Accessing the viability of HTR - Indonesia's community-based forest plantation program

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2009-04-24T18:19:10Z

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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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Schneck, Joshua (2009). Accessing the viability of HTR - Indonesia's community-based forest plantation program. Master's project, Duke University. Retrieved from https://hdl.handle.net/10161/1025.


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