Biodiversity Offsets in Indonesia: Challenges, Opportunities, and Implementation in Rio Kemunyang Village Forest

Indonesia, as one of the countries with the greatest biodiversity in the world, faces many serious challenges in preserving its natural environment. Deforestation, land-use change, and massive industrial activities have caused ecosystem damage and the loss of flora and fauna habitats. The need for innovative solutions is increasingly urgent, and the biodiversity offset scheme has emerged as one of the efforts to compensate for the negative impacts of development on biodiversity.

Biodiversity offset is a compensation mechanism to address the negative impacts of development on biodiversity. The principle is that the biodiversity loss that occurs at a particular site due to development activities is “offset” by conservation or restoration efforts at another location. This offset site ideally has the same or higher biodiversity value. The objective of this scheme is “No Net Loss” ensuring there is no overall loss of biodiversity, while allowing economic development to proceed, but with environmental impact considerations and conservation efforts in place. In Indonesia, this scheme can be integrated with social forestry. Local communities managing social forests have the opportunity to gain economic benefits through the provision of ecosystem services generated from such restoration or conservation activities. In this way, they contribute to biodiversity conservation.

Although promising, the implementation of the biodiversity offset scheme also faces several challenges. First, there needs to be specific regulations that comprehensively govern biodiversity offsets. Currently, Indonesia does not yet have a law or government regulation that specifically addresses biodiversity offsets. Existing laws only indirectly touch on the principles of “prevention, mitigation, and compensation” of environmental impacts, such as Law No. 32 of 2009 on Environmental Protection and Management. Second, there needs to be a standardized and transparent methodology for calculating the compensation value and the impact of biodiversity loss. Third, there must be an effective monitoring and evaluation mechanism to ensure that the implementation of this scheme is appropriate and yields positive impacts for biodiversity conservation. Fourth, it is important to ensure that the scheme provides fair benefits for Indigenous Peoples and Local Communities (IPLC) and does not create social conflict.

Amid these challenges, Community Forest Ecosystem Services (CFES), as an organization, aims to enable Indigenous Peoples and Local Communities (IPLC) to manage their natural forest resources sustainably. CFES has implemented the biodiversity offset scheme to compensate for biodiversity damage caused by development activities by providing compensation through the Payment for Ecosystem Services (PES) instrument. One example of the implementation of this scheme is in the Rio Kemunyang Village Forest (Hutan Desa) in Durian Rambun Village, Jambi, which is one of the buffer villages of Kerinci Seblat National Park (TNKS).

The biodiversity offset scheme is essentially a mechanism in which biodiversity damage at one location is compensated with conservation or restoration efforts at another location. CFES has facilitated the implementation of this scheme in Rio Kemunyang Village Forest, in collaboration with companies or industries whose activities impact biodiversity, especially the Sunda Pangolin (Manis javanica), a species listed as Critically Endangered (CR) on the IUCN Red List. Compensation from the company is channeled through CFES to the LPHD (Village Forest Management Institution) using a performance-based Payment for Ecosystem Services (PES) mechanism. This PES funding is then used to support various conservation and ecosystem restoration activities in Rio Kemunyang Village Forest, such as forest patrols and monitoring using the SMART Patrol app, nursery development, rehabilitation, and especially support for marginalized communities and women's business groups.

The implementation of the biodiversity offset scheme in Rio Kemunyang Village Forest brings several benefits. First, this scheme acts as compensation for unavoidable development projects that cause ecosystem damage and significantly impact biodiversity. Second, local communities are actively involved in conservation and forest rehabilitation efforts, thereby encouraging community empowerment and local economic improvement. Third, this scheme contributes to the conservation of biodiversity in Rio Kemunyang Village Forest, which is a habitat for various important flora and fauna, especially the Sunda Pangolin, Sumatran Tiger (Panthera tigris sumatrae), and other species.

The biodiversity offset scheme implemented by CFES in Rio Kemunyang Village Forest is an innovative step in efforts to protect Indonesia’s biodiversity and promote community empowerment. With proper management and support from various parties, this scheme has the potential to be replicated in other areas and make a significant contribution to achieving sustainable development goals (SDGs).