Indonesia’s Tropical Landscape Finance Facility: A Catalyst for Environmental Sustainability and Long-Term Food Security?

9 November 2016 Reginald Ramos, Research Analyst, Global Food and Water Crises Programme

Background

On 26 October 2016, Indonesia launched The Tropical Landscapes Finance Facility (TLFF). The TLFF aims to bring the government, private-sector and local communities together to channel long-term finance towards green investment, with a focus on renewable energy and sustainable land management. This is part of an effort to achieve its commitments in accordance with the Paris Climate Agreement and strengthen rural community livelihoods, largely to finance renewable energy initiatives and decrease the rates of de-forestation and land degradation.

The TLFF will financially empower sustainable initiatives, particularly within local communities, however, the burning question remains whether, or not, Indonesia can successfully monitor the forestry sector and shift the business model towards green growth, investment and sustainable ecological management to safeguard its long-term food security.

indonesia-slash-and-burn

Comment

The TLFF seems promising as Indonesia remains the fifth-largest emitter of greenhouse gases in the world. In accordance with the Paris Climate Agreement, Indonesia has committed to reduce greenhouse gas emissions by 29 per cent by 2030. Most of these emissions come from land clearing, namely through traditional slash and burn practices, which causes an annual haze crisis within the south-east Asian region. Land clearing is largely driven by the plantation of mono-cultural cash crops, particularly oil palm. Indonesia is the world’s largest palm oil exporter; it produced 32.5 million tonnes and generated roughly US$18.6 billion dollars ($24.5 billion dollars) in export revenue in 2015.

The palm oil sector remains a key component of the national economy, but the Indonesian Government estimates that the cost of the emergency response to the fires, as well as the health implications, could cost the country up to 475 trillion rupiah ($47.5 billion). The long-term incentive for Indonesia’s economic outlook, as well as its commitment to the Paris Climate Agreement, suggests that green growth and sustainable land management may be a relatively untapped economic and environmental opportunity. Although the TLFF strives to foster green investment in Indonesia, it remains to be seen whether the country can successfully shift the business model towards green growth and safeguard its long-term food security.

The international community has strongly condemned Indonesia’s lacklustre ability to enforce deforestation laws and decrease rates of deforestation, despite the government’s efforts to impose ”zero burning” policies and moratoriums. Although the palm oil sector remains a multi-million dollar industry, deforestation will result in the loss of biodiversity, the loss of nutritious soil and the depletion of arable land. These environmental challenges will undermine Indonesia’s long-term food security as, over the next 25 years, Indonesia is projected to see a growth in demand for resources with an increase of 67 million people, further complicated by an additional 66 million migrating from rural to urban areas. Consequently, Indonesia will need to ensure that it provides economic opportunities and access to resources for its burgeoning youth and urbanising population.

The loss of biodiversity will threaten long-term food security, due to the destabilisation or loss of natural ecosystems and the services they provide. Ecosystem services include the regulation and stabilisation of climate, the movement of nutrients, disease and pest regulation, and water purification. With the loss of biodiversity and ecosystem services, Indonesian agriculture could be affected, which will affect the country’s long-term food security outlook. Due to its importance, Indonesia must look towards managing its environment by balancing food production, biodiversity conservation and the maintenance of ecosystem services which may be attainable through green investment facilitated through the TLFF.

Indonesia’s extensive land clearing for mono-cultural crops also affects the soil, which naturally has implications for agricultural output and the availability of arable land. The intensification of farming and the lack of recovery time for soil may result in soil erosion and the depletion of nutrients, by encouraging the practice of shifting cultivation, which allows soil to recover between crops, a more sustainable form of agriculture could be implemented in Indonesia.

Existing research on the effects of slash and burn on soil suggests that high intensity fires (in this study, identified as above 300 degrees Celsius) can potentially affect the mineralogical structure of the soils, due to the reduced recovery rate of phosphorous within the soil. This is significant as phosphorous is an integral element for the process of photosynthesis. In the long-term, the reduced recovery rate of phosphorous within the soil can potentially result in shortened annual cropping periods and a decline in soil fertility; however, other studies suggest that the effects are complicated by other factors such as geography.

The launch of the TLFF seems like a promising catalyst for the promotion of green investment towards renewable energy and sustainable land management, however, Indonesia’s failure to monitor the forestry sector and traditional slash and burn practices continue to undermine the country’s environmental initiatives. Indonesia’s ability to safeguard its long-term food security will be determined by its ability to increasingly monitor the forestry sector and shift the business model away from exploitative agricultural practices, such as traditional slash and burn, and move towards green growth, investment and sustainable ecological management.

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