This document summarizes experiences from a REDD project in Papua, Indonesia led by New Forests Advisory Inc. Key points include: 1) The Papua project aims to conserve 28MtCO2e through avoided deforestation by preventing conversion of forests to palm oil plantations. 2) Extensive consultation was conducted with local communities but further engagement is needed regarding project activities and benefits distribution. 3) Challenges include establishing robust baselines given limited deforestation data, and legal and financial uncertainty without established REDD frameworks. 4) Private investment can help develop challenging REDD projects, but requires certainty on carbon rights, revenue sharing, and alignment with national activities.

1. Amazonas Workshop:
Readiness for REDD
Experiences from Papua, Indonesia
Marisa Meizlish
Director
New Forests Advisory Inc
+1-415-321-3301
mmeizlish@newforests.com.au
Thursday, February 12, 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
Mitigation – Forestry
Mechanism Market
Project-Based / Credits National Accounting
(“market”) (“non-market”)
Reforestation /
CDM – Only Reforestation
UNFCCC Deforestation
Regulatory “CDM” – REDD post-2012 ?
REDD post-2012 – ?
2008: $118B Domestic Regulatory Reforestation
3.9 BtCO2 Reforestation /
Markets (i.e. U.S., Forest Management
Deforestation
Australia, Canada) REDD – ?
Voluntary
Business Commitments / Reforestation
Marketing / Forest Management not relevant
2008: $499M
Personal Choice REDD
100 MtCO2
• 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
Mamberamb
o
Mimik
a
7

8. 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
8

9. 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
9

10. 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
10

11. 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)
• “Oxygen” project
Village meeting in Bagusa, Mamberamo, June Meeting with regency & district government officials and
2008
village elders in Mimika, June 2008
11

12. 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, project activities and
socio-economic considerations Receiving letter from head of dewan adat in
Casanoyagia, Mamberamo, June 2008
relevant to project design and
implementation
• Free, Prior & Informed Consent crucial to ensure
successful project and social & environmental outcomes
12

13. 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
13

14. 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
o Draft national legislation issued in mid-2008 and national
government is now working to revise and finalize legislation – June
2009
14

15. 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 government officials in 15
Mamberamo, June 2008

16. 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
• Returns delivered through credit
sales over time
Managing Directors of New Forests and Emerald
Planet meeting with Governor Suebu, May 2008 c
• Upfront costs shared among project partners
• Long-term commitment to sustainable resource use in Indonesia
16

17. 5. Lessons Learned
• Projects in areas with low rates of deforestation have high hurdle
to establish evidence-based baselines
• Area, such as Papua, where this is limited data availability make
this even harder
• Legal uncertainty for REDD projects outside national-level
demonstration activities – right to transact credits?
• Also face technical uncertainty – project vs. national level
baselines?
• 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
17

18. 6. 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
remains important for information Arial view of Mimika site, June 2008
gathering, data analysis and FPIC/
community engagement
18

19. www.newforests.com.au
19