Development of policy & institutional option

Development of policy & institutional option

“Best bet” Land-use Systems

Country reports

Alternatives To Slash-And-Burn In Indonesia

Unique id: IDAZQYWB

Source file: D:\Projects\ASB\ASB Country and Thematic reports\Indonesia PhaseII report\Part VI VII plus annexes.xml

Authors: Thomas P. Tomich, Meine van Noordwijk, Suseno Budidarsono, Andy Gillison, Trikurnianti Kusumanto, Daniel Murdiyarso, Fred Stolle, Ahmad M. Fagi, Iswandi Anas, A.F.S. Budiman, Kenneth Chomitz, Rebecca Elmhirst, Chip Fay, Hubert de Foresta, Dennis Garrity, Danan P. Hadi, Suryo Hardiwinoto, Kurniatun Hairiah, Genevieve Michon, Nu Nu San, Cheryl Palm, Soetjipto Partoharjono, Djuber Pasaribu, Eric Penot, Robert Simanungkalit, Martua Sirait, S.M. Sitompul, F.X. Susilo, David Thomas

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This part of the report concerns Project Output 3.2, development of policy interventions to facilitate the adoption of recommended land uses by (a) reviewing and analyzing policy options and recent institutional experiences relevant to the alternative land uses, (b) facilitating community participation schemes in selected pilot areas, and (c) organizing national workshops and consultations with relevant stakeholders and policymakers for policy and institutional reforms necessary for adoption of recommended land use alternatives.

VI.1Analysis of policy and institutional options

Many of the forces driving deforestation and natural resource degradation arise at the regional or national level. In particular, an inflow of migrants facilitated by road construction and driven by lack of economic opportunity elsewhere can swamp the effects of best-bet alternatives at the field-level. Profitability is a necessary condition for adoption of ‘best bets’ by smallholders, but is not sufficient by itself as a means to slow deforestation. Indeed, precisely because these alternative land uses are profitable, the ‘best-bets’ could have the perverse effect of accelerating deforestation by attracting new migrants to the forest margins. But the relative profitability of forest conversion by smallholders it not determined solely by production technology; it also is tied to institutions and the legal framework that establishes, monitors and enforces boundaries of public land as well as private property rights; to policies regarding public investment in infrastructure and social services; and to macroeconomic policy instruments (exchange rates, monetary and fiscal policies). The institutional and policy environment that is necessary and sufficient for ‘best bet’ alternatives to reduce poverty and deforestation is not well understood yet--and is a top priority of ongoing ASB research. However, it is a sure bet that deforestation will accelerate if profitable innovations for rainfed land uses are introduced where there is open access to forests and within an economy-wide context of rapid population growth and stagnant opportunities elsewhere in agriculture, industry and services.

The key hypothesis underlying the ASB research project in Indonesia can be summarized as: Intensifying land use as an alternative to slash-and-burn can reduce deforestation and reduce poverty. Under which conditions are intensification a reasonable approach; under which ones is it not? At least three necessary conditions for validity of the intensification hypothesis were identified in ASB Phase I (van Noordwijk et al., 1995) and some of their interrelationships are depicted schematically in Figure VI.1.

1. At the plot level, intensification technologies must be environmentally and agronomically sound, socially acceptable, and financially profitable for smallholders.

2. At the community level, there must be effective monitoring and enforcement of property rights.

3. At the provincial and national level, attention must be given to reducing the broader forces that drive deforestation.

Figure VI.3 ICRAF Southeast Asia Regional Policy Research Agenda

Component	Scale	Main Policy Questions	Clients	Policy Instruments	Research Methods	Collaborators	Sites
Analysis of Land Use Systems	Plot	Are productivity increases feasible and profitable? If so, are they agronomically sustainable? And how are changes in technology and land use likely to affect the supply of global public goods?	Smallholders; NARS; ministries of agriculture, forestry, environment and finance; donor agencies.	Public investments in research and extension. Trade and price policies.	Application of the policy analysis matrix to analysis of private and social profitability, policy distortions, & market imperfections. Rapid assessment tools for agronomic sustainability & biodiversity. Measurement of C stocks & GHG emissions.	ASB Consortia in Indonesia and Thailand; including CASER, FORDA, LATIN, Lampung University and EU Project in Indonesia; Chiang Mai University and the Royal Forest Department in Thailand; TSBF, CIFOR.	Jambi and LampungProvinces on the island of Sumatra in Indonesia. Northern Thailand, focusing on the Mae Chaem watershed with supplemental sites in Mae Taeng and elsewhere as needs are identified in consultation with research partners.
Analysis of Land Use Systems	Watershed / Landscape	How do changes in patterns of land use affect the supply of watershed functions? Specifically, what are the effects of land cover change on: (1) sedimentation of reservoirs, (2) flooding, and (3) seasonal water shortages?	Local communities, local government, NGOs, ministries of agriculture, forestry, environment, and public works; donor agencies.	Land use planning through local participation. Watershed classification. Public investment in infrastructure & other sectoral programmes. Resettlement policies.	Tools to be developed for rapid assessment of watershed functions. Spatial models of watershed functions.	ASB Consortia in Indonesia, Thailand, & the Philippines; incl. FORDA in Indonesia, Chiang Mai, Kasetsart, and Mae Jo Universities, Royal Forest Dept, Dept of Land Development, Royal Project Foundation, & ANU in Thailand, & UPLB in the Philippines.	Upper Tulang Bawang watershed in LampungProvince, Sumatra. Mae Chaem watershed in Northern Thailand. Manupali watershed on Mindanao in the Philippines.
Land & Tree Tenure: Indigenous Institutions	Household / Community	How do indigenous institutions adapt to population pressure? Do indigenous institutions establish and enforce clear resource access and property rights? How do these institutions affect resource management decisions?	Local communities, local government, NARS; NGOs; ministries of internal affairs, agriculture, and forestry; donor agencies.	Institutional endowments (customary, local government, NGO).	Econometric models.	IFPRI and JambiUniversity.	Various communities in the buffer zone of Kerinci Seblat National Park in Sumatra.
Land & Tree Tenure: Options for Institutional Reform	Community	Do existing institutions and regulations establish and enforce clear resource access and property rights? What can communities and government do to improve institutions and regulations in order to better meet social, economic, and environmental objectives?	Same as above.	Institutional reform. Land allocation policy. Sectoral programmes.	Process-oriented research on institutional reform.	LATIN, WATALA, ORSTOM, Univ. of Indonesia, Dept of Forestry and CIFOR in Indonesia. ChiangMaiUniversity, Care-Thailand and RoyalForest Dept. in Thailand. Philippine collaborators to be identified.	Krui, LampungProvince, in the buffer zone of Bukit Barisan Selatan Nat’l Park and other communities to be selected in Indonesia. Buffer zone of Mt. Kitanglad Nat’l Park, Manupali watershed in Mindanao. Mae Chaem watershed in N. Thailand, including buffer zone of Doi Inthanon Nat’l Park.
National Policies: Market Access & Infrastructure	Provincial	How do decisions about location of road construction and other large government projects affect land use change? (Bottlenecks in access to improved germplasm may be studied later.)	Ministries of public works, resettlement, planning, forestry & agriculture; donor agencies.	Infrastructure investment. Land allocation & resettlement policies.	GIS-based spatial econometric models.	World Bank Policy Research Dept; UNESCO; BIOTROP in Indonesia; ChiangMaiUniversity & RoyalForest Dept. in Thailand.	Sumatra with possibility of extension to Kalimantan in Indonesia. Mae Chaem watershed in N. Thailand.
National Policies: Macroeconomic & Trade Policies	National	How do macroeconomic & trade policies affect land use change? Do macroeconomic & trade polices create sufficient employment in other sectors to reduce pressure on land & forest resources?	Ministries of planning, finance, forestry, and agriculture; donor agencies.	Macroeconomic & trade policies.	CGE model with distinct regional components for labor flow between Java & Sumatra and detailed land use activities for lowland Sumatra.	IFPRI (in leading role) and CASER in Indonesia. School of Environment, University of Brighton	Java-Sumatra labor market interactions and their links with land use change in lowland Sumatra.

Synthesis of these results is intended to yield policy lessons relevant for the region. A participatory, client-driven approach is intended to enhance prospects for impact on institutional development and policy reform. ASB research priorities are driven by the needs of two broad groups of clients: smallholders living at the forest margins and policymakers who influence the range of choices available to these smallholders. Just as participatory methods are used in ASB research to understand smallholders' objectives and constraints, consultation with policymakers also is a hallmark of this client-driven approach to policy research. The focus of consultation is to obtain crucial insights from policymakers about their perceptions of problems, opportunities, and constraints, including institutional mechanisms for policy implementation, in order to guide the iterative process of research to identify and develop feasible policy options.

VI.2 Property rights and community participation in natural resource management

Land and tree tenure institutions --both formal and informal -- affect resource access and property rights, and are a major determinant of incentives (and disincentives) for sustainable resource management. But do existing formal and informal institutions and the regulatory framework create incentives that are compatible with sustainable resource management? In particular, do tenure institutions and regulations establish and enforce clear resource access and property rights? If not, what (if anything) can governments do to better support improve functioning of these institutions?

Existing resource access controls typically are inadequate to address the realities of poverty and land pressure in Indonesia and more generally in Southeast Asia. The result often has been increasing conflict among communities and between rural populations and the institutions of the state charged with managing forests. However, exceptional windows of opportunity currently exist in the region for institutional innovations aimed at authentic people's participation in forest resource management. (A new decree for community-based resource management in Indonesia is discussed in Part VII.)

While clearer property rights may be necessary to establish better incentives for natural resource management, they may not be sufficient to secure sufficient environmental benefits. For example, community management of buffer zones of protected areas may be a more effective means of monitoring and enforcing restrictions on forest encroachment by spontaneous migrants ('forest squatters') and illicit logging, but little is known about tradeoffs and complementarities among multiple goals in the implementation of such programmes. Another working hypothesis is that devolution of management of production forests (including logging) and/or watershed land use to local communities could improve natural resource management compared to the status quo ante. But devolution of control by itself may not create sufficient incentives for local communities to supply some forest services, including abatement of externalities felt at the regional level (flooding, siltation, smoke that impedes aviation) and global public goods (carbon sequestration and biodiversity conservation). Workable institutional mechanisms that can clarify, monitor, and enforce responsibilities as well as rights are needed to address such complex natural resource policy issues.

Figure VI.4 was developed collaboratively during a regional planning workshop in 1996 to depict the interactions between the measurements of environmental, agronomic, and socioeconomic indicators described in Parts II-IV and which contribute to Output 3.1 of this project combined with pilot projects at the community level (described in Part VII) and ongoing consultations with policymakers. As stressed above, the measurements are necessary to quantify tradeoffs between various objectives. The process-oriented work is necessary to discover institutional options that have good prospects to meet the objectives of policymakers and of local people—which, in turn, contributes to Output 3.2 of this project. Both parallel streams of activity – empirical measurements and process-oriented research – are necessary and complementary efforts in providing a sound basis for recommendations for policy change. These recommendations comprise the ‘deliverables’ of

Output 3.3, discussed in Part VII.

Figure VI.4 Linking land use analysis to community participation in resource management

VI.3 National policies and forces driving land use change

The return of severe financial instability in Indonesia--after three decades of steady growth-- combined with new global and regional trade agreements may lead to significant dislocations of people and economic activity. Priorities for research on national policies affecting deforestation may be grouped in two sets of policy instruments that influence incentives for forest conversion: policies that affect market access and links between trade and macroeconomic policies and migration pressure.

Market access. Market access affects opportunities for land use by smallholders and large-scale operators and for local entrepreneurs, including those engaging in activities linked economically to forestry and agriculture (nurseries and seed producers, processors, traders and transport companies). Do efficient local markets exist for products and inputs? Investigations focus on two elements of market access – the road system and germplasm supply – but also will endeavor to identify other important market imperfections that may warrant further investigation.

The road system has powerful effects on people's access to resources and marketing links that condition land use choices in the uplands. Is transport infrastructure (especially the road network) sufficient for marketing agroforestry products? If transport is a bottleneck, how will road construction change land use? Obviously, it matters where roads are built; but ICRAF researchers work with colleagues from the World Bank, BIOTROP, and other collaborators to learn more about how interactions of road location and other factors (markets, property rights, sectoral policies, biophysical characteristics) affect land use choice in an effort to understand what determines whether a road project will be a boon for regional development or an environmental catastrophe.

Research on the dynamics of land use change in JambiProvince seeks to answer the policy question: where is smallholder 'encroachment' on logged-over forest most likely to be a problem? This spatial econometric analysis of land use change focuses on the peneplain and piedmont agroecological zones. A geographic information system (GIS) containing maps of rivers, main roads, land use units (topographic and edaphic features), and land cover for the early 1980s and the early 1990s was sampled with a one km grid, which generated 9477 observations. A multivariate econometric model with a binary dependent variable (a probit) was used to control for site-specific biophysical features (fixed effects) and to estimate the effect of distance to rivers and main (asphalted) roads on the probability that logged forest would be converted to rubber agroforests and other land uses by smallholders. The data indicate that there was substantial smallholder 'encroachment' on logged natural forests in Jambi between the early 1980s and the early 1990s. The prototype model correctly predicts about 85% of conversion of logged forests by smallholders

And about 78% of the cases where logged forest was not yet converted.[1] Site-specific biophysical features are highly significant, indicating that smallholders are selective in their choices of sites for conversion. Smallholder conversion of logged forest is significantly more likely within 10 km of main roads, which is consistent with a process driven by market opportunities for profitable treecrops. However, the results of this prototype model must be interpreted with great care. The period under study witnessed three big sources of change in Jambi: the all-weather Trans Sumatra Highway was completed, transmigration settlement projects expanded greatly, and large areas of the province were logged. Factors that affected which areas had been logged by the early 1980s (and which had not) may also affect the validity of our interpretation of these estimates. More work is needed to attempt to control for this possible selection bias. If these preliminary results hold up to further statistical refinements, this analysis can help set priorities for action within a two-pronged strategy combining community participation in management of some forest lands with improved monitoring and enforcement of access restrictions in other areas.

Trade and macroeconomic policies. Trade and macroeconomic policies affect households' livelihood options and, thereby, reduce (or intensify) forces that push migrants to forest margins; these policies also affect resource management decisions once they get there. Similarly, for subsistence-oriented communities who have long resided in remote forest areas, policies can affect opportunities for them to become more integrated into national economies, which could alter local land use patterns (and their sustainability) or shift labor away from agriculture or forestry into other sectors of the economy. Yet despite the dramatic change that trade and macroeconomic policies have already brought to Southeast Asia, the current shocks sweeping the region, and further important changes that will be forthcoming under global and regional trade agreements, the effects of these powerful policy instruments on rural land use patterns and incentives for forest conversion seldom have been analyzed. Are current trade and macroeconomic policies compatible with sustainable natural resource management by households? If not, what are the policy reform options? Are expanding employment opportunities in other sectors likely to take pressure off protected forest areas? If not, is forest conservation hopeless?

Research on these questions in Indonesia (and a twin study conducted for ASB in Brazil) is led by colleagues at IFPRI (the International Food Policy Research Institute) in collaboration with CASER (the Centre for Agro-Socio-Economic Research) and ICRAF Southeast Asia and is funded primarily by DANIDA. This study, entitled ‘Macroeconomic Policy, Labor Migration, and Land Use in Sumatra,’ is intended to answer a timely policy question: what are the impacts of structural adjustment programs (e.g., exchange rate devaluation, trade policy liberalization) on land use change and deforestation? This research activity incorporates links between macroeconomic policies and the level of wages, which in turn affect migration and, ultimately, land use change. These issues will be analyzed using a regional Computable General Equilibrium (CGE) model. This approach is particularly appropriate when analyzing interactions between agriculture and industry, links between macro and microeconomics, and the impacts of changes in policy and world markets on production, employment, and income distribution. The prototype model comprises over 20 sectors, with particularly rich detail for agriculture. The database for the model is a regional social accounting matrix (SAM), which provides a consistent framework for analysis. TheRegional product accounts in the SAM capture the flows of goods and services and the regional income accounts depict income distribution among seven different types of households. Data on production technology are derived mainly from prior studies supplemented byThe ongoing ASB research on major production systems in Sumatra reported in Part IV.

VI.4 Ongoing policy analyses and the monetary crisis

Beginning in August 1997 and continuing until now, Indonesia has suffered the greatest real exchange rate depreciation of any country in the past 50 years (IMF staff, pers comm). The ongoing monetary crisis in Indonesia creates both a need for the types of research described above as well as an opportunity to analyze how macroeconomic shocks affect land use change, environmental services, poverty, and household food security.

The policy analysis matrix (PAM) technique described in Part IV provides a flexible tool for examining the effects of Indonesia’s monetary crisis on production incentives. Because these are simple, spreadsheet-based models, it is possible to revise basic macroeconomic parameters to reflect current changes in exchange rates and inflation. The results presented in Table VI.1 reflect the change from an exchange rate of Rp 4000 per US dollar in July 1997 to a real exchange rate of approximately Rp 7,700 in June 1998. This ‘real’ exchange rate is calculated by deflating the nominal exchange rate of Rp 11,550 per US dollar that prevailed early in June 1998 by the 50% inflation since July 1997. These partial equilibrium models provide only first-order approximations of shifting incentives resulting from Indonesia’s financial collapse. However the data used in these calculations also will be employed in the CGE models mentioned above, which are able to capture effects on real wages and various other macroeconomic feedbacks.

Prior to the monetary crisis that began in Indonesia in August 1997; unsustainable shifting cultivation was not financially profitable in much of Sumatra. This appears to have changed since the collapse of the Indonesian currency over the past 12 months, which may reverse the long-term decline in shifting cultivation. Also because of the currency collapse, profitability of many tree-based systems has increased substantially, which boosts incentives for forest conversion by smallholders and large-scale operators alike (see Table VI.I).

Table VI.1 Sensitivity of PAM studies to macroeconomic parameters

Land Use	Rupiah 000's / ha		US $ / ha
	*July -- 1997*	*June -- 1998*	*July -- 1997*	*June -- 1998*
Community - based forest management	9.4 - 18	38 - 75	3.9 - 7.7	5.0 - 9.7
Commercial Logging	(32) - 2,102	317 - 7,422	(13) - 876	41 - 964
Rubber agroforest (seedlings)	73	6,743	30	741
Rubber agroforest (clones)	234 - 3,622	12,544 - 24,340	98 - 1,509	1,629 - 3,161
Rubber monoculture	(993)	5,114	(414)	664
Oil palm monoculture	1,479	2,104	617	273
Upland rice / bush fallow rotation	(180) - 53	1,200	(75) - (22)	150
Monoculture cassava / imperata cylindrica	(314) - 224	3,536 - 4,038	(131) - 93	405 - 501

VI.5 Smoke as a symptom of underlying policy and institutional problems

In 1994 large amounts of smoke, caused by fires in Sumatra and Kalimantan and aggravated by El Niño, resulted in poor visibility and air pollution for the neighboring countries of Singapore and Malaysia and caused severe health problems for people in the entire region. In 1997 history repeated itself, and this time the consequences were even more serious and more widespread than they were 3 years ago. One effect of El Niño is an air temperature inversion over Southeast Asia, which traps smoke that otherwise, would escape into the upper atmosphere.

Who is responsible for the fires in Sumatra, Kalimantan and elsewhere in Indonesia?

We must be cautious in attributing blame for the haze that shrouded the region. It has been customary to put all the blame on smallholders. But now, thanks to satellite images posted on the Internet, it is clear that big companies have important roles in the problem too. At least 3 types of fires contributed to the smoke that, together with the drought and atmospheric conditions brought on by El Niño, created the regional problem:

Fires used as a tool to clear land;

Fires that accidentally got out of control; and

Fires started deliberately as a weapon in social conflict.

No one knows how many of the fires were started to clear land or to serve as a weapon and how many were accidental. Nor can anyone now say with certainty how much smoke is the result of smallholders’ actions versus the actions of large companies. However, numerous eyewitness reports are consistent with official assessments based on remote sensing and site visits: that land clearing by large companies apparently played a major role in the problem.

Fire as a tool. Slash-and-burn is a technique for land clearing and conversion to other purposes. It also describes an extensive system of agriculture that leaves land fallow after a few years of crop growing and opens up new land for planting. Slash-and-burn is the preferred method of land clearing in Indonesia—for smallholders and large companies alike—because it is cheap and easy. In addition, fire eliminates field debris, decreases regrowth of weeds, reduces pest and disease problems, adds fertilizer in the form of ash and loosens the soil to make planting easier. In some ways it is preferable to other land-clearing methods. For example, bulldozers cause soil compaction, erosion and sedimentation.

Slash-and-burn as a land-use system worked well for smallholders for centuries because communities regulated the use of fires. However, when used as a technique to convert entire forests to rubber or palm oil plantations, the amounts of smoke those fires produce can be excessive. That is the problem this year, as it was in 1994—too much smoke in the wrong place at the wrong time. The objective then, is to reduce smoke emissions in critical years and during times of the year when smoke disperses slowly because of atmospheric conditions. Development policies for conversion of ‘forestlands’ are linked to the smoke problems Indonesia faced this year. ‘Forestlands’ are designated as state-owned lands, and they represent about 3/4 of the Indonesian land area. The many licenses granted each year to private companies for planting fast-growing timber species on forestland or oil palm on private land (that is, ‘converted’ state forestland) acts as a multiplying factor for fires. Because planters use fire to clear their fields and prepare them for planting, the 1997 fires should not have been totally unexpected. In this respect, smoke is an inevitable—if unintended—product of planned conversion.

Fire that accidentally spreads.Many local communities in Indonesia have created their own effective systems of fines and other penalties that are imposed on people who mismanage fire and cause damage to their neighbors’ property. Until recently, no mechanisms have existed to punish incompetence or negligence in the use of fire by large companies. A monitoring and enforcement system also could be developed to detect and punish blatant misuse of fire by large companies.

Fire as a weapon.Millions of people live in the forestland areas but because they have no security of tenure, they can be evicted at any time to make way for development projects. Large companies have been known to burn land to drive out smallholders. Smallholders have been known to burn trees established by large companies to retaliate for perceived injustices. At the heart of this problem are conflicts over land, resulting from unclear and insecure property rights and land allocation policies that take too little account of established—albeit informal—local claims. Aside from contributing to social conflict, ‘land grabs’ by large companies that displace local people also undermine incentives at the community level to prevent report and fight fires. If land allocation policies concentrate holdings while destroying incentives for on-the-spot fire prevention and management by the local people, there is a great risk that the present situation will be repeated.

It is important to note that part of the land granted to companies is not ‘empty’ forestland but land that has been occupied by farmers—often for centuries. These farmers have developed their own systems of land use, which they have to give up when the company takes over. Some companies try to accommodate farmers’ needs but others don’t, which leads to conflict. In these conflicts, fire is a powerful weapon for both planters and farmers.

These changes in land use disturb pre-existing social systems. They erode traditional techniques and social rules for fire control and increase social inequities and the perception of these inequities in rural areas. When lands are converted into estates, some smallholders may find jobs on the estates; some may be allowed to retain control of a piece of the land through the ‘nucleus estate’ scheme; some may move to other forestlands; and others will be forced to move to crowded urban centres, becoming part of the already large group of urban poor. Seen from these perspectives, it is reasonable to conclude that the risks of fires can only increase in the coming years unless social and policy issues are addressed along with the technical causes of fire and smoke. This needs to be carried out at 2 levels: by understanding how present policies affect smallholders and by recognizing the wider consequences of all policies related to land allocation and land conversion, from both an ecological and a social perspective.

Options for managing fires and smoke. Banning fires as a land clearing tool has been the focus of efforts to respond to the crisis but it is not the only option for managing smoke emissions. Potential alternatives include measures to:

Promote land clearing techniques that do not produce smoke

Reduce land clearing or burning during El Niño years or at other critical times

Decrease the amount of timber that is burned

Option 1: Ban use of fire for land clearing. Banning fires has not been effective. Bans on burning didn’t work in 1994, the last time smoke was a regional problem, they didn’t work this year, and they won’t work as long as fire is the cheapest way to clear land. Until a workable mix of regulations, incentives, and sanctions is in place for the big companies involved, there is a risk that the brunt of enforcement may fall on a few unlucky smallholders. This would simply add to the burdens the drought already imposes on the rural poor, without much prospect of an overall effect on the smoke problem now or in the future. (The exception may be to ban fires on peat swamps, which can smolder underground for months and produce much more smoke per unit area than do fires that occur on upland soils.)

Option 2: Develop alternatives to unsustainable forms of slash-and-burn agriculture. In contrast to bans on burning, Indonesia’s partnership with a number of international organizations in the global ASB Programme to develop viable alternatives that diminish (if not eliminate) smallholders’ need for burning is an approach that can reduce smoke and poverty, but has received scant media attention. Agroforests are good examples of viable alternatives that are good for people’s livelihoods, good for the economy and good for the environment.

Option 3: Clear land without burning.There are a number of land clearing techniques that do not produce smoke. These include biological methods to accelerate decomposition and various mechanical techniques that chip or shred biomass, either for mulching on-site or for transport off-site for disposal or sale. All of these ‘no-burn’ techniques are less effective and more expensive than burning. Research may be able to reduce the economic and technical costs of some environmentally benign techniques such as mulching. If subsidies for adoption of these techniques are administratively feasible, such payments may be an efficient means to reduce smoke emissions. To determine whether subsidies for adoption of no-burn techniques are appropriate, the social and economic costs of smoke must be compared with the costs of alternatives.

Option 4: Burn when it does less harm. It is not feasible to regulate burning by the many smallholders who clear plots of a hectare or so. But government permits regulate land clearing by large companies. So, one option is to allow less clearing in El Niño years, which can be predicted. Another option is to require burning permits for large companies and to enforce sanctions on those that burn without permits or burn more than specified in their permits. Selective restrictions have been used elsewhere to prohibit burning when smoke would linger because of atmospheric conditions. Implementation of these options would require an effective monitoring system using remote sensing combined with on-site verification, stiff penalties, and certain enforcement. Offering permits through an auction could improve the efficiency of distribution among companies when rationing is needed, but may not be socially acceptable.

Option 5: Reduce the amount of timber that is burned. Indonesian forestry policies are designed to depress domestic prices of timber relative to world prices. Policies that depress prices of wood products increase the ‘waste’ that must be disposed of by burning or other means. If these policies were eased or removed, more of the wood felled in land clearing would be sold for timber, thereby reducing the amount that is burned. And if wood were sold instead of burned, there would be less smoke. The attractiveness of technological alternatives to clear land without burning discussed in Option 3—or the level of subsidies required for adoption of these techniques—also is influenced by national policies. In addition, since conversion forests are being planted mostly to oil palm, it is important to study alternative uses for the vast amounts of oil palm wood that will be available in the future.

Option 6: Recognize long-standing land claims. It is important to have balanced consideration for the community, the economy and the environment. Iinvolving members of the community in decisions that affect their livelihoods and their tenure security would help to minimize conflicts over land allocation, thereby reducing use of fire as a weapon.

Deeper investigation is needed to reveal more of the facts behind these fires. But even with the limited information at hand, it is possible to identify certain steps that can be taken to help ensure that a catastrophe of this scale will not be repeated.

Bans on burning may have symbolic value but are not practical because of the higher cost of alternative land clearing techniques. The exception would be to ban burning on peat soils. Reducing costs of alternative techniques deserves further study. However, this is a longer-term strategy, since widespread adoption of environmentally benign no-burn techniques will be slow until costs fall.

Regulating burning by large operators and introducing penalties for the effects of accidental fires also deserves further study. BAPEDAL—the Indonesian agency charged with environmental protection—has already made impressive efforts in this direction. The agency has laid the foundation to develop ways to restrict burning to periods when smoke does less harm and to impose penalties on large companies that allow fires to get out of control. Investments in equipment and human resources are needed to sustain and strengthen BAPEDAL’s new capacity to detect fires, verify their causes, analyze policies and provide timely, accurate information.

Recognizing long-standing land claims would help minimize conflicts over land allocation.

Reducing or eliminating restrictions that depress domestic timber prices would decrease the amount of timber that is burned after land clearing. Among these options, this one would be the easiest to implement and would have immediate effects.

In Part VII we report on important action on recognition of longstanding land claims and we present further analysis of timber export restrictions within the context of the agreements on economic and financial policy reform between Indonesia and the IMF.

[1] The preliminary results presented in this paragraph are subject to revision and are not for citation or quotation. The findings, interpretations, and conclusions expressed in this paragraph are entirely those of the researchers. They do not necessarily represent the views of the World Bank, its Executive Directors, or the countries they represent.