Abstract
Over the last decade, efforts to slow deforestation and
climate change merged with new ideas on paying for
performance in the context of development aid to
culminate in a series of agreements between Norway
and tropical forest countries. These experiences hold
lessons for international cooperation in reducing
greenhouse gas emissions from deforestation and for
financial relationships between countries addressing
this and other global challenges.
In this paper we set out the origins and trajectory
of an agreement signed by Indonesia and Norway
in 2010 to reduce greenhouse gas emissions from
deforestation and forest degradation, assess the
extent to which it can be called a success, and draw
some lessons from the experience for other pay-forperformance
agreements.
In 2009, Indonesia was the first developing
country to announce voluntary targets for reducing
greenhouse gas emissions, which would require a
significant reduction in emissions from deforestation.
Deforestation in Indonesia is driven by a range of
economic interests entwined with politically powerful
groups. The country’s shift toward decentralized
democracy and the absence of a strong constituency
for addressing climate change have complicated
commitments to enact policies aimed at slowing
deforestation. Indonesia made a commitment to
establish a moratorium on licensing forest exploitation
as part of the negotiations with Norway, and also
agreed to institutionalize broader policies to deal
with emissions from deforestation and degradation
by creating a new agency reporting directly to the
president.
Though Indonesia’s emissions from deforestation
continued to rise through at least 2012 (the most
recent year for which data is available), we argue that
the pay-for-performance agreement has been a success
in at least two respects. First, it led to a series of steps
that provided visibility to and strengthened at least
moderately the hand of those within and outside
government who favor controlling deforestation and
protecting indigenous rights. Second, by not releasing
payments when Indonesia did not perform at reducing
deforestation, the agreement represents a successful case
of “non-payment for non-performance”. It leaves on
the table the option for the newly elected government
(which took office in late 2014) to take full ownership
of the agreement and the challenge, and thus capture
the available transfers in the next several years. The
glass, in short, is half-full. The modest progress
achieved under the agreement so far is fragile, but the
agreement’s existence sets the stage for the country’s
new leaders to institutionalize and build on progress up
to now.
