The document summarizes experiences from a REDD project in Papua, Indonesia. It describes New Forests, the company developing the project, and provides context on deforestation drivers in the region. It then summarizes the Papua project, which covers two sites totaling over 225,000 hectares that are at risk of deforestation. Key project characteristics discussed include governance structure, baseline methodology, consultation process, links to national strategies, and financing approach. Lessons learned and conclusions from the project are also presented.

1. Amazonas Workshop:
Readiness for REDD
Experiences from Papua, Indonesia
John Eckford
Senior Analyst
New Forests Advisory Inc
+1-415-321-3301
mmeizlish@newforests.com.au
Wednesday, March 18, 2009
South-South Collaboration Workshop
Amazonas, Brazil 1

2. Outline
1. Introduction to New Forests
2. Context for Papua Project
3. Papua project summary
4. Project characteristics
a) Governance
b) Baseline
c) Consultation / social
d) Link to national strategies
e) Distribution of benefits
f) Financing
5. Lessons learned & conclusions
2

3. 1. New Forests
• Private for-profit forest investment management and advisory
services firm
• Headquartered in Sydney, Australia, with offices in Washington,
D.C., San Francisco and Kota Kinabalu, Malaysia
• Investments primarily in Australia, New Zealand and the Asia
Pacific region
• REDD: began studying in 2007 and developing the Papua
project in 2008; hope to achieve certification (Voluntary Carbon
Standard) in 2009
• Developing other smaller REDD projects as part of larger
investments
3

4. 2. Papua Project Context
4

5. 2. Papua Project Context: Deforestation Drivers
• 90% of world’s palm oil exports come from Malaysia & Indonesia
• 300,000 ha converted per year globally
• Luxury products (cosmetics, shampoos, food) & biofuels
5

6. 2. Papua Project Context: REDD Markets
Mechanism
Driver Scope
Project-Level Country/State-Level
(“market”) (“non-market”)
International CDM – Only Reforestation Forest Stock Change
(UNFCCC) REDD post-2012 ? REDD post-2012 – ?
Regulatory
Reforestation
Domestic Reforestation /
Forest Management
(e.g. RGGI, WCI) Deforestation
REDD – ?
Reforestation
Businesses /
Voluntary Forest Management Not relevant
Individuals
REDD
• Voluntary market projects can move the REDD market forward
while complex regulatory mechanisms are negotiated
• Develop technical methodologies and new business models
• Ultimately, REDD will survive or fail in regulatory markets 6

7. 3. Papua Project Summary
• Began with Memorandum of Understanding between
Governor Suebu & New Forests, May 2008
• Government nominated 3 concession areas – 2 were
prioritized after desktop review
• June 2008, site visits to begin feasibility and project design
Mamberamo
Mimika
7

8. 3. Papua Project Summary
• Mamberamo
o REDD site is114,750 hectares
o 50% under risk of conversion
o Mamberamo Basin (8M ha) is largest
& least disturbed tropical humid forest
in Asia Pacific
o Low population density (12,000 people
in Basin)
o 95% forested – low deforestation rate
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9. 3. Papua Project Summary
• Mimika
o REDD site is111,344 hectares
o 33% under risk of conversion
o Borders the Freeport mine and
Lorentz National Park
o Low population density (<1000
people)
o Limited road access but encroaching
development in the regency
9

10. 3. Papua Project Summary
• Project framework
o Baseline assumes conversion to palm
o Approximately 28MtCO2e conserved under project scenario
o Voluntary carbon sales – Voluntary Carbon Standard (VCS) &
Climate, Community & Biodiversity Alliance Standards (CCBA)
o Revenues to local foundation, government & investors
o Local partner with political & implementation experience
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11. Still awake?
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12. 4a. Governance
• MOU for joint development of
REDD project: “commercially
sustainable model for forest
conservation and community
development”
• Applying for provincial license
that will grant carbon rights to
New Forests Gov. Suebu signing MOU, May 2008
• Term sheet defines financial arrangements
• Regency and district governments provide local political and
logistical support
• Papua Carbon Foundation receives revenue from credit sales
to fund community development & forest protection activities
o Governed by Advisory Committee with local stakeholders and
relevant experts 12

13. 4b. Baseline
Characteristic Baseline Assumption
Threat of Zoning for conversion (VCS: “Avoiding Planned
Deforestation Deforestation”) – palm oil developers already
surveying areas & province has authority to
grant conversion licenses
Rate of Mamberamo: 60,000ha converted 2012-2022
Deforestation
Mimika: 37,000ha converted 2010-2020
Carbon Stock 792tCO2/ha (literature & field data)
Baseline Carbon Sequestration in growing palm plantation
subtracted from project carbon stock
Leakage Monitoring total areas zoned for conversion,
rate and likelihood of conversion
13

14. 4b. Baseline
• No existing methodologies for
Avoiding Planned Deforestation -
areas with low rates of historical
deforestation require technical rigor
• Other areas of province have higher
deforestation rates but causal “link”
needs to be established
• Limited data and existing quantitative
analysis of deforestation drivers
Where we are now:
• Understanding data requirements needed to establish biophysical and
economic feasibility of conversion
• Understanding modeling requirements to demonstrate likely rates of
deforestation
• Evaluating in-house capabilities and resource needs
14

15. 4c. Consultation Process
• Dozens of small villages in both project areas – primarily small
scale agriculture, sago palm harvesting, hunting & fishing
• Loosely organized through district & regency governments
• In June 2008 met with local governments and held village
meetings in conjunction with local NGOs and met with dewan
adat (tribal council)
Village meeting in Bagusa, Mamberamo, Meeting with regency & district government officials
June 2008 and village elders in Mimika, June 2008
15

16. 4c. Consultation Process
• Initial feedback at all levels of
was positive
• Written letter of support from
head of dewan adat in
Mamberamo
• However, questions remain
regarding community
development aspirations, Receiving letter from head of dewan adat in
Casanoyagia, Mamberamo, June 2008
project activities and socio-
economic considerations
relevant to project design and
implementation
• Free, Prior & Informed Consent crucial to ensure
successful project and social & environmental outcomes
16

17. 4c. Consultation Process
• Free, Prior & Informed Consent
o Limited guidance & standards
o Work with best experts with field experience in community
engagement for forestry in Papua and Indonesia
o Intention to provide full information about the project and
potential outcomes & risks
o Decisions and debate at the community level to accept or
reject the project
• Help shape the objectives and management plan for the
Papua Carbon Foundation
• Further establish channels of communication between
impacted communities and government
17

18. 4d. Link to National Strategies
• Indonesia is extremely active in REDD
o More than 20 REDD projects in development in the country
o Participant in the UN-REDD Programme and the World Bank
Forest Carbon Partnership Facility
o Bilateral agreements with Germany (Forest and Climate
Change Program) and Australia (Forest Carbon Partnership)
o Governors of Aceh & Papua (and several Brazilian states)
have signed an MOU with US governors for inclusion of
REDD credits in emerging carbon schemes
• Unclear how these activities will interact on a technical level
(i.e. carbon accounting)
• However, biggest questions now are legal and financial…
18

19. 4d. Link to National Strategies
• Draft legislation issued in mid-2008 required national
government approval for all projects and 30% of credits
transferred to a newly established government commission
o Unclear whether this applied to private projects outside
national-level REDD demonstration activities
o Unclear revenue distribution and approvals through layers of
government
• The national government is now working to revise and
finalize legislation – June 2009
• Papua is exploring provincial licensing for REDD under
Special Autonomy Law and provincial forestry regulations
o As yet unclear how this interacts with national activities
o Remains a project risk
19

20. 4e. Distribution of Benefits
• Beneficiaries at village, district, province and national level
• Private investment necessitates returns
• Primary distribution channel is the Papua Carbon
Foundation
o annual disbursements to fund community development and
forest protection activities – determined by FPIC process
o Advisory Board comprising representatives of community
stakeholders and relevant experts
• Remaining revenue: government, investors & project managers
New Forests & Emerald Planet staff with
provincial Forestry Department staff and 20
government officials in Mamberamo, June 2008

21. 4e. Distribution of Benefits
Investor Market
$
Investment Carbon
capital revenues Carbon
credits
Carbon
Carbon rights
Papua revenues Government
Project Entity (National, Provincial
Foundation Carbon Regency)
revenues
Local
distribution
21

22. 4f. Project Financing
• New Forests represents private
investors interested in financial
and environmental returns
• Skilled in monetizing
environmental assets
associated with forestry
investment
• Well aligned with Papua’s
objectives and project
parameters
Managing Directors of New Forests and Emerald
• Returns delivered through Planet meeting with Governor Suebu, May 2008
credit sales over time c
• Upfront costs shared among project partners
• Long-term commitment to sustainable resource use in
Indonesia 22

23. 5. Lessons Learned
• RISKS
o Projects in areas with low rates of deforestation have high
hurdle to establish evidence-based baselines
o Area, such as Papua, where this is limited data availability
make this even harder
o Legal uncertainty for REDD projects outside national-level
demonstration activities – right to transact credits?
o Also face technical uncertainty – project vs. national level
baselines?
o FPIC is time consuming and requires dedicated resources –
lack of standardized guidance
Difficult to get early project financing where there
is no established legal & methodological
frameworks
23

24. 8. Conclusions
• Private investment can play pivotal role in more challenging
REDD areas that attract less public & multilateral funding
• Will take on the risks as long as there is some certainty on
fundamental issues:
o Legal right to transact in
carbon
o Legal arrangements for
revenue sharing among
government agencies/levels
o Legal recognition of project
activities within national-level
activities
• Donor / grant / multilateral finance Arial view of Mimika site, June 2008
remains important for information
gathering, data analysis and
FPIC/community engagement 24

25. www.newforests.com.au
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