Projection of Deforestation and Cost of Slowing Deforestation in Indonesian Forestry Sector

Besides, Indonesia has significant gas and coal resources, indeed, has a lot of oil reserves, Indonesia has also the second largest tropical forest after Brazil and has about 144 million ha or around 10% of what remains of this resources (Trisasongko, 2002). Otherwise, Indonesian deforestation continues unabated, making the country a potentially big supplier of projects under the CDM (clean development mechanism). Since carbon emissions from forestry sector are also high, we would like to investigate the potential of emissions on forestry sector of Indonesia. We have modified an econometric model of tropical deforestation from Kant’s and Redantz, 1997, and apply them to Indonesian deforestation as a forestry sub-model. The rate of deforestation is expressed as a function of the direct causes; pressure for forest products, pressure on forest land alternative land uses, and forest fire. We developed and extended the MERGE (a Model for Evaluating the Regional and Global Effects of greenhouse gas reduction policies) with it added a forestry sub-model. This research also examines the cost of slowing deforestation in Indonesia. This paper presents estimates of deforestation of Indonesia which used population and economic growth as driving force on projects the rate of deforestation. Population and economic growth leads to increasing of deforestation. Indonesian deforestation will increase gradually till the end of century. We notice the cost of slowing deforestation in Indonesia, increase exponentially $14.38 million in 2010 to $2,390 million in 2100. When Indonesia participated in global emissions trade, Indonesia gains profit its forest such as revenue through the slowing deforestation activities. The profits increase exponentially $0.39 million in 2010 to $10,216 million in 2100 if the OECD (Organisation for Economic Co-operation and Development) countries reduce their emissions with global emissions trade. Indonesia received more and more profit when all countries reduce their emissions, is $4.32 million in 2010 to $12,939 million in 2100. These indicators also show Indonesia has a big potential in mitigation of emissions via slowing deforestation.