12 Innovative Financing for Peatland Restoration in Indonesia
255
Options for Peat Restoration Financing
There are options to reach the financial amount necessary to fulfill BRG’s mandate.
They include, for example, the government’s own budget, grants, and assistance from
bilateral and multilateral public sources, philanthropy, and others. Nevertheless, the
potential amount from these public sources may not be sufficient. Business options
need to be made available for an even larger amount of financing to be made available
so that private investors will come. As such, there need to be business cases in peat
restoration.
Public Interest in Financing Peat Restoration
In the latest 2018 Budget, the allocation for environmental protection was IDR11.1
trillion (US$792,000) in the 2017 outlook and budgeted for IDR15.7 trillions
(US$1,122,000) for 2018 (e.g. GOI 2018a, b). From 2007 to 2014, GOI spent a
total of US$17.48 billions for climate change adaptation, mitigation, and supporting
activities. It allocated US$55 billion more for the period of 2015–2019 and would
continue to set aside a national budget for climate change in the future (e.g. GOI
2016c).
For peat restoration, the Indonesian government budgeted just US$200 millions
by the end of 2017 and as a result, only about 10% of the total area was rewetted. This
funding includes US$4.4 million from the Government of Norway, US$134.6 million
from the US, the UK, Japan, Germany, and the Netherlands. The Government of
Indonesia itself allocated about $60 million from its own budget (e.g. Jong 2018a).
Further, the Government of Norway increased its contribution to about $50 million.
This amount remains far from the required amount, however. The business case for
peat restoration will have to be made available for private investors to participate.
This needs to be done when we can find a business case for peat restoration to attract
private investors to participate.
The Business Case for Peatlands Restoration
The landscape approach in peatlands restoration allows for an area larger than the
areas being restored themselves. BRG embraces this approach through the establishment of about 106 Peatland Hydrological Units (PHU, or Kesatuan Hidrologis
Gambut, KHG, in Indonesian). The areas outside and around the peatlands within
the PHU can be utilized productively for economic purposes through farming, plantations, and other income-generating activities. In the peat areas, farming can also
be done with species that are peat-adaptive or peat-appropriate called paludiculture.
There are at least the following business opportunities that can be developed.
255
Options for Peat Restoration Financing
There are options to reach the financial amount necessary to fulfill BRG’s mandate.
They include, for example, the government’s own budget, grants, and assistance from
bilateral and multilateral public sources, philanthropy, and others. Nevertheless, the
potential amount from these public sources may not be sufficient. Business options
need to be made available for an even larger amount of financing to be made available
so that private investors will come. As such, there need to be business cases in peat
restoration.
Public Interest in Financing Peat Restoration
In the latest 2018 Budget, the allocation for environmental protection was IDR11.1
trillion (US$792,000) in the 2017 outlook and budgeted for IDR15.7 trillions
(US$1,122,000) for 2018 (e.g. GOI 2018a, b). From 2007 to 2014, GOI spent a
total of US$17.48 billions for climate change adaptation, mitigation, and supporting
activities. It allocated US$55 billion more for the period of 2015–2019 and would
continue to set aside a national budget for climate change in the future (e.g. GOI
2016c).
For peat restoration, the Indonesian government budgeted just US$200 millions
by the end of 2017 and as a result, only about 10% of the total area was rewetted. This
funding includes US$4.4 million from the Government of Norway, US$134.6 million
from the US, the UK, Japan, Germany, and the Netherlands. The Government of
Indonesia itself allocated about $60 million from its own budget (e.g. Jong 2018a).
Further, the Government of Norway increased its contribution to about $50 million.
This amount remains far from the required amount, however. The business case for
peat restoration will have to be made available for private investors to participate.
This needs to be done when we can find a business case for peat restoration to attract
private investors to participate.
The Business Case for Peatlands Restoration
The landscape approach in peatlands restoration allows for an area larger than the
areas being restored themselves. BRG embraces this approach through the establishment of about 106 Peatland Hydrological Units (PHU, or Kesatuan Hidrologis
Gambut, KHG, in Indonesian). The areas outside and around the peatlands within
the PHU can be utilized productively for economic purposes through farming, plantations, and other income-generating activities. In the peat areas, farming can also
be done with species that are peat-adaptive or peat-appropriate called paludiculture.
There are at least the following business opportunities that can be developed.