Indonesia-U.S. in debt-for-nature deal

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US, Indonesia sign debt for nature agreement
The United States and Indonesia signed an agreement in which the largest Southeast Asian nation will commit to protect tropical forests in return for reduced debt payments to Washington, officials said Tuesday. It is the largest debt-for-nature swap under the US Tropical Forest Conservation Act passed in 1998 and aimed at providing debt relief to developing countries that protected forests, the US Treasury said. The swap with Indonesia was made possible through contributions of 20 million dollars by the US government and a combined donation of two million dollars from two environmental groups -- US based Conservation International and Indonesia's KEHATI, a Treasury statement said. "The agreements will reduce Indonesia's debt payments to the United States government by nearly 30 million dollars over the next eight years," it said. "In return, the government of Indonesia has committed these funds to support grants to protect and restore the country's tropical forests." Indonesia is one of the most biologically diverse nations and, according to the statement, funds generated by this program will help protect several forest areas on the large island of Sumatra. These forests are home to species found only in Indonesia, including the endangered Sumatran tiger, elephant, rhino and orangutan, and will provide important ecosystem services such as maintaining freshwater supplies, the statement said. (AFP Report)

by Staff Writers
Jakarta (UPI) Jul 1, 2009
The United States is cutting nearly $30 million in Indonesian debt in exchange for a promise of protection for Sumatran forests.

About 10.5 million acres of forest on Sumatra have been cleared since 1985, further threatening a wide variety of endangered species, including elephants, tigers, rhinoceroses and orangutans, found nowhere else and contributing to climate change.

Trees have been lost to deforestation and adapting the land for use as palm oil and acacia plantations. The burning of trees and peat swamps contributes about 80 percent of Indonesia's carbon emissions, and the country has the world's third-highest rate of carbon emissions, U.S. statistics indicate.

Last year the Indonesian government initiated a plan to save the remaining forests.

"This agreement commits all the governors of Sumatra's 10 provinces, along with the Indonesian Ministries of Forestry, Environment, Interior and Public Works, to restore critical ecosystems in Sumatra and protect areas with high conservation values," Deputy Minister of Environment Hermien Roosita said at the time. "The governors will now work together to develop ecosystem-based spatial plans that will serve as the basis for future development on the island."

The agreement between Indonesia and the United States, announced Tuesday by the U.S. Embassy in Jakarta, will aid that effort with about $30 million in redirected funds over eight years.

"Indonesia is one of the most biologically diverse countries on Earth," U.S. Ambassador Cameron R. Hume said in a release. "Funds generated by the debt-for-nature program will help Indonesia protect critical forest habitats in Sumatra."

The embassy release said grants involved in the debt-for-nature program are designed to improve natural resource management and conservation efforts, and develop sustainable livelihoods for local people who rely on forests.

Debt-for-nature agreements call on governments to make principal and interest payments on outstanding obligations, but instead of going to the United States, the funds are made available to a new local tropical forest fund.

Part of the deal includes a forest conservation agreement between the host country and donor non-government organizations outlining how the funds will be used and establishing oversight and operation methods.

In Indonesia the program looks to conserve tropical forests in several sections of Sumatra with Batang Gadis National Park, Bukit Tigapuluh National Park, Way Kambas National Park all considered priorities. Another area to get consideration is Siberut Island, which has such a unique biodiversity that it has been called "the Asian Galapagos." Eligible areas cover a total of 18.4 million acres, the U.S. Embassy said.

The United States has entered into 15 debt-for-nature agreements that have a combined value of $218 million since 1998. Other countries involved in the program are: Bangladesh, Belize, Botswana, Colombia, Costa Rica, El Salvador, Guatemala, Jamaica, Panama, Paraguay, Peru and the Philippines.

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