Indonesia: Worst Forest Country

Indonesia scores a whopping zero on the green index for forestry.

The phrase "carbon emissions" usually conjures images of coal-burning power plants or smog-enveloped cities. Less widely appreciated is the role of trees as a source of emissions. When a tree dies or a forest is cut, the carbon is released back into the atmosphere. This simple fact presents a big environmental challenge (and an opportunity). Whereas the two biggest carbon emitters, China and the United States, have coal plants and cars to blame, the No. 3 culprit—Indonesia—produces 85 percent of its carbon emissions from forests.

Indonesia's magnificent dipterocarp forests, a hardwood valued for its timber, have been in retreat for decades. They're almost entirely gone on heavily populated Java. In the 1990s, Sumatra lost 35 percent of its forests and Kalimantan (Indonesian Borneo) lost 19 percent—much of it lowland forest rich in iconic creatures like the Sumatran rhinoceros and the orangutan. In the forestry component of Yale and Columbia's Environmental Performance Index, Indonesia comes in last with a score of zero. (Brazil, more infamous for rain-forest destruction, scores an 82.)

Although much of the loss was initially due to harvesting for timber and forest products, particularly plywood, in recent decades illegal logging has been more widespread. The rapid spread of oil-palm plantations is a relatively new threat. Palm oil has recently been recognized as a source of biofuels. From 1990 to 2005, 56 percent of the expansion in oil-palm plantations in Indonesia occurred at the expense of biodiversity-rich forests. Another disturbing trend is the conversion of peat forests, which hold huge amounts of carbon, into plantations by international companies, China's Asia Pulp & Paper principal among them. Once the forest is cut, the peat dries out, releasing its carbon and raising the risk of fires, which can smolder for years.

Many efforts are underway to stem the deforestation. Emil Salim, Indonesia's first minister of the Environment, created protected areas and laws and regulations to control logging. Conservation International is working with coffee producers to maintain upland forest in Sumatra. Of particular promise is the innovative Samboja Lestari project on Kalimantan, which uses income from sugar palm (a biofuel source) to wean locals from logging.

In the long run, the most promising development is carbon trading—the only way to generate funds on a sufficient scale to address rampant deforestation in the tropics and its contribution to greenhouse-gas emissions. The beauty of carbon trading is that funds can largely flow to the people in the forest regions who currently have no financial incentive to stop logging. Carbon trading, of course, has many critics. One concern is "leakage"—the notion that controlling the damage in one forest would simply shift the cutting to other forests, with no net gain. This could be avoided with a system of national forest accounting to keep track. Another concern is preventing a proprietor from cutting down a tract of forest shortly after being paid to keep it intact. The simple solution would be to avoid one-time payments and instead use something akin to rent—a periodic payment in return for keeping carbon in the forest and out of the atmosphere.

Collective management of the world's forests must be sensitive to national aspirations and sovereignty. Done right, it could turn rain-forest nations into powerful forces for environmental good. At the same time, we shouldn't forget the need to establish incentives to conserve biodiversity as well; valuing a forest for its carbon is like valuing a computer chip for its silicon. Compared with the alternative, investing now in preserving the world's forests would be a bargain.