This paper summarises a study undertaken by the Indonesian Forest Climate Alliance (IFCA) to support Indonesian stakeholders to participate in global negotiations. The authors note that the objective of reducing emissions from deforestation and forest degradation (REDD) payment distribution mechanisms is to support policies and measures that reduce deforestation and degradation through transfer of revenues from international REDD funds or carbon markets to national levels. This may provide benefits of: shared responsibility for reducing a major driver of global climate change; financial payments and co-investment that exceed the economic opportunities foregone from decisions to maintain carbon stocks; and co-benefits through the other environmental service functions that well-maintained forests can provide. Two types of financial transfers have so far been proposed to provide incentives for REDD: the creation of a separate REDD fund with a mandate to target emission reductions in forested countries, and the creation of tradable rights to emit. They further note that overcapacity in the pulp and paper sector and the lack of clarity on the legal status of forests across Indonesia is accompanied by unresolved claims between the state and local communities. The authors find out that existing funding and incentive schemes in Indonesia are subject to risks due to lack of transparency and accountability and high corruption.A number of recommendations are noted, which include:
support clear property rights and rules on benefits, responsibilities and sanctions at the local level
existing institutions will need to be reconstructed and strengthened to make a change and reduce emissions
provide efficiency as well as fairness. Focus on the areas, drivers and sectors that are currently most directly linked to emissions from deforestation and forest/peatland degradation, and provide appropriate incentives to areas, drivers and sectors that actively contribute to resource conservation, and provide new options to those at a cross-roads of alternative development pathways
develop and operationalise a vision of a long term transition to sustainability that meets the Millennium Development Goals and respects the rights of forest and agroforest communities
improve the transparency and accountability of governance systems that link the local to the national scale
enhance the REDDiness of local and national stakeholders by creating active learning on what emission reduction with effective feedback systems is about. Enhance awareness, develop local monitoring skills, and support local creativity in finding effective solutions through appropriate incentive systems.