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Federal Reform StrategiesLessons from Asia and Australia$
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Stephen Howes and M. Govinda Rao

Print publication date: 2013

Print ISBN-13: 9780198092001

Published to Oxford Scholarship Online: September 2013

DOI: 10.1093/acprof:oso/9780198092001.001.0001

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Decentralization and Avoiding Deforestation

Decentralization and Avoiding Deforestation

The Case of Indonesia

Chapter:
(p.274) 9 Decentralization and Avoiding Deforestation
Source:
Federal Reform Strategies
Author(s):

Fitrian Ardiansyah

Frank Jotzo

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780198092001.003.0009

Indonesia has undergone far-reaching political, administrative and fiscal decentralization over the last decade. Significant powers now rest with the district level including the management of natural resources and the environment. A large share of state revenue goes to district governments. Deforestation has been a part and parcel of Indonesia’s economic development and it is the principal source of Indonesia’s large greenhouse gas emissions. Indonesia has committed to curb its greenhouse gas emissions, mostly through reduced deforestation. We assess challenges and options for avoiding deforestation under the decentralized system, using Indonesia’s fiscal transfer system. We find that schemes for improving land management and deforestation need to be structured around the interests of local governments and actors. Positive incentives for local governments will need to be created to compensate them for foregone profits and to facilitate alternative development. This could be done through intergovernmental transfers, using either outcome-based or input-based payment schemes.

Keywords:   Indonesia, decentralization, avoiding deforestation, REDD+ programme, forest and land use governance, intergovernmental fiscal transfers

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