Jakarta. Indonesia has been paid for protecting its forests, and it is likely to be paid more. Norway alone has sent four payments worth about $216 million for cutting forest loss. The World Bank has agreed to pay up to $110 million for lower emissions in East Kalimantan. A new global fund, the Tropical Forest Forever Facility, promises yearly payments for every hectare of forest a country keeps standing.

This is good news. But much of this money still reaches the ground as projects. A project has a start date and an end date. It brings in outside staff, writes reports, and then leaves. A district head cannot plan a five-year budget around money that may not come back next year. And the villages that protect the forest often see little of it.

There is a better route, and Indonesia has already built it. It is called ecological fiscal transfer, or EFT. A fiscal transfer is money that one level of government sends to another, for example, from a district to its villages. Indonesia's districts and provinces already send billions of rupiah down this way every year. EFT simply adds a rule: part of that money goes to the places that look after their environment best. Villages and districts are scored on things like forest protection, fire prevention, clean rivers and waste management. Higher scores bring more money.

The idea is spreading without any order from Jakarta. In a radio interview this year, the director of Pinus Indonesia, a civil society group that helps local governments design these schemes, said that 44 regions have now adopted EFT on their own. He made a sharp point. Under today's rules, regions that dig up coal or cut timber get a share of the income, so destroying nature pays. Regions that keep their forests get far less.

Bulukumba in South Sulawesi shows how EFT works in practice. With help from Pinus, the district head issued a regulation that sets aside part of the 2025 village fund as a reward. Villages are ranked on their environmental policies, how much of their budget goes to the environment, the quality of their local environment and whether they run a waste bank. The top 15 villages each receive more than Rp 100 million ($5,543). Bulukumba followed Parepare, Maros and Sinjai in the same province. In North Kalimantan, the first province to try the idea, the scoring includes fire prevention and water protection. In Siak, Riau, one village used its reward to build ponds that hold water for fighting fires.

The weakness is size. Across 39 regions, these schemes had moved about Rp289 billion over four years. That is a small slice of local budgets, and it comes from money that districts already have. When budgets get tight, it is easy to cut.

Here is where international forest money can help. Instead of funding one more project, donors and global funds could pay into the transfer system itself. A national pot, run by the government's environment fund agency, would receive the money. It would then pass it down to provinces and districts using a public formula based on forest cover and fire. Districts would pass part of it on to villages, using the same kind of scores that Bulukumba and others already use.

This would change three things. First, money would arrive on a fixed timetable, so district budgets could count on it like any other income. Second, the reward would go to those who actually keep forests standing, not to whoever writes the best proposal. Third, it would cost less to run, because the pipes already exist. Each district has a budget office, and each village already receives a village fund.

For this to work, the system must be open. Scores, formulas and payments should be published every year, so anyone can check them. Forest cover and fire can be measured by satellite, which makes cheating harder. Independent groups like Pinus should keep a role in checking the results, as they do now.

Indonesia does not need to invent a new tool to bring forest money home. It needs to connect the money from abroad to the transfer rules its own districts have already written. When protecting a forest becomes a steady line in the district budget, local leaders will treat it as seriously as roads and schools. Ahead of COP31, the United Nations climate summit in Antalya next month, Indonesia can offer this model to its partners: pay for results, and pay through the budget.

---

The opinion article is authored by Bhima Yudhistira Adhinegara, Executive Director of CELIOS, and Muhammad Zulfikar Rakhmat, Director of China-Indonesia Desk, CELIOS.

The views expressed in this article are those of the authors.

Add as a preferred source on Google +