Financing mechanisms for sustainable forest management in Indonesia: the role of public financing instruments

This paper presents the public financing instruments for forestry of Indonesia, especially the Re-greening Fund. The conclusion is that a gap in financing mechanisms exists. The development of a new financing institution that is autonomous and independent to address current issues in forest financing is proposed. It is also be stressed that any new initiatives in forest conservation, including the introduction of forest financing instruments, should be predicated on solving the underlying causes of failure. Therefore, a discussion of the current problems and necessary pre-conditions for achieving sustainable forest management and rehabilitation is also provided. Finally, payment for environmental services (PES) is briefly covered. The definition of “payment for environmental services”, the various types of environmental services provided, as well as the role of governments, are clarified. The paper concludes by offering some recommendations for addressing forest financing problems in Indonesia.