Palm and Profit – the UK’s Deforestation Plan for Indonesia

February 4, 2010

I used to be rainforest

Isn’t it great that the British government is trying to do something about deforestation in Indonesia? This week, it has announced a £50 million plan to “educate the Indonesian public on how the forests in the country are used and to help them adapt to climate change.”

Education plans like this are almost always a less effective alternative to cracking down on companies which import from offending countries (and certainly less effective than the governments in those countries actually taking on vested interests and enforcing their environmental and corruption laws). But it the UK government was just sending out some leaflets, then the plan would at least be relatively harmless.

Unfortunately it’s not. As the BBC continues, “It will also give palm oil companies money to help them offset extra costs from growing on less fertile, degraded land.”

As much of this land has been degraded and made less fertile by…palm oil companies, this amounts to a subsidy for cutting down rainforests and poorly managing the results. In any case, weak incentives to behave well are pathetic alternatives to effective regulation and, even better, to reducing the UK’s dependence on palm oil imported from rainforest regions.

This all makes UK Development minister Douglas Alexander seem a tiny bit hypocritical when he spoke at Davos last week, claiming that “through this partnership the UK will stand side by side with the Indonesians to help manage their forests, protecting this vital resource for future generations.”

I suggest not. The problem is that deforestation in Indonesia is driven largely by a hugely corrupt political system. As the Jakarta Post reports this week, the Indonesian government fails to collect some $2 billion in taxes owed by logging companies each year, while half of all logging is estimated to be illegal. The government regularly gives permits to firms operating in protected areas, while when illegal loggers are charged, their cases never make it to court.

As for palm oil growers, the head of NGO Sawit Watch told the paper that “The forest to plantation conversion rate reaches 400,000 hectares per year” while “Most of the companies have not secured a forest conversion permit, but were given a license to operate on a lend-lease basis by the local authorities” resulting in huge areas of plantations being considered “forests” while the trees are long gone.

Moreover, deforestation is part of a military-state, one that the UK government is happy to prop up. As Bloomberg reports, “Members of Indonesia’s military coordinate, invest in and supervise the illegal logging business on the island of Borneo” in conjunction with multi-national businessmen.

One means of tackling deforestation and carbon emissions resulting from it, would be to promote rural development – locally focused agriculture, tourism, small scale industry, education and healthcare policies. But another development reported this week will make little headway towards such a goal.

As AFP reports, Indonesia’s government is hoping to set up a “Green Investment Fund” with the help of foreign governments, including the UK. “Projects eligible for the funds would be things like new geothermal or hydro power stations, bio-waste technologies and water distribution projects” – meaning that small scale energy projects and sustainable agriculture would seem to be marginalized.

Such large scale projects fit into the tradition of “development” which has privileged larger infrastructure ventures. Driven by the interests of corporations, lenders like the World Bank loaned billions to poorer nations in order to build what turned out to be largely useless projects. While Indonesian government adviser Edward Gustely claims that returns from the GIF will be measured in greenhouse gas reductions, such pecuniary interests will be paramount, as ever.

Green business is becoming good business – and the UK government is well aware of this – hence its subsidies for palm oil producers and support for the GIF.


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