| dc.description.abstract |
In Indonesia, development of sustainable supplies of timber has failed to keep pace
with industrial demand. After decades of overharvesting and clearing to bridge supply
gaps, Indonesia’s forests and forest industries are in a crisis, with declining stocks
of timber to support forest-dependent livelihoods and biodiversity, and large recurring
emissions of atmospheric CO2 linked to deforestation. The Indonesian Government’s
strategy of providing incentives to developers of large-scale industrial timber plantations
has been of limited success, with only 30% of state targets reached after nearly twenty
years of work. Difficulties can be traced to conflicts over land rights at the community
level, and the limited financial viability of plantation investments in markets distorted
by illegal and cheaply-priced wood supplies. In an effort to address these obstacles,
the Indonesian Government introduced a new community-based plantation program in 2007,
Hutan Tanaman Rakyat (HTR), which affords local communities rights and incentives
for developing timber plantations on community lands. Country-wide targets for HTR
are substantial, with 5.4 million hectares of plantations planned, however substantial
challenges lie ahead in identifying suitable areas of land, creating effective institutional
arrangements, and ensuring economic viability. Here, we examine the financial viability
of developing pulpwood plantations under HTR at 22 proposed sites in West Kalimantan,
and consider challenges to implementing HTR on the ground by surveying a local plantation
company operating under a partnership model similar to the kind proposed for HTR.
Investments in all 22 sites yield negative net present values, indicating HTR is not
profitable under current market conditions. Results suggest HTR may be best facilitated
by accompanying macroeconomic and forest-sector policies which reduce market distortions,
improve market transparency and liquidity, and raise domestic log prices.
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