Sandy Nofyanza, Zahra Avia, Colas Chervier, Agus Muhamad Maulana

REDD+ Projects and Their Impact on Household Incomes in Indonesian Borneo

Introduction

Redd+ projects and their impact on household incomes in indonesian borneo. Analyzes REDD+ projects' impact on household incomes in Indonesian Borneo. Finds small, mixed effects: short-term agricultural income loss, no overall income improvement. Income safeguards needed.

Abstract

In Indonesia, early Reducing Emissions from Deforestation and Forest Degradation (REDD+) projects, established in the early 2010s, were required to self-fund through carbon credit sales or donor aid while supporting local livelihoods. This paper examines the impact of REDD+ projects on both agricultural and overall household incomes (i.e., from all economic activities, including agriculture). We hypothesize that the agricultural incomes of REDD+ participating households (or treated households) would decrease as REDD+ forbids forest clearance, but this loss would be offset by a subsequent rise in overall household income as REDD+ encourages income diversification. Additionally, we assess whether REDD+ implementation has an intra-community 'spillover' effect by comparing the incomes of households living in REDD+ villages but abstaining from participation, with those in non-REDD+ (control) villages. We evaluate two such projects in Indonesian Borneo (Kalimantan) using panel survey data from over 400 households, collected in 2010, 2014, and 2018. Our analysis employs panel difference-in-differences in matched samples. Overall, our results reveal a small, heterogeneous impact of REDD+ on household incomes. While we found no significant impact in East Kalimantan’s BFCP site, participation in Central Kalimantan’s KMP site led to a reduced agricultural income over the short term (2010-2014). However, we detected no improvement in overall household income, nor did we find this impact to be long-lasting. We also found no conclusive evidence of intra-community spillover effects. The short-term income shock observed at the KMP site, despite its small overall magnitude, indicates the need for strategies to support and safeguard household incomes against temporary disruptions associated with REDD+ implementation. Our research contributes to the broader discourse on REDD+ performance, echoing previous findings of its mixed and modest impact on local communities' incomes globally.

Review

This paper presents a timely and methodologically robust examination of the livelihood impacts of early REDD+ projects in Indonesian Borneo, a region central to global deforestation discussions. The authors employ a rigorous panel difference-in-differences approach on matched samples, utilizing longitudinal data collected over eight years (2010, 2014, 2018) from over 400 households across two distinct project sites. This detailed empirical strategy, coupled with a clear set of hypotheses regarding agricultural income reduction, overall income diversification, and intra-community spillover, significantly strengthens the study's ability to isolate the causal effects of REDD+ participation. The paper effectively addresses a critical gap in understanding how early REDD+ initiatives, designed to be self-funding, balanced conservation goals with local livelihood support. The findings reveal a nuanced and largely modest impact of REDD+ on household incomes, which challenges some initial expectations for the program. Contrary to the hypothesis that income diversification would offset agricultural losses, the study found no significant improvement in overall household income at either site. While a short-term reduction in agricultural income was observed at the Central Kalimantan KMP site (2010-2014), this effect was not long-lasting, nor was any significant impact detected at the East Kalimantan BFCP site. Furthermore, the analysis provides no conclusive evidence of intra-community spillover effects, suggesting that benefits do not readily extend to non-participating households within REDD+ villages. These results underscore the complex and often localized nature of REDD+ interventions, aligning with a growing body of literature that points to mixed and often limited economic benefits for local communities globally. Despite the relatively small and heterogeneous impacts observed, the paper offers crucial insights for policymakers and practitioners. The short-term income shock identified at the KMP site highlights a persistent challenge for REDD+ projects: the need for effective strategies to safeguard and support household incomes during transitional phases of implementation. This implies a need for more robust livelihood components and potentially more sustained external support beyond initial self-funding models. The paper makes a valuable contribution to the ongoing discourse on REDD+ performance, providing essential empirical evidence that can inform the design of future climate change mitigation and adaptation initiatives, emphasizing the necessity of carefully crafted livelihood strategies to ensure equitable outcomes for forest-dependent communities.

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