance. Indeed, there are timbers cut by complying with harvesting standards which are legal, legitimate, an in accordance with the existing laws. e proof that the timber harvested from natural wood area complies with the legal regulations is the Forest Product Legality Certificate (Surat Keterangan Sahnya Hasil Hutan, SKSHH) issued by the forestry authorities. For timber originating from tenures, timber Certificate of Origin (Surat Keterangan Asal Usul, SKAU) which explains where the timber’s origin is issued. Nevertheless, it is undeniably that a large amount of timber in domestic and export market is harvested without complying with the legal regulations, which threatens the sustainability of nature and the environment, especially within the state forest area. In natural wood areas where the surveillance is minimal and the forestry authorities’ (the government’s) span of control is inadequate, timber can be harvested in haphazardly and the

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SVLK, Pathway toward REDD+

timber exported to international market like Europe, America, and other places. In this case, the timber trade is categorized as illegal as it originates from illegal logging which poses a serious threat to environmental preservation, especially in the form of green carbon depletion in nature. It is here where SVLK has an important role in curtailing bad forestry governance which deteriorating the environmental quality. As a governance system, SVLK tries to improve environmental quality through the verification of the legality of timber in the market. One dismal fact is that there is a larger area of natural forests in Indonesia where illegal logging is rampant compared to the area which is well controlled through conventional (government) timber administration systems. e classic problem is the lack of government’s presence in completely monitoring all natural forests in Indonesia, which gives way to illegal logging to persist until this day. It is even more distressing that consumers in the international market welcome the presence of illegal timber. is fact makes the bad forestry governance in Indonesia even worse. ere are three major challenges to toward the implementation of good forestry governance. First, how to decrease or to slow down the illegal timber harvest which defies the sustainable forest management principles. Second, how to restore the environmental quality which has been threatened or desecrated by illegal logging, causing the depletion of the environmental carbon stock and will trigger a global ecological crisis. ird, how to improve GFG in state-owned forest governance without inflicting loss or posing a burden to the people (forest farmers), and instead, if possible, how to give incentives to the people to plant trees to either support their economy or save the environment, including augmenting the carbon stock. SVLK and REDD+ approaches are meant to overcome the two first obstacles, but not the third and it is unintentionally burdening the forest farmers (it is a disincentive for the tenure forest development). While the SLVK concept approaches the environmental problem through verification of timber harvested and traded, the REDD+ concept approaches the problem through a development strategy scheme to reduce carbon emission and increase the carbon reserve. In a simple expression, REDD+ is a condition that if in an area there are initiatives that cause the carbonbalance (carbon loss and carbon gain) to become positive (there is carbon stock accumulation), then the developed countries (currently known as the polluters) may dispense their funds to support the carbon accumulation initiative in that area. e carbon transfer of payment builds a synergic collaboration bridge between developed countries and Indonesia to preserve carbon and the environment. Meanwhile, the system applied by SVLK is more of an effort to derail illegal logging rate which will deplete the carbon from forest resources from the downstream side (the timber industry and trade). By using the two mechanisms, the sustainability of the environment or natural resources, where carbon accumulates, can be preserved.

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SVLK, a Pathway toward REDD+

e problem that keeps looming ahead is whether the SVLK and REDD+ concepts can enhance good forestry governance and reduce the rate of degradation/deforestation in Indonesia. REDD+ works in the upstream area of forest resources and the SVLK works in the downstream area. If so, is it possible to combine the two as a synergic approach in preserving forests or forest resources or the environment in Indonesia? VARIOUS PERSPECTIVES IN VIEWING SVLK AND REDD+ View Differences ere are many perspectives in seeing SVLK or REDD+, and not all of them synergizes with one another. ere are at least three parties – the critical group, the welfarian-populism group, and the developmentalism group – that debate the chance of a synergy between SVLK and REDD+. Each party has its own view concerning the two concepts and the combination of the two concepts in achieving the goal of a sustainable forest management. Even though the synergy between SVLK and REDD+ is theoretically believed to be effective in decelerating the rate of environmental degeneration and carbon depletion in a certain area (which will further assure the achievement of sustainable forest management), the implementation of the two concepts are never far from bitter criticism. Critical points of view towards REDD+ are mostly aimed at the political economy that severely divides between “environmental polluters” (those who release carbon though pollution) and those who must reduce the emission through tree planting to accumulate carbon. e two are in opposite positions geo-spatially and socio-economically. Indonesia is thought to be a much poorer country and sub-ordinated by the western industrial developed countries in the implementation of REDD+ and the environmental clean-up. e unequal position is what is being sued by the critical group as an ecological injustice. Even so, some see that the REDD+ scheme is a positive chance for Indonesia to accumulate the carbon stock in the local level in the form of reforestation of vegetation-free areas. Meanwhile, the point of debate towards SVLK circulates not only around the questioning and uncertainty of the effectiveness and credibility of the concept’s mechanism to reduce the carbon loss through illegal logging decrease but also the implementation level. SVLK is regarded to be ineffective in reaching the upstream forestry problems (for example timber theft, tenure conflict, as SVLK works more at the timber industrial and trade level. Besides, SVLK is also judged to be powerless in detecting the origins of the timber used in the industry. e Critical Group’s Argument In the meantime, the flow of criticism towards SVLK never subsides. e critical view holders towards forestry issues voice their objections towards SVLK’s presence in the timber administration system. ey state that in Indonesia there is already a timber administration (tata usaha kayu, TUK) which applies an instrument called the forest product legality certificate (Surat Keterangan Sahnya Hasil Hutan, SKSHH) for timber harvested from natural forests. e

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SVLK, Pathway toward REDD+

implementation of SVLK, they believe, will overlap the TUK and pose extra cost to timber business. e critical view holders say that if by utilizing TUK a forest area could be guaranteed to achieve the SFM (sustainable forest management) goal, then that area no longer needs SVLK (which also aims to achieve the SFM goal). When the SFM goal has been reached, it means that carbon has been accumulating well in that area. is means that the drive towards carbon accumulation through SVLK and REDD+ is redundant. e problem is, the implementation of TUK is not widespread in all of the natural forests in Indonesia. But it is stated further by the critical view holders that SVLK and REDD+ will not be able to cover all the natural forest areas in Indonesia either. So, both TUK and SVLK face the same problems, they will never be able to control the harvesting of timber in all the forest areas in Indonesia. e Welfarian-Populism Group’s Argument A more profound but slightly different critical thought is voiced by those who believe in the welfarian-populism (a populist economic view). ey ask why the wood-based products must be verified. Why is there more desire to control wood-based products compared to non wood-based ones, and what is behind this desire? Is there any political-economic interest of the developed countries towards Indonesia’s forestry sector and wood industry? e believers of this view strongly criticize that if revisited through the essence of social welfare, all the concepts, REDD+, SVLK, TUK, are not in line with the people’s welfare. erefore, they suggest that the Government forgets all those mechanisms. e Government needs to pursue the people’s welfare rather than catering to the international desires. If this view is accepted, the carbon preservation concept must be synergistic to the goal to improve the people’s welfare. e question is how to change our views of carbon emission and accumulation that aims at the people’s welfare. is group radically states that in order to improve the Indonesian people’s welfare, emission increase is actually required. is view contradicts with that of the EU, USA or other developed countries which are required to curb carbon emission in their own countries. ere is a question why Indonesia, instead of the industrial countries, is forced to grapple with carbon emission. is political economy injustice is strongly opposed by those who believe in welfarianism-populism. e Developmentalism Group’s Argument e believers of developmentalism think that SVLK should be seen as an evaluative reflection material of the timber harvesting and utilizing that occur in Indonesia’s tropical rainforest. By using SVLK, it is possible to assess whether the timber harvesting is made in accordance with the principles of sustainable forest management which ensures the sustainability of the forest and all of its elements. If the forest management is not sustainable, reflected by the low SVLK assessment results, sanctions could be handed and improvements should be done to reach a much better forest management level.

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SVLK, a Pathway toward REDD+

In simple terms, the believers of developmentalism see SVLK as a “forest management report card”. Until now, several certifications have proven to have substantial contributions towards the sustainable forest management which strengthens the sustainable development goal, a condition that all forestry stakeholders strive to achieve. us, they do not agree with the critical view holders who say that the SVLK has had no effect. SVLK is in reality a small screw that has an important role in supporting the sustainable development in aggregate in Indonesia’s forestry system. Many routes are available in achieving sustainable forest management (SFM), one of them is by pushing local authorities to improve their timber administration through SVLK and REDD+. Even though there are many different views, it is still certain that if SVLK and REDD+ synergize, they can become a new route to overcome factual forestry problems in the form of extreme carbon loss. Once combined and implemented, both concepts have opportunity to decrease the carbon emission and increase carbon reserves which in turn will improve the environmental quality and augment the people’s welfare. e Study in the Central Kalimantan Province Forestry Problems in Central Kalimantan To recognize whether SVLK and REDD+ could be implemented, a problem identification was done in the field. One of the areas chosen was Central Kalimantan (Kalteng), considering that this province has been chosen by the Government as an area for the REDD+ pilot project in Indonesia. Wood areas in Kalteng have been facing a complex and haphazard governance problem since so many authorities in different levels feel as if they had the right to manage and utilize the forest. e problem of overlapped area claims and the vagueness of tenure characterizes the management of forest areas in Kalteng. In order to whether SVLK can be implemented and able to push the implementation of REDD+ in a certain area, a field study was conducted. ere are a number of assumptions or questions to be embraced to help direct the focus of the observation in Kalteng:

1. TUK faces forest governance problems in the field. Rules and laws are not well-enforced, regional government’s administrative capacity is inadequate, all of which do not find any solution yet. Consequently, the effort to implement SVLK to push REDD+ towards SFM is not realistic. Is it true? What lessons need to be learned from the field in the region? 2. There is an assumption that the practice of the TUK system by the Government is enough to ensure timber legality, and at the same time guarantees the carbon stock and the forest resources. If the timber legality has been guaranteed by a credible TUK system, then it is assumed that the timber was harvested from the forest in accordance to the SFM guidelines. If the forest harvesting is done according to SFM guidelines, there will not be any substantial carbon depletion or decrease. But if the TUK presence is in the form of certification – such as the certificate of origin (Surat Keterangan Asal Usul, SKAU) for community timber of the sonokeling, mahogany, sengon variety which is distinct from the variety owned by Perhutani; log certificate (Surat

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SVLK, Pathway toward REDD+

Keterangan Kayu Bulat, SKKB) for the teakwood the people want to sell; the forest product legality certificate (SKSHH) for timber originating from state-owned forests — could not always guarantee the legality of timber in the field, is there any credible system other than TUK that all forestry stakeholders could apply? When SVLK was suggested as an alternative to TUK in verifying timber legality, the question that arose is, can SVLK be applied as a replacement for TUK? If not, what problems will SVLK face? 3. It is assumed that SVLK has potential to push the realization of carbon stock accumulation in a certain area through the REDD+ scheme. If SVLK is expected to become one of the compelling factors for REDD+ and in turn will allow carbon funds to be bestowed by developed countries to local communities, the question is, how much effort and cost to take to obtain the SVLK certification and how much fund can be proportionally proposed for the carbon credit (REDD+)? What economic calculations which communities may make in obtaining SVLK? 4. Governance infrastructure is inadequate to ensure the implementation of SVLK and REDD+ in regional areas. If SVLK is expected to become REDD+ policy infrastructure in a certain area, what problems must be considered so that the forest governance in the regional level can support the synergy between the two concepts? To answer the questions above, a field investigation was made and some findings were discovered. Not all the questions above could be clearly answered in the field, but implied conclusions could be made.

e Implementation of SVLK and REDD+ in Central Kalimantan e TUK system that has been implemented so far should have been able to trace timber’s origin. TUK can help discover whether the timber is cut from illegal logging or not. erefore, TUK is actually an adequate system. But the problem is that TUK fails when applied to the log-tracing level due to a number of forestry non-technical problems. e problem, for instance, rises from many actors in various levels who have interest in timber business, which defies the TUK system. Unfortunately, based on the regulations, TUK is one of fundamental parts of timber legality to be verified. is means that when TUK is not credible, this will derail SVLK’s credibility. An experience shows that in 1990s there was once a certificate of processed wood product (Surat Keterangan Kayu Olahan, SKO) in Kalteng issued by forestry authority to ensure timber legality. What happened later was that some perpetrators manipulated and even traded the certificate for personal advantages. e public were aware of the “SKO trade” to legitimize timber in trade, no matter where it came from. As a result, products from illegal logging could be “guaranteed” their legality as long as they could obtain the SKO. is was an example of law-disobedience in regional areas. It seems that all timber originating from state-owned forests is legal only because it has received legal certification, no matter how in fact the timber’s origin cannot be determined. ere are fears that SVLK may have the same fate as that of the SKO that happened in 1990s. If the distortion happens, illegal logging will still remain unchecked, since illegal loggers can purchase the certificate. e timber administration credibility is at stake and it will determine

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SVLK, a Pathway toward REDD+

whether all timber legality can be guaranteed. Besides, many parties voice their concern that as long as forest governance in regional areas is permeated by bad forest governance, SVLK is projected to face very difficult hurdles in rectifying the system. e fact that SVLK applies in rather downstream will make it difficult for SVLK to encompass problems looming over the forest level. In relation to the cost that the forest business entities must pay in their effort to align their business management with SVLK principles, they hope that in return they will receive premium prices that SVLK promises. If SVLK is applied voluntarily, the business owners fund the SVLK. In that case, they hope to receive profits from the premium price where they can gain positive margin over the total cost they spend for SVLK. is means that the margin between the premium price that they receive (thanks to SVLK-labeled timber that they trade) and the costs that they pay in ensuring SVLK in their products serves as a driving factor for SVLK implementation. But there are some doubts whether the business entities’ calculation will really generate economic profit for them. Or is SVLK merely a discourse where economic profit is difficult to come true. Beside the qualms in the regional areas that if the SVLK is voluntary, verification of timber legality is not mandatory. Since it is not mandatory, it indirectly implies that illegal logging is tolerable. ere is a discourse to make SVLK mandatory for all timber businesses, but if the cost is too high, then the state must be engaged in doing the certification through subsidy mechanism. If SVLK could be implemented in regional areas, will REDD+ automatically be implementable? It is without doubt that Kalteng is an ideal REDD+ pilot project area because in certain areas in the province, the wood areas can be boosted to accumulate carbon. On the other hand, Kalteng also faces a risk where REDD+ may not work because of the overlapped and complex concession claims. For example, an area may have many claims from different parties. Each concession claim is granted and endorsed by different authorities of various hierarchy levels. e overlapped claims caused a hesitation among stakeholders in Kalteng since every step that they take may cause fatal horizontal conflict. REDD+ operational problem roots from the bad forestry governance in the province. e world’s demands that Kalteng is designated to become a site to develop forest zones to slow down carbon emission up to 41% with some 7% economic growth seems to be hard to reach. In return to international funds that the province receives, Kalteng is also required to reduce its carbon emission not 26% as other areas (not recipients of international funds) but 41%. e uncertainty of the law over a number of forest areas in Kalteng makes the unreasonable target difficult to reach, no matter how it finds support from foreign aids. e reason is that all economic growth will trigger carbon emission, and because growth needs development, and development imposes energy. e energy, originating from fossil fuels, which is necessary to boost development and economic growth, triggers another carbon emission problem that needs solving in this area.

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SVLK, Pathway toward REDD+

Proposal of SVLK-REDD+ Implementation in Kalteng Problems in Kalteng will determine the formula of SVLK and REDD+ implementation. e problems in implementing SVLK and REDD+ not only spring from the bad forest governance and tenure insecurity, but also include larger dimensions. Why is the forest undergoing severe carbon reserve depletion? is is because the lack of security assurance over the forest areas. It is not sure who are supposed to have absolute authority and control over the forest. As a result, a tragedy of common over the open access forests happens. ere is an urgent need for an effective and efficient management of forests in rural areas since forestry authorities in such areas are too absorbed into legalization and licensing of forestry industry. is situation lures forestry authorities in every hierarchy level to act as if they were the righteous agents to issue many kinds of permits— which cause redundancy, ineffectiveness, and problems related to the rights to control wood areas. Control over forest areas was originally at the hand of National Government, namely, the Ministry of Forestry. Later, the control was handed to local governments, which in ironically the long run sparked a conflict between the National Government and its local counterparts. e conflicts take place when the local governments issue permits over the use of forest resources. In area governance, Kalteng has four levels of main problems which are related one to another. ese four levels are the international level, national, province level and district level. International matters such as global warming which the world is trying to curb through carbon emission control and re-stocking of carbon sink in the national context, does not mean that the same issue of context can be solved successfully in the provinces and lower regional levels. Since the Government introduced local autonomy, provinces and districts began to have their own autonomous capacity to run the governance. erefore, policies and regulation by the National Government to be implemented in local areas would be better take into account of local elements and needs. Generalized policy and regulation will pose problems. Due to these potential problems, parameters of indicators and criteria of SVLK in Kalteng should be made differently from that in other area, for example Sumatra. e differences of factors which affect whether logging is legal or illegal in a certain area are very specific and different for each area of jurisdiction. An idea for solving this problem is by creating a synergy of SVLK and REDD+ which is specifically made for a certain area. e uniqueness is not only based on the area but also based on property rights of the wood areas. It should be kept in mind that forests belong to the people. For Kalteng, the SVLK should also touch the timber legal aspects by determining the certificate of timber’s origin. e SVLK should not only apply in industries’ timber legal aspects. In other words, SVLK should not only have control over timber distribution, rather, it should also have access to move further to trace the origins of the timber. If the SVLK fails to cover those fields, then SVLK will not be able to handle the roots of the problem where illegal logging takes place. ere are some ideas on solving the problems related to the overlapped claims and the problems

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SVLK, a Pathway toward REDD+

related to claims over area boundaries which should be solved one step at a time. Even though the steps might take a long time, these steps should be taken since the problems in Kalteng cannot be solved all at once. Some inputs of innovated approaches include: Forest development by applying REDD+ approach in Kalteng has been suggested not to be riented on natural forests due to its low carbon growth rate, but to the industrial forest (Hutan Tanaman Industri, HTI) where carbon-gain for time unit is very high. SVLK should be aimed to HTI for Central Kalimantan. e problem is, illegal logging occurs more often within the natural forests compared to those in the industrial forests so SVLK. is is because being a control device for illegal logging, SVLK is more suitable to be applied to natural forests compared to HTI areas. Orientation or option toward the most suitable forest management to create the effectiveness of the SVLK and REDD+ to reduce emission and increase the carbon supply has become a debate which needs special attention from all stakeholders to solve the complexity of the forestry in Kalteng, aside from tenure and bad governance issues. a. Sociological approach, done through dialogs, communication, and mediation. This approach is meant to solve the conflict triggered by overlapped claims. b. Regulative approach, where the Government makes special rules to solve problems in Kalteng. Revision of forestry law and regulations especially the rules related to forest boundaries is one of the suggestions. The problem-solving effort will also include permit moratorium to address concession permits which have been overlapping long. c. Legal approach, which can be done when mediation hit a block. This approach should be taken no matter how it may put corrupt Government’s agents to court. d. Academic approach, which redefines and agrees on conceptual terms related to forest governance. This includes the perception about what REDD+ really is. e. Technical approach, which remaps together to create agreement on boundaries of each forest area. This should be done since there has been disagreement on the previous forest area map. FIELD STUDY IN RIAU PROVINCE Forestry Problems in Riau Both SVLK and REDD, despite their intervention areas are different, have the same goal. e goal is to make sure that the forestry system which produces timber for industrial needs and trade is treated wisely. us, the forest sustainability is not disrupted and aggregate carbon supply stays in an adequate level. In other words, SVLK and REDD+ play a role to improve the environmental quality and to maintain the forests. SVLK and REDD aim at several main forestry issues. First, suppressing or overcoming any forms of illegal logging which has caused the decrease of carbon supply and forest degradation. Second, building good forest governance to ensure sustainable timber harvest. ird, ensuring the route in achieving the ultimate goal SFM.

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SVLK, Pathway toward REDD+

implementation of sVlK and redd+ may face some questions which are not easy to answer. The answer to these questions needs some awareness and critical thinking. some of these questions are: 1. Can SVLK reach the areas of timber origin before it the timber is processed by industry to become furniture? So far, SVLK is known to only reach the timber which is traded in the market, without being able to control timber origins within wood area. 2. Can SVLK really control illegal logging and illegal timber trade in Indonesia? There are so many modes of illegal logging – from timber theft to the inappropriate use of forest land. Other than that, illegal logging, whether admitted or not, involves economy-politics at national and international scopes, which is rather complex. 3. A great deal of timber comes from illegal logging and enters trade that is beyond the reach of SVLK, e.g. logs sold as building materials or smuggled to neighboring countries. 4. In upstream area, there are structural problems which are hard to solve before the SVLK could be implemented: (a) unstable legal ownership over wood area due to unclear map and boundaries, which causes uncertainty of area usage and triggers conflicts; (b) poor practice of forestry governance with overlapped area permits; (c) illegal logging and forest clearing with unknown intensity.

More specifically, forestry problems in Riau have something more to do with peat-land which is known as a substantial area to supply carbon. Riau is known as one of two largest peat-land areas in Sumatra Island, next to South Sumatra Province. Riau is an area of carbon stake which is quite important for REDD+ and SVLK as well. But there is a question whether it is possible to preserve such carbon-rich land in Riau for the sake of an effort to reduce world global warming? In Riau, especially in the south-east coast area such Indragiri Hilir (Inhil) District is a very important peat-land area. On the other hand, just like other areas, there has been continuous conversion of peat land for other land usages to improve people’s welfare. Expansion of oil palm plantations have invaded the peat-land and decreased the carbon supply in the area. is means that there is a stiff competition between ecological needs and the economic needs. e critical question is that how relevant and reliable are REDD+ and SVLK in controlling the loss of carbon in the area? On behalf of economic growth as the main orientation of Riau’s development, people create catastrophes (peat-land fires) and this becomes a serious issue in Riau. Peat-land fire is usually related to the activity of peat-land conversion from forest area to farm and plantation. One of the existing efforts to reduce the risks of environmental damage is by taking care the 8.9 million acres of the area which is divided into 63 types of areas through the province’s geo-spatial plans in 2011. However, it is not always easy to secure such a vast area. ere is plenty of conflicting interests over the area which causes problem with the province geo-spatial plans. What is worse, Riau also faces the pressure of releasing its wood areas to be converted into oil palm plantations.

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SVLK, a Pathway toward REDD+

Photo: Sigit Pramono - CITK

e pressure of forest area conversion into oil palm plantations causes the loss of carbon reserve and environmental changes, which in turn also triggers biodiversity loss. And this condition is not solely caused by the forestry mismanagement. But rather, this is also because the global economy system which continuously offers attractive incentive from international market to oil palm industry. is explains why palm plantation thrives surprisingly in Riau. ere is no doubt that the decrease of carbon reserve in the area is caused by the power which forces the peat-land conversion. is phenomenon is exacerbated by the dynamics of local politics which influence bad governance in permit release. e result is that the conversion of wood areas into other functions is getting worse all the time, causing higher depletion of carbon reserve in Riau. Notes on the Implementation of SVLK in Riau Riau Province Government states that the existing timber administration system in Riau can guarantee the legality of the timber in the market. With extra efforts and obstacles, there is still a system apart from SVLK, which can be applied to deals with timber legal aspects with strict manners. e certification system includes PHPL for timber-based industry, certification of technical support supervisor of PHPL to industry’s technical support, and certification of technical support staff to preserve the forest sustainability. SVLK, through the regulations of Permenhut P.38/Menhut – II/2009, applies the downstream area of forestry. While PHPL aims at the effort to build the system of forestry area management

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SVLK, Pathway toward REDD+

to guarantee legal aspects of timber products, SVLK gives emphasis to timber legality assurance. ey complement each other. is means that SVLK needs TUK to reach SFM, thanks to TUK’s ability to trace the legality of timber. SVLK actually finds enormous support from TUK system, even though TUK still has obstacle, such as PHPL which has questionable objectivity since the whole auditing process is funded by the auditing companies. Above all, another problem with SVLK is its limited ability to only deal with exported timber, but remains fertile when it should deal with domestic timber industry. is is caused by the nature and state of mind of domestic consumers who are not well-educated enough to take part in a cause to fight illegal logging by only using legal and certified timber. Another note emphasizes illegal logging that happens in conservation forest areas. Timber cut from such areas is clearly illegal to be sold and used by end consumers. But since SVLK only concentrates on production forests, the timber coming from conservation areas remain untraced. e lack of SVLK’s coverage should be noted in future improvements. Notes on REDD+ Implementation in Riau e destruction of peat-land has become a long time concern to government of Riau Province. ere was a moratorium of the use of peat-land for oil palm plantation, which once seemed to be reliable. Riau has some 5.7 million acres of peat-land, covering 64% of the region. With such enormous potential, Riau should get special attention. Peat-land forest is characterized by specific traits. First, irreversible dryness which means that if the land had dried out it would be very difficult to return to its wet state. Second, the hydrological capacity which is very important for the stability of local ecological system. ird, it has unique biodiversity. Fourth, it is combustible, once it starts to burn it is extremely difficult to put out. Peat-land is a specifically-sensitive natural resource which needs extra care, otherwise it will waste million tons of carbon emission. Unfortunately, peat-land in Riau is seriously damaged by conversion of wood areas into oil palm plantations. e peat-land fires are also caused by the continuous drainage. Continuous carbon emission in millions of tons is inevitable, causing global warming, health problems, and even air traffic problems due to heavy and dense smoke. Carbon emission in Riau has even become national problem. at is why it is urgent to perceive REDD+ as a solution to help accumulate carbon stock. However, there is redundancy and conflicting regulations, which causes complexity. A policy by the Ministry of Agriculture allows exploitation of peat-land area as long as it is less than three meters thick. Areas of peat-land with thickness under three meters are allowed to be transformed into oil palm plantation. But scientific facts show that trees living over two or three meter thick peat-land are easily uprooted and got burned under the heat of the sun. Investors of oil palm plantation see this regulation as a loophole through which they swarm all around the province, which results in destruction of peat-land ecosystem and environment at large. Most investors

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SVLK, a Pathway toward REDD+

have less care about hydrological functions of peat-land. Investors are only interested in developing plantations without thinking to build system to retain the water. ey tend to dry up the peat-land areas and make them ready to be developed into plantations much sooner. e regulations on the utilization of peat-lands as plantations, accompanied by the fact that each level of authority has legitimate power to give permits of land use, has led Riau to an abyss of tragedy of the common just like what Hardyn had predicted about an open access area. It is common in Riau where permits for mining and forestry purposes overlap one another, which instigate a string of never-ending conflicts. e authority’s weak control over the areas is the most crucial problem which causes illegal logging and the decrease of carbon reserves in Riau. e protected forests are mostly left uncared by those who are supposed to keep guard. Million acres of forest area is too vast for the authority to control effectively. Can this kind of carbon loss be solved by REDD+?

Photo: Syukur, MFP

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SVLK, Pathway toward REDD+

summarY Two main issues were discovered based on the implementation of SVLK and the initiation and development of REDD+ in the two locations of field study. The two issues have become an important lesson in the research of policy implementations that relate between SVLK and REDD+: 1. SVLK will not be able to be implemented if the area (tenure system) of timber plantation to be harvested is under uncertainty. Thus, it is strategic when SVLK takes into account of area legality. Timber legality verification system and REDD+ that have been relying on the forestry system which occurs in the tenure structure, forestry governance, regulations, and technical concepts which are needed to support SVLK and REDD+ have been systematically arranged. Unfortunately, the study indicates that not all the necessary conditions can be fulfilled, which means that SVLK and REDD+ are difficult to operate. 2. There are some major problems which make it difficult to implement SVLK and REDD+ some areas. The problems are: the overlapped permits over an area; a severe depletion of carbon reserves due to misuse of the peat-land; continuing land conversion; improper authorization which have already been given over land, which triggers uncertainty of land management. And problems occurring in the areas become obstacles that stand in the way for SVLK and REDD+ to implement. n

Photo: Syukur, MFP

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Photo: Sigit Pramono - CITK

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Chapter

A Synergy of SVLK and REDD+

Based on the field study, there are problems concerning production of forestry through which SFM could be achieved. e next part of this book will focus on these problems. e discussion will also be linked to the potential implementation of SVLK and REDD+. Challenges in the Strengthening of Forest Resource Governance Spatial data in released in April 2011 (the Ministry of Forestry, 2011) indicates that the forest and water covers 130.68 million hectares of Indonesia’s territory. According to its function, the territory falls into the following classifications: conservation forests (hutan konservasi, HK) 26.8 million hectares, protected forests (hutan lindung, HL) 28.8 million hectares, production forest (hutan produksi, HP) 32.6 million hectares, limited production forests (hutan produksi terbatas, HPT) 24.4 million hectares, and convertible production forest (hutan produksi yang dapat dikonversi, HPK) 17.9 million hectares. Of the total area, within the production forests, there are some 42.26 million hectares of former harvested wood areas which are left uncared, comprising 32.4% of the whole forest. e total length of outer borders and between function of forestry area borders extend to is 281,873 kilometers. By 2010, the realization of

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SVLK, a Pathway toward REDD+

boundary setting has reached 74.67% or about 222,452 kilometers, while official wood areas cover 14,238,516 acres or only about 10.9% of the total forest and water territory. is condition presumably become the cause of overlapped claims and even conflicts of rights and access over 22.5 to 24.4 million acres of forest areas, and 19,420 villages in 32 provinces (the Ministry of Forestry and BPS, 2007; 2009), and also causes illegal logging. Generally, illegal logging and forest conversion are caused by the vastness of the forest areas and the failure to manage the forests intensively. If the whole areas need to be assembled into forest management unit (Kesatuan Pengelolaan Hutan, KPH) to optimize the effectiveness of forest management, there should be as many as 523 KPHs (not including Aceh Province) for the all forest areas in Indonesia. KPHs consist of 162 KPHLs, covering 20.4 million hectares, 252 KPHPs covering 37.5 million hectares, and as many as 109 KPHKs covering 29 million hectares. Today there are only 53 KPH models assembled, which consist of 10 KPHKs and 43 KPHKs and KPHLs (the Ministry of Forestry, 2011). Indonesia’s wood areas nowadays have been used and utilized for various forestry and nonforestry purposes. For non-forestry purposes, the utilization of the forest areas is regulated through forest conversion (a conversion of usage) into plantations and transmigration and through the borrowing and utilizing permit mechanism (Izin Pinjam dan Pakai Kawasan Hutan, IPPKH). e use of forest areas could be illustrated below. (Figure 5).

Figure 5. The use of forestry land in Indonesia (by January 2011; the Ministry of Forestry, 2011)

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SVLK, Pathway toward REDD+

e permit is issued through an administration process involving local governments— the province, district/city – in accordance to PP No 38/2007 which regulates authority distribution, but unfortunately, not knowing the precise location as the authority is not well-prepared with adequate map. e process gives way to those who want to propose for permit simply apply for the location permits. is mechanism takes place without any accountability or transparency, which causes a high-cost economy in permit application. What is worse, the Government’s control in issuing permits even also requires high expenses. A research conducted from the 1990s to 201o portrays the condition (Kartodihardjo, 2008; Supriono, 2004; the Ministry of Forestry, 2010). Uncertainty over tenure boundaries and unclear permit procedures pose threat to the effort to achieve the SFM. Such problems have greatly fatal dimensions since they are closely related to regulations and policies, not only because of the main content of the regulations but also the mind frame in formulating the laws. In that case, bureaucratic and forestry governance problems are becoming an essential element to cope with in achieving SFM. Problem that rises from such high cost economy also looms over the forest product trade, especially during shipping process. Forest products, which are still the Government’s domain, largely depend on market mechanism, which also causes high cost. e Gap Analysis between the SVLK and REDD+ Implementation and Policy SVLK is a program to assess the performance of forestry industries form the view of timber legality. us, efforts to achieve SFM through SVLK depend on inputs that SVLK can gain and also input of other programs, in improving legal standings over wood areas, especially in achieving SFM through production aspect strengthening. Policy to implement REDD+ aims at forestry development to enhance mitigation of climate changes. The policy includes: 1. Control over deforestation and degradation, a control of conversion of the existing convertible production forest (HPK) and the efforts to enhance forest industrial development reach SFM, 2. Expansion of wood areas through HTI, HTR, HKm, Village Forests, Tenure Forests, forest and land rehabilitation.

Both policies can be reached if only the pre-conditions can be fulfilled through five programs depicted in Figure 6 to solve the following problems: 1. Problem of uncertainty of the forest area status by synchronizing the forest planning with the development planning system in other sectors and conflict resolution related to the forest boundaries to ensure the legal rights over lands, 2. e slow development of KPH;

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SVLK, a Pathway toward REDD+

Figure 6. Five main prerequisites for climate change mitigation and its implications for the organization of the Ministry of Forestry and for the determination of strategic planning, programs, and activities.

3. Simplification of various policies and laws related to permit issues and utilization of forest products by private sector, Government-owned companies (BUMN), people, and rationalization of forestry expenses. 4. A harmonious relation between the Ministry of Forestry and stakeholders to strengthen community institutions involved in forest utilization. 5. A harmonious relation between the Ministry of Forestry and local governments (Pemda) in curbing the conversion of the existing convertible production forests. If those five aspects are the requirements for implementation SVLK and REDD+, SVLK is not related to resolving of the five problems above. e five main prerequisites for climate change mitigation also serve as prerequisites for integration of SVLK and REDD+. is means, integration of SVLK and REDD+ leaves a lot of “homework” that must be done to enhance an optimum implementation of these two policy instruments: SVLK and REDD+. n

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Photo: Een Nuraeni

Photo: Sigit Pramono - CITK

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Photo: Een Nuraeni

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Chapter

SVLK as a Part of Credit Payment in the REDD+ Funding Scheme

Inclusion of SVLK as an infrastructure of REDD+ could be done since both have the same goal. Both are instruments of SFM to decrease deforestation and curb forest degradation. However, implementation of SVLK and REDD+, as shown in chapter 4, faces five structural problems in the forestry production dimension, i.e.: tenure issues, law, policy, institution, management pertaining to forest sustainability (supply side improvement), which also include boundary setting in the context of regional development. Apart from that, the SVLK’s normative superiorities such independency, accountability, transparency, and the presence of an incentive mechanism are asset for the implementation of MRV in the REDD+ development system. If SVLK is meant to serve as REDD+ infrastructure, it should be approached by a system which at the first hand does not necessarily aim at making certain of land’s legal status. Instead, timber cut should be made on demand-driven basis to encourage awareness of domestic consumers about the necessity of certified timber. An improving awareness about certified

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timber will be an incentive for all stakeholders of forest industry, both upstream and downstream, to only produce and trade legal certified timber. e approach on demand –driven basis can help build consumers’ awareness about the importance of using certified timber. e process should be accompanied by a development of system to provide to domestic forest industry which is committed to complying with SVLK norms. By enforcing use of the legal timber among industry, SVLK can also become an instrument to build timber trade relationships to attract international funds packaged in REDD+ implementation frame. Enhancing the SVLK to Support REDD+ Implementation Certification of timber is basically generated by market demand, which means that consumers’ awareness improves. International community’s demand for products of timber from legal origin is forcing Indonesian timber industries to obtain the certification. A discussion with timber industry in East Java indicates that policy of mandatory SVLK huge timber is not relevant as the market has already forced them to comply with SVLK or other similar certifications, like verification legality of origin (VLO) that Netherland market demands. Hence, they argue that certification system does not have to be mandatory as long as the market has got awareness about the necessity of using legal and certified timber products. At the light of an effort to position SVLK as an instrument of REDD+, there must be willingness to pay more attention to domestic consumers. is is because domestic consumers are still likely to be ignorant about the necessity of using certified timber. Rather, domestic consumers are more aware of prices than certifications. at is why cheaper products without certificates are more attractive than certified but expensive ones. If the attitude of domestic consumers does not change in a long term, industry which uses certified timber will become a fallen victim in a competition against its competitors whose products are made of non-certified products and sold in a somewhat cheaper price. In East Java, industry can buy timber cut from illegal logging with half price less expensive than that of timer cut legally. Subsidy that the Government provides through the APBN as an incentive for small-scale industry to obtain SVLK will not be enough since production cost of a single product unit is high. In promoting SVLK as a way to support the implementation of REDD+, beside providing subsidy through APBN to small-scale to medium industry, the Government should also give additional incentives to help the price of certified timber products compete with non-certified ones. erefore, it is important to continuously improve the SVLK application procedures to help smallto-medium-industry obtain it easily. us, it is necessary to enhance the effort to build domestic consumers’ awareness about the importance of using certified timber products in order to preserve the forest sustainability. Chances are, the Government may improve its subsidy. In the long run this will give significant

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results in discouraging the domestically-market oriented industry to obtain illegal timber. is will hopefully help slow down forest degradation significantly and generate REDD+ imbursement. e REDD+ imbursements will hopefully cover Government’s investments in constructing all the necessary conditions (Figure 7). e basic issue is whether the international incentive for emission decrease from forest degradation will actually come true and how long will the Government be able to afford to support the subsidy for the small and medium-scale industry to obtain SVLK. In that case, a deal should be made with the international party to determine the REL of the forest degradation. A simpler approach perhaps can be negotiated as a transition phase before REL could be achieved through second approach. e first REL determining will create a more tangible and measurable decrease of emission from degradation compared to the second approach.

Figure 7. SVLK mechanism to supports implementation of REDD+.

Discussion above indicates that imposing SVLK to small to medium-scale industry without building consumers’ awareness about the necessity of using legal timber products may derail the Government’s efforts, like providing subsidy to industry. ere have been many mandatory policies and regulations concerning with forestry development, but most of them remain ineffective in curbing deforestation and forest degradation. is will be better to develop a pilot project to introduce SVLK to support the implementation of REDD+ (as seen in Figure 7). It is also necessary to develop an MRV to evaluate if the systems can work and help slow down degradation and illegal logging in a measurable way. is process is parallel to the next subject about REDD+ payment by strengthening SVLK programs.

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Potential and Policy of REDD Payment in Supporting the SVLK e mitigation of climate change needs innovative policies. is can be carried out by tracing SVLK mechanism, strengthening and linking it with REDD+ funds. e policy formulation will encourage SFM. Development of innovative activities for mitigation of climate change, especially REDD+, could utilize the international support of finance, technology, and capacity building. is may help find strategic steps to fund REDD+ to support SVLK. e sources of international funding to support the efforts to control climate change through mitigation and adaptation could be seen in Figure 8. Opportunity to access the funds can be developed through multilateral, bilateral arrangements or through international banks like the World Bank (WB) or the Asian Development Bank (ADB). e funds could be a grant, soft loan or investment related to carbon credit. e fund available is huge sums.

Figure 8. The sources of climate change international funding. Source: Rizaldi Boer in Kolopaking L.M. Ed (2008)

Efforts to mobilize international funding to support REDD and SVLK should be made through bilateral mechanism instead of simply referring to Norway LoI. Apart from that, the fund sources can be directed to carbon trade through bilateral schemes that have started to be developed in several Annex 1 countries like Japan, Korea, New Zealand, and USA. is method is chosen because SVLK is essentially related to bilateral timber trade.

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To spend funds to support activities climate change mitigation, especially in REDD or REDD+ through a bilateral mechanism, must follow the existing rules. It will be better to make innovative strategies to comply with the existing rules. is not only concerns with developments of procedures but also developments of all stakeholders’ mindset about forestry industry. For example, the REDD+ implementation in relation to SVLK within bilateral mechanism should be made, starting with an agreement on one REDD+ method for national scale. Please refer to the discussion of methodology about REDD+ governance which reviews REL, the previous MRV. is process should be done stage by stage seriously. During the development process, there should be strategies to carry out pilot projects through which REDD+ funding can be obtained to support SVLK. Pilot projects can be established either by initiating new ones or improving the existing ones, using available ideas and initiatives and linking them to sub-national governments’ programs in achieving SFM. Such pilot projects will become media through which stakeholders learn to find suitable formats of REDD+ funding to support SVLK in the frame of low-emission development. For provincial government in particular, it is advised that they should become the agents of development in encouraging and facilitating district/municipal governments to develop demonstrative activities. is will help find a suitable mechanism in synergizing SVLK and REDD+. is effort can be made through the development of selected technology innovation, institutional capacity building, and establishment of low-emission development funding institutions. e international funding to support adaptation or mitigation for climate change preparation is divided in three stages. e first is the readiness phase. is is where the international funding is used to prepare the capacity in developing the institutions and growing the pilot projects to adapt the system of climate change mitigation —- REDD+ as one of its forms. In this phase there will an opportunity to prove whether SVLK can successfully decrease illegal logging, and whether REDD+ imbursement is effective to check destruction of natural resources. e pilot protects in sub national level will be significant a baseline in developing the similar methodology in national level. e second stage is concessional investment phase, a continuation stage of the international funding program to pay for the investment at the light of climate change mitigation. Here, various development strategies within sub national and national levels is made as the planning of building low emission projects through funding which uses the REDD+ funding to support SVLK. To search further international funding, there should be meetings which promote the achievements of lesson learnt of REDD+ and SVLK to donors. ese meetings should be held nationally and internationally. Moreover, it is necessary to encourage local governments which are ready with the strategies to implement SVLK and REDD+ to take part in side events during

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international meetings on climate changes where the parties who sign the convention of climate change are present. e third stage is carbon payment phase. ere must be effort to encourage the National Government and its sub-national counterparts establish monetary institutions in supporting low emission economical activities. At the national level, the trust fund institution policy development plans to attract international funds for climate adaptation and change need to be continuously pushed. At the same time, in smaller areas (provinces and districts), it is worth enhancing establishments of institutions like regional government-owned companies and public services development to manage areas at the light of climate change funds. Here, it is advised to support establishment of hybrid monetary fund institution to support low emission-oriented developments. e government should provide facilities to all people who have successfully implemented SVLK and REDD+. e facilities should be packaged in the carbon trade mechanism to follow the international carbon trade which is held annually in various countries in Asia, USA and Europe. n

Photo: Een Nuraeni

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Photo: Sigit Pramono - CITK

Photo: Een Nuraeni

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Closing Notes

SVLK and REDD+ Aim at the Same Objectives

Discussions in this book spark a hope for chances to improve environment. is is especially forest environment. Improvement of SFM will in return contribute quality environment at large. is emphasizes hat forest plays role in slowing down emission by withholding natural carbon stocks. ere are chances to reach the ideal objectives through a couple of similar instruments, namely SVLK and REDD+. In other words, SVLK can play a role as REDD+ infrastructure. SVLK and REDD+ have the same goal, to reduce deforestation carbon emission and to stop degradation for SFM. With SVLK playing a role as infrastructure of REDD+ , the system that develops not only aims at the production dimension of forestry such tenure aspects, law, policy, institutions, and SFM management— improvement of area legal standing in line with regional developments. e system needs improving, by paying attention to the necessity to enhance domestic consumers’ awareness about certified timber products. SVLK can serve as an instrument of REDD+ by encouraging domestic consumers’ awareness. is will help boost market of certified timber. To make certified timber price more attractive than that of uncertified one, the Government needs to provide subsidy through APBN to industry that sincerely complies with SVLK. e Government’s subsidy is also hoped to lure international funds for implementation of REDD+. ere must be mechanism to make easy for industry to obtain SVLK. e cost to spend to support programs to raise community’s awareness to only use legal timber as well as the incentives to all forestry industry are considered as investment in which international funds can be attracted to support implementation of REDD+ during readiness phase. By promoting issues on legal timber, SVLK can also be enhanced to be a tool to develop international trade relation. It is even also possible that the international funds can be optimized to resolve five problems concerning a god forestry governance: tenure, law, policy, institution, and SFM. us, SFM can be reached, and at the same time REDD+ can be applied optimally. Once all of the goals are accomplished, SVLK can serve as an indispensable instrument in the implementation REDD+ and will help REDD+ be effectively implemented. ere have been so many policy instruments and regulations that the Government issued, but almost all of them turn futile in curbing deforestation and forest degradation. It is important to link some findings in this study to daily practice of timber industry. is means that there must be a series of trial-and-error to find evidences on how effective SVLK is in enhancing the implementation of REDD+. is can be done by establishing MRV to evaluate achievements that the system has made in coping with forest degradation and illegal logging a measurable manner. A suitable pilot project can be developed within sub-national areas (districts, provinces, or other development management units), no matter how complicated the industrial problem that the project may face, like that that happen in Riau and Kalteng. ere are many routes through which efforts to improve quality environment and good governance of wood areas and their yields. SVLK and REDD+ are among those routes. n

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Bibliography

BAPPENAS. 2010. Rancangan Strategi Nasional REDD+. Badan Perencanaan Pembangunan Nasional, Jakarta. Boer, R., Nugroho, B and Ardiansyah. 2010. Analisis potensi perdagangan karbon kehutanan sebagai inovasi investasi dalam rangka mengatasi krisis keuangan global. Dalam Kolopaking, L.M (editor). Manajemen Krisis: Protokol Penyelamatan dan Pemulihan di Sektor Pangan, Pertanian dan Perdesaan. IPB Press, Bogor. Gibson, C.G, McKean, M.A, Ostrom, E. 2000. People and Forests: Communities. Institutions, and Governance. MIT Press. Cambridge. Miller, C. 2001. Hybrid Management: Boundary Organization, Science Policy, and Environmental Governance in the Climate Regime. Science, Technology and Human Values, Vol.26/4, pp. 478-500.

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Attachment 1. Timber-based Industries Which Have Obtained SVLK

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There are pathways that lead to Reducing Emission from Deforestation and Forest Degradation (REDD+). One of which is Timber Legal Verification System (SVLK), or it can be put in short “timber certification”. And this book will demonstrate how far SVLK can play its role as a pathway toward REDD+.

Generally, this book depicts outputs of studies which were conducted from March to July 2011 by the Centre for Agricultural and Rural Development (PSP3) of Bogor Institute of Agriculture (IPB) with the support of Multistakeholder Forestry Programme (MFP) II, at the light of strategic frameworks in preparing SVLK as infrastructure of REDD+.

SVLK gives a hope to slow down deforestation and forest degradation. And in return, forest with good governance will provide a means to withhold natural carbon stocks and to slow down greenhouse gases which trigger climate change and natural disasters.