Indonesia - Promoting Sustainable Production Forest Management to Secure Globally Important Biodiversity Project

PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No. 62314 Project Name Project Name: Promoting Sustainable Production Forest Management to Secure Globally Important Biodiversity Region East Asia and Pacific Sector Forestry (100%) Project ID P112419 Borrower(s) Republic of Indonesia Implementing Agency Burung Indonesia & MoFor Environment Category [ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined) Date PID Prepared May 18, 2011 Estimated Date of June 20, 2011 Appraisal Authorization Estimated Date of Board November 15, 2011 Approval I. Key development issues and rationale for Bank involvement Indonesia continues to be identified as a global priority for biodiversity conservation. Covering only about 1.3% of the world’s total area, it has one of the highest levels of biodiversity and endemism in the world, with 10% of flowering plants, 12% of mammals, 16% of reptiles and amphibians, 17% of birds and 35% of fishes. Traditionally, biodiversity protection has been carried out through the establishment of protected areas. Nonetheless, Indonesia’s production forests contain areas of high biodiversity value that are located outside of these protected areas where potential exists for development of alternative models of forest management that integrate economic and biodiversity objectives. Production forest is the predominant forest category in the lowlands and in areas where protected area coverage is low. It forms important biological corridors between protected areas, but is also an important habitat in its own right. The Ministry of Forestry (MoFr) has created a new policy framework under which Ecosystem Restoration Concession (ERC) licenses are granted for logged-over concessions. As indicated in the Decree No.61/2008 by MoFr, only activities that are beneficial for ER are allowed, while activities that result in ecosystem damage are prohibited. The priority of the license is to maintain forest function and its representativeness through activities of maintenance, protection and forest ecosystem recovery. Burung Indonesia and the BirdLife International Consortium, in collaboration with PT Restorasi Ekosistem (PT REKI), pioneered the first ER site of 100,000 ha of Sumatran lowland rainforest known as “Harapan Rainforest” in 2007. Currently, there are 30 applicants for ERC licenses in various stages of the application process. The ERC policy presents an encouraging opportunity for stabilizing and enhancing the natural production forest resources of Indonesia, and the policy allows for the possibility of fully integrating biodiversity conservation objectives into the management of production forests. This requires a management approach which realizes the multi-product business potential of the ecosystems, conserves and enhances biodiversity, provides for equitable benefit sharing with communities, and provides sufficiently attractive returns on investment. Alignment with CPS The proposed project would be aligned with the Country Partnership Strategy (CPS) 2009-2012, particularly Core Engagement Area (CEA) No. 5: Environmental sustainability and disaster mitigation. Climate change issues are at the center of this area and since deforestation and forest degradation contribute 80 percent of Indonesia’s GHG emissions, restoration concessions will put strategic value to the emission reduction. In addition, the proposed project activities will align with CEA No. 3: Community development and social protection, made easier by MoFr’s recent Regulation on developing NTFPs (P.19/2009) as part of promoting community empowerment, one of Ministry’s five priority polices. The project is also consistent with the Bank’s other policy engagements and TA activities on forestry, trying to build up the legal, institutional and technical base needed for Indonesia to become "ready for REDD”. The Forest Carbon Partnership Facility aims to support the Ministry in several readiness activities, in full collaboration with UN REDD and AusAid, among other donors. In the future, it may also be possible for Indonesia to receive grant funds for REDD program implementation through the Forest Investment Program, which is one of the Climate Investment Funds established by the WB in 2008 with donor support after the successful Bali Climate Change Conference, hosted by Indonesia. II. Proposed objective(s) Project Development Objective: The proposed development objective of the project is to accelerate the implementation of the Government policy on Ecosystem Restoration Concessions (ERC) whilst ensuring that biodiversity and community participation is mainstreamed into (ERC) management practices and business plans. III. Preliminary Description The ER policy framework provides the opportunity for restoring lowland forests and addressing long-term issues of illegal logging, community-concession interactions, and conservation management. Elements of a sustainable approach can be found in the experience of the first ER site, the “Harapan Rainforest”. The proposed project will address the opportunities presented by the ER policy and aim to address the remaining gaps in (i) government capacity for implementing the ER policy, (ii) private sector participation and the frameworks and standards for managing ERCs, and (iii) experience and knowledge sharing. The proposed PDO will be met through four complementary components to be implemented over four years: Component 1: Business Development in Ecosystem Restoration Concessions. The focus of this component will be on promoting the development of multi-product sources of income that can be derived from the ecosystem whilst restoring natural balances, incorporating these into management plans of ERCs, and establishing working agreements between concession holders and local communities concerning the sharing of responsibilities and benefits in the use and management of ERCs. This component focuses on private sector issues and responsibilities. Component 2: Policy and Administration of Ecosystem Restoration Concessions. This component is aimed at strengthening the capacity of Government at all levels to achieve the visions and objectives of its ERC policy. The project will support three areas: (i) policy and regulation; (ii) understanding of ER concepts and technical aspects; and (iii) monitoring of ecosystems and biodiversity status. The expected outcomes will be improved regulatory and licensing processes in Government to enable progress in the implementation of ERC policy, and a working capacity in both Ministry of Forestry and local Government agencies to administer, oversee compliance and monitor progress of the policy. Component 3: Knowledge and Experience. This component aims to ensure that information on best practices, frameworks and standards, current policy and regulatory issues is shared and exchanged among key interested parties in ERC. This will be achieved by supporting the ERC Forum in its discussions and activities, and through a communication and outreach program to ensure that documented experience is available to audiences directly concerned with ERC. Component 4: Project Management. The project will require the establishment of an office at the headquarters of the Ministry of Forestry in Jakarta to handle project administration, monitoring and evaluation, and liaison with Government. IV. Safeguard Policies that might apply Safeguard Policies Triggered by the Project Yes No TBD Environmental Assessment (OP/BP 4.01) X The project will seek to influence the actions of ecosystem restoration concession license holders/applicants in expired forest concessions. Thus, there are various potential impacts on the forest ecosystem and on forest dwellers and local communities. Given the project’s emphasis on facilitating ERC holders/applicants to restore degraded forests and on people’s participation, most of the impacts on the forest and on forest dwellers can be expected to be positive. However, given the nature of the activities undertaken by ERC holders and the ERC concept being relatively new in Indonesia, and as clear impacts (positive and negative) are not fully known, an Environmental and Social Management Framework (ESMF) will be prepared as the guideline for any site-specific Environmental and Social Management Plans (ESMP) relating to a participating ERC. The ESMF will ensure that the potential environmental impacts are addressed as an integral part of project design, appraisal and implementation. Site-specific ESMPs for activities anticipated during the first year of implementation will be prepared before the appraisal. Natural Habitats (OP/BP 4.04) X The objectives of the project are to provide technical assistance to the restoration and conservation of biodiversity in logged over production forest concession sites yet to be identified. No conversion or degradation of natural habitats is anticipated. To the contrary, degraded habitats will be restored through assisted regeneration and enrichment planting with local species for maximizing biodiversity. Planning of ER concessions will obviously have to take into account possible impacts as well as ensure that best available science is brought to the overall management for biodiversity enhancement and protection. Any issues pertaining to OP/BP4.04 will be addressed in the ESMF. Site specific ESMPs will be developed for once sites are known. Forests (OP/BP 4.36) X The project will help develop management plans for select ERCs in previously logged over production forest areas. The objectives of the project are fully consistent with the objectives of the OP/BP4.36. The ERCs selected for technical assistance by the project will involve ecosystem Safeguard Policies Triggered by the Project Yes No TBD restoration activities through assisted natural regeneration and enrichment planting by enhancing native tree species. As far as possible, the seedlings are obtained naturally from forest lands. No commercial logging will be allowed in ERCs under the project. Any issues pertaining to OP/BP4.36 will be addressed in the ESMF, which will also include a set of Environmental Codes of Practice (ECOPs) for guidance. Site specific ESMPs will be developed once the sites are known. Pest Management (OP 4.09) X The project will not promote the use of pesticides, and natural sources of seedlings are preferred. Nurseries may be set up by ER concession holders in the sites selected for technical assistance by the project. These nurseries would be set-up regardless of the project, the project will not procure pesticides directly or indirectly and the project will not affect pest management in a way that harm could be done. The project will, on the contrary, promote IPM and biological control of pests, where required. Physical Cultural Resources (OP/BP 4.11) X The project will collaborate with ERC holders/applicants in logged over commercial forest concessions and further degradation or limiting of access to physical cultural resources is not anticipated. The presence of rivers/forests/mountains/objects of spiritual significance will be assessed in the ESMF. Site specific ESMP will be developed once the sub-project sites are known. Indigenous Peoples (OP/BP 4.10) X It is likely that Indigenous Peoples inhabit some of the ERCs collaborating with the project. An Indigenous People Planning Framework will be developed to establish the procedures to be followed in managing relations between the ERC and indigenous people. Site specific IPPs will be prepared once the sites are known. Involuntary Resettlement (OP/BP 4.12) X The project will not directly finance activities in ERC sites nor physically relocate any people living within a site. However, changes in forest management systems promoted by the project may potentially affect access to, and use of, natural resources in select ERCs. For this reason a Process Framework for Access Restriction will be prepared. Safety of Dams (OP/BP 4.37) X Projects on International Waterways (OP/BP 7.50) X Projects in Disputed Areas (OP/BP 7.60) X 1. Contact point Contact: Kwaw Andam Title: Young Professional Tel: (202) 473-5112 Fax: (202) 477-2733 Email: kandam@worldbank.org Location: Washington, D.C. (IBRD) 2. For more information contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-4500 Fax: (202) 522-1500 Email: pic@worldbank.org Web: http://www.worldbank.org/infoshop