Indonesian Peatland Functions: Initiated Peatland Restoration and Responsible Management of Peatland for the Benefit of Local Community, Case Study in Riau and West Kalimantan Provinces

Indonesian peat swamp forest ecosystems provide various environmental services, which are important locally, nationally, and globally. However, due to increasing land scarcity, the pressure to utilize them for agriculture is increasing. This chapter focuses on a case study in Riau and West Kalimantan to discuss the socioeconomic and environmental values of peatland through examples of financial analysis and economic valuation and discussion based on fieldwork data. It shows that the opportunity cost of CO2 emission reductions by conserving peat swamp forests from conversion to oil palm plantation ranged from USD $3.7 to 8.25/t CO2e, which is far higher than the current registered emission reduction compensation price. Opportunity costs are higher than the carbon market price, and a carbon market is not available currently, especially for peat forest conservation. This chapter clarifies what models are viable taking the case study as a point of departure and calls for urgent development strategies to establish viable compensation alternatives to landholders beyond the carbon market. Peat conservation measures imply high opportunity costs, however indigenous and adaptive plants show economic promise to help further develop markets, paludiculture techniques, and management options to rewet peatlands.