Financing mechanism for sustainable forest management in Indonesia: the role of public financing instrument

The paper presents the identification of public financing instruments in Indonesia, especially under the Re-greening Fund, which is one of the most potential forest financing sources. In conclusion, a gap in financing institution exists. A new financing institution that should be autonomous and independent to solve current problems in forest financing schemes is proposed. The authors also stressed that any new initiatives in forest conservation, including the introduction of any forest financing instruments, should be started by solving the underlying causes of failure in forest conservation. Therefore, a discussion of the analysis of problems currently occurred and necessary pre-conditions in managing and rehabilitatingIndonesian’s forests based on its environmental issues is also provided. Finally, ‘payments for environmental services’ schemes that attract many attentions nowadays are briefly covered. The definition of ‘payments for environmental services’, different levels of environmental services as well as the role of governments at each level are clarified. The authors also give some conclusions and offer some recommendations for solving forest financing problems in Indonesia.

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