In Sumatra, Local Communities Who Protected Forests Don't Get the Financial Benefits
This story and lead image were produced and published by Asia Democracy Chronicles.
When residents of four villages in Bungo Regency, Jambi, on the Indonesian island of Sumatra, sold their first carbon credits in 2018, they spent all the approximately IDR 400 million ($28,000) to develop their communities. They renovated their mosques, gave scholarships to children, and donated to poor families.
The villages are located in the Bukit Panjang Rantau Bayur. A landscape of lush lowland tropical rainforest covering 109,000 hectares, it is an area constantly threatened by logging, palm-oil plantation expansions, and illegal mining. The residents earned the carbon credits from protecting their forest — which they had been doing for generations anyway.
For more than two years, the villages sold more than 300,000 tons of CO2eq for $362,000 or roughly IDR 6 billion in the international market, mostly to travel companies and individuals. In May 2021, however, the villages received an official letter from the Ministry of Environment and Forestry (KLHK) halting the issuance of carbon credits until the government regulated the sales in the international market.
Jarimi, a village elder in his 50s, said that residents were disappointed upon learning they could not sell carbon credits for the meantime.
“The carbon finance really helped us build our villages,” he told Asia Democracy Chronicles (ADC), noting as well that they had earned while protecting the forest. “But what choice do we have?”
The central government suspended carbon-credit issuance primarily to prevent double counting, which happens when carbon credits sold in the market are also claimed as emission reduction by the host country to meet its Nationally Determined Contribution (NDC) as stipulated in the Paris Agreement. Months before the villages received written notice from KLHK, the Jambi provincial government had received a BioCarbon Fund (BioCF-ISFL) grant from five developed countries managed by the World Bank.
The grant, totaling $351 million through a government-to-government scheme, aims to reduce emissions in the land sector through various efforts, including sustainable agriculture, prevented deforestation and degradation (REDD+), and land-use planning in accordance with the NDC and land-sector emission reduction targets.
The U.N. Framework Convention on Climate Change (UNFCCC) has stipulated that to avoid double counting, countries must have a corresponding adjustment mechanism that would exclude community-led carbon crediting projects from NDC targets.
A presidential decree on carbon economic value in line with the NDC was issued in October 2021, or five months after the Bukit Panjang Rantau Bayur villages received the KLHK letter. But it failed to include a mechanism to regulate carbon-credit sales, leaving community-based carbon projects like those of the four villages in limbo.
Big dreams on weak foundations
Indonesia is poised to enter the international carbon market by offering more than 13 billion tons of CO2eq until 2050. During COP30 in Belem, Brazil last November, President Prabowo Subianto’s younger brother, Special Envoy on Climate and Energy Hashim Djojohadikusumo, declared, “Our vision is to make Indonesia a global hub for high-integrity carbon markets that deliver real and measurable climate impact, while creating green jobs, sustainable livelihoods, and resilient communities.”
Several observers say that can take some doing, however. A January 2026 article in The Interpreter, a publication of the Sydney-based think tank Lowy Institute, pointed out that while Indonesia had expected to have its carbon-credit transactions at Belem reach as much as $960 million, it “secured commitments for only $2.75 million.” It said that this signaled that “Indonesia’s carbon-credit strategy rests on weaker demand, credibility, and governance foundations than its policymakers acknowledge.”
Among the many concerns are technical weaknesses and equity issues, said the article. For instance, it said, “(Indigenous) peoples and local communities, which have managed many of Indonesia’s forests for generations, remain largely excluded from carbon finance.”
“Weak land tenure recognition, unclear legal standing, and unequal bargaining power limit their participation,” the Interpreter piece continued. “As trading expands, corporate projects could override customary claims, restricting access and criminalizing traditional livelihoods.”
Indeed, according to Tempo Magazine, at least 150 logging companies are now seeking to generate carbon credits from inside their concessions. In 2021, the government introduced the Multipurpose Forestry program, allowing private logging companies to diversify their business line to include ecosystem restoration, loggings/plantations, and carbon projects.
Environmental and indigenous activists have long criticized the government’s scheme to generate carbon credits from the forestry sector, mainly due to its exclusion of indigenous and local communities.
The area covered by village forest management rights is currently 8.3 million hectares, according to the government. At 68 million hectares, forests designated as Production Forest for pulpwood, palm oil, and mining, are at least eight times bigger than that, based on figures from the country’s statistics agency.
In 2023, a civil-society joint open letter calling for a boycott of Indonesia’s carbon trading underscored how businesses have had an easier time dealing with bureaucracy than communities. The letter read in part: “It only takes 14 days for corporations to process cultivation rights, but it takes years for people to get land management rights.”
The Bukit Panjang Rantau Bayur villagers can attest to that. Bakian, a 67-year-old village elder, told ADC that getting their village forests recognized by the government under its Social Forestry program “wasn’t an easy task.”
“We had to get through the bureaucracy and wait for years,” he said.
Indonesia’s Social Forestry program is a sustainable forest management initiative that grants local communities legal rights to manage, protect, and use state forest areas for up to 35 years. It allows right holders to practice agroforestry and to provide ecosystem services, such as eco-tourism and carbon sequestration.
The four villages began their campaign to be included in the program in the early 2000s. It took until 2012 for all four to finally receive their forest management rights, which cover more than 5,000 hectares.
Double counts and overlaps?
In 2015, the villages’ residents decided to enter the carbon-credit market, but the process took them three years to complete before they could start selling the results of their forest-protection efforts.
It was the Jambi-based conservation non-profit KKI Warsi, which aims to empower communities in times of climate crisis, that drew the villagers’ attention to the initiative.
“Forests in Bukit Panjang Rantau Bayur are unique,” said KKI Warsi senior advisor Rudi Syaf. “It is some of the last intact rainforests in Jambi with rich biodiversity, but at the same time, consistently under threat. That’s why we need to empower the communities around it.”
Sepdinal, head of the Jambi BioCF-ISFL Sub-National Project Management Unit, meanwhile said that Jambi was selected as a recipient of BioCF funds, along with East Kalimantan, because it has comprehensive potential, encompassing four national parks and natural forest areas.
“Furthermore,” he said, “we also have a green economic growth planning document from 2019 to 2045. And we are optimistic that we can achieve the [emission reduction] target.”
The BioCF program in Jambi, managed jointly by KLHK and the Jambi Provincial Government, covers more than two million hectares of land across the province, with a target of reducing emissions of 15 million tons of CO2eq over five years.
But concerns have arisen among community groups that BioCF could overlap with community-based emission reduction initiatives in the voluntary carbon market, such as those in Bukit Panjang Rantau Bayur, which could lead to double counting. Apparently, all carbon emission reduction efforts in Jambi are included in the BioCF annual report and the government’s NDC targets.
There have been discussions to remove the Bukit Panjang Rantau Bayur carbon project from the BioCF program and the government’s NDC targets. The problem is that this would require extensive coordination among the provincial government, the central government, the World Bank, and donor countries.
Sepdinal, though, said that the BioCF program will not overlap with the community carbon project in Bukit Panjang Rantau Bayur. He said that the calculations will be conducted after the community-based project is discontinued. He also said that Free, Prior, and Informed Consent (FPIC) has been obtained with the Bukit Panjang Rantau Bayur community and that it agreed to support BioCF.
“We held a meeting with the community, said Sepdinal. “There was an agreement to join the Biocarbon Fund program without any coercion. They have expressed their readiness to support the BioCF program. This means their performance from 2020 to 2022 will be included in the BioCF program. So, there is no overlap because the calculation years are different.”
Slicing the pie
The government, through KLHK, has said as well that several policies have been implemented to develop a voluntary carbon market, particularly through the signing of Mutual Recognition Agreements (MRAs) with various certification and standardization bodies, including Verra, Plan Vivo
