Reducing Greenhouse Gas Emissions from Deforestation: Valuation Modelling of Natural Assets in Gunung Palung National Park (Indonesia)

Reducing Greenhouse Gas Emissions from Deforestation: Valuation Modelling of Natural Assets in Gunung Palung National Park (Indonesia)

The objective of the project is to assess the economic case for reducing greenhouse gas emissions from deforestation in Gunung Palung National Park (GPNP). We will compare the long-term economics of current "Business-As-Usual" deforestation practices (such as illegal logging, and illegal land clearing for agriculture) with the 'sustainable' value alternatives such as carbon and biodiversity credits, eco-tourism, forestry products and bioprospecting. This entails the development of a spreadsheet-based valuation tool for practitioners, that allows for decision making on the 'best use' of forestry assets while seeking to minimize greenhouse gas emissions.

Context

Indonesia is, after China and the US, the world's third largest emitter of greenhouse gases (GHG). In 2005, Indonesia's emissions accounted for 2.1 billion tons of CO2e (~4.5-5% of global), with deforestation and conversion of land contributing 78% of national emissions. The Indonesian part of Borneo (Kalimantan) has been a main area of deforestation and land use changes from "Business-As-Usual' (BAU) activities such as illegal logging, and illegal land clearing for small scale farming (e.g. rice, vegetables, rubber, palm oil) clearing of land for large scale commercial plantations such as palm oil.

About GPNP

Gunung Palung National Park (GPNP) is situated in West Kalimantan, in the administrative district of Kayong Utara. The 90,000ha national park contains a wider range of habitats than any other protected area in Kalimantan, making GPNP one of the most species-rich parks in Asia. GPNP hosts high densities of endemic and endangered species such as clouded leopards, sun bears as well as the largest population of wild orang-utans in Kalimantan.

Greenhouse Gas Emissions in GPNP:

Despite its status as a national park, various studies have found that deforestation rates in GPNP have historically been high. Going forward, high forest extraction and land conversion rates are expected. Drivers of related greenhouse gas emissions are economic incentives via illegal sale of tropical timber and use of land for small-scale farming. Local experts are concerned that 'within 20-years, all of the forest may be gone, if we can't provide economic alternatives'. A survey conducted recently indicated that illegal logging activity is still continuing, albeit at a lower level compared to historical rates.

Research Question:

The project seeks to assess whether 'economic alternatives' through conservation can be developed. Specifically, the project assesses the current long-term economic value of GPNP's natural assets under the 'extraction-oriented' land-use or "Business-As-Usual" (BAU) activities; the alternative long-term economic value via a portfolio of conservation-based 'sustainable' land-use practices; the barriers that would need to be overcome to shift activities in GPNP towards sustainable practices; how local communities could be integrated into a new approach; and estimating the difference in greenhouse gas emissions.

Project Approach:

We used a valuation framework to compare the long term economics of alternative land uses:

Progress Thus Far

Key results include the development of meta model structure; development of model structure for Business-As-Usual (BAU) activities (which include illegal commercial logging, illegal land clearing for farming and agriculture); completion of a household survey around GPNP to obtained current data on logging and farming practices, related economics, and socio-economic data that is used in the financial model; conducted research on the timber and development of timber demand and supply projections for the Indonesian market.

The portfolio modules have also been completed and includes research on the carbon credit market; and investigation into the carbon credit potential for GPNP, assessing the potential for biodiversity credits, ecotourism, bioprospecting, and sustainable harvesting of non-timber forest products (NTFP); development of the model scenarios, and sensitivity analysis.

The preliminary final results of the net present values (NPV) of the respective modules are summarized in the chart below:

In summary, the BAU activities appear to offer the highest values compared to the Portfolio activities. The NPV above include projected cash flows attributable to all relevant stakeholders, but excludes non-monetary value from other forest use or non-use.

The highest value is from illegal logging primarily due to the immediacy of cash flows and a ready market. The base case projections suggest that demand for timber in Indonesia could double within the next 30 years, thereby increasing the pressure of deforestation across Indonesian and possibly within GPNP. In addition, most of the area surrounding GPNP appears to be slated for palm oil developments.

The district is one of the poorest in West Kalimantan with farmers having relatively small plots. Coupled with continued population growth and lack of land, the demand for farmland and woodfuel within GPNP is expected to be maintained in the long term.

While a carbon credit program could potentially be developed based on approved methodology, the lack of a mandatory market, recent collapse in prices, and other significant issues resulted in relatively low values being projected. The existing ecotourism has some potential for increased value if facilities could be improved though some limitations exist.

No values were ascribed to other activities such as biopropecting, biodiversity credits and sustainable harvesting of NTFP as they were deemed highly uncertain having shown no strong evidence of recent successful implementation.

Conclusion

The creation of stable and alternative livelihoods and incomes was identified as one of the key options to reduce the participation of villagers in illegal forest activities. Continued monitoring by park officials and conservation efforts by stakeholders is recommended and encouraged as it has shown to be effective in reducing illegal forest activities.

Next Steps:

The remaining steps include the final wrap-up of results, discussion of results with local stakeholders, and dissemination of results to other researchers, and/or the public domain.

For more information on this project, please contact Edmund Hoh at edmundhwm@ntu.edu.sg