For peat's sake - stopping the rot in the logging industry

Sydney Morning Herald

For peat's sake - stopping the rot in logging industry

December 1, 2007

With world leaders preparing to nut out the Kyoto Protocol's successor, the culture of corruption in Indonesian forestry presents one of the biggest challenges, writes Mark Forbes.



Lashed together four abreast, a raft of illegal logs seems to take forever to snake down a winding, peat-stained stream in Borneo. More than 100 metres wide and guided with a pole by a sullen logger, it drifts through a tropical peat forest, past ramshackle logging camps, the silence broken by a distant chainsaw buzz and occasional tree fall.

Here is the dark heart of the plunder of Indonesia's forests. Loggers have ravaged the trees, farmers have fire-cleared, and palm-oil companies now want to drain most of the remaining Sungai Putri ("daughter of the river") forest to plant their lucrative crop.

Police and officials pocket bribes, unconcerned at the fate of this environmental treasure trove. It is populated by endangered orang-utans, who swing above and make their massive nests in the treetops - but those who have to walk its paths sink in the sodden peat-mire below.

Palm oil will bring quick wealth, with promises of greater riches as 57,000 hectares are drained to enable villagers to burn and plant. They know little of global warming here and cannot comprehend that the forest's peat - rich decayed trees and organic matter between four and 13 metres deep - holds masses of carbon, potentially worth millions of dollars if protected under proposed changes to the Kyoto Protocol.

Scientists calculate that clearing Sungai Putri could release 55 million tonnes of carbon dioxide into the atmosphere annually. Such forest-related emissions from Indonesia have already made it the world's third-largest greenhouse gas emitter.

Over the next two weeks in Bali the world's leaders will begin to forge a new strategy to reduce the growing threat of global warming. They will consider a radical expansion of the Kyoto Protocol to pay countries and companies that exploit forests to protect them instead.

Researchers, environmentalists and developing nations argue that without stopping forest destruction - which accounts for a fifth of all greenhouse emissions - the battle to halt climate change is doomed.

With $US200 million ($226.5 million) from the World Bank to kick-start a global forest carbon protection fund, Indonesia is set to be the world's test case. If it can reverse practices that have destroyed nearly half its forests, clearing nearly 2 million hectares a year, it hopes to be rewarded with billions of dollars.

The difficulties of changing a culture of corruption and exploitation are immense, but must be faced, says Frances Seymour, the director of the world-leading Centre for International Forestry Research.

Indonesia's massive forests and peatlands make it the place to begin to address deforestation. "If you agree with Al Gore that we are in a climate emergency and you have to do everything you can about it, then forests have to be part of the answer," Seymour says.

In the dank Sungai Putri forest, sinewy men such as Tono labour to chainsaw trees, carrying with a workmate the 150-kilogram logs to narrow paths where rickety boards run along the peat. There they are balanced on ageing, steel-reinforced bicycles that are ridden to the stream on a journey that would challenge a circus performer.

He does not enjoy this life, living on rough-hewn platforms above the damp soil for 10 days at a stretch. "It is hard work; these logs are really heavy," Tono says. "I know I am breaking the law, but I have a family to feed."

The $5 he earns a day is "far from enough", he says. "My sons, my grandsons will have to work just like me; I cannot afford education for them."

Tono would welcome a palm-oil plantation. "They will get rid of the water; I can work there or do farming. In the other villages they have a better life with palm oil: they get money every month, every house has a motorbike."

Tono and his four-man team see little of the forest's illicit wealth. The logs they float down the stream are worth 10 times more by the time they reach the timber bosses in the regional capital of Ketapang - 20 times if smuggled on a short boat trip to Malaysia.

In Ketapang those bosses have grand homes and fraternise with local officials. One was invited by police to attend a key government meeting on preventing illegal logging earlier this year.
The family of one of the most senior provincial officials has shares in illegal sawmills and palm-oil companies he has issued with licences. Usually, he demands a $1000 "fee" to help issue a licence.

Although a decree from the Indonesian President, Susilo Bambang Yudhoyono, bans clearing land with more than three metres of peat, four companies have been issued palm-oil location licences in Sungai Putri.

Indonesia is already the world's largest producer of palm oil and with demand and prices booming - partly because of its promotion as an environmentally-friendly "biofuel" - at least another 10 million hectares are earmarked.

In the province of West Kalimantan, of the 3 million hectares released for palm-oil plantations, only 10 per cent has been planted. Mostly these logs have been cleared for a quick profit, leaving a

devastated landscape behind. The drained peat is highly susceptible to fires, which release masses of carbon and blanket the region in haze every year.

Such environmental vandalism is neither new nor isolated. In Central Kalimantan sits a denuded, fire-prone 800,000 hectares cleared for a massive rice project by the former Indonesian president Soeharto. Not a grain was grown, but cronies pocketed the logging revenue.

Illegal logging is sanctioned within the Forestry Ministry. Dr Bambang Setiono, a forest finance policy analyst with the Centre for International Forestry Research, estimates Indonesian loggers reap about $US6 billion a year, half from illegal timber.

Official ministry data had defined illegal logs as sourced from the "free market". Under greater scrutiny, it now uses the term "other legal sources" for suspect logs. With legal and illegal logs deliberately mixed, and the forestry minister viewing any transgressions by companies with logging licences as "administrative violations", prosecutions are difficult unless authorities follow the money trail.

About $US3 billion from illegal logging is laundered each year through banks, with money regularly flowing back to Forestry Ministry and district officials.

In Sumatra province this year a police crackdown seized more than 1 million illegally cut logs linked to large pulp companies. Prosecutions have been hampered by Forestry Ministry officials, including the minister, Malem Sambat Kaban.

The Herald has obtained letters from Kaban urging police to abandon their investigations. One letter was instrumental in the release in October of one of Indonesia's most notorious timber barons, Adelin Lis, who immediately fled overseas for a second time.

In an endorsement requested by Lis's lawyer, Hotman Paris, Kaban stated Lis had committed only administrative violations.

A second letter to North Sumatra's police chief, governor and chief prosecutor criticises police for pursuing large logging companies. They should be supported as they "employ many workers and their existence provides significant social and economic effects", Kaban wrote.
Companies that held logging concessions could not be criminals, as any breaches were administrative, he states. "In order to avoid the excess of operations towards illegal logging that blocked operations of legitimate permit holders" police should leave any sanctions to the ministry, Kaban urges.

Although Kaban's ministry would be responsible for overseeing and enforcing forest protection under Indonesia's proposal to the Bali conference, he continues to emphasise the needs of the pulp and paper industry. "The investment has reached $US25 billion; this needs a continued supply of raw materials."

Indonesia's Environment Minister, Rachmat Witoelar, will preside over the Bali conference and says it is essential the meeting endorses the REDD (Reducing Environmental Deforestation and Degradation) scheme, as part of the new, post-Kyoto regime and immediately approve Indonesian pilot projects. Asked how he could guarantee forest protection when the forestry minister seems to be part of the problem, Witoelar replies: "Touche."

"It is highly embarrassing," he says, adding that many of Kaban's claims are true but it creates a damaging "psychological position".

Things must change, Witoelar says. "I have to integrate the positions as Indonesia has a lack of credibility."

Protecting forests such as Sungai Putri from palm-oil plantations is an uphill battle, he admits. "There is a long way to go but we will use the incentives and disincentives that come from global funding.

"First of all we must try and insist the district leaders are not part of the crime and I am for catching them and putting them in jail," Witoelar says.

"Then the local population are complaining they have no subsistence. Let's give them subsistence."

If the forest protection program is to work, Seymour says, funds must flow to the locals, but the scheme will face corruption and other moral challenges. "This isn't going to be easy," she says. "Do we want to pay illegal loggers to stop their illegal activities? That doesn't feel right.

"There will be trade-offs between equity and efficiency. It may be the most potent investments will be giving funds or investing in activities that appear to benefit the bad guys, not the good guys."

Joe Leitmann, the World Bank's environment co-ordinator for Indonesia, does not underestimate the difficulties, but says solutions must be found. The bank's $US200 million fund is intended to iron out some of the issues in practice.

"One in five tons of carbon emitted comes from the forests," Leitmann says. "We want to kick-start this very, very important market."

It was a similar World Bank scheme that began the global trade in carbon credits for cuts to industrial emissions, now worth more than $US30 billion a year.

Under the new program, countries such as Indonesia would earn carbon credits for halting deforestation, which could be sold to companies and other countries to help meet their targets for cuts in emissions.

The value of those carbon credits would depend on Indonesia's credibility in enforcing carbon protection and complex measurement schemes estimating the amount of carbon preserved. And the only body equipped for the job is the heavily compromised Forestry Ministry.

Seymour says her organisation "and pretty much all the organisations that care about forests face a moral hazard, because on the one hand it's great - we have new political attention, new money to do what we do - and on the other hand we know better than anyone else how hard this is going to be".

She prefers to focus on the positive, taking heart from two forward-thinking provincial governors embracing the radical shift. Aceh's Irwandi Yusuf and Papua's Barnabas Suebu have announced a moratorium on forest-clearing licences before the Bali conference.

Thousands of forest rangers would be employed to implement environmentally friendly
policies, they pledged in a joint statement.

Witoelar also applauds the moves. "The value of the 20-odd million hectares in Papua is so much that Bas Suebu can expect to have so many billion dollars for keeping himself honest," he says.

The cost of the scheme is projected to rocket and Seymour says this links the two big issues for the Bali conference: incorporating forests in the successor to the Kyoto Protocol and the scale of cuts countries such as Australia are prepared to adopt - bigger cuts will stimulate demand.

The looming debate will be too late to stop the logging or help feed his children, Tono predicts. "For years we hear about programs for the forests, money through the government," he says. "But it never reaches us."