Developing financing mechanisms of conservation under decentralised governance of natural resources

Although these declarations have not yet convinced the national government to recognize the CD initiative as an important and genuine initiative, the idea of payment for environmental services has provided opportunities to make CDs work in practice. The general challenge is to define sustainable development based on the conservation of natural resources in CDs and create an administrative and financial framework that facilitates implementation. A key condition is deploying mechanisms to compensate districts, private stakeholders and central government for the opportunity cost of forgone unsustainable development, such as conversion to oil palm plantations, timber harvesting and mining. The district government and district population must be able to generate income that helps to improve the economy and wellbeing in the districts.
The Reduced Emissions from Deforestation and Degradation (REDD) decision adopted at the UNFCCC COP 13 in Bali is one of the options. Institutions and models will need to be developed to ensure compliance with REDD requirements at the district level. The conservation district model is a potential mechanism, but needs to be further developed. Issues to be addressed are the distribution of benefits between stakeholders and the district and between central and local levels.

Some research questions addressed in this project are:

• What local, regional and international markets exist for environmental services associated with conservation areas?
• What are current and potential financing mechanisms for forest management in conservation districts?
• What are institutional requirements of fair and sustainable financing mechanisms?
• What are the requirements for, opportunities of and constraints on the sale of environmental services at district level (technical, institutional, human resources)?
• To what extent would alternative financing options change forest management and forest governance decisions in conservation districts (and lead to conservation and better lives)?