ENVIRONMENTAL AND SOCIAL RISK INDICATORS

In the context of political economy in East Kalimantan, ERP needs to consider two main market forces consisting of conventional and carbon markets. Conventional market still play major role in macro- economic factor of East Kalimantan Province (i.e., GDP contribution from mining and estate crop sectors). Conventional market may act as negative influencers to the success of the ERP, as conventional sectors may still be crucial to provincial economy. On the other hand, carbon market may serve as positive influencer that supports the success of ERP. Carbon market or carbon mechanism may be able to provide incentives and benefits to complement (or substitute) those from conventional market. However, much still needs to be done to prepare East Kalimantan to enter carbon market (e.g., setting up baseline, registration, and carbon accounting capacities).

5.5 ENVIRONMENTAL AND SOCIAL RISK INDICATORS

Business as Usual (BAU) scenario was defined by assessing past trends (historical) of land productivity. Land productivity can provide indicative political economy impacts (i.e., contribution to macro economy), and indicative impacts on conflicts (overlapping concessions with Indigenous peoples). Historical data were used to calculate trend of increase of lands used in the three sectors.

Furthermore, the calculated trend was projected towards 2020 to identify total areas at the end of ERP implementation period. Business as usual scenario as as follows:

 Palm oil plantation area is 1,192,000 ha as part of fulfillment of provincial target of 1 million hectares. In 2010, palm oil plantation was There has been an increase of 110% within seven years (or approximately 16% per year). Assuming this average increase, calculated BAU scenario indicates a possibility of increasing palm oil plantation up to 1.9 million ha (allocated in the spatial plan of East Kalimantan 2016-2036);

 Production forest area is allocated for 5,309,719 ha in the spatial plan 2016-2036;

 Data on mining area are scarce, so analysis of this sector is not optimal. Coal mining area is approximately 5.2 million hectares in 2018 with an estimated production of 200 metric tons per year (506 of 1,404 licenses are in production stage). Estimated 4 billions IDR are generated annually as provincial revenue. Mining concessions in East Kalimantan overlap with forestry, plantation, settlement and conservation areas (including habitat of endangered species).

5.5.1.2 ERP Scenario

Emission Reduction scenario was defined by taking into account lands set aside for emission reduction. These allocation cosist of:

 Total forest areas subject to licenses postponement (moratorium) based on indicative moratorium map (Peta Indikatif Penundaan Pemberian Ijin Baru – PIPPIB); and

 Total forested areas on estate crops area allocated for emission reduction consisting of 640,000 ha existing concession and 50,000 ha of peatland.

In comparison with the BAU scenario:

 ERP Scenario involves reservation of 640,000 ha of existing estate crop area for HCV that can reduce production by 36% (based on proportion of HCV allocations versus the total plantation area in BAU scenario). This may impact private companies, as the revenue will decrease. However, HCV allocations will support conservation of biodiversity and ecosystem services (including peatland conservation and prevention of fires);

 Similarly, forest license moratorium will hold licensing process 2,585,468 ha ha of forest areas (production forest and peatland). This will result in the 49% decrease of potential revenue from forestry sector (based on proportion of moratorium area versus total production forest allocation). This moratorium may cause decrease in revenue from forestry sector (compared to BAU scenario), but it may contribute to the prevention of unsustainable logging practices;

 In mining sector, 406 form 1,404 licenses are revoked based on the Governor’s regulations (Pergub No. 1/2018). Although provincial revenue is expected to decrease, the requirements for reclamations imposed on the existing licenses may benefit the environment.

Other environmental .components to consider in ERP scenario are:

 Environmental aspects such as risks of leakage and reversals. Leakage may occur due to increased emission-inducing activities (BAU scenario) than cannot be offset by ERP.

Reversal may occur due to deforestation and environmental degradation that occurs after ERP is completed. Reducing the risk of fires (plantation sector and peatland) will help reduce the risk of reversals; and

 Social aspects such as access restrictions and loss of jobs need to be considered when implementing moratorium and license revocation. Political economy aspects may need to be considered, as decrease in provincial revenue is anticipated as the result of ERP.

5.5.2 Environmental and Social Components

Based on the scenario analysis, potential environmental risks include loss of natural habitats and key biodiversity species at areas designated as non-forest and/or through increased human activities, contamination of soil and water, and health risks associated with the use of pesticides and as result of poor waste management practices, successes in reducing impacts on forests could lead to displacements of these impacts to other areas.

Potential social risks include risks associated with activities conducted in areas under existing and potential conflicts and/or disputes or areas with overlapping boundaries and/or claims, between customary and common/formal laws and processes and in areas with competing claims especially with concessions, livelihoods impacts including displacement due to bans on timber logging, oil palm plantation and artisanal mining activities, impacts to indigenous peoples, loss and/or damage to physical cultural resource, community and health safety risks for fire prevention and suppression activities, lack of awareness, management capacity and participation of community in managing social forestry, institutional capacity constraints to manage potential environmental and social risks at field level, as well as gender inequalities and social exclusion.

In addition to the environmental and social components, ERP implementation needs to consider the following aspects:

 Regulations to support and/or strengthen mitigation of environmental and social risks (e.g., environmental permit regulations to support mitigation of negative environmental impacts, and guidelines on conflict resolutions from MoEF). There are also potentials for conflicting policies and regulations such as policies on improving agricultural production that does not explicitly encourage the use of organic fertilisers or pesticides (integrated pest management); and

 Law enforcement to uphold the policies and regulations may need to be considered. Recent separations between conservation and law enforcement (DG of Law Enforcement, respectively) may add another layer of bureacracy in protecting biodiversity. Conservation area managers do not have authorities to conduct law enforcement activities. This will have to be done through coordination of two directorate generals.

5.5.3 Environmental and Social Indicators

Indicative environmental and social risks that can be analysed in the SESA are summarised in Table 22. These will be discussed further in the social and environmental impact assessment provided in Section 0.

Table 22 Summary of relevant environmental and social (E&S) indicators to monitor/track over the course of ERP implementation.

E&S Indicators Summary of Issues Data Sources Timeline for Monitoring Occurrences of conflicts

and disputes in non- forest areas (e.g., plantation conflicts, revocation of mining permits)

 Tenurial conflicts between

communities and palm oil plantations

 Accumulation of unresolved problems

 Conflicting licenses

 Capacity building for smallholders in implementing sustainable estate crops that will reduce the potential for land disputes

 Forestry Agency

 Estate Agency

 FGRM institution

 Environmental Agency

 Energy and Mineral Resource Agency

 SEKDA

Semester

Cases of Access restriction to land and natural resources

 Forest and plantation concessions are restricting access to livelihood/cultural activities

 Unclear boundaries (FMU, mining and plantations)

 FGRM institution

 Concession holders

 ATR/BPN for plantation HGU

 Village administration

 FMU

Semester

Numbers (quantity) and frequency of Impacts received by indigenous peopls

 Previous and existing uses by local communities and indigenous people

 FMU

 Estate Crops Agency

 NGO Reports

Semester

Numbers of cases of Community Health &

Safety

 Health and safety aspects in fire control/prevention measures

 Health Agency (Province)

 Environmental Agency

Quarterly

Lack of awareness, management capacity and participation (qualitative indicators on the presence of capacity building, accessibility, and incentives)

 Lack of cross- sectoral conflict resolution

mechanisms (e.g., plantation,

andforestry sectors, environmental disturbances)

 Limited capacity for government staff to access alternative livelihood options for local people

 Lack of accessibility for all social strata of the community to be involved in the

 FGRM institutions

 DGCC

 DDPI

Quarterly

E&S Indicators Summary of Issues Data Sources Timeline for Monitoring plantation process

 Lack of incentives in sustainable forest management is expected to facilitate social inclusion

 Lack of agreement on benefit sharing mechanism Institutional capacity to

manage potential environmental & social risk (qualitative

assessment on capacity building and capacity improvements)

 Capacity building needs for KPH officers is needed, especially to implement and monitor the process of RIL, to manage HCV forests, and to implement ISPO standards

 Lack of ability to mediate environmental conflicts

 Lack of capacity to implement

sustainable palm oil plantation

 FMU

 Forestry agencies

 Estate Crops agencies

 Concession holders

Semester

Institutional capacity to monitor livelihood impacts

 Monthly household revenue (baseline) is not regularly

monitored

 Need to establish indicators based on the percentage of poor

people/disadvantage

 Need to monitor employment or workforce participation as a livelihood indicator

 Village Development Agency

 Village government (Village Secretary)

 Bureau of Statistics

Annually

Numbers of cases on Gender and social inclusion

 Sub-optimal involvement of women in forest management will help reduce encroachment and deforestation

District agencies:

BAPPEDA, Women Empowerment

Annually

Cases, areas, and severity of Loss of natural habitat and Biodiversity

 Overlapping with key biodiversity areas and endangered

 FMU

 BKSDA

 ATR/BPN for

Semester

E&S Indicators Summary of Issues Data Sources Timeline for Monitoring species population

 Community-based monitoring efforts are not optimised

 Lack of clear conservation guidelines

plantation HGU

Numbers of

cases/frequency and severity of Contamination and Pollution

 Use of pesticides in agriculture and plantation sector

 Small-scale civil/construction works and waste management

 Environmental agency (Province)

Quarterly

Numbers of cases indicating risks of Leakages and reversals

 Shifting carbon emissions to other areas or provinces

 Lack of participation in fire

control/prevention resulting in increased carbon emission

 DGCC

 DDPI

Annually

POLICY AND REGULATION FRAMEWORK