Project Potico

World Resources Institute Project POTICO

World Resources Institute World Resources Institute

World Resources Institute

World Resources Institute World Resources Institute

WRI’s approach

Non-partisan

Analytical excellence

Ideas into action

Practical solutions

Partnerships

WRI has a diverse network of business partners

WRI’s corporate strategic relationships

Forests are important natural resources World Resources Institute

But they’ve been under pressure Source: UNEP-WCMC; UMD-SDSU; WRI; Hansen et al. 2008 Croplands/ built-up areas Recent tropical deforestation Intact forests Managed/ fragmented forests Sparse managed/ fragmented forests 8,000 years ago Today World Resources Institute

Forests of Indonesia span ~225 million acres . . . World Resources Institute

. . . comprise 10% of world’s remaining tropical rainforests . . .

. . . are a biodiversity “hot spot” . . . World Resources Institute

. . . and are home to indigenous peoples World Resources Institute

However, Indonesia is losing its forests . . . World Resources Institute

. . . currently to plantations for palm oil. But what is palm oil? World Resources Institute

Oil palm plantations have grown dramatically in Indonesia 2007 Sources: “Indonesian Palm Oil Industry”, paper given by Derom Bangun, Executive Chairman, Indonesian Palm Oil Producers Association (GAPKI), at the National Institute of Oilseed Products Annual Convention, March 21-25, 2006, Phoenix, Arizona. http://www.oilseed.org/pdf/am_2006_materials/Bangun_Text.pdf . “ Palm oil firms burning Indonesia forests-Greenpeace”, Reuters, July 12, 2007. http://www.alertnet.org/thenews/newsdesk/JAK23429.htm

You can see oil palm plantations expanding into forests . . .

. . . even from space 1991 2001 2004

This deforestation has significant consequences

Loss of biodiversity

Greenhouse gas emissions

Disrupted communities

Illegal logging

Palm oil expansion fuels illegal logging 5.7 15.0 Allowable cut Actual cut Indonesia timber extraction (2004) Million cubic meters 9.3 Source: Indonesian Ministry of Forestry World Resources Institute

Indonesia is a leading source of illegal logs and fiber Source: Seneca Creek Associates, LLC and Wood Resources International, LLC. “Illegal logging and Global Wood Markets: The Competitive Impacts on the U.S. Wood Products Industry”. Prepared for American Forest & Paper Association. November 2004. http://www.afandpa.org/Content/NavigationMenu/About_AFandPA/Public_Calendar_and_Industry_Events/Events_Calendar/AFPAIllegalLoggingReportFINAL2.pdf World Resources Institute

Indonesia, however, has ~35-50 million acres of degraded land World Resources Institute

Why aren’t palm oil developers going there? Years $/ha Palm oil Timber / fiber Net cash flow per year for “business as usual” oil palm plantation Source: Adapted from oil palm production studies by Oil Palm Research Institute via the World Agroforestry Centre; Butler, R. “Is Peat Swamp Worth More than Palm Oil Plantations?” July 16, 2007 0 World Resources Institute

Project POTICO is addressing this challenge certified P alm O il certified TI mber C arbon O ffsets POTICO + + = World Resources Institute

How POTICO works ILLUSTRATIVE X World Resources Institute

. . . to tackle the underlying economics Years $/ha Palm oil Illustrative net cash flow per year for a POTICO deal Source: Adapted from oil palm production studies by Oil Palm Research Institute via the World Agroforestry Centre; Butler, R. “Is Peat Swamp Worth More than Palm Oil Plantations?” July 16, 2007 0 World Resources Institute

Years $/ha Certified palm oil Illustrative net cash flow per year for a POTICO deal Source: Adapted from oil palm production studies by Oil Palm Research Institute via the World Agroforestry Centre; Butler, R. “Is Peat Swamp Worth More than Palm Oil Plantations?” July 16, 2007 0 Palm oil premium . . . to tackle the underlying economics World Resources Institute

Years $/ha Certified palm oil Certified timber Illustrative net cash flow per year for a POTICO deal Source: Adapted from oil palm production studies by Oil Palm Research Institute via the World Agroforestry Centre; Butler, R. “Is Peat Swamp Worth More than Palm Oil Plantations?” July 16, 2007 0 Palm oil premium . . . to tackle the underlying economics World Resources Institute

Years $/ha Certified palm oil Certified timber Illustrative net cash flow per year for a POTICO deal Source: Adapted from oil palm production studies by Oil Palm Research Institute via the World Agroforestry Centre; Butler, R. “Is Peat Swamp Worth More than Palm Oil Plantations?” July 16, 2007 0 Palm oil premium Carbon offsets . . . to tackle the underlying economics World Resources Institute

Expected results