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The Complexities of Green Economy Policy

Reform: a case study in Aceh, Indonesia

Luke John Swainson

December, 2016

A thesis submitted for the degree of Doctor of Philosophy of The Australian National University

© Copyright by Luke John Swainson 2016

All Rights Reserved

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This thesis is the original work of Luke John Swainson. With a word count of 65,168.

Luke Swainson, 8 December 2016

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Abstract

As the world continues its search for effective approaches to sustainable development, a green

economy has been touted as a ‘triple-win’ solution. This thesis applies a political economy framework

to examine the prospects and barriers for achieving green economy policy reforms. It questions

simplistic assumptions regarding the feasibility of ‘triple-win solutions’ in green economy literature.

The thesis instead reveals the conflicts, trade-offs and power dynamics that ultimately determine

whether or not a green economy can be realised in practice.

The research focuses on the Aceh Green intervention, initiated in 2007 in Aceh Province, Indonesia.

Aceh Green was one of the first attempts globally to transform economic and environmental

management systems in an integrated, cross-sectoral manner, as envisaged by green economy

engineers. An analysis of the shortcomings of Aceh Green, which failed to survive a change of political

leadership, provides new insights into the difficult realities of green economy policy reform, and

highlights problems within the approach and its assumptions.

I argue that Aceh Green failed to achieve its vision of a private sector driven transition towards a new

economic system due to three related reasons: 1) the risk versus reward balance was not sufficient

for ‘green investors’; 2) actors with vested economic and political interests resisted change; and 3) the

Aceh Green intervention was unable to build coalitions for change that may have helped to overcome

these obstacles.

Case study findings raise important questions regarding the viability of a green economy approach to

sustainable development in Aceh, and beyond. Fundamentally, the green economy approach, with its

reliance on market based solutions, is vulnerable to the local investment climate as well as the lack of

mature markets for ‘green commodities’. Furthermore, entrenched political and economic elites can

undermine the institutional reforms on which the green economy concept is founded.

The study therefore proposes that green economy efforts must be founded upon a deeper

understanding of the nuanced political economy at play in different settings. The dilemma of realising

a green economy is exposed as an elemental struggle between actors over the management of and

access to natural resources and the benefits derived from them. The process of navigating these

complexities needs to receive greater attention. In contrast, much of the current normative work on

a green economy emphasises the desired policies and outcomes without factoring in the difficulties

of the reform process that must be addressed. More consideration is needed of specific and early

interventions that shift beliefs and realign economic incentives amongst critical actors. Without this,

attempts at green economy policy reform will fail to build the necessary coalitions for change to

counter vested interests.

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Acknowledgements

First and foremost I want to thank all of my interviewees for this research and the people of Aceh that

looked after me during my time there. Your openness, friendship and logistical support ensured that

my field research was both successful and extremely enjoyable. Without you my research would not

have been possible.

My main supervisor, Sango Mahanty, deserves a special mention for helping to bring my thesis

together and for expanding my thought processes on sustainable development issues. I would also

like to acknowledge my supporting supervisor, John McCarthy, for his assistance on thesis structure

and helping with my understanding of the local context in Aceh.

I am exceptionally grateful for my parents who have always been so supportive in my education and

other ambitions. Finally, I especially want to thank my wife, Jane. Your proof reading has been

invaluable and your companionship amazing.

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Table of Contents

Abstract .................................................................................................................................................. iii

Acknowledgements ................................................................................................................................ iv

List of Boxes ...........................................................................................................................................vii

List of Figures ........................................................................................................................................ viii

List of Tables .......................................................................................................................................... ix

Acronyms ................................................................................................................................................ x

Chapter 1: Introduction .......................................................................................................................... 2

1.1 The promise of a green economy and current gaps in knowedge ............................................... 2

1.2 Research context ........................................................................................................................... 4

1.3 Analytical framework .................................................................................................................... 7

1.4 Thesis overview ............................................................................................................................. 8

1.5 Thesis structure ............................................................................................................................. 9

Chapter 2: The ‘green economy’ concept and current debates ........................................................... 12

2.1 A green economy ........................................................................................................................ 12

2.1.1 Conceptual underpinnings ................................................................................................... 12

2.1.2 Historical antecedents to a green economy ........................................................................ 16

2.2 A green economy as a policy reform process ............................................................................. 20

2.2.1 The barriers to reform posed by vested interests ............................................................... 21

2.2.2 Critical junctures and the importance of building coalitions for change ............................. 23

2.2.3 Beliefs and the production, framing and utilisation of information .................................... 24

2.2.4 Creating and reorienting benefits ........................................................................................ 28

Conclusion ......................................................................................................................................... 31

Chapter 3: Research Methodology ....................................................................................................... 32

3.1 Looking through a political economy lens .................................................................................. 32

3.1.1 Institutions ........................................................................................................................... 34

3.1.2 Actors ................................................................................................................................... 36

3.1.3 Power ................................................................................................................................... 37

3.1.4 Scale ..................................................................................................................................... 39

3.2 Data Collection and Analysis ....................................................................................................... 40

3.2.1 The rationale for case study research .................................................................................. 41

3.2.2 Rationale for studying Aceh Green ...................................................................................... 42

3.2.3 Sampling processes for data collection ............................................................................... 46

3.2.4 Methods of data collection and analysis ............................................................................. 49

3.2.5 Cross culture research, subjectivity and positionality ......................................................... 52

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Conclusion ......................................................................................................................................... 54

Chapter 4: How Aceh’s Political Economy shaped Aceh Green ............................................................ 55

4.1 An historical overview of sustainable development discourse in Indonesia and Aceh ........ 56

4.1.1 The Suharto, or ‘New Order’era .......................................................................................... 56

4.1.2 Decentralisation ................................................................................................................... 60

4.2 The perceived need for Aceh Green ..................................................................................... 66

4.2.1 Sustainable development challenges, critical junctures and the beginnings of Aceh Green ...................................................................................................................................................... 66

4.2.2 Targeted regulatory reform ................................................................................................. 73

4.2.3 Proposed planning, implementation and financing strategies ............................................ 77

4.2.4 The Ulu Masen and Leuser REDD+ projects, sustainable forestry and renewable energy .. 79

Conclusion ......................................................................................................................................... 83

Chapter 5: Barriers to green economy reform in Aceh ........................................................................ 85

5.1 The incompatibility of Aceh’s investment climate and the interests of ‘green’ investors ......... 85

5.1.1 Investor perceptions of risk relative to expected returns ................................................... 85

5.1.2 Aceh’s coffee sector: market signals promoting green economy goals in a limited setting 94

5.2 Regulatory uncertainty and a lack of willingness for reform ...................................................... 98

5.2.1 The end of Aceh Green ........................................................................................................ 98

5.2.2 Contested authority and bureaucratic confusion .............................................................. 101

5.2.3 The resurgence of powerful vested interests against reform ........................................... 107

Conclusion ....................................................................................................................................... 116

Chapter 6: The difficulties encountered in building coalitions for change ......................................... 117

6.1 The challenges of encouraging actors to align their beliefs with the proposed reforms ......... 117

6.1.1 Collaboration weaknesses ................................................................................................. 118

6.1.2 Making a case for reform ................................................................................................... 124

6.1.3 Technical and financial capacity shortfalls ......................................................................... 131

6.2 An absence of benefits in the early stages of the reform process ........................................... 137

6.2.1 Why early benefits are important ...................................................................................... 137

6.2.2 Reasons why international organisations provided limited support ................................. 141

Conclusion ....................................................................................................................................... 148

Chapter 7: Prospects for green economy from a political economy perspective .............................. 149

Annex 1: List of interviews .................................................................................................................. 157

Annex 2: Semi-structured interview questions .................................................................................. 160

Annex 3: Aceh Green spatial plan proposed by TIPERESKA (2008) .................................................... 163

Bibliography ........................................................................................................................................ 164

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List of Boxes

Box 1: Policies and programmes proposed through the green economy approach …………………………14

Box 2: Description of previous conservation initiatives........................................................................ 17

Box 3: Studies showing potential inter-linkages between economic, social and environmental benefits ................................................................................................................................................. 25

Box 4: Legislation relevant to the management of Aceh’s forests ..................................................... 104

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List of Figures

Figure 1: Map of the district boundaries in Aceh Province, Indonesia ................................................... 5

Figure 2: Main elements of a political economy framework in the context of policy reform .............. 33

Figure 3: The probability of deforestation of 2006 forest cover caused by road construction projects proposed by BAPPEDA, Aceh’s provincial development agency. ......................................................... 69

Figure 4: Existing timber and oil palm concessions inside the Leuser Ecosystem ................................ 70

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List of Tables

Table 1: An overview of Aceh Green’s eight components .................................................................... 44

Table 2: Economic growth in Aceh, 2003-2006 .................................................................................... 68

Table 3: Actor’s position on Aceh Green ............................................................................................ 117

Table 4: Benefits of various environmental assets and economic sectors under deforestation versus conservation strategies (30 year time frame) .................................................................................... 128

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Acronyms

ADB Asian Development Bank

AFEP Integrating Environment and Forest Protection into the Recovery and Future Development of Aceh project

APDA Aceh Plantation Development Authority

AusAID The Australian Government's overseas aid program

BPKEL Badan Pengelola Kawasan Ekosistem Leuser (Leuser Ecosystem Management Agency)

BPN Badan Pertanahan Nasional (National Land Agency)

BRR NAD-Nias Badan Rehabilitasi and Rekonstruksi untuk Nanggroe Aceh Darussalam dan Nias (Agency for Rehabilitation and Reconstruction for Aceh and Nias)

BUMD Badan Usaha Milik Daerah (Regional Business Agency)

CBNRM Community Based Natural Resource Management

CIDA Canadian International Development Agency

CO2e Carbon Dioxide equivalent

COP Conference of the Parties (United Nations Climate Change Conference)

DevCo PT Leuser Development

EU European Union

FAO Food and Agriculture Organisation

FELDA Malaysia’s Federal Land Development Agency

FFI Fauna & Flora International

G20 The ‘Group of Twenty’; an international forum for the governments and central bank governors from 20 major economies

GAM Gerakan Aceh Merdeka (Free Aceh Movement)

GDP Gross Domestic Product

GER Global Eco Rescue Ltd.

GFC Global Financial Crisis

GTZ Deutsche Gesellschaft für Internationale Zusammenarbeit (German Development Agency)

HAkA Hutan, Alam dan Lingkungan Aceh ( Forest, Nature and Environment of Aceh)

ICDPs Integrated Conservation and Development Programmes

IFC International Finance Corporation

JICA Japan International Cooperation Agency

KBQB Koperasi Baitul Qiradh Baburrayyan (An Aceh coffee cooperative)

Km Kilometre

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LDP Leuser Development Programme

LIF Leuser International Foundation

LoGA Law on Governing Aceh

LULUCF Land Use, Land Use Change and Forest

MoU Memorandum of Understanding

NCBA National Cooperative Business Association

NGOs Non-Government Organisations

Otus Dana Otonomi Khusus (Special Autonomy Fund)

PES Payments for Environmental Services

REDD+ Reducing Emissions from Deforestation and forest Degradation

RSPO Roundtable on Sustainable Palm Oil

SBY President Susilo Bambang Yudhoyono

SFM Sustainable Forest Management Ltd.

TIPERISKA Tim Penyusunan Rencana Strategis Pengelolaan Hutan Aceh (Drafting Team for Strategic Planning of Forest Management in Aceh)

UK United Kingdom

UN United Nations

UNDP United Nations Development Programme

UNORC Office of the United Nations Recovery Coordinator

US$ United States dollars

USA United States of America

USAID United States Agency for International Development

USDA United States Department of Agriculture

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Chapter 1: Introduction

1.1 The promise of a green economy and current gaps in knowedge

‘Sustainable development’ has been at the forefront of global development paradigms since the early

1990s (Lele 1991). The concept calls for a convergence of three pillars – economic development, social

equity and environmental protection (Baker 2006) – resulting in development “that meets the needs

of the present without compromising the ability of future generations to meet their own needs”

(WCED 1987: 43). But progress towards sustainable development to date has been inadequate (UNDP

2014). There have been some success stories in each of the separate domains, but more often than

not, economic and social goals have been prioritised above environmental sustainability (United

Nations 2014). Global ecosystems have suffered greatly as a consequence. The Worldwatch Institute's

(2015) State of the World report cautions that if humanity does not urgently alter its management of

natural resources critical thresholds may be exceeded beyond which abrupt and irreversible changes

to the plant’s life support functions could occur. As mounting evidence points towards growing

environmental degradation, considerable attention is being devoted to good practice sustainable

development strategies and policies that can address human welfare while maintaining functioning

ecosystems. It is against this background that the concept of a ‘green economy’ has emerged as a

focus point within international conservation and development discourse. Early experiments that

utilise a green economy approach (here after ‘green economy’) need to be critically assessed to

contribute to this policy realm, as well as progressing our scholarly understanding of the nexus

between economic, social and environmental systems.

While the concept of a green economy first appeared in 1989 in a report to the UK government

(UNCTAD 2011), in the last few years it has gained greater prominence after being promoted by a

range of multilateral organisations, particularly within the United Nation system (see UNEP 2011). A

green economy was the emphasis of the ‘Rio+20’ United Nations Summit in June 2012 (UNCSD 2012),

and at the G20 Summits in France 2011, and Mexico in 2012, the world’s largest economies committed

themselves to the promotion of a green economy (Government of France 2011, Government of

Mexico 2012). The main rationale given for why a green economy might succeed where other

approaches have failed is its more integrated response to economic, social and environmental issues.

This in turn is expected to generate broader private sector buy-in and political support for a green

economy by aligning with the priorities of a broad range of people and organisations; from those

focused on the importance of continued economic growth to those interested in conservation (Jacobs

2012, Morrow 2012).

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While there are slight variations in how a green economy is defined, most academic literature and

commentators refer to the working definition employed in the UNEP's (2011) pre ‘Rio+20’

documentation as, “one that results in improved human wellbeing and social equity, while significantly

reducing environmental risks and ecological scarcities.” A green economy requires an integrated

approach to sustainable development via reorientation of the economic system. It aims to transform

incentive structures within the economic system so that the system no longer produces goods and

services that cause social and environmental harm. Instead the approach aims to proactively address

and prevent such harm by ensuring that economic activity more fully accounts for social and

environmental costs and benefits in an integrated manner (UNEP 2011). The approach is underpinned

by the recognition that the current devastation of the world’s environment results from an economic

system that relies on the use and extraction of natural resources that are not accounted for in

economic decision making (Cotula 2012). These problems are exacerbated by burgeoning population

growth coupled with ever increasing demands for improvements in living standards (Moyo 2012). A

green economy attempts to turn this situation around by addressing the underlying drivers of

environmental problems while at the same time supporting improvements to human wellbeing

(Drexhage and Murphy 2010). Its integrated, economy wide framework contrasts with many previous

sustainable development initiatives that have been more sector or site focused (Ashley, Russell et al.

2006, Fisher, Maginnis et al. 2008, UNEP 2011).

Although the idea of a green economy is increasingly attracting attention, there are many knowledge

gaps around the viability of the model. Missing is a critical reflection of real world experiences that

goes beyond the many simplistic statements made in agency strategies that equate the objective of

‘triple-win solutions’ with the practices and transformations needed to achieve these. There is a need

to more deeply understand the opportunities, complexities and potential trade-offs in policy reform

processes associated with a green economy.

As numerous authors have documented, there are often significant differences between anticipated

impacts that are derived from theoretical predictions, and what actually occurs in practice through

policy reform processes (Lewis, Bebbington et al. 2003, Quarles van Ufford and Kumar 2003, Mosse

2005). Several reasons are put forward for this divergence. Many previous attempts to improve

economic and natural resource management systems have been impeded by vested interests (Rodan,

Hewison et al. 2006, Barman and Vogel 2008), with the likelihood of success often dependent on the

presence of critical junctures (Acemoglu and Robinson 2012), and the building of coalitions for change

(Frost, Campbell et al. 2006). The ability to build pro-change coalitions is in turn influenced by how the

policy reform process aligns with the beliefs of people and organisations from which support is being

elicited (Stiglitz 2012), or the new benefits offered to them (Angelsen and Brockhaus 2012). There is a

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need to further investigate how the green economy model is affected by such policy reform

complexities. As Morrow (2012: 288) concludes on the status of post ‘Rio+20’ green economy policy

reform, “green economy reform required a number of necessary 'specific enabling conditions' to

provide the societal infrastructure to realise the green economy approach in practice … the huge

challenges that this would inevitably present were not really acknowledged.”

Until now, there are few cases where a comprehensive green economy approach has even been

attempted and assessed. This knowledge gap concerning the barriers to green economy policy reform,

and lack of evidence from attempted green economy interventions, is the point of departure for this

thesis.

1.2 Research context

This research examines the opportunities and constraints for a green economy to achieve the stated

objectives of sustainable development. The focus is on the Aceh Green initiative (called ‘Aceh Green’

hereafter), a green economy reform process attempted between 2007 – 2012 in Aceh Province,

Indonesia (see figure 1). Aceh Green presents an ideal case to address current knowledge gaps on the

viability and relevance of a green economy, as one of the first attempts globally to implement a green

economy in an integrated, cross-sectoral manner, as envisaged in the literature. Aceh Green proposed

comprehensive regulatory reform and direct interventions in Land Use, Land Use Change and Forest

(LULUCF) management, sustainable economic development, and renewable energy. Its aim was to

transition Aceh away from an economic system reliant on natural resource extraction towards a

system that emphasised human wellbeing and social equity while reducing environmental risks and

ecological scarcities. As an intervention that failed to survive a change of political leadership, but which

managed some gains in the coffee sector (which was one of the sectors investigated in this thesis in

section 5.1.2), Aceh Green provides a potent example of the tough realities of putting the concept of

a green economy into practice and allows for a rich analysis of challenges with the approach.

Aceh Province is endowed with abundant natural resources, specifically in forestry, mining,

agriculture, and fisheries. The province retains 33,184 km² of its original forest cover (60 per cent of

total land area) (GCF 2013), which is the home of wild orangutans, elephants, tigers, rhinos, leopards

and bears (BPKEL 2009). The fact that Aceh has retained high quality forest up until now is in a large

part due to its long history of conflict, which made forest conversion unsafe for would be exploiters

(McCarthy 2006). The stalemate in the conflict was only broken by the devastating Indian Ocean

tsunami of December 26, 2004. The tsunami killed approximately 200,000 people and displaced more

than half a million in the province. Some 465 coastal villages were partially or wholly destroyed, and

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around 88,000 hectares of productive farmland damaged (FAO 2005). Local economies and livelihoods

were decimated, and local health, education and government capacities lost (BRR NAD-Nias 2006).

This tragic event provided a critical juncture in which Aceh’s separatist movement and the central

government had little choice but to negotiate a peace agreement (Barron and Clark 2006). The

tsunami also led to an outpouring of international humanitarian aid at levels never before seen.

Approximately US$6 billion was pledged to assist in Aceh’s relief and recovery (BRR NAD-Nias 2006).

By 2006 the major reconstruction effort had helped reduce poverty levels to 26.5 per cent, which was

below pre tsunami levels (World Bank 2008a).

Figure 1: Map of the district boundaries in Aceh Province, Indonesia

Source: www.mapsoftheworld.com

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While the reconstruction efforts were heralded as positive, especially given the scale of destruction,

there were also criticisms that the economy was only growing at a ‘sluggish’ 2.4 per cent (IFC 2008),

and was primarily driven by reconstruction rather than an increase in long term business activity

(World Bank 2008a). Continued economic stagnation and high unemployment remained a constant

threat to peace, especially as many of the jobs were scheduled to disappear as the multi-billion dollar

reconstruction efforts phased down (McCulloch 2008). In addition to socio economic concerns, Aceh

faced a number of pressing environmental issues due to the reconstruction process itself, and the

threat that there would be a rush to extract Aceh’s natural resources following the end of conflict

(BPKEL 2009).

The key actor responsible for addressing Aceh’s economic and environmental future in the post

tsunami/post conflict era was Irwandi Yusuf, who was elected Governor of Aceh in 2006. Governor

Irwandi developed a seemingly comprehensive, multi-sector strategy for sustainable development in

the province. The initiative was termed the Green Economic Development and Investment Strategy

for Aceh, or ‘Aceh Green’. An early concept note outlining Aceh Green states that Governor Irwandi

was motivated by the realisation that for Aceh’s peace process and post tsunami reconstruction

efforts to succeed, policies and programmes of the Government of Aceh had to generate employment

and income opportunities for all citizens of Aceh, with a particular focus on poor people and former

combatants. At the same time, he acknowledged that the protection and preservation of Aceh’s

natural resources – particularly its inland forests, watersheds and marine reserves – was essential if

economic development objectives were to be sustained through future generations (Aceh Green

Secretariat 2008).

As described in later chapters, Aceh Green failed to achieve its targeted policy reforms, and Aceh’s

economic system has reverted to extensive natural resource extraction, including legal and illegal land

conversion for mining, plantation development, road construction, logging and wildlife poaching

(Schonhardt 2013). In fact, as of early 2016, the Government of Aceh was promoting a new land use

plan that would reduce protected forests across the province by 1.2 million hectares (Aceh Forest

Coalition 2014). The fact that Aceh has now abandoned its attempted transition to a green economy

deserves critical reflection. Here is a case where there was commitment from the Governor of the

province to implement the same comprehensive reforms that are at the forefront of global discourse

on how best to achieve sustainable development, yet the reforms were a complete failure. Why?

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1.3 Analytical framework

The thesis analyses this attempted policy reform process in the context of ongoing struggles for

resources and power in Aceh. Because Aceh Green ultimately failed to steer Aceh away from an

extraction oriented development trajectory, it is not appropriate to assess on the ground impacts of

the intervention – these never eventuated. Instead, the research is focused temporally at the critical

early stages of green economy policy reforms, and the inherent challenges encountered when a leader

– in this case the Governor of Aceh Province – instigates policy reforms that aim to transform the

vision of a green economy to implementation on the ground. While this thesis is unable to analyse the

effects of green economy interventions, it does nevertheless contribute novel insights about critical

influences on policy reform, and therefore the viability and relevance of a green economy in practice.

The study draws on a political economy framework, which is explained in detail in chapter 2. This

framework enables the research to uncover how green economy interventions interact with political

and economic incentive structures across multiple scales (Grimble and Wellard 1997, Adam and

Dercon 2009), how and why various actors respond to these incentives (Long 2001), and how positions

of power are used to enact or impede change (Rausser, Swinnen et al. 2011). That is, through this lens

the research examines political processes, and their interaction with the economy and environment,

to uncover underlying influences that either encourage or impede policy reform, and ultimately decide

how resources are allocated and governed (Kay 2012, Boettke, Coyne et al. 2013). The result is an

analysis that reveals the incentives, conflicts, trade-offs and compromises that decision makers face

in considering a fundamental restructuring of the economy, and the relations of power that determine

which natural resource policies and strategies are chosen in practice. Based on this political economy

approach, the thesis responds to the following overarching research question, and sub-questions:

What can be learned from the Aceh Green case about the wider viability and relevance of the

green economy model? In particular:

1. How did the green economy model emerge globally, and what is known of its viability

and relevance?

2. How did Aceh’s political economy shape the framing of the initiative?

3. How did Aceh’s political economy shape implementation of the initiative?

4. What coalitions for change did Aceh Green proponents try to build and how?

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1.4 Thesis overview

The research finds that the integrated approach to sustainable development sought through a green

economy is an important aspiration, but such sustainability goals will remain elusive without a

transformation of the underlying political and economic system. The case study further demonstrates

that green economy faces important limitations in implementing the required policy reforms and thus

in achieving the intended goals of economic reorientation. In the case of Aceh Green, the intervention

failed to reorient Aceh’s economic system toward the desired private sector driven transition to a

green economy. Aceh Green was heavily reliant on private sector engagement, but due to the

limitations of the investment climate investors felt that the risks were not adequately offset by the

benefits they were likely to receive. Regulatory reforms could have improved this situation but the

proposed reforms were impeded by vested government interests who had the power to block change.

The main proponents of the initiative under the Governor of Aceh – the Aceh Green Secretariat – were

unable to grasp the opportunities for reform presented by critical junctures due to the lack of

attention to supportive coalition building. They encountered challenges in collaborating with other

actors because they did not reach out and involve a broad range of actors in the reform process,

particularly in the very early stages of the attempted reforms, and thus failed to convince other actors

of the viability of Aceh Green. Furthermore, Aceh Green did not provide direct, early stage benefits to

actors outside of the Secretariat and did not present any other incentives for the private sector or civil

society to engage more extensively in the reform process, or for government decision makers to

change their tactics concerning resource allocation and management.

The research highlights unresolved complications hanging over the viability and relevance of a green

economy approach. The model’s reliance on market based solutions leaves it vulnerable to inaction

due to the fact that the private sector will not engage without regulatory reform and the promise of

strong market demand and price premiums for goods and services that provide beneficial social and

environmental outcomes. Institutional reforms are often obstructed by vested interests committed to

maintaining the existing political and economic status quo, and global markets remain reluctant to

pay price premiums at a sufficiently large scale to alter the incentives facing investors.

Interventions at the early stages of the policy reform process that help shift beliefs and realign

economic incentives for civil society and the private sector could help to build the necessary coalitions

for change. Support from these groups is needed to alter the political and economic power dynamics

currently controlled by vested interests. Presently, the green economy model does not emphasise the

importance of such early stage interventions in the reform process. The case study shows that active

engagement of international organisations is important, yet these groups also show reluctance to

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directly involve themselves in complex reform processes, leading to a divergence between policy

reform objectives and outcomes on the ground.

There is a significant mismatch then between the interests and priorities of green economy

proponents and many of the actors in government, civil society, the private sector, and international

organisations, all of whom are important to achieving reform. Contrary to the prevailing rhetoric,

actors may not easily rally behind the ‘triple win’ strategies of a green economy. These insights

reinforce the need for future initiatives with similar systemic and policy agendas to be embedded in a

deep understanding of the nuanced political economy at play in different settings. The dilemma of

realising a green economy must be seen for what it really is; an elemental power struggle between

actors for how natural resources and the benefits derived from them should be managed and

accessed. That is, more consideration is needed of the processes required to implement green

economy reforms, rather than just a focus on end goals and aspirations.

1.5 Thesis structure

This thesis is organised into six further chapters.

Building on the initial overview in this Introduction, Chapter two more fully addresses the first sub-

question by examining why the green economy model has been proposed as a solution for sustainable

development. This discussion is developed through a detailed analysis of conservation literature,

which provides further insights that help explain the integrated framework promoted in green

economy discourse. Chapter two further sets the scene for the research by highlighting outstanding

knowledge gaps concerning a green economy, notably the need to understand factors that can impede

or enable policy reform processes.

Chapter three discusses the analytical framework employed in this research. It justifies the use of a

political economy lens to examine institutions, actors and power across different scales so as to

uncover the opportunities and complexities of green economy policy reform that led to the failure of

Aceh Green. The chapter also discusses the specific methods of data collection and analysis that were

utilised, and provides a brief overview of the interventions involved in Aceh Green. It argues that the

case study research provides the most suitable basis to gather context rich new knowledge about the

constraints of implementing green economy reforms. As a failed intervention and a world first, this

chapter highlights that Aceh Green presents a unique opportunity to uncover the inherent tensions

involved in trying to move the concept of a green economy through the early stages of the policy

reform process.

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Chapter four addresses the second sub-question regarding how Aceh’s political economy shaped the

framing of Aceh Green. First, it provides an historical overview of political economy of sustainable

development in Aceh. The chapter contextualises Aceh Green within long standing cultural traditions

and power dynamics. The second half of the chapter goes on to explain the perceived need for Aceh

Green, and the set of circumstances that led to the intervention. It explains the mechanisms and

strategies through which Aceh Green was expected to address development and natural resource

management challenges in Aceh, and the rationale that guided these tactics.

Chapter five focuses on the tensions between the prevailing political economy and the policy shifts

promulgated by Aceh Green, thereby addressing sub-question three. It argues that both the private

sector and the state failed to take the steps deemed necessary to transition to a green economy. The

private sector did not establish new green businesses due to existing investment climate constraints.

It was a case of the risks outweighing the investors' expected rewards. The main concerns that

investors raised were the high levels of corruption and the lack of security over resource rights. Such

risks were not adequately offset due to an absence of positive market signals for business models

tailored to social and environmental goals, coupled with investor and capital market expectations for

quick, high value returns. Aceh’s coffee sector provides a notable exception to the lack of alternative

green economy progress in Aceh, and demonstrates that businesses may address green economy

goals where it is in their economic interests to do so. The second part of the chapter analyses state

barriers to the realisation of Aceh Green associated with existing regulatory uncertainty and a lack of

willingness for reform from government decision makers who had a vested interest in the status quo.

The primary limitation was that Aceh Green was promoted by the Governor of Aceh and ad-hoc

government agencies, neither of which had the authority to determine policy reform outcomes. Laws

could not be passed, or new programmes initiated, without broader political support at district,

provincial and central levels. The fact that Aceh Green attempted to move forward without such

support led to implementation problems associated with bureaucratic competition and confusion, and

ultimately meant that once a new administration was elected to power, Aceh Green was simply

discarded.

Chapter six addresses sub-question four to show how the critical juncture of a ‘Green Governor’

elected to power could not be seized due to a lack of coalition building by proponents of Aceh Green.

The main themes discussed are: 1) the processes for gaining endorsement through the active

engagement of other actors; and 2) the absence of green economy benefits at the early stages of the

reform process as a means to build support for the proposed policy reforms. It argues that a key barrier

was the lack of appropriate types or levels of assistance from the international community whose

11

bureaucratic systems, capacities and beliefs were ill suited to engage directly with government or the

private sector.

Chapter seven draws on the insights from the proceeding chapters to synthesise the opportunities

and complexities of achieving effective policy reform to realise a green economy, and therefore what

this means for the viability and relevance of this model as a means to achieve sustainable development

internationally. Special attention is given to contextual issues within Aceh and the Aceh Green

initiative so as to clarify the limitations of generalising case study findings and insights to other

settings.

12

Chapter 2: The ‘green economy’ concept and current

debates

Over the last decade the concept of a ‘green economy’ has been increasingly promoted for its ability

to counter mounting economic inequality, resource depletion, environmental degradation and

climate change (UNEP 2011). Proponents suggest that it presents a fundamentally different way of

reframing and achieving sustainable development by aiming to reorient the economic system in ways

that jointly address the underlying drivers of economic, social and environmental problems (ten Brink,

Mazza et al. 2012). The aim is to bring business into social and environmental arenas that have

historically been the primary domain for government and not for profit actors, and through this

approach create wider benefits and synergies. This integrated approach hopes to appease multiple

interests – ranging from those focused on the importance of continued economic growth to those

who are interested in environmental conservation – and is therefore expected to generate broader

buy in and political support compared to previous sustainable development approaches that have

mostly been site, or sector specific (Jacobs 2012). As this chapter will show, however, there are

ongoing debates concerning the viability and relevance of a green economy, especially in terms of the

challenges of implementing the model through the early stages of policy reforms. This work helps

identify knowledge gaps around a green economy to situate the contribution of this research.

2.1 A green economy

This section provides an overview of the green economy model, including the rationale for its

proposed objectives and strategies. Literature from natural resource conservation is then used to

understand the basis for a green economy’s purportedly integrated approach.

2.1.1 Conceptual underpinnings

A green economy aims to improve human wellbeing and social equity while at the same time reducing

environmental risks and ecological scarcities (UNEP 2011). Green economy policies and strategies aim

to achieve this by shifting economic systems away from environmentally and socially harmful

economic growth trajectories towards the production of goods and services that proactively address

and prevent such destruction (Chapple 2008, Khor 2011, UNEP 2011, ten Brink, Mazza et al. 2012). A

green economy would, for example, generate income and employment opportunities while

13

concurrently reducing carbon emissions and pollution, enhancing energy, water and mineral

efficiency, and preventing the loss of biodiversity and ecosystem services (Ocampo 2011).

The underlying premise of a green economy is that the current economic system does not adequately

value social and environmental costs and benefits which leads to a gross misallocation of capital

(Pearce and Barbier 2000). In other words, because markets and prices do not accurately reflect the

full social and environmental costs of economic activity, resources are not allocated in the best

interests of society (Frank and Bernanke 2004). In Indonesia, for example, seasonal burning of the

rainforest to make way for the establishment of estate crops causes approximately US$1 billion in

annual health and tourism related costs for neighbouring Singapore and Malaysia. But because the

prevailing economic system does not attribute these costs to the individuals and businesses

establishing the estate crops, it remains profitable for them to continue destroying the forests (Onn

2013). A green economy aims to address problems such as this by reorienting the incentive structures

within the economic system so that public and private investments must account for the full set of

costs and benefits they produce. In the case of Indonesia’s burning rainforests, for instance, this would

mean that those responsible for the burning would be liable for the full set of costs the burning

created. Through this approach it is expected that human and financial capital will be reallocated in a

manner that better matches the sustainable development imperatives of improving human wellbeing,

increasing social equity and reducing environmental degradation (TEEB 2009, UNDP 2016, ten Brink,

Mazza et al. 2012).

A green economy proposes three primary strategies to reorient the economic system to help lever

and direct private sector investment towards a green economy: 1) addressing market failures through

price adjustments and regulatory enforcement so that resources are used more efficiently and in line

with societal values; 2) public spending to support environmentally friendly economic growth,

innovation, and access to information; and 3) international collaboration to put in place global

agreements and regulations in support of these efforts. Box 1 below provides more detailed examples

on the types of policies and programmes that fall within the remit of a green economy.

14

Box 1: Policies and programmes proposed through the green economy approach

Resource pricing. Internalising the full costs of environmental degradation or protection into the price of a

good or service promotes green activities by reorienting investment incentives and ensuring a more level

playing field between green economy oriented investors and their unsustainable competitors.

Subsidy reform. Factoring environmental considerations into decisions around subsidies removes those

business practices, firms and industries that only exist because of subsidies in under priced resources. For

example, the phasing out of subsidies for fossil fuels, and pricing in health and environmental externalities

from fossil fuel combustion, could help the transformation to more renewable and environmentally friendly

energy sources.

Public investment and spending. Four focuses for public spending are: 1) increasing investment in the

sustainability of ecosystem services for the benefit of current and future generations; 2) promoting

innovation in appropriate new technologies and behaviours; 3) investment in common infrastructure that is

required for certain green innovations to flourish; and 4) fostering infant green industries. Governments can

also focus on how their existing spending is being used – for example, ensuring public buildings are

constructed with sustainably sourced materials.

Information and metrics. Better information on the state of the environment, ecosystems and biodiversity

is essential for both private and public decision making that determines the allocation of natural resources.

Conventional economic indicators – namely, Gross Domestic Product (GDP) – fail to reflect the extent to

which production and consumption activities may be drawing down on natural capital. A green economy

demands that new policies and programmes understand the true economic, social, and environmental

impacts of their prescriptions.

Regulatory reform and enforcement. A well designed and enforced regulatory framework can create rights

and incentives that remove barriers to green investments, and regulate the most harmful forms of

unsustainable behaviour, either by creating minimum standards or prohibiting certain activities entirely.

These strategies can increase the confidence of investors to channel capital into businesses that drive a

green economy forward.

International frameworks. In addition to national laws, there are also a number of international and

multilateral mechanisms that regulate economic activity and can help play a role in the transition to a green

economy by: 1) regulating unsustainable economic activity with standards or prohibitions (multilateral

environmental agreements); 2) enabling or obstructing the flow of green goods, technologies and

investments (the international trading system); and 3) affecting the rights and obligations regarding foreign

investments (the international investment framework).

Sources: Pearce and Barbier 2000, TEEB 2009, UNEP 2010a, UNEP 2011, Stiglitz 2012

15

Green economy proponents suggest that the exact nature of policies and strategies should be tailored

to each unique setting. UNEP (2011), for example, states that green economy initiatives should adhere

to the lessons learnt from the ‘blueprint’ development failures of the past (see Roe 1991), and

encourages a diversity of approaches relevant to each context. There is, however, a commonality

across the various approaches; a focus on reorienting the incentives within the economic system –

either through fiscal measures, laws, norms, international frameworks, or new infrastructure, for

example – so as to encourage a progression towards sustainable development (UNEP 2010a). Neo-

liberal ideas inform these proposed interventions, especially the emphasis on formalising property

rights over environmental goods and services and creating new markets for these assets (Castree

2008). These efforts to commodify nature are then expected to incentivise the private sector to

redirect capital in favour of investments that improve natural resource management (Morrow 2012,

TEEB 2010, UNEP 2011). Robinson (2012: 1) justifies this approach based on the standpoint that any

intervention that fails to engage with or influence the private sector is unlikely to deliver significant

impact given the overarching role that the private sector plays in economic, social and environmental

spheres around the globe; “the land area under corporate management is vast. The extent to which

people depend on businesses for their incomes and livelihoods is overwhelming”.

A green economy has been hailed for its potential to reignite international political interest in

sustainable development (Jacobs 2012). The concept of sustainable development was criticised as

early as the 1990s for an absence of a clear theoretical and analytical framework, and its incoherent

or inconsistent concepts, criteria and policies (Lele 1991). A later review shows that the concept of

sustainable development has continued to suffer from this fragmentation, creating political divides

between various strategies ranging from those emphasising the overarching importance of economic

growth, to those focused on sustainability as protectionist conservation (Hopwood, Mellor et al.

2005). In contrast, green economy proponents assert that because their model addresses the three

pillars of sustainable development in an integrated, holistic manner it can better generate broader

buy in and political support from multiple interests (Drexhage and Murphy 2010). Of particular

importance in this respect is that a green economy is attractive to political decision makers who want

to improve social and environmental conditions but are hard pressed by their electorates to ensure

continued economic progress (Jacobs 2012, Reilly 2012). On the other side of the argument, there is

considerable criticism that a green economy slots environmental issues into the prevailing capitalist

system without addressing underlying drivers of environmental degradation (as discussed further in

section 2.2) (Morrow 2012).

16

2.1.2 Historical antecedents to a green economy

Green economy ideas came out of a recognition that economic, social and environmental processes

could not be treated as separate entities and that an integrated approach is needed to avoid policy,

management and governance fragmentation (Morrow 2012). An important feature of this argument

is that the private sector needed to be engaged more intensively given that it is a big contributor to

current problems, and therefore should play a major role in improving the situation. Underpinning

this rationale is the large conservation literature highlighting the deficiencies of previous approaches

(see Box 2 for definitions and brief overviews of each type of initiative) that have failed to implement

integrated, cross sectoral strategies that consider the linkages and interactions between economic,

social and natural processes (Ashley, Russell et al. 2006, Fisher, Maginnis et al. 2008). Recent findings

from conservation research promote a landscape approach, which takes a holistic view of society’s

needs – including, biodiversity conservation, fresh water supply, food and energy security, and job

creation, for example – and tries to balance the potential trade-offs between these inter-linked

objectives within a particular geographic landscape1 (Sayer, Sunderland et al. 2013). The landscape

approach both informs the rationale of the green economy concept, and provides some practical

examples that showcase the benefits of utilising an integrated approach to sustainable development

(Kissinger, Brasser et al. 2013, Thiaw 2013).

‘Fortress conservation’ approaches of the 1960s and 1970s concentrated on the importance of

establishing Protected Areas (Fisher, Maginnis et al. 2008). Success has been limited, however. A study

of Protected Areas in 133 countries in Latin America, Africa, the Middle East, Asia and Eastern Europe

estimates that only one-third of the areas investigated have been effectively conserved (Strassburg

and Creed 2009). Protected Areas have also been heavily critiqued for generating negative social

impacts, including gross violations of human rights and the economic and political marginalisation of

rural people that have been blocked from accessing and utilising their traditional resources

(Brockington and Igoe 2006, Coad, Campbell et al. 2008). One of the main reasons why protectionist

approaches have failed is that they have succumbed to ecological simplification; where protected

areas are undermined by outside pressures because they ignore the dynamics of the wider and human

influenced landscapes which ecosystems are ultimately a part of (Fisher, Maginnis et al. 2008).

1Landscapes are multi-jurisdictional, incorporate a variety of stakeholders, and reflect not only biophysical

systems but also economic, political, and cultural meanings (Mckinney, Scarlett et al. 2010).

17

Box 2: Description of previous conservation initiatives

- Protected Areas. Protected Areas attempt to be free from human influence and actively promote the

removal of local communities from conservation sites (Fisher, Maginnis et al. 2008). Some 12.9 per cent

of the world’s land areas outside of Antarctica, and 6.3 per cent of the world’s territorial seas, are now

Protected Areas – the largest deliberate decision of resource use allocation in history (UNEP 2010a).

- Integrated Conservation and Development Projects. ICDPs are defined as conservation projects that

incorporate rural development components (Wells and Brandon 1992). They assume that poverty

alleviation and development serve to increase community receptiveness to conservation by providing a

form of compensation for restricted access to resources (Blom, Sunderland et al. 2010), and through

new employment opportunities that counter the need to engage in extractive activities (Robinson and

Redford 2004).

- Community Based Natural Resource Management. The central precept of CBNRM is that the locus of

environmental management is at the local community level, where conservation is undertaken by, for

and with the local community (Ostrom 1990, Western and Wright 1994).

- Payments for Environmental Services. PES involves transactions where the buyers of environmental

services (such as clean water) conditionally compensate the providers of those services (such as

upstream residents who keep waterways clean by avoiding deforestation and other polluting activities)

(Wunder 2005). Like ICDPs, PES assumes that people will respond to the benefit – i.e. they will protect

the area in question if they receive greater direct benefits from conserving it than they do from

degrading it (Ferraro 2001). PES differentiates itself from previous conservation approaches, however,

by requiring that payments to resource owners are performance based – that is, they are conditional on

the explicit achievement of certain conservation goals (Blom, Sunderland et al. 2010).

By the 1980s, conservation and development practitioners increasingly accepted that it was neither

ethically justifiable nor politically feasible to exclude natural resource dependent people from

conservation areas without ensuring their livelihood security. This acknowledgement led to the

emergence of a new conservation paradigm; Integrated Conservation and Development Projects

(ICDPs) (Wells and Brandon 1992). However, published reviews conclude that ICDP projects

worldwide, including in Indonesia (Wells, Guggenheim et al. 1999), have had limited success at

achieving either conservation or development objectives (Barret, Brandon et al. 2001, McShane and

Newby 2004). This is due to a focus at the site level, ignoring influential factors at wider scales – for

example: availability of rural credit, subsidies, and tax incentives; inflation versus stability of the

national currency; raising or lowering trade barriers; laws governing labour practices; and receptivity

to foreign capital (van Schaik and Kramer 1997, Ferraro 2001, McShane and Newby 2004, Fisher,

Maginnis et al. 2008). This point is well summarised by Terborgh (1999: 169), who states that, “what

ICDPs do not take into account is that local people are only minor players in a much larger theatre”.

Community Based Natural Resource Management (CBNRM) arose in parallel to ICDPs in an effort to

give more attention to the principles of community rights and empowerment (Lele, Wilshusen et al.

2010). While a range of research findings demonstrate the ability of local communities to achieve

18

effective natural resource management (Gilmour and Fisher 1991, Ostrom, Burger et al. 1999,

Wyckoff-Baird, Kaus et al. 2000, Bray, Duran et al. 2008, Porter-Bolland, Ellis et al. 2011), strong

disagreements remain about how realistic it is to achieve positive results at a larger scale. CBNRM is

centred on the establishment of community rights to resources; where clearly defined and secure

rights provide an incentive for active participation and sustainable use because they guarantee long

term access to, and control over, resources (Ostrom 1990, Robinson and Redford 2004, Rasul, Thapa

et al. 2011). A key problem with this approach is that local rights to resources are often not respected

and are weakly implemented in the face of a powerful state and wider pressures on resources (Barman

and Vogel 2008). An example of this can be seen in Indonesia where adat, or customary rights, have

gained increased recognition in recent years, and various legal instruments have now been established

which outline the rules and procedures for de jure recognition of these rights. However, limited

resources, as well as the time and complexities involved in an application to formalise these rights

mean that very few adat areas have actually been mapped and legally recognised (Yuntho 2012). The

problem in this and many other cases, is that broader social, political and market processes make it

difficult for local groups to protect their resources from exploitation by powerful outsiders (Wyckoff-

Baird, Kaus et al. 2000, Chhatre and Saberwal 2005).

Payments for Environmental Services (PES) have more recently emerged as a conservation tool that

aims to provide greater accountability than previous approaches (Blom, Sunderland et al. 2010).

Published findings on PES schemes highlight the limitations of this approach in achieving either of the

economic, social and environmental outcomes targeted (Cropper, Puri et al. 2001, Engel, Pagiola et

al. 2008, Porras, Grieg-Gran et al. 2008). The problems with PES are similarly clustered around non

site specific issues that limit project effectiveness, including: 1) the difficulties of clearly defining

community rights to resources (Brown 2008, Tacconi 2010); 2) a lack of permanence based on market

limitations that do not provide certainty that financial incentives will continue over the long term

(Angelsen 2008, Peskett 2009); and 3) problems posed by drivers of environmental destruction that

are external to the project site, particularly economic growth models promoting plantation

expansion, population migration to rural areas, and inappropriate infrastructure development (Sayer

and Wells 2004, Parrotta, Wildburger et al. 2012).

The common themes that have emerged from previous conservation experiences are the importance

of considering the full range of society’s interests, and that major drivers of conservation and

development outcomes are often the result of decisions or actions made off site by powerful (typically

government or company) actors. The need to approach society’s various needs and interests in an

integrated manner means, for example, that the management of multiple land uses (farms, forests,

water bodies, and settlements) should recognise the interactions between the natural environment

19

and the human systems that depend on it (Parrotta, Wildburger et al. 2012, Kyte 2012). Contemporary

conservation literature therefore promotes the need to move away from narrow, sectoral, or site

specific interventions towards a landscape approach, which takes into consideration the wider social,

political, market, and ecological issues that influence sustainable development outcomes (McShane

and Wells 2004, Ashley, Russell et al. 2006, Frost, Campbell et al. 2006, Parrotta, Wildburger et al.

2012).

The advantages of a landscape approach are explained from recent forest conservation research. In

these case studies, integrated sustainable development strategies that attempt to synergise

conservation and economic development strategies. Some of the economic programs have included

improving access to credit for sustainable businesses while restricting credit to extractive businesses

(Nepstad, McGrath et al. 2014), the establishment of industrial timber plantations outside of

protected areas to improve timber supplies and create jobs (Sukhdevb, Prabhua et al. 2012),

agriculture intensification on existing farms (Oakes 2012), and the establishment of renewable energy

for households within and outside the project site (Hodgdon, Hayward et al. 2013). The lessons learnt

are that this cross sectoral, integrated approach can improve program outcomes by making it easier

to gain political and public support for conservation through the process of addressing wider needs

within society, such as food, livelihood and energy security. Other benefits of the landscape approach

is that it directly tackles the underlying drivers of deforestation by providing sustainable livelihoods

and other sources of timber (Graham 2011), and reduces the risks associated with relying on only one

stream of financing to provide livelihood benefits and cover ongoing program development costs

(Cranford, Parker et al. 2011, Macqueen, deMarsh et al. 2012, Gaveau, Kshatriya et al. 2013). Through

these examples, the value of using a range of conventional conservation interventions – i.e. Protected

Areas, ICDPs, CBNRM, and PES – is not discounted. The important point is that economic, social and

environmental benefits have been shown to increase where interventions are nested within a wider

landscape approach that emphasises cross sectoral strategies, and that considers broader drivers of

environmental destruction beyond the immediate project site (Sayer and Wells 2004, Parrotta,

Wildburger et al. 2012).

The well documented experiences of conservation initiatives, and the emerging recognition of the

importance of a landscape approach in particular, support the rationale for the integrated framework

promoted by a green economy. Both the landscape and green economy models recognise that efforts

aimed at improving natural resource management must take into account interdependent human and

environment needs specific to certain people and places. The other fundamental lesson to emerge

from conservation research, which has likewise informed the landscape and green economy

approaches, is that it is essential to look outside the immediate variables present at the project site

20

level, and to tackle broader political and economic reforms that are ultimately key determinants of

sustainable development. A key outstanding question though is whether or not the strategies and

programmes employed through a green economy can in fact address sustainable development

challenges in the integrated manner that it espouses.

2.2 A green economy as a policy reform process

The implementation of a green economy involves a process of policy reform, which is defined here as

the political process of identifying problems, and designing and implementing strategies to deal with

those problems (Keeley 2001). For the viability and relevance of a green economy to be better

understood it needs to be analysed in terms of the opportunities and complexities of navigating this

policy reform process. As natural resource management literature clearly demonstrates, there are

often significant differences between the anticipated impacts derived from a concept or model, and

what actually happens in practice (Lewis, Bebbington et al. 2003, Quarles van Ufford and Kumar 2003,

Mosse 2005). Without an analysis of the practice of green economy policy reform we have an

interesting concept that outlines a set of ideas and strategies, but lack knowledge about whether or

not this approach can be effective at transforming its stated goals into results.

So far there have been limited case studies to analyse the opportunities and complexities of green

economy implementation. A range of research has focused on particular projects encouraged by the

green economy concept – for example, REDD+, bioenergy, and ecotourism (Robertson 2006, Bumpus

and Liverman 2008, Pye 2010, Lohmann and Böhm 2012) – but these case studies do not resemble

the comprehensive, multi-sector policy reforms that are supposed to differentiate a green economy

approach from its predecessors. In one of the more comprehensive pieces of analysis, Sukhdev, Stone

et al. (2010) provide a broad overview of green economy interventions, but these case studies are also

both sector and site specific and, furthermore, the ‘success stories’ presented are normative in tone

and lack critical reflection. Scoones, Leach et al. (2015) offer another example of green economy

analysis, but again this work does not dig into the specifics of green economy reform complexities.

Instead, their work provides a high level discussion of different sustainable development options,

which briefly comments on policy reform challenges, but does not draw on insights from actual green

economy policy reform experiences. In a final example, Smith, Halton et al. (2014) look at the

transition to a green economy in small states around the globe, but focus on people’s perceptions of

what is needed for such a transition to transpire, rather than a detailed assessment of what happens

when green economy interventions are attempted in practice.

21

The lack of case study material makes it difficult to analyse the opportunities and complexities of green

economy policy reform. Indeed, as Brand (2012: 30) highlights, “what is usually described is the

potential of a green economy, whereas the obstacles and opposing interests are hardly addressed.”

There is, however, an extensive literature discussing factors that have inhibited previous natural

resource policy reform processes in achieving their targeted outcomes (see Acemoglu and Robinson

2012 for a good summary). Vested interests are often described as the dominant problem (Barman

and Vogel 2008). This obstacle can be countered by harnessing critical junctures (Acemoglu and

Robinson 2012), but there are also challenges in this, particularly the difficulties in altering incentives

so that people and organisations redirect their resource allocation decisions in favour of proposed

policy reforms (Angelsen 2009). An incentive is defined as something that motivates an individual or

organisation to perform an action (Armstrong 2013), and is commonly determined by belief systems

and an expectation of receiving benefits in exchange for acting in a particular way (Dalkir 2013). The

following sections review these common constraints to previous policy reforms and discusses how

they interact with a green economy approach. This analysis provides analytical ground work for this

thesis as it sets out some of the main factors that need to be better understood in relation to the

viability of green economy policy reform, which are then further built on through the case study

research in later chapters.

2.2.1 The barriers to reform posed by vested interests

Policy reforms promoting new resource management strategies and ideas create trade-offs that

attract resources away from existing activities and disrupt the status quo. As a result, they are often

difficult to achieve due to the hostility of vested interests who fear the loss of economic, social or

political privileges (Young 2002, Underdal 2006, Barman and Vogel 2008). The literature provides

numerous examples of interventions that aim to improve sustainable development conditions but are

blocked by actors who will lose access to existing benefits (Rodan, Hewison et al. 2006, Li 2007, Cotula

2012).

Vested interests within the private sector are often well positioned to ensure that policy reforms are

either abandoned altogether or are steered in their favour given the close interaction between

political decision making and existing economic interests (Stiglitz 2012). The private sector also has

significant finances at their disposal to sway public opinion, or engage in direct bribery of decision

makers (Tapscott and Williams 2012). The difficulties encountered in transitioning from fossil fuels

towards renewable energy provides a good example. Hoffman (2011) explains that investment in

decentralised energy grids would help facilitate the adoption of renewable energy, but due to the

22

political influence of existing energy companies, and the financing companies that back them, policy

preferences remain fixed on centralised grids that continue the hegemony of fossil fuels and enable

existing energy companies to retain their market power.

Vested interests within government can also play a large role in determining the fate of the policy

reforms. Powerful interest groups within specific government departments can build up commitment

to existing policies due to the benefits they enjoy under the status quo, such as prestige and

management control, as well as corrupt relationships with existing industries (Shannon 2003, Rausser,

Swinnen et al. 2011). The problems associated with corruption are especially pertinent in low income

countries were surveys have found that bribes are solicited by between 15 and 45 per cent of public

service providers (Cockcroft 2012). Corruption presents one of the biggest hurdles to reform in the

case study discussed in this thesis; indeed, Indonesia is ranked 107/174 countries on Transparency

International's (2014) corruption index.

The opportunities and complexities of addressing vested interests through green economy policy

reform have not been studied in detail. Green economy experiences to date, particularly in developing

countries, have been focused on specific sectors (see Sukhdev, Stone et al. 2010) rather than a

comprehensive reform model. This thesis explores the ways in which efforts to transition to a green

economy encounters the traditional barriers posed by vested interests. As will be seen later in the

thesis, vested interests continue to present a challenge to reformers given that a green economy

involves new economic sectors, technologies, and financing mechanisms (TEEB 2010, UNEP 2011),

that disrupt political and economic dynamics favourable to current elites. An important focus of this

work is on the private sector, and the extent to which it is determined to steer policy reform processes

for its own benefit, including how established businesses (i.e. the palm oil and mining companies in

the Aceh Green case study) push back against reform efforts, and how new businesses looking to

establish themselves under a green economy framework also try to influence decision makers to their

advantage. Also relevant is the analysis on how government representatives respond to green

economy reforms given the existence of strong patronage systems tied to the political and economic

status quo. This thesis provides in-depth analysis of the interplay between green economy and vested

interests in the Aceh Green case.

23

2.2.2 Critical junctures and the importance of building coalitions for change

A number of scholars have recently examined the way in which resistance to change by vested

interests can be countered through ‘critical junctures’; major events that disrupt the existing political

and economic conditions and thus create opportunities for policy reform (Acemoglu and Robinson

2012, Stiglitz 2012). The corollary of these findings is that achieving policy reforms in the absence of

critical junctures can be particularly difficult.

Critical junctures often arise when a sudden alteration of existing conditions emerges, which opens

up opportunities for further changes that were previously non-existent (Malloch-Brown 2011). Critical

junctures can be generated through: mass movements, revolts, or the emergence of remarkable

leaders (Rasul, Thapa et al. 2011); a shortage of resources (such as peak oil and its ability to destabilize

existing political and economic systems) (Leggett 2014); or random factors, including a change in

climate conditions (Acemoglu and Robinson 2012). In the Aceh Green case study there was arguably

the concurrent occurrence of three critical junctures: 1) the 2004 Boxing Day tsunami; 2) the end of a

30 year conflict; and 3) the unique circumstances presented by Aceh’s first democratic election that

led to the instatement of a ‘Green Governor’.

How to ensure that these critical junctures result in sustained policy reform as desired? Previous

studies show that pro change coalitions that are determined to resist the ability of vested interests to

block reforms during and after critical juncture moments are an important factor (Frost, Campbell et

al. 2006, Acemoglu and Robinson 2012). Pro change coalitions can be made up of people and

organisations from within government, international organisations, civil society and the private sector,

who together provide the political and economic weight to sustain reforms (Scoones, Leach et al.

2015). As an example, Fox, Adhuri et al. (2005) explain that even if national leaders decide to try and

combat climate change, this is only one side of the equation; equally important is strong public support

and engagement to hold politicians to account in keeping their promises to achieve the targeted

reforms.

Other important attributes of pro change coalitions is that they provide the variety of skill sets and

resources essential to implement the reforms effectively (Acemoglu and Robinson 2012). For example,

conservation literature shows that attempts to implement a landscape approach require a whole

range of partners from diverse sectors to work together, especially given the complexities and multi-

dimensions of integrating conservation goals into national economic strategies, and managing for

societal values beyond biodiversity (McShane and Wells 2004, Millennium Ecosystem Assessment

2005). That is, because conservation organisations frequently lack appropriate expertise and

resources in key areas – the economy and business activities, for example – building coalitions that

24

include people and organisations that cover all necessary skill sets is an essential part of effective

policy reform (Blom, Sunderland et al. 2010). This thesis investigates to what extent a green economy

reform process can engineer the necessary coalitions in support of change, and what are the

challenges involved in doing so.

2.2.3 Beliefs and the production, framing and utilisation of information

People’s beliefs are ideas that they accept as true (Schwitzgebel 2006), and that generally determine

what is important and desirable to them, and how they think public and private resources should be

managed (Angelsen and Brockhaus 2012). People’s beliefs are adaptable, however. If they receive new

information or insights, they can change their mind about what they think to be true or false. A crucial

aspect of building pro change coalitions is therefore the dissemination of information about how the

proposed policies either align with people’s existing beliefs, or why it is necessary for people to shift

their beliefs in favour of the proposed reforms (Stiglitz 2012). As Arts and Buizer (2009) note,

knowledge production and people’s interpretations of the world have driven change throughout

history as new ideas, concepts and narratives become disseminated and accepted within society and

affect social practices and outcomes. This section helps set the scene for the research conducted in

this thesis by discussing some of the tensions between different beliefs about the acceptability of a

green economy, and how beliefs are affected by the production, framing and utilisation of

information.

Current beliefs about a green economy are varied, especially regarding the extent to which it

generates negative impacts, and the acceptability of these impacts. One of the central tenets of a

green economy is that it aims to simultaneously improve economic, social and environmental

conditions. Ocampo (2011: 19) asserts that:

It is possible to have a win-win or ‘double dividend’ strategy of growth with environmental sustainability, and even a win-win-win or ‘triple dividend’ strategy that also includes poverty eradication and broader improvements in social equity.

A number of recent publications highlight the possibilities for a green economy to deliver triple-win

benefits, and promote the message that there does not need to be trade-offs between economic

gains, social equity and environmental sustainability (Box 3 provides a snapshot of this work). Such

positions are supported by the work of Smith, Hargroves et al. (2010) who present a series of examples

as evidence that it is possible for economic growth, social justice and environmental conservation

objectives to be simultaneously achieved – including, the case study of South Korea, where economic

growth rates have been achieved for the last 30 years alongside increasing forest cover. Gea and Zhib

25

(2016) find that green growth strategies have positive impacts on employment in both developed and

developing countries. Further arguments are presented by the UNEP (2011), who show that globally

about 25 per cent less natural resources were required in 2002 compared to 1980 to produce one unit

of Gross Domestic Product (GDP), and that there are opportunities to continue this trend so that

further economic growth can be achieved with less environmental degradation.

Box 3: Studies showing potential inter-linkages between economic, social and environmental benefits

The ‘success’ stories provided in the literature do not, however, prove that a green economy can be

attempted without the generation of negative impacts. These stories tend to focus on a specific

project or sector, and they do not demonstrate that absolute decoupling is achievable – i.e. the

economy grows while overall resource use declines. For instance, the example from the UNEP (2011)

above regarding resource use decline only showcases the possibility of relative decoupling – i.e. where

fewer resources are needed per unit of growth but resource use as a whole continues to climb as

growth climbs. Losch, Freguin-Gresh et al. (2012) highlight that many ‘green’ initiatives that are

promoted due to their impact on tackling environmental problems fail to acknowledge the adverse

consequences they also generate. For example, agricultural intensification is heralded by many as a

solution for reducing deforestation pressures, yet the increased use of agricultural inputs such as

fertilisers, pesticides, irrigation and mechanisation can lead to greater pollution and carbon emissions

and the displacement of deforestation to other areas (Parrotta, Wildburger et al. 2012). These

challenges are even more complex at a global scale where a ‘race to the bottom’ could result in

businesses exiting highly regulated countries in search of lower cost, less regulated investment

climates, thus transplanting negative environmental impacts elsewhere and resulting in no net global

improvements (Cole 2004).

- The World Bank’s (2009) Sunken Billions study shows that productivity gains to the fisheries sector of

around US$50 billion per annum are possible if fishing efforts were reduced.

- The FAO’s (2013) Food Waste Footprint study shows that food waste is already costing the global

economy US$1 Trillion per annum, and there are cost effective ways to reduce this.

- The UN and EU’s (2009) The Economics of Ecosystems and Biodiversity study shows that the costs of

inaction on natural resource restoration could cost global GDP US$7 Trillion per annum by 2050.

- McKinsey Global Institute’s (2011) Resource Revolution study shows that improved energy and

resource productivity could increase global GDP by US$2.9 trillion per annum by 2030 above BAU.

26

To some authors who oppose the idea of a green economy, the notion that markets can solve the

environmental problems that they themselves are creating is paradoxical (Büscher and Arsel 2012).

This position sees the green economy’s claim of triple-win solutions as an attempt to nullify attention

to limiting economic growth (Ferguson 2015, Wanner 2015), and its inherently destructive

environmental effects (Lorek and Spangenberg 2014, Scoones, Leach et al. 2015). The possibility of

triple-win solutions is called into question even more acutely for low income, or rapidly emerging

economies, given their growing resource pressures. The challenges are highlighted by Brown (2008:

13):

If, for example, each person in China consumes paper at the current American rate, then in 2030 China’s 1.46 billion people will need twice as much paper as is produced worldwide today. If we assume that in 2030 there are three cars for every four people in China, as there now are in the United States, China will have 1.1 billion cars. The world currently has 860 million cars. To provide the needed roads, highways, and parking lots, China would have to pave an area comparable to what it now plants in rice. By 2030 China would need 98 million barrels of oil a day. The world is currently producing 85 million barrels a day and experts from the International Energy Agency have warned in 2007 that we may never produce much more than that.

Daunting statistics such as these have led many authors to criticise the green economy model for being

overly focused on advancing economic growth while failing to account for the escalating consumption

of an increasingly wealthy and urbanised population (York and Rosa 2003). However, this line of

thinking is countered by green economy proponents who maintain that slowing economic growth will

only make it harder for developing countries to make the investments necessary to transition to a

green economy (in more appropriate infrastructure, for example) (Ridley 2010). These authors

maintain that even without absolute decoupling, a green economy could, at a minimum, provide an

improvement on the social and environmental conditions that would otherwise be generated under

the status quo (Smith, Hargroves et al. 2010).

There is also a wide spectrum of views about the acceptability of trade-offs between economic, social

and environmental costs and benefits. Those with ecocentric beliefs emphasise the conservation of

‘nature’ is for its own sake, including the rights of non-human species, while others with more

anthropocentric views value nature and ecosystems based on human needs and purposes (Scoones,

Leach et al. 2015). The ‘precautionary principle’, which holds that ecosystems can reach ‘tipping

points’ and collapse abruptly without much prior warning, severely affecting the ability of future

generations to meet their needs (Dobson 1996, Lovelock 2009), creates further disagreement about

what level of environmental risk is tolerable. People’s acceptability of trade-offs ultimately depends

on their beliefs on the viability of proposed interventions and what level of environmental risk they

find acceptable.

27

People’s beliefs can change. The production, dissemination and absorption of information is a key

driver of this change (Stiglitz 2012). Green economy literature recognises the importance of

information in the policy reform process. For example, the UNEP (2010a) argue that a key problem

currently blocking environmental reforms is that conventional economic indicators that inform

government decision making, namely GDP, provide inadequate information on the extent to which

production and consumption activities may be drawing down on natural capital. The problem is that

by leaving environmental metrics out of decision making processes, activities that are not sustainable

are overvalued, thus helping extractive activities gain more public support than they otherwise might

if the full set of information on economic, social and environmental costs was made available.

Likewise, TEEB (2010) state that better information on the current state of the environment, what the

implications of further degradation would be, and what can be done, could help convince people of

the importance of green economy interventions.

Even where sufficient information is available, however, changing beliefs in favour of a proposed

policy reform can be difficult. Research shows that information that is consistent with people’s existing

beliefs is more often remembered, and seen as relevant, compared to information that is inconsistent

with their beliefs, which is more likely to be ignored, discounted or forgotten (Schrag and Schrag 1999).

Also of particular concern is that the framing of information, defined as the set of concepts and

theoretical perspectives that organise experiences (Goffman 1974), is often controlled and

manipulated to reinforce particular beliefs at the expense of others (Dewulf, Gray et al. 2009). The

topic of climate change exemplifies this dilemma. Policymakers, lobbyists, financial interests,

environmental advocates and climate contrarians all publicly battle to frame information in a way that

will turn the weight of public opinion – and the funds controlled by it – in their preferred directions

(McLeod 2005, Hawken 2010). Stiglitz (2012: 162-163) explains this situation as a contest based on

the art of persuasion rather than a true and fair depiction of the facts:

There is a real battlefield of ideas. But it does not, for the most part, involve a battle of ideas as academics would understand it, where evidence and theory on both sides are carefully weighed. It is a battlefield of ‘persuasions,’ of ‘framing,’ of attempts not necessarily to get to the truth of the matter but to understand better how ordinary citizen’s perceptions are formed and to influence those perceptions.

This battlefield of ideas is also an uneven one because the process of influencing people’s beliefs takes

large amounts of time, energy, and financing. Those with greater resources are in a better position to

influence. The carbon and resource intensive industries provide a good example. They utilise media

outlets, which they control, to consistently down play the risks of climate change to help ensure that

policies promoting environmental improvement do not make intellectual or political headway

(Hamilton 2010).

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In addition to the problems associated with control over the production and dissemination of

information, there are technical dimensions that also affect beliefs. For instance, forecasting the

impacts of change with great accuracy is particularly difficult, which in turn, can diminish people’s

belief that change is necessary or desirable (Goldstein 1999). Likewise, the costs of acquiring

knowledge and deepening people’s understanding of specific issues can be prohibitive (Fox, Adhuri et

al. 2005), or even if people do have access to information, they have varying capacities to analyse and

dissect it (Angelsen and Brockhaus 2012). Despite this, Tapscott and Williams (2012) write that this is

changing given the world is experiencing a revolution where we now have the technology at our

disposal to bring new ideas to light very rapidly, often helping these ideas to resonate throughout

society and take on a life of their own, no matter what vested interests do to try and resist them.

The green economy concept was intended to resolve the fragmented responses to sustainable

development so often encountered in the past. Instead, it seems to be further polarising opinions.

Further research is needed on how people’s various beliefs about a green economy affect attempted

policy reforms, and how information is utilised to impede or support these processes. These are areas

of enquiry pursued through this research.

2.2.4 Creating and reorienting benefits

To build pro change coalitions, proposed reforms must provide benefits to those people and

organisations whose support is being targeted (Angelsen 2009, Angelsen and Brockhaus 2012). Green

economy literature recognises this, and focuses on the need to create new or reorient existing benefits

through, for example: the formalisation of rights to environmental resources, cash payments for the

maintenance of these resources, and financial incentives that encourage research and investment in

businesses that have positive social or environmental impact (Pearce and Barbier 2000, TEEB 2009,

UNEP 2011).

Financial benefits have received the most attention in green economy literature, with positive stories

used to back up the proposed strategies. In the renewable energy sector, for example, early subsidies

from governments and international development organisations have helped speedup technological

advancements in solar, wind and bio-energy. As a result, renewable energy options are now cheaper

than fossil fuels in many countries and generate at least half of the energy needs of 50 developing

countries (IRENA 2015). In the forestry sector, Angelsen and Brockhaus (2012: 30) write that, “cash is

king”, and show that shifts in financial rewards can provide a powerful means to ensure that

deforestation is reduced by increasing the relative value of standing trees. However, in this example,

distributional issues concerning who actually receives the ‘cash’ are not addressed, thus creating

29

uncertainty to what extent these benefits would support coalition building. Furthermore, both of

these examples, as with most green economy research, are sector specific. Important questions

remain regarding the ability of a green economy to create or reorient benefits, including who they

target, and to what extent they encourage the formation of pro change coalitions.

A number of barriers to effectively creating or reorienting benefits have been highlighted by previous

research. Temporal factors can have a major impact. It is especially hard to incentivise people to

commit to reforms that they need to pay the cost of today, but do not enjoy the benefits of until a

later date, perhaps even beyond their lifetime. For example, research on climate change shows how

people’s day to day decisions are oriented towards short term priorities, rather than the difficult

adjustments required to avert future ecological disruption (Tapscott and Williams 2012).

How benefits are distributed can also affect the development of pro change coalitions. The potential

for a green economy to create unequal access to resources is being brought to fore by the recent

escalation of ‘resource grabs’; where agribusiness interests are acquiring long term rights over large

tracts of land and other resources at the expense of local communities in lower income countries

(Fairhead, Leach et al. 2012). Resource grabs are often being driven inadvertently by green economy

policy – including, the commercialisation of nature, subsidies for bioenergy plantations, and

underlying expectations of higher agricultural commodity prices if there are reductions in

deforestation (Cotula 2012). Some authors, as well as civil society organisations, have come out

against the green economy model due to the threat that it will benefit powerful private sector

interests at the expense of the poor who lose public access to basic amenities and livelihood

opportunities (Hoffman 2011, Benson and Greenfield 2013). An additional point made by Mcleod and

MacIntyre (2007) concerning the distribution of benefits is that while the costs of policy reform

adjustments tend to be concentrated amongst certain groups, the benefits are often widely dispersed

and so their impact on any one person is diluted. As a result, the people or organisations directly

threatened by the new policies are much more likely to mobilise against the proposed changes

compared to the more dispersed beneficiary groups, who are relatively less motivated to push for

change.

Constraints around accessing benefits present further complications. Ribot and Peluso (2003) show

that while a reform process may grant a person rights to a resource, that person may not actually have

the ability to access benefits from that resource due to a range of additional factors – including, access

to markets, capital technology, knowledge, or authority for example. Without addressing these wider

issues, which in many cases will present major challenges on their own, the benefit in question can be

negligible.

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Implementing new benefit schemes can also be problematic; and, if the proposed benefits do not

come to fruition then they cannot be expected to help engineer coalitions in support of change.

Conservation literature provides a number of examples. In the case of PES schemes, many local

communities have been disappointed that the benefits promised to them – mainly new livelihood

opportunities – have not materialised, and the benefits ultimately received have been insufficient to

offset restricted access to their land and the income previously accrued through resource extraction

(Zbinden and Lee 2005, Pagiola, Rios et al. 2008, Blom, Sunderland et al. 2010). ICDPs have also faced

similar constraints (Wells and Brandon 1992, Ferraro 2001, McShane and Wells 2004). The problem is

summarized by Fisher, Maginnis et al. (2008: 23), “few projects have been able to provide the range

of income generating, labour intensive activities that satisfy the livelihood needs of local inhabitants”.

Key hindrances have been inter-organisational conflict and coordination problems between

implementing partners (McShane and Wells 2004), a lack appropriate technical skills required to put

adequate benefits in place (Fisher, Maginnis et al. 2008), and insufficient financial backing (McShane

and Wells 2004, Blom, Sunderland et al. 2010).

The ability of government and international organisations to provide, or support, the provision of new

benefits has also been heavily critiqued. As discussed above in relation to the work by Ribot and Peluso

(2003), the establishment of new benefits can require a host of other pre-conditions – such as, access

to supporting infrastructure, a well-functioning financial system, and effective regulations that are

monitored and enforced, for example (see also Hausmann and Rodrik 2003). Governments often do

not address such issues effectively due to the problem of vested interests (Karsenty and Ongolo 2011).

A lack of technical skills, management experience and finance can also play a part, especially in

developing countries (Zaelke, Stilwell et al. 2005). The efforts of international organisations to help

address these deficiencies are often disappointing. One of the main criticisms of international

organisations is that they repeatedly dedicate disproportionate resources to expatriate experts to

prepare detailed project plans and strategies, which then either lack implementation related funding

or, if implemented, are burdened by insufficient management capacity or budget flexibility to respond

appropriately when reality deviates from the plans (Sayer and Wells 2004). Other shortfalls relate to

the flow of programme funds; namely, that such funds are poorly aligned with the recipient’s needs

and development agenda, are often unpredictable, the timeframes are too short, there is

fragmentation between donors, and there are overly burdensome compliance obligations placed on

recipients (Heller 2005, Bourguignon and Sundberg 2007). The interventions of international

organisations in policy reform processes are thus often chronically incomplete.

To sum up, research has established that it can be exceptionally difficult to effectively reorient benefit

structures in an attempt to build pro change coalitions, especially regarding the challenge of ensuring

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effective timeliness, access, distribution and the creation of new benefits. The ability of a green

economy to navigate these problems, as well as any additional barriers, is yet to be ascertained. This

is a gap in knowledge that this thesis helps to fill through its analysis of the opportunities and

complexities of implementing green economy policy reform.

Conclusion

This chapter has outlined the rationale underpinning a green economy. It summarised a range of

literature, including the insights gleaned from previous conservation experiences, to present the main

arguments of green economy proponents – namely, that sustainable development goals will remain

elusive unless the integrated, cross sectoral, non-site specific approach promoted through a green

economy is adopted. This chapter also made it clear, however, that the viability of a green economy

remains contested. There are outstanding knowledge gaps concerning the opportunities and

challenges of the policy reform process, which ultimately determines if a green economy vision can

be realised in practice. The main questions that emerged through this analysis is how a green economy

will counter previous policy reform limitations such as the barriers presented by vested interests, and

the difficulties around building coalitions for change. As the remainder of the thesis will demonstrate,

a green economy model offers little new in terms of its ability to overcome the limitations that

previous policy reform processes have encountered. In fact, a host of new complexities emerge given

a green economy’s reliance on (mostly foreign) private sector investment in new sectors, which

complicates its ability to develop coalitions in support of change.

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Chapter 3: Research Methodology

Political economy has taken a more critical turn since it was first framed by scholars such as Adam

Smith in the late eighteenth century (an historical overview is provided by Mueller 2003). The

approach has been drawn on to discuss an array of political and economic processes within society

(see Boettke, Coyne et al. 2013). A political economy framework has been particularly useful in

understanding why previous policy reform processes concerning the use and management of natural

resources have either failed or succeeded (Boltz, Holmes et al. 2003, Acemoglu and Robinson 2012).

The first part of this chapter provides further details on the political economy framework to justify

why it has been employed in this research to understand the opportunities and complexities of green

economy policy reform.

The second part of this chapter details methods of data collection and analysis that were employed in

this thesis. Case study research forms the central feature of the approach because it provides much

needed empirical evidence to help fill the knowledge gaps identified in chapter 2, on the complexities

`of green economy policy reform. A brief introduction to Aceh Green is also offered in this chapter in

order to explain the rationale for selecting this particular case study – one of the world’s first attempts

(and failures) to implement a comprehensive, cross sectoral green economy strategy. Its failure

enables analysis of the questions surrounding the viability of a green economy approach.

3.1 Looking through a political economy lens

The central premise of a political economy framework in relation to natural resource use and

management is that interactions between political, economic and environmental conditions

determine the outcomes of attempted reforms and ultimately decide how resources are allocated and

governed (Gilpin 2001, Barman and Vogel 2008, Rausser, Swinnen et al. 2011, Kay 2012). This is well

summarised by Acemoglu and Robinson (2012: 79) who show that in disputes over resource allocation,

the outcome “depends on which people or group wins out in the game of politics – who can get more

support, obtain additional resources and form more effective alliances”.

Political economists have investigated issues of relevance to green economy reforms such as: the

institutions that frame the incentives faced by decision makers (Adam and Dercon 2009, Brondizio,

Ostrom et al. 2009, Rausser, Swinnen et al. 2011, Acemoglu and Robinson 2012); how and why various

actors respond to these incentives (Grimble and Wellard 1997, Long 2001, Leftwich 2010, Losch,

Freguin-Gresh et al. 2012); and, how and why positions of power are important for determining access

to and control over resources (Peluso 2005), and affecting the outcomes of reform processes (Weir

33

2007, Biermann 2010). Any political economy analysis is considered across multiple scales; from local

through to international (Boscolo, Buongiorno et al. 1997, Putz, Zuidema et al. 2012). Together, these

hallmarks of political economy help reveal the incentives, conflicts, trade-offs and compromises that

decision makers face in considering a fundamental restructuring of the economy, and the relations of

power that ultimately determine which natural resource policies and strategies prevail.

The analytical framework used in this research also draws on insights from political ecology

scholarship. This is to ensure that this research captures the complex connections between social and

economic factors and the political dimension of the environmental issues at hand (Brown and Purcell

2005, Bryant 1998), as well acknowledging the mutual dependency between social values,

environmental knowledge and politics (Peet and Watts 2004, Ribot and Peluso 2003). However, the

analytical framework employed remains dominated by political economy insights. This is because

most political ecology analysis also relies heavily on a political economy framework in its attempt to

uncover social forms of access and control over resources (Forsyth 2008). Furthermore, this research

endeavours to avoid the criticism often targeted at political ecology, which is that it focuses too much

on ecology and forgets the politics and economics (Vayda and Walters 1999). As is seen in chapters 4-

7, it is issues surrounding power, politics and economics that had the dominant impact on Aceh Green

policy reform, not ecological factors.

Key analytical elements of political economy are presented in figure 2 below. The figure highlights that

actors affect policy reform processes depending on their beliefs, interests and power, which are in

turn influenced by institutions. A political economy framework studies these issues from the local to

international scale.

Figure 2: Main elements of a political economy framework in the context of policy reform

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3.1.1 Institutions

The political economy approach focuses on the investigation of institutions, specifically: what

institutional structures are present; how they are formed; and, how they influence the political and

economic decisions of governments and citizens (Hall 1997, Adam and Dercon 2009).

Institutions are not synonymous with ‘organisations’, as is sometimes the case in common parlance.

Rather, in the context of political economy analysis, institutions are:

… the rules of the game in a society as they structure incentives in human exchange, whether political, social, or economic ... The purpose of the rules is to define the way the game is played (North 1990: 3-5).

A distinction is drawn between formal rules, such as legal frameworks that govern rights and

responsibilities; and the informal, such as norms and conventions (North 1990). Political economy

analysis has traditionally concentrated on formal laws, especially how voting rules, the rule of law,

property rights, and laws governing exchange work to influence political and economic processes

(Rausser, Swinnen et al. 2011). Recent work, however, has highlighted that informal rules and norms

are no less influential and they have gained increased attention. Of particular importance is the

growing body of work on social capital, defined by Brondizio, Ostrom et al. (2009: 261) as, “the value

of trust generated by social networks to facilitate individual and group cooperation on shared interests

and the organization of social institutions at different scales”. Similar examples can be found in the

works of Barman and Vogel (2008), Henrik and Najam (2011), and Stiglitz (2012) who draw on the

concept of social capital to demonstrate the consequences of increasing inequality of wealth within

society. Their separate works all conclude that inequality reduces trust and erodes social capital, which

increases the likelihood that decision makers in richer nations, and richer enclaves within a country,

will have lower levels of concern about the less well off, leading to unfair allocations of resources, and

ultimately even greater inequality. As Kosoy, Brown et al (2012: 17) conclude, “No one wants to

cooperate and make sacrifices for the common good when they know that others will receive most of

the benefits.”

The literature is clear that institutions are crucial determinants of political and economic decisions and

processes, and that they ultimately influence the viability of policy reforms (Ostrom 1990, Underdal

2006, Bardhan and Ray 2008, Parrotta, Wildburger et al. 2012). The extensive historical review

provided by Acemoglu and Robinson (2012) is particularly insightful. They conclude that policy reform

will either be obstructed or supported depending on existing institutional arrangements. Where

existing institutions do not distribute political and economic power throughout society they will often

lead to extractive economic systems with very poor natural resource management. These types of

elitist institutions tend to create a ‘vicious circle’, where the chances of reform are weak because

35

existing elites are well placed to capture economic and political power to block changes to the status

quo. In contrast, institutions that are more politically and economically inclusive have been shown to

encourage the rule of law and property rights, allow for the exchange of information, and encourage

investments in new technologies and skills (see also Barman and Vogel 2008). These more inclusive

institutions facilitate opportunities for reform through a process of ‘virtuous circles’, where the broad

distribution of political and economic power facilitates effective policy reform, creating a positive

feedback loop that sets in motion further reforms that then led to greater political and economic

inclusion (Acemoglu and Robinson 2012). This way of understanding the opportunities and challenges

to reform proved particularly useful in this research in analysing how institutions presented a barrier

to change.

In studying how institutions influence policy reform processes it is important to consider the historical

context in which current institutions have developed (Boettke, Coyne et al. 2013). By widening the

research from a limited focus on existing institutions at one point in time, to a broader view of

historical experiences that have shaped a nation’s political economy, the researcher can better

understand how existing institutions came to fruition, which in turn helps to generate a better

understanding of why they function the way they do today, and the opportunities for changing them

(Hall and Soskice 2001, Losch, Freguin-Gresh et al. 2012). This approach also allows for an analysis of

how institutions interact with each other rather than just considering a snapshot in time where

institutions are rigid and distinct from one another (Hall 1997). Accordingly, through secondary

research, this thesis investigates two distinct periods in Indonesia’s history – the Suharto and

decentralisation eras – to show how institutions relevant to the case study emerged through time, as

well as how these institutions interacted with the reforms attempted through Aceh Green.

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3.1.2 Actors

While institutions are significant, it is also important to examine the roles of the actors2 involved, the

interests and strategies they employ (Long and Long 1992, Long 2001), the relationships or coalitions

between actors (Grimble and Wellard 1997), and the interactions between these issues and

environmental, social and political conditions (Pradella 2015).

Actors may be significant in the design, formation, enforcement and maintenance of institutions

(Leftwich 2010), and more critically, whether they chose to follow or reject certain rules (Gresh et al.

2012). That is, actors affected by public policies are not passive, and can pursue strategies to influence

and alter the selection and implementation of those policies based on a range of considerations that

are near impossible to predict (Rausser, Swinnen et al. 2011). This viewpoint is supported by Tacconi

(2000), who states that it is often a false assumption that individuals behave rationally or consistently;

behaviour may in fact stem from a combination of motivations and context specific factors. This study

therefore investigates the role of various actors, their interests, beliefs, and strategies, so as to

uncover and better understand the main factors that either enable or block policy reform in the case

of Aceh Green.

An important lesson to draw from the political economy literature is that actors’ interests and beliefs

are not static but are objects of contestation (Scoones, Leach et al. 2015). To consider otherwise would

be to ignore how policy reform outcomes, “can be created via processes of political conflict and not

generated entirely by the antecedents to that conflict” (Hall 1997: 197). That is, it is essential to follow

and understand the process of policy reform, not just the institutional context in which the reforms

are attempted (Weir 2007, Bardsley, Cubitt et al. 2010). This thesis addresses this issue by asking

interviewees to recall whether certain aspects of Aceh Green affected their interests and beliefs at

different phases of the intervention, in attempt to capture changes through time.

Another important reason for researching the role of actors, and one that is particularly relevant for

this thesis, is that it allows for the consideration of capacity, defined here as the availability of

resources and the efficiency and effectiveness with which actors deploy these resources to identify

and pursue their goals (World Bank 2014a). This thesis attempts to analyse actors’ capacity as another

important layer in understanding why change does or does not occur. Recent political economy

literature has observed that effective policy reform must cope with human ignorance (Boettke, Coyne

et al. 2013), as well as shortfalls in the availability of information and economic resources (Besley

2 Relevant actors may be individual persons, informal groups or interpersonal networks, organisations, collective groupings, and macro actors (a particular national government, church or international organisation (Long 2001).

37

2007) . This point is highlighted by several decades of research on the limits of government, especially

in developing countries, where weak capacity has played a dominant role in limiting the effectiveness

of policy reform, especially: weak accountability on public spending; inadequate technical and

management capacity; and, missed opportunities for cooperative problem solving (Tacconi 2006,

Bourguignon and Sundberg 2007, Bardhan and Ray 2008).

The mode of investigation adopted in this thesis strikes a balance between an analysis of institutional

arrangements so as to frame the context of the intervention, while also focusing on actors so as to

understand who was either driving or restraining the reform process and why. This approach is in line

with the work of Layder (1998), who accepts the existence of institutions beyond individual

experience, as well as the role of human agency in bringing these institutions to life. As Rausser,

Swinnen et al. (2011: 6) conclude:

Policy making outcomes reflect personal exchanges and relationships. Accordingly, the relative positions and influence of agents, players, and interest groups must represent the core of political economic analysis.

In this way, the behaviour and interactions of actors will be analysed in process oriented terms, to be

investigated in relation to the institutional context but not considered as wholly dependent on it

(Gibson-Graham 2000, Underdal 2006).

3.1.3 Power

At the heart of a political economy approach is an analysis of power, defined here as the ability of

actors to influence resource allocation decisions such that the outcomes of these decision making

processes serve their interests (Biermann 2010). The importance of power to policy reform is clarified

by Bryant (1998), who concludes that actors can have all the willingness in the world to enact change

but without the power to do so change will not occur.

The importance of power in affecting and shaping policy reform processes is supported by a range of

studies. For example, analysis of global financial systems highlights that the wealthiest, most powerful

one per cent of people are able to shape financial systems in their favour (Stiglitz 2012). Similarly in

the context of forest resource control, Macqueen, deMarsh et al. (2012) show that those with political

and economic power – namely, local elites, distant consumers, investors and corporations – ultimately

control how forest related land and products are utilised by controlling the allocation of land and

capital. For example, oil palm developers and their government supporters have sustained extensive

forest clearing and land grabbing in Indonesia at the expense of local communities who have been

mostly powerless to resist (Varkkey 2013).

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If we accept that influence over resources and policy reform are intimately linked to power then it is

essential that we understand how power is exercised, and specifically how it relates to the making and

enforcing of decisions that affect change. Research on power has traditionally been directed at the

people and organisations that control decision making processes concerning the factors of production

– land, labour, and capital – and the relationship of domination and subordination, hierarchy,

exploitation, and control that they have over others in less privileged positions (Bowles and Edwards

1990). This top down understanding of power is contested by Weir (2007), who shows how the

attempted operation of control over an individual often gives rise to opposition to that domination,

and power is best understood through an analysis of these struggles. Other authors reinforce the

bilateral nature of power by highlighting that most power relationships are reciprocal in that they have

some level of influence on each other (Rausser, Swinnen et al. 2011), and are often in a state of flux

(Bacha and Rodriguez 2007). To better understand these dynamics of power, this thesis investigates

underlying political, economic, discursive and social dynamics to help identify which agents have

power, how it is gained, enforced and maintained, and what role it plays in the policy reform process

(Bacha and Rodriguez 2007, Cockcroft 2012).

A diverse mix of factors determine when, how and for whom power exists. The use or threat of

physical force to achieve or defend influence is the most obvious source of power (Couto 2010), along

with economic dominance and privileged access to resources (Bacha and Rodriguez 2007, Li 2007).

There are also more concealed dimensions to the layer of power that contribute to a political economy

analysis. Schumpeter (1942) captures the hidden dimensions of power in pointing out that humans

may have the ability to make choices, but others shape their ‘choosing mentalities’. That is, often the

list of possibilities from which people can chose from is narrowed, refined and legitimised through

another actors’ power of coercion (Bryant 1998, Lukes 2005, Couto 2010). This insight demands an

analysis of the role of power in the construction and dissemination of information (Parrotta,

Wildburger et al. 2012), and in influencing perceptions and beliefs by privileging or negating various

forms of information (Cockcroft 2012). To analyse power and its influences it is important to

understand that actors often hold bundles of power, made up of the diverse factors discussed above,

which they mobilise to gain, maintain, or control access to tangible and intangible things (Ribot and

Peluso 2003). This thesis attempts to understand the variety of means by which actors have the ability

to influence resource decisions in their favour to provide a better understanding of the power

dynamics that either enable or impede green economy policy reform.

39

3.1.4 Scale

Political economy considers policy reform processes at multiple scales; from local through to

international (Boscolo, Buongiorno et al. 1997). The importance of considering multi-scalar

dimensions is demonstrated by Putz, Zuidema et al. (2012) who point out that decisions taken by

actors at a local level are often influenced by factors at broader scales, especially by regional policies

and global economic systems. There are, at all times, cross scale linkages at play; a point already

recognised in landscape conservation scholarship (discussed in section 2.1.2), which clearly affirms

that outcomes at any scale are moulded by processes operating at other scales (Sayer, Sunderland et

al. 2013).

Paying attention to the relative importance of, and interactions between, different scales is important

in understanding the constraints to green economy policy reform. The UNEP (2011) explain how

international and multilateral mechanisms, in addition to national ones, can help play a role in the

transition to a green economy by: 1) regulating unsustainable economic activity with standards or

prohibitions (multilateral environmental agreements); 2) enabling or obstructing the flow of green

goods, technologies and investments (the international trading system); and 3) affecting individuals

and organisational rights and obligations regarding foreign investment (the international investment

framework). Beyond the national and international scale, green economy studies also make it clear

that limited progress will be made unless interventions take account of conditions at the local

community level (ten Brink, Mazza et al. 2012).

The relative influence of actors and institutions at different scales is debated. On one side of the

argument, Brown and Purcell (2005) conclude that researchers are often caught in a ‘local trap’ where

they incorrectly assume that organization, policies, and action at the local scale are inherently more

likely to have desired social and ecological effects than activities organized at other scales. This line of

argument is supported by Brondizio, Ostrom et al. (2009), who explain that ongoing environmental

change amplifies the need to understand and address inter-linkages between the local and global.

They make this argument on the basis of four main factors: 1) expansion of global market chains,

trade, and finance flows are competing for land and water resources and limiting the ability of nation

states to stare their own policy reform agendas; 2) there are overlaps of community and government

jurisdictions concerning use, rights, and ownership of resources; 3) regional trade blocks, multilateral

infrastructure and international/transboundary conservation areas are increasingly being created;

and 4) global climate change is affecting the distribution and frequency of rainfall, drought, and

temperature changes. On the other hand, Hadiz (2010: 1) states that researchers should not get too

caught up in focusing on global influences on local events, highlighting that “issues of local power

40

[continue to] matter greatly by forging and mediating the conditions under which economic

globalisation is experienced and made sense of”.

In attempting to weigh up these discussions about the relative importance of influences at different

scales, this thesis draws on the work of Boscolo, Buongiorno et al. (1997), who find that the particular

composition and relevance of scalar arrangements to social and ecological outcomes is determined by

the political strategies of actors in each specific setting. This is supported by Putz, Sist et al. (2008),

who show that in some contexts state functions are being created or strengthened relative to other

power structures or local or global scales, while in others they are being devalued. So as Peet and

Watts (2004) conclude, locality studies cannot assume the characteristics of scalar arrangements a-

priori, and must instead engage in multi-layered scalar analyses to get an understanding of the

opportunities and constraints facing actors in that particular setting.

The issue of scale is addressed in this research by ensuring that the selection of data gathered included

information on local communities, district, provincial and central government, as well as international

organisations and both foreign and local investors. The case study findings discussed later in this thesis

explain why it was so important for this research to address multiple scales; political confusion and

tension between different levels of government, as well as changes that occurred in global market

conditions, which had a major bearing on the failure of Aceh Green.

3.2 Data Collection and Analysis

This research examines a case study in Aceh Province, Indonesia. A case study is defined as an

empirical inquiry which provides an in depth investigation of a contemporary phenomenon within its

real life context (Yin 1994, Yin 2009). Case studies are well suited to new research areas, or research

areas for which existing theory seems inadequate or lacking (Hubermann and Miles 2002). This mode

of enquiry is particularly suitable given the very early and under researched nature of green economy

reform processes. Further discussion on the use of case study research is provided in this section, with

a particular focus on why Aceh Green was chosen as the case study. Additional insights are also

provided on the sampling techniques used, as well as methods of data collection and issues concerning

cross culture research, subjectivity and positionality. This work, coupled with the first section in this

chapter, provides a detailed discussion and justification for the research methodology utilised in this

thesis.

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3.2.1 The rationale for case study research

Huberman and Miles (2002: 29) argue that a strength of case study research is that it builds up a

collection of real life experiences that together can help build novel theories and insights:

… constant juxtaposition of conflicting realities tends to ‘unfreeze’ thinking, and so the process has the potential to generate theory with less researcher bias than theory built from incremental studies or armchair, axiomatic deduction.

Huberman and Miles (2002) also show that some characteristics that lead to strengths in theory

building from case studies also lead to weaknesses. One of the main challenges is that case study

research may result in ‘narrow theory’, where the resultant theory describes an idiosyncratic picture

of the world that is essentially a theory about a specific situation. Hammersley and Atkinson (2007)

reinforce that it is often difficult to move beyond context specific findings to produce generalisations

that are relevant to other persons, times, or settings. The literature also shows, nonetheless, that it is

possible to test out theoretical propositions and generate insights that are relevant to other settings

through case study research (Yin 2009). Directions on how to achieve better cross case relevance

emphasize the importance of undertaking in depth, systematic analysis that provides sufficient

contextual knowledge to allow explanations of why findings may overlap or differ from other

situations (Kees van Dong 2006).

This thesis investigates crucial factors that influence green economy policy reform in the particular

context of Aceh Province, Indonesia. Careful attention is paid to clarifying political, social, economic

and environmental contextual details so that findings can be understood in relation to the specific

setting in which they took place; thus helping to facilitate comparisons between the case study and

findings from other contexts. This thesis does not claim to be generalizable to all other contexts and

settings but it is intended that the analysis herein will provide future researchers and policy

practitioners with information about the factors they should be aware of, and the questions they

should be asking, even if they have to re-evaluate the relevance of these factors in their own particular

setting. It is intended that this case study will contribute to what Hubermann and Miles (2002)

describe as ‘grand theory building’, in that this thesis provides one study that could ultimately be

coupled with multiple studies from a variety of different settings to provide an accumulation of both

theory building and theory testing empirical research. This is assuming that similar studies on green

economy policy reform processes are undertaken elsewhere and then synthesised.

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3.2.2 Rationale for studying Aceh Green

Aceh Green provides an ideal case study to research the opportunities and complexities of green

economy policy reform. First, Indonesia, and Aceh in particular, has been a critical battleground

between proponents of the existing economic system and those actors who espouse a more

sustainable approach to development. Secondly, Aceh Green was the first international attempt to

deliver provincial wide, multi-sectoral green economy reforms. The fact that Aceh Green’s proposed

policy reforms did not come to fruition means that this case study is useful in that it emphasises the

inherent tensions that arise with attempts to realise a green economy vision in practice. Further details

on the significance of this case study follow below.

Lessons learnt from Aceh Green are significant in the Indonesian context given that the national

economy is heavily dependent on the extraction of natural resources that are rapidly depleting.

Improved management of Indonesia’s resources is critical not only for the wellbeing of local people,

but also for the functioning of the global environmental system. Indonesia’s tropical forests cover an

estimated 95 million hectares – over 50 per cent of the tropical forests in the Southeast Asian region

and more than 10 per cent of the world’s total tropical forests (FAO 2010). In terms of area, the

country’s tropical forests are third only to those in Brazil and the Congo. Indonesia also contains the

world’s largest remaining mangrove forests, has the largest area of coral reefs of any country, and its

waters are among the most productive of all tropical seas (Resosudarmo 2005). Around 95 million

people live in and around Indonesia’s forests and make their living directly from forest resources

(IWGIA 2011). Millions of Indonesians are similarly dependent on marine resources, which provide a

source of income and livelihood for at least 5 million fisher people, while fish products deliver more

than 60 per cent of animal protein intake of the average Indonesian person (Resosudarmo 2005). The

human and environmental consequences of not managing Indonesia’s natural resources more

effectively are dire.

So far Indonesia has not managed its abundant resources sustainably and its extraction oriented

economy is drawing down on its natural capital faster than it is able to replenish (World Bank 2014d).

Renewable resources such as water, forests, fisheries and other biological resources have, and

continue to be, exploited beyond their regeneration potential (Resosudarmo 2005). Indonesia is

responsible for 34 per cent of global emissions from land use change, deforestation and forest

degradation, making it the world’s largest emitter in this category, and third largest emitter overall

(Sari, Maulidya et al. 2007). It now has the highest deforestation rates globally, taking over from Brazil

in 2014 (Margano, Potapov et al. 2014). Indonesia’s resources are expected to be put under further

stress from climate change, namely rising temperatures, unpredictable weather patterns, declining

43

rainfall in the south and an increase in the north, a greater threat of fires in peatlands, severe flood

risks in coastal areas from rising sea levels, and biodiversity losses in both terrestrial and marine

environments (Pachauri and Reisinger 2007). Given the importance of Indonesia’s resources, and the

extent to which they are currently under threat, it is an imperative that the country’s current economic

system is transformed.

Indonesia’s environmental issues are increasingly gaining political and media attention both nationally

and internationally. Of recent significance is former President Susilo Bambang Yudhoyono’s (SBY)

pledge to reduce carbon emissions by 26 per cent in 2020 from business as usual levels, and up to 41

per cent with outside assistance (Government of Indonesia 2011). One of the main mechanisms to

achieve these goals is a moratorium on new forest concessions, which covers a total area of more than

65 million hectares, 14.5 million hectares of which is on unprotected forest land (Lang 2013). SBY also

declared that Indonesia needs to reorient development to accommodate the green economy

paradigm (UNEP 2010b). Indonesia’s current President – Joko Widodo, inaugurated in 2014 – has

made strong statements that he too is concerned with transitioning Indonesia away from an extraction

based economy. In response to palm oil companies causing fires and forest destruction he stated:

If they [plantation companies] are indeed destroying the ecosystem, disturbing the ecosystem because of their mono-culture plantations, they will have to be terminated … It must be stopped, we mustn’t allow our tropical rainforest to disappear because of monoculture plantations like oil palm (Jakarta Globe 2014).

While such statements are encouraging, it is important to understand what barriers stand in the way

of Indonesia’s efforts to transform their economic system. Aceh Green provides an ideal case study to

research these issues. It is the only case study known in Indonesia, and in fact any developing country

setting, where the attempted policy reforms are representative of the integrated, cross sectoral, and

non-site specific recommendations presented in green economy literature. The case study affords

valuable insights into some of the issues that both impede and enable green economy policy makers

to fulfil their goals.

Aceh Green was built around the principles of inclusive, pro poor economic development and

environmental conservation with the aim to balance livelihoods and job creation with sustainable

natural resource management (Aceh Green Secretariat 2008). Underscoring Aceh Green was a

premise that economic value, reliable energy, food security, disaster risk reduction, and livelihood

opportunities could be generated through the maintenance and promotion of ecosystem services,

including: avoiding deforestation and planting trees to enhance carbon sequestration; the

maintenance of water supplies for hydroelectricity and irrigation; and, the sustainable management

44

and certification of timber and agroforestry commodities so as to gain access to premium markets

(Secretariat interview No. 2 2012, 25 September).

Aceh Green comprised eight cross sectoral and mutually dependent components that integrated

development and environmental management priorities across Aceh Province (see Aceh Green

Secretariat 2008). At the heart of Aceh Green was the generation and sale of carbon credits through

avoided deforestation and reforestation (components one and two), which was to provide a significant

portion of the finance to be reinvested into the other six components focusing more economic

development priorities (Secretariat interview No. 1 2012, 11 June). These investments aimed to

reduce environmental pressures and resource extraction by generating greater financial value and

increased job opportunities from the resources already under use outside of protected areas (Aceh

Green Secretariat 2008). For example, it was envisioned that investments in the agriculture sector

would improve production efficiency and fill supply chain gaps – in handling, processing, and cold

chain transportation and storage – creating additional value per hectare of land already under

cultivation allowing economic goals to be achieved without further expansion into forested areas (IFC

2008). These are precisely the types of interventions suggested in green economy literature, especially

given that they were attempted simultaneously in an integrated manner (UNEP 2011).

Table 1: An overview of Aceh Green’s eight components

Sector Component Key Actions

Land Use,

Land Use

Change and

Forest

(LULUCF)

Management

1. Primary Forest

Protection and

Management

- Protect the more than 1.8 million hectares of natural forest.

- Moratorium on logging activities in the province.

- A force of 1,000 forest guards to monitor and enforce the

moratorium.

- Generate carbon credits through REDD+ to help finance primary

forest protection and management and components 2-8 below.

2. Reforestation

and Forest

Restoration

- Restoration (and assisted natural regeneration) of degraded and

deforested land throughout the province.

- The work will create employment for people adjacent to these

natural forests. To reinforce the peace accord, communities in

active conflict areas will be prioritized.

3. Community

Forestry and

Agroforestry

Development

- Community based, multi-purpose tree crop planting involving

about 150,000 hectares throughout Aceh province.

- Tree crop planting will generate initial employment and long

term income for farmers and labourers.

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- Promote intercropping of diverse permanent tree crops for

biofuels, fuel wood, building materials, gums and resins, and

essential oils, as well as fruit trees for consumption and/or sale.

Sustainable

Economic

Development

4. Smallholder

Estate Crop

Development

in Partnership

with Private

Sector and

Parastatal

Estate Crops &

Associated

Infrastructure

- Smallholder estate crop development on land suitable for

specific priority commodities.

- Initiative to be led by a new government body called the Aceh

Plantation Development Authority (APDA).

- Oil Palm would be developed through out-grower (plasma)

plantations. Participating families would own (e.g., have title to)

and run their own out-grower plantations.

- The strategy will assure that both existing and new oil palm

development in Aceh – whether government, private, or

smallholder – will closely follow the principles and criteria of the

Roundtable on Sustainable Palm Oil (RSPO).

- Rehabilitation of smallholder coffee plantations and post-

harvest processing and marketing infrastructure.

- Certification and marketing via specialty channels.

- Establish smallholder plantations in other estate crops,

especially rubber, cocoa, and nutmeg.

5. Development

of Capture

Fisheries and

Aquaculture

- Support to post harvest handling along the supply chain to

sustain quality and increase product value in the market.

- Promote fisheries products for marketing and distribution

network expansion.

- Integrate governmental marine and fisheries conservation

policies with traditional management systems, with more

emphasis on efforts to care for, and protect marine and fisheries

resources.

6. Public

Infrastructure

Development

- Government programmes and investments for significantly

improving Aceh’s infrastructure – specifically communications,

transportation, and logistics.

Renewable

Green

Energy

7. Geothermal

Energy

- Assess and develop feasibility studies of geothermal energy,

which would power Aceh and provide for export of power to

Sumatra.

8. Micro Hydro - Develop hydropower facilities across Aceh’s watersheds and

rivers.

Source: Aceh Green Secretariat (2008)

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Aceh Green called for effective collaboration between actors – the private sector, government,

international organisations and local civil society. It actively encouraged public-private partnerships,

the involvement of local community organisations to help coordinate projects at the village level, and

requested assistance from international organisations to help facilitate and finance the various

initiatives. There was a strong emphasis on encouraging the private sector to take the lead on

implementation and finance. This was to be achieved through regulatory reform targeting

improvements in Aceh’s investment climate as well as increased dialogue between government and

the private sector (Aceh Green Secretariat 2008). These collaboration intentions across a number of

different actors is exactly what green economy literature calls for (ten Brink, Mazza et al. 2012), and

hence further justify the relevance of the Aceh Green case study by enabling an analysis of the

complexities of uniting various actors in support of the policy reform process.

While the Aceh Green case study is clearly relevant for an analysis of the practical realities of green

economy policy reform, special consideration needs to be taken of Aceh’s political, economic, social

and environmental context so that any lessons learnt can be analysed against the specifics of the

situation (as highlighted above in section 3.2.1). This is certainly important in Aceh, which has a

number of unique characteristics. Of particular note is the ongoing centre-periphery contestation

between the provincial and central governments following a 30 year civil conflict and a peace

agreement that confirmed Aceh as a semi-autonomous region. Aceh also received a large amount of

foreign assistance and attention in the wake of the 2004 Boxing Day tsunami. These contextual

circumstances are discussed in greater detail within chapter four.

3.2.3 Sampling processes for data collection

A selection of programmatic examples from Aceh Green were studied in detail to provide supporting

analysis for the overall investigation of the opportunities and complexities encountered through the

attempted policy reform process. The examples chosen were components one-to-four in table 1

above. These four components were chosen because they ensured broad coverage across different

economic sectors, and were prioritised by actors involved in trying to implement Aceh Green and,

hence, contained richer information for analysis in regards to factors that either blocked or enabled

reform.

Research informants were identified through ‘snowball’ sampling techniques (Huberman and Miles

2002). Personal experience, relationships (the author of this thesis spent five years working on Aceh

Green, as is discussed further in sections 3.2.4 and 3.2.5), and recommendations helped to pinpoint

particular informants whose insights were useful to the research because they were either: directly

47

involved in certain aspects of Aceh Green; in a position to get involved but opted not to; or, they

perhaps were important to the intervention but did not have the chance to participate.

Interviews were conducted with a full range of actors both directly and indirectly affected by Aceh

Green. These actors are referenced in the thesis according to seven sub-groups: 1) government actors

from the district, provincial, and central levels; members of 2) BPKEL and 3) the Aceh Green Secretariat

(which were both ad hoc government agencies specifically established to progress Aceh Green); 4)

civil society (local NGOs and community leaders); 5) international organisations (international NGOs,

donors, and multi-lateral organisations); 6) external consultants; and 7) local and international actors

from the private sector. This referencing method was chosen due to respondents’ concerns about the

political sensitivity of their remarks, and their desire not to be referenced by name. By ensuring

anonymity it enabled respondents to speak frankly and therefore increase the richness and reliability

of responses. Instead of just giving each respondent a non-descript reference, sub-groups have been

chosen so as to allow for an analysis of trends and generalisations across different groups of actors

involved in Aceh Green. Governor Irwandi is the only actor referenced by name based on the fact that

he gave his express approval, and because of his unique importance as Governor and leader of Aceh

Green.

A total of 70 interviews were conducted; the governor, 13 government respondents, 9 respondents

from civil society, 21 respondents from international organisations, 11 consultants, and 15 local and

international investors (see Annex 1 for a list of respondents). Some of the targeted interviews could

not be undertaken; only one interview was conducted with government actors at the district level,

and only two interviews were completed with both central level government figures and local

community leaders.

These limitations emerged because many respondents from international organisations, consultants,

and investors who were previously engaged in Aceh Green have since left the case study site because

their projects are no longer operational. Locating Aceh’s post tsunami development diaspora and

getting their agreement to devote time to recount their experiences in Aceh was a significant

challenge. The personal relationships that the author had built up during the time previously spent

working on Aceh Green helped counter these problems to a degree, but there were still at least 25

targeted interviews that could not be conducted due to the logistical constraints of linking up with

these informants. This was not, however, a significant limitation because the interviews that were

conducted with the 70 respondents covered all of the main actors involved in Aceh Green; the

respondents missed were involved with Aceh’s post tsunami and post conflict process rather than

being specifically engaged in Aceh Green. Furthermore, given that the author had a prior relationship

with many of the respondents they were generous with their time; most interviews lasted between

48

one and half and three hours, often across two sessions, and covered the full range of Aceh Green

related issues in depth (see Annex 2 for an outline of semi-structured questions).

Gaining relevant insights from government representatives was another challenging aspect of this

research. Many of the government actors in office during the Aceh Green era no longer worked in

government and were difficult to track down. Most of the government actors that could be contacted

cited a lack of time. Furthermore, even when interviews were granted, it was difficult to gain detailed

insights as the informants were generally unwilling to open up about details regarding Aceh Green as

they tended to feel uncomfortable about discussing environmental management issues in general.

Instead, they mostly gave nonspecific, generalised responses that had little relevance to the

particulars of the case study. These shortfalls were mitigated by interviewing eleven different

consultants who had worked alongside officials in various levels of government on a day to day basis

before, after and during the Aceh Green era. These interviews were in depth, and provided useful

information about government actors in response to Aceh Green. Although these were not direct, first

person insights, their relevance was corroborated by triangulating data from different sources

(discussed further in section 3.2.4 below). The research also benefited considerably from at least five

interviews with key figures in government during the Aceh Green era, including the Governor. The

interview with Governor Irwandi was especially useful as he gave two hours of his time to provide

insights about his own motivations for Aceh Green, how he interpreted the responses of other

government actors, along with details of the internal workings of government that influenced the

policy reform process.

Instead of undertaking a large number of interviews with informants from local communities (only

two were conducted), this thesis draws on the significant amount of data available from other studies

that have recently analysed local community interests and perspectives regarding underlying issues

related to Aceh Green – for example, community concerns and preferences concerning environmental

management. The author of this thesis has been directly involved in collecting and analysing this data

through previous research in Aceh. Of particular note is a comprehensive study that was conducted in

50 villages situated in and around the Leuser Ecosystem, which aimed to determine communities’

socio economic conditions and perceptions of environmental issues prior to the implementation of

the Leuser Ecosystem REDD+ Project (discussed in detail in section 4.3.6). A heavy reliance on this data

to gather community related information is justified on the basis that none of the components under

Aceh Green reached a stage in the policy reform process where on the ground implementation was

attempted. Consultation processes specifically related to Aceh Green did not even reach the

community level. That is, given that local communities did not experience any specific Aceh Green

related impacts, and had little knowledge of what the initiative even was, it was not deemed

49

worthwhile to conduct interviews with local communities specifically in regards to Aceh Green as it

was unlikely that any new insights would be gathered beyond the existing data sets already available.

The research does not discount the fact that specific projects can encounter implementation

challenges at the ground level, particularly in regards to local resistance to change and technical

capacity difficulties (Li 2007, Scott 2008). Consideration of very local actors is critical, and would be

expected to add further challenges to green economy reform, which must be taken into account. In

the case of Aceh Green, the policy reform process simply did not reach this stage of implementation

so it is not possible to investigate the impacts or resistance to on the ground implementation efforts.

Instead, the focus of this research is to understand crucial issues that enabled the reform process to

get as far as it did, focussing in particular on the critical early years of reform, and factors that blocked

it from progressing.

3.2.4 Methods of data collection and analysis

An ethnographic approach to data collection and analysis is used to address the research questions.

Ethnographic research is a mode of investigation focused on gathering insights from case study

research by studying social life as it unfolds in the practices of day to day life (LeCompte and Goetz

1982, Kees van Dong 2006). The researcher immerses themselves in the everyday activities of the

project, both in the office and the field, and makes detailed observations of actors’ interactions,

practices and motivations (Denzin and Lincoln 1998, Milne 2009), thus enabling an investigation of

how and why actors respond to the policy reform process from the unique perspectives of those

involved (Markowitz 2001, Hammersley and Atkinson 2007). An ethnographic approach is thus well

suited to an investigation of the practicalities of policy reform as it allows for critical reflection; a

means to understand in individual cases how ideas and approaches actually play out in reality (Mosse

2005, Kees van Dong 2006).

This thesis aligns with common ethnographic modes of enquiry where the researcher engages in

participant observation, asks questions through informal and formal interviews, and collects

documents relevant to the case study (Hammersley and Atkinson 2007). The participant observation

component involved watching, listening, questioning, learning, and taking notes and photos about

Aceh Green between 2007 and 2012. The author of this thesis was directly involved in this work –

firstly, as an economic advisor to Oxfam Great Britain’s Policy and Advocacy Unit, and secondly as a

project manager for the company developing the Leuser Ecosystem REDD+ project – and was thus

well positioned to undertake these observations. Examples include attending numerous meetings

regarding Aceh Green that involved many of the key actors from government, civil society,

50

international organisations and business sectors. Insights from such meetings were recalled from

notes taken at the time, and follow up interviews were conducted with the actors that were involved

(further details are provided in the discussion on semi-structured interviews below). This aspect of the

data collection process played an important part in addressing the research questions, for as Punch

(1998) explains, participant observation helps to discover the intricacies of project design and

implementation, particularly the perspectives and strategies employed by actors in response to the

proposed changes. The limitations of the author being directly involved in the case study, and how

these issues were managed in this thesis are discussed in section 3.2.5 below.

Semi-structured interviews were conducted to build on, and help verify the participant observations.

This data collection method made a crucial contribution to this thesis by helping to understand the

perspectives, experiences, aspirations, attitudes, and reactions of the different actors’ involved in

Aceh Green. Yin (2009) notes that interviews are best suited to gather these types of insights because

they draw out information that lies embedded in the knowledge of the actors themselves. The semi-

structured nature of the interviews aligned with the recommendation of Kees van Dong (2006), who

states that questions should be guided by key themes relevant to the theoretical propositions and

ideas of the thesis, but flexible enough to elicit responses from informants rather than get answers to

particular questions, thus allowing actors’ unique experiences and insights to emerge. The framing of

specific, detailed questions was therefore avoided in this thesis.

Huberman and Miles (2002) state that another issue researchers should be aware of during the

interview process is the fact that they are usually in the presence of the person being interviewed only

briefly, and must necessarily draw inferences from what happened during that brief period to the rest

of the informant’s life, including his or her perspectives and actions. The interview process may in fact

miss other aspects of the persons’ perspectives that were not expressed in the interview, and can

easily lead to false inferences about his or her actions outside the interview situation. This thesis tried

to address the problems associated with the brevity of the interview process by conducting follow up

interviews with respondents (20 per cent were interviewed more than once) to help clarify and

reaffirm statements from the first set of interviews.

Secondary research is drawn on in this thesis so as to understand the wider context in which Aceh

Green has emerged. Gilpin (2001) notes that secondary texts set the scene and provide context from

which more in depth analysis can be conducted. Project documents and academic, policy and legal

literature regarding economic, environmental, social and political conditions in Aceh, and in Indonesia

more broadly, were analysed in detail. Special attention was given to reports, project design

documents, position papers and concept notes directly related to Aceh Green. As outlined by Fairhead

and Leach (2002), these secondary texts enable a better understanding of the social relations that

51

produce such documents, the future contests they anticipate, and wider ‘discourse coalitions’ such

texts are intended to encourage. The use of secondary texts is further justified by Li (2007), who

explains that they allow the researcher to understand what change the initiative in question was trying

to achieve, the techniques devised, the relationships established, the underlying assumptions used,

and to develop a baseline between what was originally proposed, how this evolved, and what was

actually delivered in practice.

Caution was applied in the use of project documents because as Scheyvens and Storey (2003: 42) note,

there are numerous examples of publications that are, “deliberately false, selective or distorted in

order to support a particular policy or point of view”. Furthermore, Mosse (2005: 15) recommends to

be careful to avoid giving pre-eminence to texts as representations of discourse; “texts are important,

but they cannot be read at face value without reference to the arguments, interests and divergent

points of view that they encode and to which they allude”.

This thesis addresses the limitations of over reliance on particular sources of information by

triangulating data from secondary texts with the other two forms of data collection mentioned above.

Indeed, the fact that this thesis utilises three different modes of data collection – participant

observation, interviews, and secondary texts – is an important attribute of the research, for as Yin

(2009) advises, case study research should rely on several sources of data so that the findings can be

cross checked.

The data collection methods used in this research mainly capture qualitative insights, coupled with a

relatively small amount of quantitative data. Some researchers claim that a lack of quantitative data

inhibits the ability of research findings to be generalised and applied to other settings (Stoecker 1991),

or for hypotheses to be properly tested (Bardhan and Ray 2008). Yet, Donovan (1988) warns that over

emphasis on quantitative research can be void of concern for the subject matter and does not

necessarily reflect the experiences of the people under study. This viewpoint is supported by

Sarantakos (1993: 42), who stresses that quantitative measurement cannot capture the real meanings

of social behaviour as it, “often results in meanings that are closer to the beliefs of the recorders than

to those of the respondents”. Qualitative data, on the other hand, helps reveal the processes,

perspectives and influences of those actually affected by the researched situations (Bryman and

Burgess 1994), which is especially important given that individuals experience the same events and

places in different ways that can only be captured by describing individuals’ viewpoints, which can

otherwise be silenced or excluded under quantitative research (Winchester 2000).

To help counter the shortfalls of both qualitative and quantitative data, research methodology

literature suggests a mixed approach, where qualitative data is gathered to reveal processes and the

52

perspectives of those actually involved, and quantitative data is used to map out general patterns

(Bryman and Burgess 1994). Quantitative data is drawn on where possible in this thesis, particularly a

previous study of Leuser Ecosystem communities, which the author of this thesis assisted on. This

study provided in depth surveys of 50 villages that was statistically representative of all villages in

around the Leuser Ecosystem. Other quantitative data of importance included government and

international organisation budget allocations, and reports on economic indicators and business supply

chains in the province – for example, crop productivity and hectares under production. Even with

these quantitative data, this thesis remains a predominately qualitative piece. More extensive efforts

to gather primary quantitative data was not pursued due to time and resource constraints.

3.2.5 Cross culture research, subjectivity and positionality

In addition to the challenges outlined above the other main research limitations encountered, and

mitigated, included the scope for cross cultural misunderstanding, subjectivity and positionality. These

issues are discussed in detail below, especially in relation to the author’s extensive involvement in the

case study.

A researcher’s ability to understand and represent the perspectives of respondents who are from a

different cultural background is contested within the literature. Wolf (1996: 13) writes that some

authors have suggested that “only those who are of a particular race or ethnic group can study or

understand others in a similar situation”. This line of thinking is also presented by Herod (1999: 314),

who states that it is often assumed that a researcher looking at issues in a different country from their

homeland, “is automatically at a disadvantage because they could never hope to understand the

cultural complexities of that which they are not”. Such views have received heavy criticism, however.

Scheyvens and Storey (2003) argue that it is excessively romantic to conceive that only local people

are competent to speak on the social issues affecting their countries. This is reinforced by Reinharz

(1992), who states that cross cultural research helps us to understand complicated problems that

surround interdependent development issues.

Studies on research methodology explains that potential limitations of cross cultural research can be

addressed by achieving an appropriate ‘fit’, whereby the researcher gains the confidence of the people

being studied (Kees van Dong 2006). This often requires getting acquainted with another language, as

well as time to build confidence, and achieve systematic observations of behaviour (Markowitz 2001).

These requirements were well met in this research given the authors’ familiarity with Aceh, its

language, people and culture after living in Aceh and working on Aceh Green for five years.

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Other important methodological considerations are the issues of subjectivity and positionality. The

fact that the author was immersed in the case study, and was not independent from the events that

unfolded, raises concerns about subjectivity – i.e. that the analysis presented has a bias towards the

personal views of the author on what transpired through Aceh Green and why. Of relevance here is

the acknowledgements from the author that: a) he felt some level of frustration during his time

working on Aceh Green with Oxfam’s policy and advocacy team and Sustainable Forest Management

Ltd. and Global Eco Rescue Ltd., especially regarding the lack of assistance shown by many of the

international organisations present in Aceh at the time. This may have made the author more critical

of international organisations compared to another researcher who was not involved in the initiative,

and b) given that the author worked with the private sector on trying to implement the Leuser

Ecosystem REDD+ project within Aceh Green, it allowed for a more private sector orientated view

when discussing investment climate issues. In addition, the personal insights gathered by the author

through the Aceh Green era were generated before the idea for the thesis was even conceived. Hence,

during the period of Aceh Green implementation, other actors saw the author not as an independent

researcher but as an active participant in the initiative. The author’s positionality during this time may

therefore have affected the views that various actors expressed. These issues do not, however, mean

the analysis presented in this thesis is invalid. One of the main themes that has emerged from social

research literature is that all research has a subjective dimension (Bulmer 1983, Reinharz 1992, Herod

1999, Hay 2000, Skelton 2001, Scheyvens and Storey 2003). Madge (1993) concludes that as long as

researchers think reflexively about how issues of subjectivity and positionality might affect research

results, program processes and outcomes, their research can make valuable contributions in

understanding social settings.

Other strategies to address issues concerning subjectivity and positionality include a detailed

description of underlying concepts, values and experiences in the subject area concerned (Guba 1990,

Limb 2001), and maximising the ability of actors to object to what is said about them to ensure the

researcher makes every effort to verify and clarify key findings in the analysis (Latour 2000). These

suggestions were adhered to throughout the case study research. Of particular importance is the fact

that semi-structured interviews were conducted with a wide range of respondents during the field

research stage of this thesis. This enabled the insights previously gathered through participant

observation to be further explained, verified, and cross checked.

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Conclusion

This chapter has justified the use of a political economy analytical framework to address outstanding

knowledge gaps concerning the viability of a green economy, namely the opportunities and

complexities of putting the proposed policy reforms into practice. Of particular importance to this

research was that a political economy lens was selected to enable an investigation of the dominant

underlying factors that either block or enable change. The specific methods of data collection and

analysis that are utilised in this thesis were explained and justified, especially concerning the

ethnographic case study approach at the heart of the research. A brief overview of Aceh Green was

also provided to show how this case study provides a unique research opportunity given it is the only

known initiative in a developing country setting where the attempted policy reforms adhered to the

integrated, cross sectoral, and non-site specific recommendations of green economy literature.

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Chapter 4: How Aceh’s Political Economy shaped Aceh

Green

Aceh Province is endowed with abundant natural resources, specifically in the fisheries, forestry,

mining and agriculture sectors. It retains one of the largest contiguous areas of forest in Indonesia,

which contain two distinct but connected ecosystems, the Ulu Masen and Leuser ecosystems. These

ecosystems have global ecological importance by virtue of their unique continuity, intactness and

inclusion of lowland forest, which has been heavily depleted elsewhere in Indonesia (BPKEL 2009).

The continued existence of Aceh’s high quality forest is in a large part due to a three decade long

independence movement that lead to guerrilla style warfare making forest conversion unsafe for

developers (McCarthy 2006). This conflict – the most prolonged and violent in Indonesia’s history –

raged up until December 2004 when the Indian Ocean Tsunami devastated the Province and forced a

peace agreement (Barron and Clark 2006).

While Aceh’s political economy is unique, due to both the conflict and tsunami, the context is also

shaped by the same political and economic forces that broadly influence natural resource

management across Indonesia. The intertwining factors that have influenced Aceh’s political economy

in recent times are explained throughout the first section of this chapter, drawing primarily on

secondary research. Two distinct periods – the Suharto and decentralisation eras – are analysed given

the legacies they have imprinted on the perceived need for Aceh Green, and their impact on how this

particular policy reform process unfolded.

The second half of this chapter focuses on the rationale for Aceh Green policy reforms (which were

outlined in section 3.2.2 and table 1 above). By the end of this chapter the reader will understand how

the political economy of Aceh framed the perceived need for Aceh Green.

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4.1 An historical overview of sustainable development discourse in Indonesia

and Aceh

The following section describes how the Suharto and decentralisation periods have influenced Aceh’s

political economy. It draws on earlier research to highlight that the Suharto era’s legacy in Aceh is one

of excessive control over natural resources and unjust distribution of benefits from extractive

industries leading to, and exacerbating conflict (Barron and Clark 2006, McCarthy 2006). In the wake

of the Suharto era, powerful government, business and military elites have managed to manoeuvre

through the decentralisation process to maintain their political and economic prominence, leading to

ongoing environmental degradation and constrained development (Saich, Pincus et al. 2011).

4.1.1 The Suharto, or ‘New Order’era

Suharto’s period as Indonesia’s president from 1966 until 1998 is known as the ‘New Order’. The

nature and longstanding reign of this regime has left distinct patterns on Indonesia's current political

economy. In Aceh, the inequitable allocation and use of resources by powerful government, business

and military elites perpetuated conflict between Aceh and the central government, and established

patronage systems that continue to influence natural resource management today. The legacies of

the Suharto regime play an important role in understanding why Aceh Green developed in the first

place, and why it ultimately failed to gain the support it needed.

The exploitation of Indonesia’s abundant natural resources – forests, oil, gas, minerals and fisheries –

intensified greatly through the New Order (Resosudarmo 2005). In just over 30 years, a total of 60

million hectares of forest concessions (around 42 per cent of a total forest area of 143 million hectares)

were issued as long term (30-60 year) leases, both to privately owned companies and to state owned

enterprises (Elson 2001). The most destructive period was around the last decade of Suharto’s reign

(1985-1997), when 24 million hectares of Indonesia’s forest were destroyed at an annual rate of 1.7

million hectares per year (Holmes 2000). Strong global demand for tropical logs and subsequently for

plywood, sawn timber and then the oil palm plantations that replaced the forests, were the economic

drivers underpinning this transformation (Brockhaus, Obidzinski et al. 2012).

While improvements in some economic indicators were achieved during the Suharto era – the number

of people living below the poverty line declined from around 40 per cent in the early 1970s to below

15 per cent in the mid 1990s (Duncan and Mcleod 2007) – most commentators agree that the pattern

of environmental destruction, inequality and social injustice generated along the way have been

overall detrimental to Indonesia (Resosudarmo 2005, Hadiz 2010). One of the main criticisms is that

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the benefits of resource utilisation were concentrated in the hands of the elite while most of society,

and especially future generations, were burdened with the costs (Azis and Salim 2005). Rural

communities were especially hurt by the destruction of forest and marine ecosystems that were their

means to subsistence and the link to their culture and heritage. Such communities were typically

excluded from decision making processes and most of the benefits produced from resource extraction

(Erawan 2007).

Aceh Province was deeply affected by Suharto's inequitable management of resources, especially

through the impacts of the conflict that raged during and after the New Order era. In December 1976,

Hasan di Tiro, a descendant of the last sultan of Aceh, declared the formation of the Free Aceh

Movement (Gerakan Aceh Merdeka, GAM), and independence from Indonesia (Aspinall 2007). The

resulting conflict with the central government caused 15,000 deaths, with thousands more tortured

and disappeared. Rape and sexual violence were widespread along with arbitrary arrests, detentions,

mass displacements, and recruitment of child soldiers (ICG 2005). The economy went into decline, and

electricity, transportation and irrigation networks fell into disrepair due lack of investment and

intentional destruction (FAO 2005). Faced with physical violence and extortion by both the Indonesian

security forces and GAM, many Acehnese abandoned existing businesses, especially in natural

resource sectors including plantations, farming, and fisheries, and many high value processing

activities moved to cities in North Sumatra province (McMahon 2008).

The large scale appropriation of Aceh’s natural resources played a dominant role in triggering and

perpetuating Aceh’s conflict (Barron and Clark 2006). Suharto granted forestry concessions to military

and business elites (both Acehnese and in central government) at the expense of local communities

(Barron and Clark 2006). The Indonesian military were also heavily engaged in illegal extraction

activities in the forestry and mining sectors (McCarthy 2007). Perhaps the most contentious natural

resource dispute concentrated on the development of the Arun natural gas fields on the east coast of

Aceh Province – one of the world’s largest sources of gas (Barron and Clark 2006). The Acehnese were

mostly excluded from the benefits produced; instead profits were shared between the private sector

developer, ExxonMobil, and the central government, with the Indonesian military employed to

provide security from GAM and any other disgruntled local groups (McCulloch 2006). The fact that

central government had control of Aceh’s natural resources, and were allocating and managing them

in a way that were mostly benefiting elites outside of Aceh, resulted in significant local grievances that

GAM then managed to channel into centre-periphery discontent (Sulaiman 2006).

The conflict provided protection for Aceh's forests and marine resources. The unsafe security context

meant that Aceh largely avoided transmigration schemes that result in the clearance and settlement

of forest areas, and most forest concessions that were issued could not be exercised (McCarthy 2007).

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It also discouraged private investment in plantation operations that were devastating other forest

areas across Borneo and Sumatra during this period (Rijksen and Griffiths 1995). Estimates suggest

that 0.6 per cent of forest cover was lost in Aceh between 1985-1997 (Government of Indonesia 2006),

compared to an average of 2.4 per cent forest cover loss across the rest of Sumatra during the same

period (Forest Watch Indonesia 2002).

This backdrop had a significant bearing on the strategies employed through Aceh Green. For one, the

fact that there were still significant forest resources enabled the large scale avoided deforestation

strategies presented through Aceh Green. Second, the devastation wrought by the conflict on Aceh's

economy, especially the lack of value added processing infrastructure, and the need to create

employment opportunities for former combatants, informed Aceh Green's economic development

goals. Third, the history of central government control of Aceh's resources and oppression of its people

motivated Aceh Green's attempt to wrestle control of natural resources away from the central

government and under the remit of the Aceh government.

Beyond the legacy of the conflict in Aceh, the New Order imprinted a political economy of natural

resource management onto the context in which Aceh Green was situated. Resource management

systems established during the New Order were characterised by intertwining de jure state

governance – i.e. a formalised system of laws and regulations – and de facto systems, where business

interests were able to capture resource control through illegal means of corruption and nepotism

(McCarthy 2000). These extractive regimes, which permeated through the decentralisation era (as is

discussed in the next section), meant that Aceh Green faced a context in which elites viewed

government endorsed extraction of natural resources as the main mechanism for delivering economic

growth and personal gain. Details on the de facto and de jure systems of resource governance

established through the Suharto era are discussed through the remainder of this section.

Laws enacted during the New Order worked to enforce government control over natural resource

management. In what has been described as one of the biggest land grabs in history (Consultant

interview No. 1 2013, 12 June), the Indonesian government nationalised land and forest resources

that were not already recorded as private property through its Basic Forestry Law 5/1967, reaffirmed

in Forestry Law 41/1999. These laws established a system that classifies all land in Indonesia as either

within the Forest Estate (Kawasan Hutan) or outside the Forest Estate (Areal Penggunaan Lain, or APL;

and Kawasan Budidaya Non-Kehutanan, or KBNK). The Forest Estate covers approximately 70 per cent

of Indonesia’s land area, and a full fifth of the nation’s villages (some 33,000 villages) stand inside this

forest zone (Galudra and Sirait 2006). The Forest Estate is administered by the Ministry of Forestry as

a national resource and the legal rights of the people living in state forests are deemed as secondary

to the interest of the state (McCarthy 2000).

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Large scale commercial mining was enabled through Law 11/1967, which inferred that all lands were

in principle open for utilisation for mining. At the same time, Law 1/1967 on Foreign Investment

enacted clear procedures and generous tax concessions to foreign companies to invest in resource

extraction industries. These laws made it permissible for most of Indonesia’s natural resources to be

open for extraction and incentivised foreign investment in order to attract the necessary finance to

exploit these resources. This combination of laws on forestry, mining and foreign investment enabled

natural resource extraction to take place at a significant scale throughout the country during the

Suharto period and beyond (Hadiz 2010).

De facto systems of corruption formed the essence of Indonesia’s centralised political establishment

under the New Order. Corruption started at the top; by the time Suharto left office his total family

fortune was estimated at US$15 billion, generated by deals made with major business interests,

particularly in the forestry and energy sectors (Cockcroft 2012). The loyalty of local elites, bureaucrats,

military leaders, and would be politicians and businessmen was secured by offering them

opportunities for personal gain, especially through the granting of exploitation rights to natural

resources (Johnston 2005, Hadiz 2010). Extraction rights were not given out based on considerations

of resource sustainability or of development benefits for the general public, but to strategic individuals

or businesses that would reinforce Suharto’s political power (Gellert 2005, Seda 2005). Almost any

resistance was quashed through the use of political, police and military power to co-opt or marginalise

local government bureaucrats, the press, environmental experts, NGOs and local communities

(Burgess, Hansen et al. 2011). Through these mechanisms corruption became embedded across the

spectrum of business and politics at all scales in Indonesia. Decentralisation did not undo these

systems of patronage, which ultimately had a significant bearing on both the framing (as is highlighted

in the following section) and implementation of Aceh Green (discussed in chapters 5 and 6).

In summary, Aceh’s ‘sustainable development’ efforts – as with all of Indonesia – have been heavily

imprinted by the political economy of the Suharto era. While Aceh’s forest resources were left

relatively intact through the period of conflict, the extractive legacies established by the Suharto

regime framed the political economy in which Aceh Green was situated. Aceh Green had to grapple

with the extractive institutions installed by Suharto, and perpetuated by decentralisation, elaborated

below.

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4.1.2 Decentralisation

The Decentralisation era has seen a continuation of elite power, where systems of patronage and

corruption still determine natural resource allocations at the expense of the environment and rural

communities (Hadiz 2010). Aceh Green was envisaged as a policy reform process to counter these

challenges, especially in regards to inconsistent regulations and lines of government authority,

inequitable and unsustainable resource extraction as a result of corruption, and the weak capacity of

government administrators.

The Asian Financial Crisis from 1997 to 1998 catalysed an economic recession that led to the downfall

of Suharto. This period saw soaring unemployment and a steep drop in the human development index

in Indonesia. These economic impacts, as well as growing discontent over his cronyism, corruption,

extraction of rents and control, ultimately motivated the general public and political elite to rally

against the existing regime and push for change (Resosudarmo 2005). After thirty two years in power,

Suharto was forced to resign in May 1998 and was replaced by his vice president, B.J. Habibie. There

was immediate pressure for government reform. In areas remote from the capital city Jakarta, and

especially in those areas rich in natural resources, the reform agenda focused on reversing the

inequitable distribution of benefits derived from resource exploitation (Hadiz 2010, Booth 2011). New

laws were drafted to alleviate the most salient concerns, including:

- Laws 2/1999 and 31/2002, which allowed the establishment of new political parties with clearly

defined rights to compete in elections. These were followed up by the enactment of Laws

3/1999 and 12/2003, which paved the way for the two democratic elections that were held in

1999 and 2004 (Hadiz 2010).

- The enactment of two new decentralisation laws: Law 22/1999 on Local Autonomy and Law

25/1999 on Financial Balance between Central and Local governments (Erawan 2007). Both of

these decentralisation laws are discussed in greater detail below.

These laws marked the formal beginning of the decentralisation program; a period known as

‘reformasi’. The purpose of reformasi can be seen from the prologue to Law 22/1999, which had the

stated intention to: 1) underscore the principles of democracy, social participation, equity and justice;

and 2) give emphasis to local potentialities and diversity. The prologue to Law 25/1999 is equally clear

in its intention to: 1) provide the opportunity to increase democracy and local capacities; 2) enhance

social prosperity and create a civil society free of corruption, collusion and nepotism; and 3) increase

social participation, openness and responsibility (Fox, Adhuri et al. 2005). As a means to achieve these

goals, the decentralisation laws devolved approximately 25 per cent of the national budget to the

districts and municipalities in the form of block grants (Fitrani, Hofman et al. 2005), and gave districts

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and municipalities significant authority over important aspects of government – including, authority

for agriculture, industry, trade and investment, education, health and natural resource management

(Alm, Aten et al. 2001).

In Aceh, decentralisation also provided the Indonesian government with a means to attempt to quell

conflict. The Special Autonomy Law 18/2001 was introduced to address the political, economic and

cultural grievances of the Acehnese people. Direct elections of the local government executive were

provided for, and 70 per cent of oil and gas revenues were to be retained within the province. The

implementation of Syari’ah (Islamic) law and a Syari’ah court, and the establishment of the Wali

Nanggroe (a traditional cultural leader), recognised the prominence of Islam in Aceh and enabled local

government authorities to set policies on religious life, customs, and education through provincial

regulations or gubernatorial decisions (Barron and Clark 2006). Many, not least the Indonesian

military, saw the Special Autonomy Law as a ‘final settlement’ to end the conflict (Barron and Clark

2006). The Special Autonomy Law was never fully implemented, however, with both sides failing to

comply with the agreement, and conflict resumed in 2003 (HRW 2001).

In addition to the difficulties of ongoing conflict, sustainable development progress in Aceh was also

constrained by the fact that decentralisation failed in its proclaimed ambition to improve the

effectiveness of resource management and equitable development; instead, replacing central level

control with the strengthening of an elite class at the district level (Hadiz 2010). The immediate effects

of decentralisation across Indonesia, including Aceh, have been to:

… increase the number of conflicts between various levels of government, local communities and companies carrying out natural resource extraction activities, increase the level of corruption in local areas, and increase the number of local taxes and local natural resource extraction licenses. The management of natural resources in the country may not have worsened [during decentralisation], but neither has it improved (Resosudarmo 2005: 1).

The problems encountered through decentralisation have mainly revolved around the lack of clarity

about respective areas of authority across the three levels of governments – central, provincial, district

– especially in relation to control over natural resources (Hadiz 2010). The decentralisation laws

purposefully delegated authority to the districts and municipalities rather than the provinces on the

basis that central policy makers believed the districts were too small for separatist or federalist

aspirations to take root, and the central government would have more influence over relatively weak

districts compared to strong provinces (McCarthy 2006). The problem, however, is that this has led to

inconsistencies and uncertainties across Indonesia around which level of government has jurisdiction

to administer laws and government regulations (Coxhead 2005, Marifa 2005).

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A recent article in Kompas (2014) highlights the extent of the problem concerning lines of government

authority in Indonesia; their analysis found a total of 1,762 overlapping regulations among different

ministries and agencies and between central and local governments. Provincial and district officials

make the most of these inconsistencies and uncertainties, and follow whichever regulations and policy

paths best suit their personal interests (Booth 2011). The lack of clarity on land use rights in Indonesia

provides a stark example of these problems. The administration of land use rights in Indonesia is

characterised by dualism; where the ‘Forest Estate’ is managed by the Ministry of Forestry, and the

remaining non-forestland areas are managed by the National Land Agency (BPN). This creates

significant challenges as there are multiple and overlapping laws and regulatory frameworks resulting

in weak land classification (Hadiz 2010). Such arbitrary classification results in a mismatch between

the law and reality on the ground; vast territory that is categorized as Forest Estate is not actually

made up of forests alone but also includes agricultural land, roads and many human settlements

(World Bank 2014b). Land use rights are further complicated by a mismatch between central,

provincial, and district spatial plans (ADB, World Bank et al. 2012). This is certainly the case in Aceh

where it is not possible to use official land use maps of land availability because they provide

inaccurate information on which areas are forested or not, or are already occupied, either legally or

illegally (Fitzpatrick 2008). The difficulties of ‘dualism’ are compounded by the complexities of ‘legal

pluralism’ – i.e. the application of multiple systems and procedures to the same context and the

interpretation of those laws and regulations according to whatever suits the influential and

knowledgeable elite (McCarthy 2007). In early 2013, there were 582 legal instruments related to the

administration of non-forest land that were in vogue. With regard to forestland areas, there was a

similar set of around 2,000 legal instruments, which were applicable at both national and local levels

(World Bank 2014b). These conflicting regulations, coupled with poor data, the ambiguity of

government authority across different levels, and an absence of effective law enforcement, mean that

influential groups within business and government are able to capture access to land and resources

while ignoring or overriding competing customary (adat) claims and the interests of other rights

holders (Barr, Resosudarmo et al. 2006, Li 2007). The outcome is that more than 70 per cent of the

national productive assets are occupied by only 0.02 per cent of the population (Arsyad 2014).

The inconsistencies in government regulations and lines of authority were specifically targeted by

Aceh Green. As is further discussed in section 4.2.2, Aceh Green envisioned a range of reforms that

would address the regulatory gaps and overlaps across levels of government and different agencies

so that sustainable development goals were clearly enshrined in Aceh’s legal system. The problem,

however, was that the presence of regulatory inconsistencies caused acute difficulties to Aceh Green

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as the various levels of government battled for authority and blocked reforms, as is discussed in detail

in section 5.2.

Another characteristic of government dysfunction through the Decentralisation era has been the

persistence of corruption, especially through the extensive systems of bribery that either lubricate

licensing and permitting processes, or enable them to be bypassed altogether (Coxhead 2005,

Obidzinski 2005). For example, evidence of local government’s ongoing role in illegal logging and

licensing processes is provided by Burgess, Hansen et al. (2011: 8):

District heads have been found to allow logging to take place outside official concessions, to facilitate the creation of new oil palm plantations inside national forest areas, and to sanction the transport and processing of illegally harvested logs. District officials also have been known to issue conversion permits to clear cut forest and plant oil palm on their own, even though they do not have the legal authority to do so.

Rents solicited by civil servants often go into office ‘kitties’ rather than a particular individual’s pocket

and are eventually distributed among staff by a high ranking patron. This system helps to ensure that

corruption in Indonesia is systemic (where most of the bureaucracy participate) making it especially

difficult to expose and eradicate (Synnerstorm 2007). While high levels of corruption stem back to the

New Order, it is arguably a greater problem in contemporary Indonesia. Corruption was previously a

‘one-stop shop’ at the central level but has now been replicated at all levels throughout the country,

with central, provincial and local government officials, the military, the police and legislative members

all demanding and receiving bribes (King 2000, Kuncoro and Resosudarmo 2004, Mcleod and

MacIntyre 2007). A summary by Synnerstorm (2007: 174) shows how endemic the problem is:

Citizens and businesses have to pay bribes and illicit fees for most things when dealing with the administration. Parents have to pay to be able to keep their children in school. Traffic regulations and the institutions that enforce them are used to collect rents rather than actually enforce the regulations. Even public institutions have to make illicit payments to get certain things approved by some other public authority.

One of the most dramatic changes through the reformasi period that has facilitated the high levels of

corruption has been the prominence of local electoral politics (Resosudarmo 2005). With the shift in

executive responsibilities from the centre to the districts, regional parliaments now have legislative

and budgeting powers (Aspinall and Mietzner 2010). Unfortunately, the rise in local authority has not

resulted in greater accountability. Instead, as Hadiz (2010: 12) explains, it has been:

… instrumental in – and become part of – the emergence and consolidation of newly decentralised and predatory networks of patronage that have become politically ascendant after the fall of Suharto. These have continued to have vested interest in resisting many institutional reforms or have usurped them in a number of creative ways.

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The power wielded by local political parties and regional parliaments is reflected in the often intense

competition among elites to wield control over them, and in the increasingly vast resources expended

in the process (Hadiz 2010). A study of eight districts in Java, Sumatra, Bali and West Nusa Tenggara

found that party list positions are allocated on the basis of non-transparent, elite centric agreements

that can involve vast sums of money changing hands and a series of quid pro quo favours for political

support (von Luebke 2009). Money plays a major role at voting time as well. Feeling that they have

poor choices and that most politicians are corrupt anyway, many voters are easily seduced by payoffs

from election candidates (Felbab-Brown 2013).

Candidates in local elections who spend large sums of money on their campaigns, and cannot be sure

of more than one term in office, have obvious incentives to generate as much income and future

revenue generating opportunities as possible during their short time in office (Aspinall 2005c, Booth

2011). The standard model for generating quick returns from elected positions has been to grant

resource extraction licences as well as government contracts for new infrastructure projects – for

example, roading, building, and migration projects (Hidayat and van Klinken 2009). The mutually

beneficial partnerships between politicians and extraction focused businesses is well highlighted in an

example from the mining sector, where Praja (2014) shows a dramatic increase in the issuance of

mining permits immediately before or after local elections as government actors seek capital for

campaigning or to return favours incurred through the election process.

The consequences of Indonesia’s corrupt administration are well documented. In 2014, for example,

the Corruption Eradication Commission (KPK) found that gross mismanagement, an acute lack of

oversight and massive tax evasion within the coal mining industry have caused more than US$2.2

billion in annual tax losses and severe damage to Indonesia’s environment (The Jakarta Post 2014).

Corruption in the forestry sector is even worse, costing Indonesia US$7 billion in losses between 2007-

2011 (HRW 2013). Ineffective and inconsistent enforcement against illegal activities in these sectors

means that businesses are more likely to engage in unsustainable, extractive activities in the interests

of quick returns. In these cases, environmental costs have been externalised from the business, as the

business draws down on publicly owned natural assets that they do not have to pay for, leaving society

as a whole worse off (Hadiz 2010). Nowhere are these trends more evident than in the palm oil sector,

as is discussed in section 4.2.2 specifically in relation to Aceh Green.

The problem of corruption driven natural resource degradation was at the heart of Aceh Green’s policy

reform agenda. New laws backed up by intensive law enforcement efforts and new green investment

were expected to shift incentive structures away from illegal activities (as discussed further in the

following section). Ultimately, the embeddedness of corruption in Aceh’s political economy

undermined Aceh Green though, as it was one of the dominant reasons why green investment did not

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materialise (as is discussed further in section 5.1.1), and why those in power had little interest in

pursuing new programmes and policies that would threaten their ability to gain financial benefits (as

is discussed in section 5.2.3).

The shift in new responsibilities and the creation of new roles and offices under Decentralisation has

led to the weak administrative capacity of local government officials, which is another reason for the

limited sustainable development progress in Indonesia. These capacity shortfalls directly influenced

the strategies employed through Aceh Green. Even the most sincere and competent district level

administrators have encountered difficulties in effecting positive change due to a lack of managerial,

technical and financial capacity (Marifa 2005). District level administrations have insufficient

information on resource management priorities and options, including the short and long term trade-

offs associated with the decisions they make (Marifa 2005, Booth 2011). As an example, a recent

survey on Indonesia’s forest moratorium found that only 38 per cent of district level forestry officials

knew the areas within their districts where forest conversion permits were allowed (Kemen,

Alisjahbana et al. 2014). Available budgets are mostly too small to remedy these information and

knowledge shortfalls as they do not cover the fixed costs of specialists in resource management,

legislative design, and enforcement (Coxhead 2005, McLeod 2005). Compounding this, Indonesia has

a career civil service system that allocates positions through management decisions dominated by

personal connections and bribes, as opposed to competition among applicants, leading to inadequate

personal in key management positions (Synnerstorm 2007).

Aceh Green proponents recognised that these capacity challenges presented a major stumbling block

to the realisation of innovative reforms (Secretariat interview No. 1 2012, 11 June). As such, they

created new, ad hoc government bodies to facilitate the reform process (described in section 4.2.1),

and envisioned a leading implementation role for the private sector (more details discussed in section

4.2.4).

Initially as a result of Suharto’s reign, and then perpetuated further through decentralisation, powerful

government and business elites came to govern natural resource allocation for their own political and

financial benefit throughout Indonesia. A significant body of academic research shows that the result

has been: an environment of political uncertainty; inconsistent laws and regulations; insecurity of land

tenure; and weak law enforcement (Fox, Adhuri et al. 2005, Gellert 2005, Patlis 2005). The situation

has been particularly dire in Aceh where elite control over the allocation of natural resources has

intensified Aceh’s 30 year conflict, creating significant sustainable development challenges for the

province.

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4.2 The perceived need for Aceh Green

Given that Aceh’s political economy was so heavily oriented towards resource extraction, it is

somewhat surprising that Aceh Green emerged at all. There has been nothing like it attempted in

Indonesia, or in other developing countries. This section discusses the set of circumstances that led to

Aceh Green – including, the sustainable development challenges in Aceh at the time of Aceh Green’s

inception, the mechanisms and strategies through which Aceh Green was expected to address these

problems, the rationale that guided these tactics, and the actors involved in promoting them. This

analysis addresses why there was a perceived need for the reforms promoted through Aceh Green, as

well as the critical junctures that enabled them to be attempted.

4.2.1 Sustainable development challenges, critical junctures and the beginnings of Aceh

Green

The previous section provided some brief insights on the devastating impact of the conflict in Aceh.

The stalemate in this conflict was only broken by the critical juncture of the Indian Ocean tsunami of

December 26, 2004. The tsunami killed around 130,000 people and displaced more than half a million

in the province. Here the tsunami drove seawater and debris up to five kilometres inland, ripping up

roads, destroying water and electricity services, crushing buildings and obliterating land parcels and

other personal property. Hundreds of villages, towns and urban areas were decimated and the

survivors moved into temporary camps in public buildings or took refuge in unaffected communities.

Total losses in infrastructure, housing and productive capacity were estimated at more than US$6.3

billion and reconstruction was anticipated to take more than a decade (Bappenas 2005). This tragic

event provided a critical juncture in which GAM and the government had little choice but to come

back to the negotiating table (Barron and Clark 2006).

A series of peace talks in the months following the disaster lead to a ‘Memorandum of Understanding

between the Government of Indonesia and the Free Aceh Movement’, signed in Helsinki on 15 August

2005. The Helsinki MoU put a formal end to the conflict and the dissolution of GAM, and paved the

way for a new Law on Governing Aceh (LoGA, Law 11/2006), which was passed by the Indonesian

House of Representatives on 11 July 2006 and signed by President Susilo Bambang Yudhoyono on 1

August 2006 (ICG 2005). The political deal at the heart of the peace agreement saw GAM giving up its

demand for independence and its armed struggle in exchange for greater political and economic

autonomy in Aceh (Aspinall 2005a).

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Decades of conflict combined with the devastation wrought by the tsunami created psychological and

physical scars and deep development challenges in Aceh. Even before the tsunami, the province

ranked fourth out of 34 provinces for the highest poverty rates in Indonesia (World Bank 2006).

Immediately following the tsunami Aceh’s economy contracted a further 9.6 per cent and 13.4 per

cent in 2005 and 2006, respectively. Unemployment rates doubled from 6.0 per cent in 2000 to 12.0

per cent in 2005, and poverty increased from 28.4 per cent in 2004 to 32.6 per cent in 2005, despite

falling poverty levels in the rest of the country (World Bank 2008a). A report by BRR NAD-Nias (2006),

the Presidential agency responsible for post tsunami reconstruction and rehabilitation in Aceh and

Nias, summarises how the tsunami deprived many people of their means of earning a living:

- Fishermen lost their boats, nets and other equipment with an estimated 50 per cent of marine

fishing affected.

- Approximately 40 per cent of shrimp ponds and other forms of brackish water aquaculture

were damaged or lost.

- Paddy fields closest to the coastlines were damaged by soil deposits, debris and salt.

- Rural communities in the affected areas lost farm assets (productive trees, seeds, tools,

livestock, cash, farm buildings, etc.), and important agricultural infrastructure (drainage and

irrigation systems, rice mills, processing plants, palm oil terminal installations, agricultural

markets, trader shops, research and training institutions, and access roads).

- Resettled villages were often placed too far from their original livelihoods to be able to resume

economic activity.

The tsunami led to an outpouring of international humanitarian aid at unprecedented levels.

Approximately US$6 billion was pledged to assist in Aceh’s relief and recovery (BRR NAD-Nias 2006).

By 2006 the major reconstruction effort had helped reduce poverty levels to 26.5 per cent, which was

below pre tsunami levels (World Bank 2008a). The anticipated problem though was that the recent

economic progress was being driven by reconstruction efforts rather than an increase in long term

business activity (IFC 2008). Table 2 below highlights that there was an absence of economic gains

beyond the bubble of the reconstruction process; in 2006 building and construction grew by 48.4 per

cent but agriculture only grew by 1.5 per cent and manufacturing decreased by 7.9 per cent. Concerns

over the state of the economy were amplified by the fact that oil and gas reserves were rapidly

declining (see the 2004 – 2006 contraction shown in table 2). Indeed, a survey conducted in February

2007 confirmed that the priorities for people in Aceh at that time were economic development and

employment generation (IFES 2007).

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Table 2: Economic growth in Aceh, 2003-2006

Sector (%) 2003 2004 2005 2006

Agriculture 3.2 6 -3.9 1.5

Oil, Gas and Mining 9.8 -24 -22.6 -2.6

Manufacturing 1.6 -17.8 -22.3 -7.9

Electricity and water 16.9 19.5 -2 12

Building/construction 0.9 0.9 -16.1 48.4

Trade, hotel and restaurants 2.4 -2.6 6.6 7.4

Transport and communication 3.8 3.6 14.4 11

Banking and other financial 30.9 19.4 -9.5 11.8

Services 6.3 20.1 9.7 4.4

Total including oil and gas 5.5 -9.6 -10.1 2.4

Total without oil and gas 3.7 1.8 1.2 7.7

Source: World Bank (2012)

As the multi-billion dollar reconstruction efforts phased down, a lack of long term employment

opportunities, especially for the rural poor, was a major concern in post tsunami and post conflict

Aceh. Poverty in Aceh increases the further you travel from the capital city of Banda Aceh. This is for

a number of reasons, primarily due to a reliance on agriculture as the main occupation in rural areas,

as well as lower education levels. Rural, inland Aceh was also more severely affected by the conflict

as GAM chose to base their operations from there (World Bank 2008a). These same areas were less

affected by the tsunami and thus had fewer opportunities to benefit from the reconstruction effort,

which was restricted to coastal areas, sometimes to the consternation of aid workers who felt that

this did not support Aceh’s holistic, medium term development (International organisation interview

No. 1 2013, 11 February). A big part of the problem was that thousands of former combatants lived

in rural areas and they had high expectations of receiving economic benefits as a result of laying down

their arms and agreeing to the peace deal; hence, it was believed that continued economic stagnation

posed a constant threat for lasting peace (McCulloch 2008).

In addition to socio economic concerns, Aceh faced a number of pressing environmental issues. The

reconstruction process itself was expected to increase logging pressure on the Ulu Masen and Leuser

ecosystems. With 125,000 homes destroyed and 800,000 damaged, and a need for new schools,

clinics, administration buildings and infrastructure, it was feared that a surge in the demand for timber

would lead to forest loss and illegal logging (FFI 2012). There was also concern that:

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As the province returned to relative stability following the peace agreement there would be a rush to extract Aceh’s natural resources in line with the business as usual economic model seen in other provinces in Indonesia (Secretariat interview No. 2 2012, 25 September).

The main threats included new road projects proposed in forest frontier areas and associated

smallholder encroachment (see figure 3), activation of existing timber and oil palm concessions inside

the Leuser Ecosystem (see figure 4), planned settlement expansion (BPKEL 2009), and illegal mining

and logging (EOA 2009). Analysis showed that if significant deforestation occurred in either the Ulu

Masen or Leuser ecosystems, Aceh would be exposed to increasingly erratic water supplies, droughts,

flash flooding and landslides, as well as erosion and siltation of downstream irrigation and drainage

channels, and silt deposition on coral reefs that would diminish the productivity of fisheries (EOA

2009). In the energy sector it was thought that if future electricity supplies were to be generated

through the coal focused strategies of the past, then it would increase air pollution, degrade biological

systems both at the mining sites and in areas downstream, as well as accelerate climate change (UNDP

2009).

Figure 3: The probability of deforestation of 2006 forest cover caused by road construction projects proposed by BAPPEDA, Aceh’s provincial development agency.

Source: Clements, Lynam et al. (2014)

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The key actor responsible for addressing Aceh's sustainable development needs was Irwandi Yusuf,

who became the province’s first democratically elected Governor in 2006 after winning 38.2 per cent

of the popular vote as an independent candidate (Mydans 2007). This was a critical juncture moment

in terms of Aceh’s attempt to transition to a green economy. Governor Irwandi is a trained

veterinarian, with a Master’s degree from Oregon State University, and a founding member of the

Acehnese branch of international conservation NGO Fauna & Flora International. As such, many

respondents noted their expectation and excitement that Governor Irwandi would deliver a ‘green’

agenda on coming to power; “it is very rare that a conservationist is elected as Governor in Indonesia!”

(International organisation interview No. 5 2012, 10 December). Irwandi was also a former member

of GAM, and held several prominent positions in the separatist movement, including negotiation

coordinator and counter intelligence expert (Irwandi Yusuf interview 2014, 3 October). It was

therefore anticipated by most respondents that he would be well placed to work effectively with other

former combatants in government (International Organisation No. 1 2012). Advisors close to Governor

Irwandi thought that it was this combination of environmental awareness and strong connections to

other elite actors, coupled with “brave, or perhaps stubborn, or persistent, personality traits”, that

provided Governor Irwandi with the conviction to pursue an innovative green economy strategy rather

Figure 4: Existing timber and oil palm concessions inside the Leuser Ecosystem

Source: BPKEL (2009)

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than yield to pressures demanding a traditional extraction focused development path (Secretariat

interview No. 2 2012, 25 September). In addition, other commentators noted that given Governor

Irwandi's long term support for Aceh's independence he was particularly open to international

assistance and foreign investment as a way to reduce economic reliance on the central government

and further Aceh's ability to self-govern (International organisation interview No. 4 2013, 26 January).

Support from field level former combatants brought Governor Irwandi to power, not his

environmental credentials (International organisation interview No. 1 2013, 11 February).

Nonetheless, on coming to office he looked to transition Aceh to a green economy by developing a

comprehensive, holistic strategy termed the Green Economic Development and Investment Strategy

for Aceh, or ‘Aceh Green’. He stated this his motivation for Aceh Green was based on an understanding

that:

If long lasting peace was to be secured we had to generate jobs, especially for the poor and ex-combatants. Without the establishment of businesses then the reconstruction effort was just going to be a ‘bubble’, where the economy crashed once all the aid workers left. It was also important that these new businesses did not ruin Aceh’s natural resources, which would defeat their purpose as engines for prosperity, as environmental degradation would only cause more problems for the people of Aceh in the future (Irwandi Yusuf interview 2014, 3 October).

Governor Irwandi first articulated his Aceh Green vision during several international trade and

investment missions to Malaysia, Turkey, India, Europe, China, South America and the United States

during 2006 and 2007. As one of the advisors on these trips told the story:

At every meeting Governor Irwandi would take out a piece of paper and draw his vision for an integrated approach for economic development and environmental management. The picture consisted of a series of land use designations covering the core goals of renewable energy and land use management, community development, commerce and conservation (Private sector interview No. 2 2014, 30 June).

These drawings were ultimately formalised into the eight components of Aceh Green (discussed in

section 3.2.2). Aceh Green was formally launched on 7 December 2007 during the Conference of

Parties (COP-13), United Nations Framework Conference on Climate Change (UNFCCC) in Nusa Dua,

Bali.

Development and oversight responsibility for Aceh Green rested with a small team of advisors selected

by Governor Irwandi. This team initially had no formal status and was termed the Aceh Green

‘Transitional Secretariat’ before eventually being established as the ‘Aceh Green Secretariat’ under a

Governor’s Decree in late 2009. The Secretariat saw its primary role as promoting and facilitating links

between government agencies, the private sector and civil society in support of Aceh Green’s aims

(Secretariat interview No. 2 2012, 25 September).

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A number of international organisations provided direct support to the Aceh Green Secretariat.

International conservation NGO Fauna & Flora International (FFI) co-managed the Aceh Forest and

Environment project (AFEP), which was established to ensure there was an environmental

conservation component in the post tsunami reconstruction effort. The AFEP had a US$17.5 million

budget over four years (until June 2010) shared between FFI in the Ulu Masen Ecosystem and the

Leuser International Foundation (LIF) in the Leuser Ecosystem. Funding from AFEP enabled FFI to assist

the Aceh Green Secretariat on several initiatives, namely policy development and technical assistance

relating to spatial planning and the development of the Ulu Masen REDD+ project (International

organisation interview No. 5 2012, 10 December). Other international organisations that played a

prominent role in supporting the Secretariat included the United Nations Development Programme

(UNDP), Oxfam, the German Development Agency (GTZ), and the International Finance Corporation

(IFC).

While international support for Aceh Green was ultimately insufficient (discussed further in section

6.2.2), the Governor believed that without the support of the organisations that did provide some

assistance (FFI, UNDP, Oxfam, GTZ, IFC), it would have been difficult, if not impossible, to attempt

Aceh Green (Irwandi Yusuf interview 2014, 3 October). The international organisations that did engage

provided technical consultants to support planning, budgeting, and coordination of the Aceh Green

policy reform process (International organisation interview No. 1 2013, 11 February). Direct financial

assistance for Secretariat salaries were also provided by the UNDP (International organisation

interview No. 12 2013, 18 June). Through this collaboration a number of internal strategy documents

were drafted to operationalise Aceh Green. The three focal areas of the reform process were: 1)

establishing new regulations; 2) program planning and finance; and 3) the realisation of the Ulu Masen

and Leuser Ecosystem REDD+ projects, and associated sustainable forestry and renewable energy

investments. The rest of this section elaborates in turn on each of these focal areas.

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4.2.2 Targeted regulatory reform

The Secretariat believed that for Aceh Green to be implemented in a holistic and sustainable manner

its core principles needed to be embedded within Aceh’s formal legal structures (Secretariat interview

No. 3 2012, 23 October):

The best way to ensure that this would happen was for all relevant qanun [local regulations] being drafted at the time to incorporate the core elements of Aceh Green – namely, the right of Aceh’s people to economic development and a healthy environment.

Ostensibly, Aceh had a unique opportunity to define its own regulatory framework following the

passing of the Law on Governing Aceh (LoGA, Law 11/2006), which enabled a transfer of greater

decision making autonomy to the Aceh Provincial government to make and enforce new regulations

(May 2012). Through the new opportunities provided by the LoGA the Secretariat hoped that it could:

… spearhead a process that would audit and clean up the inconsistent regulations across levels of government and different agencies to address the overlaps and gaps that plagued Indonesia’s regulatory framework (Secretariat interview No. 2 2012, 25 September).

Qanun relating to Aceh Green included: spatial planning, land reform, plantations, forestry,

investment, environmental management, and government authority (Secretariat interview No. 1

2012, 11 June). The UNDP (2008) suggested a number of activities that should be undertaken to ensure

that Aceh Green was effectively incorporated into the new regulations – including, the development

of detailed policy papers to explain how the principles of Aceh Green related to each of the Qanun

listed above, and a process of broad, multi-stakeholder participation in the drafting of each policy

paper and regulation. It was envisaged that a well designed regulatory framework would effectively

target illegal activities, strengthen local people’s rights to land and resources, and reduce regulatory

and business risks, thus increasing investor confidence to establish green businesses (Consultant

interview No. 7 2012, 10 July). This mirrored a green economy approach where the new regulations

were meant to establish incentives that would align market forces in favour of businesses that

delivered positive social and environmental impact.

Spatial planning and the fair and equitable resolution of land disputes were at the heart of Aceh

Green’s regulatory reform agenda (Secretariat interview No. 3 2012, 23 October). Spatial plans

formalise the status of land use throughout Indonesia and determine how different geographic areas

are to be utilised, managed and monitored based on a classification system (Government of Indonesia

2007). According to Spatial Planning Law 26/2007, spatial plans are to be set at central, provincial and

district levels every five years. Once land use designations are clearly signed into law via the Spatial

Plans, they enable more clarity around the granting of forest and agricultural concessions, and

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alongside five year development plans, pave the way for government agencies to allocate annual

budgets in line with designated land uses (International organisation interview No. 12 2013, 18 June).

In an attempt to ensure that Aceh’s land use decisions better aligned with the principles of sustainable

development, Governor Irwandi declared a ‘logging moratorium’ in June 2007, which placed a

temporary ban on all logging activities in Aceh (Instruksi Gubernur 2007). Governor Irwandi viewed

the logging moratorium necessary to provide time and space for TIPERISKA (the Forest Redesign Team

set up under the Aceh Green Secretariat) to: 1) review the current status of Aceh’s forests,

concessions, and sustainable production capacity; 2) redesign the spatial plan so that it represented

priority areas of natural forests and watersheds that needed focused attention in their management

and protection (see proposed spatial plan in Annex 3), as well as the recognition of existing rights to

land and resources, and the identification of areas suitable for further development; 3) recognition of

local institutions, particularly in regards to clarification over rights to forest areas, and the role of local

communities as protectors and promoters of effective resource management initiatives; and 4) re-

enact stronger, more effective enforcement mechanisms to prevent violations of this policy

(TIPERESKA 2008). This land use “re-design” work was deemed essential by Governor Irwandi given

that:

There is no way you can protect the forest without both creating sustainable employment for people who rely on the forest for their livelihood and ensuring better law enforcement. To encourage more investment targeting sustainable employment, and to properly enforce laws, requires land tenure reform (Irwandi Yusuf interview 2014, 3 October).

The necessity for improved clarity on land use rights in Aceh can be seen from the discussion on land

issues in Indonesia outlined in section 4.1.2, as well as from more Aceh specific studies, particularly by

Janssen (2010) and Dunlop (2009). Of the 50 villages researched in and around the Leuser Ecosystem,

one in four believed most of the forest around their village was on adat land. Estimates varied

considerably even within the same village, but general perceptions about the size of the adat forest

were approximately 500 hectares. This means that adat claims amounted to about 25 per cent of the

total of the Leuser Ecosystem, whereas the government gave no formal recognition of customary

control over these areas (Janssen 2010). There was even confusion internally within different

communities about rights to resources. This issue is especially complex in Aceh because local people

took over lands left by transmigrants who fled Aceh because of the conflict. Most of the current land

occupiers in these cases thus do not have official land certificates because these lands de jure belong

to the transmigrants (Dunlop 2009).

The uncertainty over land use rights has been found to be an important driver of deforestation in

communities in and around the Leuser Ecosystem. The lack of secure land rights mean that

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communities face land allocation conflicts with governments who grant concessions to companies or

create protected areas blocking local access. This in turn creates a ‘race to the bottom’, where local

communities make land claims wherever possible, and as quickly as possible, to reduce the risks of

outsiders gaining access to these resources through land grabs (Janssen 2010). Furthermore, in the

absence of secure land tenure, subsistence farmers consider abandoned or regenerating land a far

less attractive option for crop establishment compared to forested land, even though forested land

requires considerably more investment for forest clearance and cultivation. This is because the

degraded land invariably has at least one, if not more, private claimants who will demand

compensation once any major investments have been made. Forested land, on the other hand, is still

widely perceived as open access, or common land, to be claimed for use by whoever clears it (Janssen

2010).

Commentators also believed that the rationale for Governor Irwandi’s focus on spatial planning and

the clarification of land rights, especially his proposal to declare all of the forest estate in Aceh as

provincial forest (Hutan Provinsi), thus taking it away from the administrative jurisdiction of the central

government, was an important aspect of his intentions to:

… wrestle control of Aceh's resources away from further meddling from Jakarta, especially the central government's right to issue concessions, share in revenues, and decide the fate of Aceh's forests (International organisation interview No. 4 2013, 26 January).

The plantation sector was also a priority focus of Aceh Green’s regulatory reform agenda. In

particular, the Secretariat believed that oil palm development could contribute towards economic

development and job creation without destroying the environment if it was managed

appropriately, and alternatively if not managed properly, unrestrained oil palm development was

one of the biggest social and environmental threats in the province. It was therefore deemed

essential to set up effective policies specifically targeting this sector (Secretariat interview No. 2

2012, 25 September).

Indonesia’s palm oil sector is characterised by deep sustainable development challenges. The large

majority of customary land in rural Indonesia is unregistered and held under customary law

arrangements. These rights are highly prone to marginalisation by palm oil company interests and it

is very common for business licences to be granted over customary land, thereby creating layers of

land claims (McCarthy 2010, Obidzinski, Takahashi et al. 2013). The impact of industrial oil palm

plantations on local livelihoods is characterised by unfair relationships between mills and smallholders

(Rist, Feintrenie et al. 2010). Prices received by Indonesian growers are 34 per cent lower than the

Malaysian benchmark (Matthias 2015). Environmental concerns are well documented and include

forest clearing and the loss of ecosystems and biodiversity, flooding, air, soil, and water pollution,

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greenhouse gas emissions, and human-animal conflict (Curran, Trigg et al. 2004, Fitzherbert, Struebig

et al. 2008, Wilcove and Koh 2010).

The attempted reform of the plantation sector under Aceh Green aimed to formalise community

management and control over 350,000 hectares of secondary forest land considered suitable for

community forestry and agroforestry development, as well as provide a further 250,000 for estate

crops, especially oil palm (Aceh Green Secretariat 2008). Governor Irwandi deemed these strategies

necessary as he recognised, “that it would be impossible to gain support for the environmental

conservation elements of Aceh Green unless his strategy also delivered significant economic and

business benefits for the private sector and local communities” (Irwandi Yusuf interview 2014, 3

October). Aceh Green also prioritised the drafting of new regulations that would ensure that both

existing and new oil palm development in Aceh closely followed the principles and criteria of the

Roundtable on Sustainable Palm Oil (RSPO). The RSPO is a global initiative of businesses, government,

and civil society to create high standards and strong incentives for environmental and social

responsibility in the palm oil industry through certification systems. It promotes:

Palm oil production practices that help reduce deforestation, preserve biodiversity, and respect the livelihoods of rural communities in oil producing countries. It ensures that no new primary forest or other high conservation value areas are sacrificed for oil palm plantations, that plantations apply accepted best practices and that the basic rights and living conditions of millions of plantation workers, smallholders and indigenous people are wholly respected (RSPO 2012: 1).

As one of the Secretariat members stated, “The hope was that if RSPO principles and criteria were

enshrined in law, then Aceh would avoid the major problems with oil palm expansion common across

Indonesia” (Secretariat interview No. 1 2012, 11 June).

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4.2.3 Proposed planning, implementation and financing strategies

Assuming that new regulations proposed through Aceh Green would be enacted, it was anticipated

that government agencies at both the provincial and district levels would need significant assistance

in program planning, implementation and financing to ensure that the new regulations were

operationalised effectively. Advisors to Aceh Green suggested that it was essential for the Secretariat

to play a role in addressing the disconnect in program planning between provincial and district

governments, and the disconnect between different sectorial agencies (Meehan 2009), which are

prevalent in Aceh and elsewhere in Indonesia (as discussed above in section 4.1.2). Other areas where

the advisors felt that assistance was needed included the development of government capacity

building initiatives clearly linked to overall Aceh Green program deliverables, clarifying technical

implementation criteria that should apply to the programmes, and devising proper procurement

mechanisms that reduce the incidence of mismanagement and corruption (Meehan 2009). These

interventions were specifically designed to address the governance limitations that previous

sustainable development interventions had encountered in both Aceh and other areas of Indonesia

(Consultant interview No. 4 2012, 22 May).

A particular focus of Aceh Green’s programmatic planning efforts concerned the establishment of the

Aceh Plantation Development Authority (APDA), which was modelled after the Malaysian organization

Federal Land Development Agency (FELDA). FELDA were also expected to provide technical and

managerial support to APDA (Aceh Green Secretariat 2008), which is another example of Governor

Irwandi's focus on foreign support, rather than looking to Jakarta for such support. The rationale for

APDA was to create a central planning agency staffed with a team of experts that could effectively

coordinate a new initiative to increase industrial crop production, namely oil palm, through what is

known as a ‘plasma-nucleus’ model. Under this program, participating households would have title to,

and run, their own plantations alongside private and government estates. The estate would provide

access to processing facilities and technical inputs – including, land preparation assistance, optimal

seed stock, tools, and transition financing until the smallholder plantations reached maturity (Fricke

2008). The hope was that APDA would create long term livelihood opportunities for rural communities

in Aceh, economic development for the province, as well as helping to reorient community and

government led economic growth strategies away from extractive activities that require further

deforestation (Fricke 2008).

APDA was expected to increase the area under oil palm production in Aceh from 280,000 hectares to

over 450,000 hectares. The focus was on the development of critically degraded land, where site

selection and planning would be conducted through a participatory landscape planning process that

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combined sophisticated land use analysis and mapping technologies with grassroots organizing (UNDP

2008). According to the initial plan, 170,000 hectares would be divided into smallholdings of four

hectares given to 35,000 families, while 11,250 orphans would receive the proceeds from the

remaining 30,000 hectares, which would be administered by APDA (Kaufman 2007). The aim was also

to revitalise existing plantations that had fallen into disrepair during the conflict – including, replanting

unproductive palms and eliminating inefficiencies in weed, pest, fertiliser and harvesting management

– so as to increase the productivity of land already under cultivation (Fricke 2008).

The UNDP (2008) advised the Aceh Green Secretariat to ensure that it had sufficient funds to run its

own operations on a continuous basis, and that government departments and organisations

implementing Aceh Green had access to appropriate finance to effectively fulfil their respective roles

and responsibilities. This recommendation was based on the experiences of the consultants involved

who had seen other policy reform interventions in Indonesia lose momentum due to a lack of long

term funding (International organisation interview No. 12 2013, 18 June).

Securing government budgetary support was a core priority of the Secretariat so as to lock in long

term funding and government support for Aceh Green (Meehan 2009). There were significant

opportunities to achieve this goal. The Government of Aceh received an annual budget increase of

over US$421 million (a 30 per cent increase) through Indonesia’s central government ‘Special

Autonomy Fund’ (Otus), which was set up as a condition of the LoGA (World Bank 2008b). Governor

Irwandi established a ‘Coordination Team’ to determine new Otus criteria and guidelines that would

allocate resources based on development indicators in each of the districts. The Otus fund presented

a key opportunity to incorporate Aceh Green related financing priorities into formal government

budgets, especially as the Otus fund was designed to support the development of large scale, cross

district and cross sectorial programmes (Consultant interview No. 4 2012, 22 May). Other government

planning and budgetary initiatives targeted by Aceh Green included the Long Term Development Plan

and revisions to the Medium Term Development Plan for the province (Meehan 2009). These plans

ultimately get endorsed by parliament and incorporated within government budgets, and hence

provided perhaps the best opportunity for Aceh Green related initiatives to secure long term funding

(International organisation interview No. 12 2013, 18 June).

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4.2.4 The Ulu Masen and Leuser REDD+ projects, sustainable forestry and renewable

energy

The most prominent projects within Aceh Green in terms of scale, ambition and potential impact,

were the Ulu Masen and Leuser REDD+ projects and associated green economy investments in

sustainable forestry and renewable energy. These projects were developed through unique public-

private-NGO partnerships, and together covered approximately 3,200,000 hectares, or 57 per cent of

Aceh’s total land area. They were Governor Irwandi’s central strategy for delivering on both the

economic development and conservation goals of Aceh Green (Irwandi Yusuf interview 2014, 3

October).

The Ulu Masen REDD+ project focussed on a 740,000 hectare block of forest comprised of various land

use designations and located in the five northern most districts of Aceh Province. Project aims were

to reduce deforestation in the Ulu Masen forest area by 85 per cent, avoiding over 3.4 million tons of

CO2e emissions annually for 30 years as well as conserving biodiversity and contributing to sustainable

economic development (GoA 2007). One of the main mechanisms to achieve these goals was the

spatial planning process discussed in section 4.2.2 above, where existing logging and mining

concessions in the Ulu Masen were to be cancelled and the area reclassified as Protection Forest

(Hutan Lindung). Land use reclassification and associated cancellation of unexercised concessions was

an essential part of the project given that 54 per cent of Ulu Masen’s forest estate was unprotected

and thus vulnerable to conversion to non-forest uses. Indeed, two thirds of this area was already

zoned and licensed for logging (FFI 2012). The continued legal validity of these concessions was

uncertain given that they had not been exercised due to the conflict, and were previously issued to

elite figures through dubious legal means (Secretariat interview No. 1 2012, 11 June). Returning this

land to the control of the Aceh Government and its people was an important goal for Governor Irwandi

for both sustainable development reasons and Acehnese pride (International organisation interview

No. 4 2013, 26 January).

The Ulu Masen REDD+ project also attempted to clarify land tenure and resource access rights for

forest dependent communities and those with customary rights. This was to be achieved by

strengthening forest management, forest governance and forest law enforcement processes at

provincial, district and community levels, and ensuring that project benefits were equitably shared

with communities through direct benefit sharing of carbon revenues and the development of

community forestry, agroforestry and other livelihood initiatives that support sustainable reductions

in carbon emissions (GoA 2007). Through these “community based, financially sustainable

interventions”, the Ulu Masen REDD+ project management team hoped to avoid the failures of

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previous sustainable development interventions in Aceh and elsewhere in Indonesia (Secretariat

interview No. 1 2012, 11 June). As a representative of one of the international organisations assisting

the project stated:

The Secretariat were aware of the limitations encountered in previous projects, which often failed to achieve the desired results due to a the lack of long term and holistic program planning and funding across scales, and the absence of community engagement (International organisation interview No. 6 2013, 23 June).

Governor Irwandi delegated the role of developing the Ulu Masen REDD+ project to the Aceh Green

Secretariat. It was their job to establish and coordinate public-private partnership arrangements

between the key actors involved in assisting the project (Secretariat interview No. 3 2012, 23 October),

namely Fauna & Flora International (FFI) and Carbon Conservation Pty Ltd, a Singapore based

company. The goal was to establish a government owned company that would manage carbon

revenue and coordinate long term project implementation (Secretariat interview No. 2 2012, 25

September). This new entity was to be supported financially by Carbon Conservation, the private

sector partner who was responsible for assisting with project design, marketing and sales of carbon

credits, for which they would receive a share of any carbon sales. FFI’s role was to facilitate

participatory processes for community development, forest management and sustainable livelihoods,

as well as spatial and land use planning, biodiversity conservation, and collaborative law enforcement

(GoA 2007).

The Leuser Ecosystem is located to the south of the Ulu Masen, and covers just over 2.2 million

hectares across 13 districts in Aceh Province, and approximately 400,000 hectares in North Sumatra

Province (BPKEL 2009). While the entire area is often referred to as the Leuser Ecosystem, the Aceh

Green related project site was limited to the portion within Aceh Province. The Leuser Ecosystem is

one of the most important conservation areas on earth due to its size and the diverse range of habitats

that it covers (Hance 2013).

Based on the LoGA, the Governor of Aceh established Badan Pengelola Kawasan Ekosistem Leuser

(BPKEL) and charged it with the management of the Leuser Ecosystem (Governor Regulation 52/2006).

Under this decree, BPKEL’s duties and authorities related to the Leuser Ecosystem included: 1)

management of the area by protecting, safeguarding, conserving, restoring area functions and utilizing

the area sustainably; 2) to coordinate and cooperate with the city/district government and other

parties; 3) to control the issuance of licenses for the sustainable utilisation of the area; 4) to seek funds

for the management of the area; and 5) to coordinate the handling of problems or conflicts in the area

and give directions and suggestions for their resolution (BPKEL 2009).

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BPKEL were confident that it could draw on existing regulations, as well as planned reforms under

Aceh Green, to effectively conserve the Leuser Ecosystem (BPKEL 2009). The status of the Leuser

Ecosystem is bound by Law 26/2007 regarding National Spatial Plans. In the implementation details

of this Law the Leuser Ecosystem was declared a National Strategic Area – an area that is of national

importance, especially for economic and environmental reasons. Consequently it is illegal to

undertake any activities inside the Leuser Ecosystem that are not directly related to either the

protection or restoration of the ecosystem, which is the strongest protection status possible under

Indonesia law (PEM and ECO 2010). Furthermore, as a result of the LoGA, the Aceh Government

believed they had the power to cancel all remaining logging and plantation concessions inside the

Leuser Ecosystem (BPKEL 2009). Additional spatial planning related work was still required, however.

Some districts had not adequately included the Leuser Ecosystem as an integral part of their district

level spatial plans, and certain areas that transcend district boundaries, such as watersheds, required

detailed spatial planning to ensure that the utilisation and conservation of water resources was carried

out on an integrated basis. The effect of disconnected spatial planning was that the Leuser Ecosystem

and its internal zoning were often not recognized at a district level, or good plans in one district were

negated by poor planning in an adjacent one (BPKEL 2009). BPKEL envisaged these deficiencies would

be addressed through the new spatial planning regulation for Aceh Province (BPKEL interview No. 1

2012, 12 November), as discussed in section 4.2.2 above.

BPKEL recognised that in order to secure support for the necessary spatial planning, as well as ongoing

government and community compliance with regulations protecting the Leuser Ecosystem, “it was

essential to generate development benefits directly tied to the conservation of the Leuser Ecosystem”

(BPKEL interview No. 1 2012, 12 November). In an attempt to deliver on this goal, BPKEL formalised a

co-operation agreement with a private sector partner, Sustainable Forest Management Ltd. (SFM),

which was formally endorsed by Governor Irwandi in June 2008. SFM ultimately sold their position in

the partnership to Global Eco Rescue Ltd. (GER) in 2009, but the essence of the project remained the

same. The co-operation agreement included the following provisions:

- SFM/GER were obliged to invest US$20 million to establish agroforestry, renewable energy

and ecotourism businesses, with a focus on the districts that included parts of the Leuser

Ecosystem.

- SFM/GER would finance and develop an REDD+ project, including the Project Design

Document and the verification of emission offsets, and the marketing and trading of carbon

credits.

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- Revenues from the sales of carbon credits would be received by a new company – PT Leuser

Development (DevCo) – which was 51% owned by the government of Aceh and 49% owned

by SFM/GER.

It was expected that revenue generated from the sale of carbon credits would mainly be used for

conservation (including financing BPKEL), as well as economic development activities in the

surroundings of the Leuser Ecosystem (GER 2010a). The expressed logic of this approach was that

because such investments were directly linked to the sale of carbon credits, which would only be

generated if the Leuser Ecosystem was protected, then local support for the conservation of the

Leuser Ecosystem would be realised due to the integral part it was playing in the development of the

economy (BPKEL interview No. 1 2012, 12 November).

Another important aspect of the investment strategy related to legal structuring. The rationale behind

the establishment of the DevCo was to create a new entity within government that had sufficient

political and economic authority to counter the extraction oriented interests of other government

entities, such as the provincial forestry or development agencies and district level officials (BPKEL

interview No. 1 2012, 12 November). More specifically, it was envisioned that:

The DevCo would have the authority to allocate direct funding to district governments, or to invest directly in businesses. The amount of funding or investments allocated to each district would be calculated on the basis of the area and quality of forest in that district. Through this mechanism it was anticipated that district level officials and communities would start viewing the Leuser Ecosystem as an asset, and integral part of the regional economy rather than a liability or a barrier to development (BPKEL interview No. 1 2012, 12 November).

The proponents of the Leuser Ecosystem REDD+ project understood that similar conservation and

development approaches had not been successful in the past (for example, see McCarthy 2006 for an

analysis of the problems encountered by the Leuser Development Programme), but they believed that

this intervention was different because of the proposed regulatory forms, a consistent flow of funding

for monitoring and law enforcement activities, as well as the industrial scale of the economic

interventions planned (BPKEL interview No. 1 2012, 12 November). That is, where previously:

The economic incentives targeting conservation improvements had been implemented at the village scale through aid projects with relatively small budgets and a lack of business acumen, the new economic interventions planned were to be undertaken by professional companies with the appropriate skills and finance to deliver viable businesses large enough to create significant employment opportunities and have a real impact on the economy (BPKEL interview No. 1 2012, 12 November).

The main sector targeted through the project’s investment strategy was the forest value chain (Private

sector interview No. 1 2012, 21 November). The investments envisioned included the planting of high

value plantation timber and agroforestry crops on the periphery of the Leuser Ecosystem, as well as

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the development of value added processing industries, including – export quality saw mills, drying

kilns, pulp and paper factories, and bioenergy facilities (wood pellets for export and biomass energy

plants for local energy production) (GER 2010b). It was intended that the investments would:

… refocus communities neighbouring the rainforest away from utilization of natural forests and employ them in ecologically balanced economic activities that maximised the productivity of non-protected areas so as to create new jobs, higher incomes, and improved living conditions in districts that complied with the regulations protecting the Leuser Ecosystem (Private sector interview No. 1 2012, 21 November).

The investments were also deemed essential to provide an adequate supply of timber to the province;

“if timber supplies from natural forests were reduced or minimized through avoided deforestation

efforts, then commercial plantations needed to be established to meet local demand and reduce long

term pressures on natural forests” (GER 2010a). Timber and agroforestry plantations were to be

developed through both community and privately owned plantations. Private plantations of interest

were Aceh Nusa Indrapuri – a 100,000 hectare block of acacia and eucalyptus plantations, lightly

forested land, grassland, and community agroforestry plots – and Tusam Hutani Lestari – another

100,000 hectares of mixed pine plantations and community plots. Associated with both of these

plantations was an idle pulp and paper mill – Kertas Kraft Aceh – which would be the main buyer of

plantation timber and biomass once reactivated as part of the forest value chain investment strategy

(GER 2010b).

Conclusion

This chapter presented the political economy that informed perceived need for Aceh Green and that

was instrumental to its ultimate lack of progress. It also outlined how Aceh Green was expected to

tackle the sustainable development challenges facing Aceh.

As a result of both the Suharto and decentralisation eras, powerful government, business and military

elites have secured control over natural resource allocation and associated political and financial

benefits. Social injustices bought about through elite control over the allocation of natural resource

rights intensified tension between Aceh and the central government and perpetuated Aceh’s 30 year

conflict, resulting in deep social and economic challenges for Aceh Province. The conflict also helped

Aceh retain large areas of forest given that it dissuaded investment into extractive activities.

The 2004 Boxing Day tsunami and the consequent election of a ‘green Governor’ – Aceh’s first

democratically elected Governor – presented a critical juncture. It was a rare occasion for Aceh, and

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indeed for Indonesia and globally, that there was a leader in office who was actively committed to

transitioning the province towards a green economy.

Governor Irwandi and the Aceh Green Secretariat – with support from several international

organisations – envisioned a series of policy reforms targeting an integrated approach to economic

development and improved environmental management as a way to address Aceh’s pressing

sustainable development challenges. For Governor Irwandi the proposed reforms also presented an

opportunity for Aceh Province to become more politically and economically independent from the

central government. The remainder of the thesis turns to a detailed analysis of how and why these

targeted policy reforms ultimately failed to gain the broad based support necessary for their

realisation.

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Chapter 5: Barriers to green economy reform in Aceh

This chapter addresses research question number three: How did Aceh’s political economy shape the

implementation of the initiative? The analysis focuses on the tensions between the prevailing political

economy and the policy shifts promulgated by Aceh Green. Two fundamental institutional interplays

are examined: 1) the relationship between private sector interests and the investment climate; and 2)

government policy and regulatory regimes and interests.

5.1 The incompatibility of Aceh’s investment climate and the interests of

‘green’ investors

This section outlines how the prevailing political economy ultimately worked against Aceh Green by

failing to encourage the private sector's support in the transition to a green economy. This was due to

the investment climate in Aceh where perceived risks to investors outweighed their expected rewards.

Investors’ main concerns focused on the high level of corruption and a lack of security over resource

rights. Such risks were not adequately offset due to the absence of positive market signals for business

models tailored to social and environmental goals, coupled with investor and capital market

expectations for stable, high value returns. Aceh’s coffee sector provides a notable exception and

demonstrates that businesses will address green economy goals where there is a more favourable risk

versus-reward balance. The coffee sector made progress because: 1) the businesses were already

operational and thus did not face initial start-up risks; 2) they received significant technical assistance;

and 3) there was a price premium for complying with business models that provided social and

environmental benefits.

5.1.1 Investor perceptions of risk relative to expected returns

This section focuses on the characteristics of Aceh’s investment climate in order to help understand

why the private sector did not deliver on the goals set out for it within Aceh Green. The World Bank

(2013) defines an investment climate as the opportunities and incentives for firms to invest

productively, create jobs, and expand. They also find that the nature of an investment climate is

predominately determined by three broad sets of variables: macroeconomic policies such as fiscal,

monetary and trade policies; governance and institutions; and, infrastructure (World Bank 2013).

Indonesia as a whole suffers significant shortfalls in all three of these categories; the World Bank

(2014c) ‘Ease of Doing Business’ database ranks Indonesia 114/185 countries, well below East Asia

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and Pacific regional averages. More specifically to Aceh, a report by the IFC (2008) states that the local

investment climate is plagued by macroeconomic instability, political risks and informal taxes, land

tenure insecurity, unclear regulations and indeterminate responsibilities and powers of the different

levels of government, as well as insufficient electricity supplies. More details on these investment

constraints are discussed throughout this section.

The Aceh Green concept note promoted business opportunities in REDD+, renewable energy, and the

development of value-added processing and marketing of Aceh’s natural resources including palm oil,

coffee, cocoa, rubber and seafood (Aceh Green Secretariat 2008). It was expected that ‘green

investors’:

… would establish new socially and environmentally oriented businesses that would generate financial returns from ecosystem services, and boost agricultural productivity and create jobs on the periphery of protected areas, and thereby create new incentives for local government and communities to comply with improved environmental management practices (Secretariat interview No. 2 2012, 25 September).

While international investors showed interest in establishing green businesses in Aceh – “hundreds

visited Aceh to undertake due-diligence during Irwandi’s time in office” (Secretariat interview No. 3

2012, 23 October) – there was very little investment beyond the planning stage. Private sector

investment in both the Ulu Masen and Leuser Ecosystem REDD+ projects progressed the furthest of

the various Aceh Green components but still did not go beyond early-stage implementation before

being abandoned. Carbon Conservation supported the Ulu Masen REDD+ project through the Climate,

Community & Biodiversity Standards validation process, which became the first REDD+ project

globally to achieve this milestone (FFI 2012). They also undertook due-diligence on green investments

on the periphery of the Ulu Masen, and secured an off-take agreement for the sale of carbon credits

from Merrill Lynch. Carbon Conservation never committed the capital needed to realise project

objectives, however, because they were never able to gain adequate legal assurances they had a right

to the carbon credits, or that the government was fully committed to the project for the long term

(Private sector interview No. 2 2014, 30 June).

In the Leuser Ecosystem REDD+ project, both SFM and GER contributed between US$20,000 and

US$50,000 per month for a period of over two years to support BPKEL’s conservation activities as part

of their agreement to reduce deforestation (Private sector interview No. 1 2012, 21 November). A

programme of work towards the generation and sale of carbon credits was undertaken by three

international consultancy teams that were engaged to undertake carbon assessments and a

comprehensive socio economic baseline survey of communities in and around the Leuser Ecosystem.

Letters of commitment from carbon credit buyers were received, and an investment portfolio in

forestry, agroforestry, renewable energy and tourism had been identified (Private sector interview

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No. 5 2013, 18 August). These initial efforts did not progress any further though, namely because

investors believed the project carried unacceptable risk relative to their expected returns as further

discussed below (Private sector interview No. 1 2012, 21 November).

Confusion over land and carbon rights was one of the main (cited) reasons why both REDD+ projects

did not progress. As section 4.2.2 explained, Aceh was characterised with land rights uncertainty

resulting from the mismatch between central, provincial and district government spatial plans, and

the unclear status of land ownership. The Aceh Green Secretariat undertook extensive work to address

both of these issues through the proposal of new spatial plans, as well as an evaluation of existing

forestry concessions in the Ulu Masen in an attempt to show that they were no longer active and, in

turn, have them repealed so the area could be re-designated as protected area (Secretariat interview

No. 3 2012, 23 October). However, as is discussed further below in section 5.2.1, the spatial plan

proposed through Aceh Green was not formalised, and the cancellation of the existing concessions

never eventuated. This left considerable uncertainty over the Ulu Masen REDD+ project where

previously issued concessions covered much of the project site (International organisation interview

No. 7 2013, 1 July). Land and carbon rights were further complicated by customary claims over the

project site. Based on field research in forest edge villages where the Ulu Masen REDD+ project was

situated, a report by Dunlop (2009) found that customary claims to land in Aceh are frequently

disputed due to a lack of clear village boundaries, no certificates of title, rural to urban migration

resulting in unused land, and the unclear rights and responsibilities of absentee landowners. Lack of

clarity on these tenure issues ultimately meant that no one was certain who had the rights to the

carbon and the revenues generated by the sale of credits, or if there would even be any avoided

deforestation achieved given the absence of progress on the spatial plan or the re-designation of the

concessions (Private sector interview No. 5 2013, 18 August).

The Leuser Ecosystem REDD+ project was also unable to progress due to a lack of clarity over land and

related carbon rights. SFM signed a commercial agreement with the Government of Aceh in 2008

which stated that SFM had the right to 49 per cent of all carbon credits produced from the Leuser

Ecosystem. Aceh’s provincial government maintained that they had the right to sign this agreement

and issue carbon rights for the Leuser Ecosystem as stipulated in the LoGA (BPKEL interview No. 1

2012, 12 November). However, as is discussed further in section 5.2.2 below, Aceh Government

authority over such decisions was never formalised. The central government did not accept that

Aceh’s provincial government had the mandate to allocate carbon rights or to manage REDD+

activities without its approval (Secretariat interview No. 2 2012, 25 September). The central

government itself was giving conflicting signals about what agency would have authority over issuing

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carbon rights, and even whether or not they would be willing to let the private sector engage in REDD+

projects (Private sector interview No. 2 2014, 30 June).

The investors in the Leuser Ecosystem REDD+ project initially went along with the provincial

government’s statements that they had complete management authority over the Leuser Ecosystem,

including issuance of contracts designating carbon rights, due to the legal stipulations in the LoGA

(Private sector interview No. 1 2012, 21 November). REDD+ business agreements were made on this

basis. GER purchased the project from SFM for US$1 million; this value was mainly based on the fact

that SFM had signed an agreement with Governor Irwandi concerning carbon rights over the Leuser

Ecosystem (Private sector interview No. 1 2012, 21 November). With time and greater experience in

Aceh, however, GER realised that there was considerable uncertainty, especially in regards to the

interaction of carbon rights with communities’ existing or emerging rights to land and forest resources,

and the relative authority of the various layers of district, provincial and central government in

regulating these rights. As one investor involved in the project commented:

You think you achieve completion of a licensing process by getting sign off at a certain level of government because this is what is required by law, but then you are informed that there are other conflicting laws that establish licensing authority at a different level of government (Private sector interview No. 1 2012, 21 November).

The problem from the perspective of international investors was that they simply could not gain clarity

over what department and what level of government had legal authority to issue and guarantee

carbon rights (International organisation interview No. 10 2013, 11 August). Ultimately, the ambiguity

around rights to resources, as well as confusion around what level of government had authority over

land use planning and business licensing processes, meant that investors considered the risks too high

to invest the necessary capital needed to move the project forward (Private sector interview No. 4

2013, 22 July). In the words of one respondent:

BPKEL were making promises to investors regarding carbon rights that did not stack up legally. Once the investor realised this, the deal was over because they lacked confidence they would ever make any money back on their investment (Secretariat interview No. 2 2012, 25 September).

Land tenure uncertainties were also a dominant reason why investors did not commit to Aceh Green’s

aims in the palm oil or timber sectors. Fricke (2008) found that land under consideration for plantation

development in Aceh lacked official titles or clear legal status, and often overlapped with customary

claims to land that were mostly undefined. This made it particularly difficult to gain RSPO certification

in these areas, or to introduce new investment opportunities:

How can you establish new plantations when there is no clarity or security over the land where they are meant to be located! Only a mad man, or someone interested in making money from

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initially clearing the land, rather than establishing plantations, would invest under these conditions (International organisation interview No. 12 2013, 18 June).

Indeed, the government of Aceh’s inability to identify and formalise land titles suitable for

development was cited as one of the main reasons why the proposed partnership between the Aceh

plantation agency, APDA, and the Malaysian entity FELDA did not proceed (Consultant interview No.

7 2012, 10 July). In this case, Governor Irwandi requested district heads to allocate suitable parcels of

land but all districts failed to do so because areas that the provincial government thought were likely

to be available had already been taken over by local communities, or granted to business interests

closely affiliated with the various district heads (Consultant interview No. 6 2012, 22 November).

Timber plantation initiatives under Aceh Green also encountered similar problems due to land tenure

uncertainty. Reports on the financial viability of establishing sustainable plantations on both the

Tusam Hutani Lestari concession (central Aceh) and the Nusa Indrapuri concession (northeast Aceh)

highlighted that one of the main impediments to the profitability of these businesses was the difficulty

in securing land areas for planting trees due to informal community use across the concession areas.

The communities in these areas claimed customary rights over the land and stated the land had

previously been taken under duress. The existing owner of the concession was unwilling to discount

the value of the land that was no longer usable due to informal community use (Private sector

interview No. 14 2013, 10 August). Establishing plantations on the land that communities were

currently utilising would mean negotiating with hundreds or even thousands of families, and the level

of compensation likely sought made the concessions uneconomic (Private sector interview No. 1 2012,

21 November). Another example that highlights the barriers posed by the lack of land rights in Aceh’s

forestry sector comes from a community reforestation project proposed by the IFC. The project was

cancelled because IFC representatives concluded that:

Local community members were not going to invest the hard work and money needed to plant trees unless they were confident that they, their children, or grandchildren would ultimately have the rights to the benefits from the sale of the timber. Aceh’s land tenure system could not provide for such security (International organisation interview No. 18 2012, 5 May).

Previous investors in Aceh have often gained access to land based on the relationship they have with

Bupati (heads of district government), who have signed off on concession areas without gaining

certainty of ownership through official land maps and registries (IFC 2008). Green economy investors

were not willing to gain access to land through such processes though because:

There is too greater risk involved in investing in sustainable land uses and improved management systems that take time to yield results and therefore demand long term certainty. Instead, it is the large scale business interests that care little for the environment or human rights that will take on the risks associated with insecure land tenure because: a) they are focused on short term extraction activities that yield quick fire profits; or b) they are well

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positioned with political connections and financial resources to ensure that their interests are not encumbered by any land disputes with local communities (International organisation interview No. 4 2013, 26 January).

Remnants of Aceh’s conflict added to investor uncertainty. The IFC (2008: 21) report on Aceh’s

investment climate found that, “many potential investors regard Aceh’s political stability and related

security issues as a live issue, and have adopted a wait and see attitude for further signals of stability”.

The concerns of international investors related not only to the potential return of physical violence

and disruption to economic activity in general, but also in regards to extensive informal payments for

security guarantees that were being demanded by former combatants. These ‘informal taxes’

hindered the financial viability of many businesses and made investors nervous about unexpected

costs that they may be faced with in the future (Consultant interview No. 5 2012, 13 November). As

an example, an investor who wanted to establish a rubber processing facility on Aceh’s east coast

ultimately decided not to proceed because former combatant leaders in that area were pushing for a

25 per cent equity stake in the company, which “completely ruined any chance that the business could

return an acceptable profit to investors, let alone their concerns with bringing these partners into the

company” (Consultant interview No. 6 2012, 22 November). Even BRR – the post tsunami Government

agency established directly under President SBY – made monthly payments to GAM leaders in

exchange for an agreement that reconstruction efforts were able to precede unencumbered

(Government interview No. 3 2012, 21 June). The situation was summed up by one respondent who

stated that:

Ex-combatants fought for 30 years to gain authority over Aceh’s resources, and they are determined that they should get a piece of any economic activity that is generated in the province from this point forward. This seriously impeded investor confidence in Aceh (International organisation interview No. 13 2012, 5 December).

It was not only these informal and uncertain payments to former combatants that concerned

investors. Standard practice in Aceh, and across Indonesia, is to pay bribes to government officials as

part of business licensing processes, as is discussed in section 4.1.2. The fact that business permits

were not attainable or significantly delayed without the payment of bribes was a major roadblock to

many Aceh Green investments:

The new, innovative, green economy type investment ideas were being driven by foreign investors who were not able to pay bribes due to international bribery legislation, which tracks all bribes, no matter what jurisdiction they are made in. On top of this legal deterrent, international investors were concerned about impeding their global reputation (Private sector interview No. 1 2012, 21 November).

The prevailing culture of corruption was especially problematic for the public-private partnerships

envisioned under Aceh Green due to a lack of trust and the different operating styles between the

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various parties involved. As an example, the Leuser Ecosystem REDD+ project investors attempted to

establish a bioenergy project in partnership with the Aceh Government at the inactive Kertas Kraft

Aceh facility in Lhoksuemawe, east Aceh. Instead of working to find a commercially viable solution to

the project, the Aceh Government representatives of the Badan Usaha Milik Daerah (BUMD), the

government agency responsible for the project, focused its attention towards channelling “large

amounts of government funds into an unviable solution in an apparent attempt to capture funds for

personal gain” (Private sector interview No. 1 2012, 21 November). The planned investment aimed to

deliver significant economic and environmental impact by creating a new market opportunity for local

agricultural waste, establishing professional nurseries and financing large scale community forestry

plantations in central and east Aceh, as well create hundreds of jobs at the pulp and paper mill itself

(GER 2010b). Ultimately the investment could not gain traction because:

Under the new partnership with the private sector, government actors would receive standard salaries and bonuses if the business was profitable. These benefits could not compete with business as usual approaches in Aceh where government would run the business with little financial oversight or concern for profitability, and would find ways to get financial gains for themselves or close contacts (Private sector interview No. 1 2012, 21 November).

The problems to green economy investment caused by the institutional norm of corruption in Aceh

were well summed up one respondent involved in the Ulu Masen REDD+ project:

Green economy businesses will continue to stall until there are more simplified business licensing systems that are transparent and efficient, and agreements with government are professionally negotiated and legally binding. Otherwise it is just too risky to invest in new business models that are commercially risky in their own right, and which cannot afford to be hampered by additional complications caused by corruption. Put simply, the ways that international investors like to do business do not align with the way that business transactions currently occur in Aceh (International organisation interview No. 6 2013, 23 June).

The balance between risk and expected returns on investment was further skewed away from Aceh

Green due to the limited market opportunities for businesses targeting social and environmental

benefits. An investor looking into the possibilities of establishing a bioenergy initiative under Aceh

Green found the market incentives insufficient because the business would have to compete on an

equal footing with coal, which is especially cheap because Indonesia does not require coal use to

account for its environmental impacts (Private sector interview No. 1 2012, 21 November). Another

example came from the forestry sector where the price premium on certified sustainable timber was

insufficient to compensate investors for the additional costs of adhering to the practices necessary to

attain certification (Private sector interview No. 7 2013, 20 March).

Likewise for RSPO certified palm oil, growers and potential investors do not face sufficient incentives

to comply with certification standards. The price premium for doing so is negligibly small (Lingga

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2013), and the size of the market is minute, especially in comparison to rapidly expanding market

opportunities in India, China and within Indonesia, which together consume 50 per cent of all palm oil

produced and have little concern for sustainability criteria (Hoffman 2011). Furthermore, there are

significant costs associated with complying with RSPO criteria – namely, the extra efforts and expenses

needed to properly support smallholders, limit environmental degradation, as well as paying fair

wages (Consultant interview No. 6 2012, 22 November). The combination of higher costs and the little

chance of improved financial returns, meant that investors were not adequately incentivised to pursue

investment in RSPO certification processes (Private sector interview No. 2 2014, 30 June). These

insights on Aceh’s palm oil sector have recently been backed up through the work of Rhein (2015),

who states that RSPO certification costs, including production losses from setting aside conservation

areas, can add another 20 percent of production costs to total costs, and may reduce profits by almost

40 percent over a 25 year production cycle.

Aceh Green proponents hoped that payments for environmental services, namely through the sale of

carbon credits generated by the two REDD+ schemes, would provide additional financial incentives

for investors to achieve sustainability criteria. That is, Aceh Green proposed that investments that

reduced pressure on deforestation could be subsidised through carbon revenues (Secretariat

interview No. 2 2012, 25 September). The expectations around this scheme were explained by one of

the investors in the Leuser Ecosystem REDD+ project:

Following the adoption of the Bali Action Plan at the UNFCCC conference in 2007 it was anticipated that a new international treaty on climate change would be adopted at the Copenhagen climate summit (COP-15) in 2009, which would have then paved the way for a new emissions trading scheme, including for forestry based carbon credits. Optimism of the likely emergence of this new market opportunity for environmental services remained high from 2007 through to 2009, and sustained investor interest in Aceh Green. The Aceh Green Secretariat, BPKEL, and GER all headed to COP-15 with high expectations that the world’s governments would provide a strong signal that they were ready to tackle climate change head-on through a carbon trading mechanism (Private sector interview No. 1 2012, 21 November).

Unfortunately for Aceh Green, international climate change negotiations faced insurmountable

obstacles (see Malloch-Brown 2011), and a regulatory framework for a compliance carbon market did

not emerge at COP-15 as was hoped. This ultimately meant that the carbon market never flourished

throughout the Aceh Green era and, as a result, both the volume demanded and prices paid for forest

related carbon credits were much lower than investors anticipated (Private sector interview No. 2

2014, 30 June). A report by Conservation International (2013) on the state of carbon markets

quantifies this point; in 2013 there was an annual supply of 22 million verified REDD+ carbon credits,

but market demand was only 6.8 million annual credits with a price of US$6-7 per credit, whereas

project developers had initially projected the price would be US$20 per credit. These market

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conditions meant that investors in Aceh’s REDD+ schemes lacked confidence they would be able to

generate a return on the investment required to make these projects operational (Private sector

interview No. 1 2012, 21 November).

The 2008-2010 Global Financial Crisis (GFC) further undermined investor interest in Aceh Green as

commercial borrowing became subject to greater restriction and the cost of capital rose markedly.

This made investors more risk adverse and less interested in untested ideas and areas with risky

investment climates (Bauer and Thant 2010). Investors who were considering investment in Aceh

Green stated that access to additional finance for the ‘new’ and ‘innovative’ opportunities they were

trying to develop was severely limited as any finance that was available through the GFC era was

diverted into stable, traditional areas of investment (Private sector interview No. 1 2012, 21

November). In the words of one respondent:

Aceh based REDD+ projects were a particularly hard sell. Prior to the GFC the financial markets were excited about ‘the next big thing’, but after the GFC, they returned their focus to business opportunities that had already achieved proof of concept (Private sector interview No. 2 2014, 30 June).

Ultimately, the balance between risk and reward was not favourable for potential investors in Aceh

Green. Although many investors showed interest in establishing businesses that would help deliver

social and environmental benefit, it was essential that they had confidence there were sufficient

opportunities to gain financial rewards proportionate to risk before they were willing to deploy capital.

In most cases the investment fundamentals just did not stack up (Private sector interview No. 1 2012,

21 November). The risks regarding rights to resources and the difficulties of securing business licenses

and permits without paying bribes were high, and there were significant costs associated with avoiding

adverse social and environmental impacts. In the REDD+ sector, ‘Free, Prior and Informed consent’

presents a good example. This process emerged as an important component of good practice REDD+,

but no one even knew how to implement it in the Aceh context. It therefore required a significant

amount of work and expense, “to figure out what was actually required and how to do it”

(International organisation interview No. 4 2013, 26 January). Investors may have tolerated these

costs if they felt there was a strong opportunity to generate profits in the future, but investors lost all

faith that a robust carbon market would emerge (Private sector interview No. 3 2013, 5 June). This has

ultimately meant that most new investment in Aceh has been a continuation of business as usual,

extractive businesses as they face lower implementation costs compared to green businesses and are

established by investors willing to comply with Aceh’s systems of patronage (Private sector interview

No. 4 2013, 22 July).

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5.1.2 Aceh’s coffee sector: market signals promoting green economy goals in a limited

setting

While the coffee sector was part of Aceh Green’s overall vision to improve sustainable agriculture

production, no specific interventions were undertaken. Nonetheless, the sector has made progress

towards Aceh Green’s objectives, which makes it worthwhile to analyse. It provides an insightful

contrast to other investment opportunities promoted through Aceh Green and demonstrates that

green business can succeed in Aceh where there are a set of conditions in place that minimise

anticipated risks relative to rewards. Interviews were conducted with representatives of five

cooperatives and two businesses in Aceh’s coffee sector. The general theme of their responses

indicate a picture of ongoing improvements in the quality and quantity of coffee produced, better

access to high value export markets, a greater focus on incorporating positive social and

environmental impact into their business models, and better internal management systems. These

positive changes were centred on a few certified cooperatives, thus leaving some unanswered

questions about sector wide impacts. The remainder of this section discusses the political economy

insights regarding these achievements as well as the challenges.

Aceh produces two types of coffee: Arabica (96 per cent of production), which is primarily exported;

and Robusta (4 per cent of production), which is mostly sold within Aceh. This thesis concentrates on

Arabica coffee, which was the focus of Aceh Green. Aceh’s Arabica coffee production is exclusively

smallholder based with an estimated 60,000 farming families with farm sizes averaging one hectare.

There are no large coffee plantations. There is an estimated 30,000 tons of Arabia coffee produced

annually, with a net export value of about US$100 million, and an estimated US$70 million paid to

farmers (Marsh 2008). Coffee is the second most valuable agricultural export earner for Aceh after

palm oil, and was an important part of the mix of commodities that Aceh Green aimed to support

(Aceh Green Secretariat 2008).

Aceh Green called for the rehabilitation of smallholder coffee plantations that were abandoned and

degraded during the conflict, the establishment of postharvest processing and marketing

infrastructure, and the creation and strengthening of farmer organizations and cooperatives with a

focus on increasing their certification and access to export markets (Aceh Green Secretariat 2008).

Given its role as a forest edge agroforestry crop, coffee was expected to play a positive role in Aceh’s

transition to a green economy. As one respondent stated:

Coffee was to act as an engine of economic growth on the fringes of protected areas where it also contributes to environmental goals by reducing extractive pressure on primary rainforests, improves soil quality, and enhances biodiversity, especially when shade grown, which most of Aceh’s Arabica is (International organisation interview No. 19 2012, 12 May).

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Aceh Green ultimately did not put in place any initiatives to reach its targeted objectives in the coffee

sector, and yet the sector has still manged to move towards greater sustainability. The social and

environmental gains in the coffee sector are mainly because of the high market demand and price

premium for certified coffee. Certification systems – namely, Organic, Fair Trade and Rainforest

Alliance certification – call for improvements in management, social and environmental practices and,

in return, generally provide higher prices and better access to buyers, particularly in the traditional

export markets of Europe and the USA, as well as in emerging regional markets such as China, Thailand

and domestically in Indonesia (Potts, Lynch et al. 2014). The improved market for certified coffee is

being driven by increasing consumer demand over the past decade for ‘quality’ coffees, which are

given material and symbolic value based on issues such as type, country, region or estate of origin,

flavour, and increasingly the story attached to the coffee – i.e. who grows it, and what are the social

and environmental impacts. For these quality characteristics consumers are charged a price premium

that they have been increasingly willing to pay (Goodman 2008). In response, local coffee cooperatives

and businesses now have a strong incentive to align with the requirements of the relevant certification

systems (Private sector interview No. 9 2012, 10 June).

The certification systems have encouraged better book keeping, reporting, and financial auditing

(Private sector interview No. 9 2012, 10 June). These changes have had a significant impact on local

coffee cooperatives and private businesses. They are now more financially accountable, which has

enabled them to source finance from investors and lending agencies to expand production and build

value added processing infrastructure, as well as engage more staff to ensure international quality

standards are met (Private sector interview No. 12 2014, 10 August). Compliance with certification

standards has also compelled local coffee cooperatives and businesses to put in place programmes

and strategies to ensure social and environmental standards are met. Examples include direct health,

education, and agro-economic assistance to cooperative members, and disaster relief assistance to

those affected by the earthquakes that struck the region in 2013 (Private sector interview No. 12 2014,

10 August). As another example, a new partnership between social investment fund Root Capital (that

finances at least three of the coffee cooperatives and businesses in the area) and local conservation

NGO HAkA is trialling a traceability methodology to monitor whether or not coffee is being sourced

from environmentally sensitive areas, including the Ulu Masen and Leuser ecosystems (BPKEL

interview No. 2 2012, 10 June).

The price premium and better access to market opportunities secured through certification are the

main reasons why local coffee cooperatives and businesses are complying with certification standards.

This was well articulated by one respondent:

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Coffee producers have only been willing to pursue certification where they are confident there is a buyer willing to pay a better price than they can currently receive without certification (Private sector interview No. 11 2012, 10 June).

The experience of Aceh’s coffee sector highlights that the economic system moved towards positive

economic, social, and environmental impact because the market provided additional financial benefits

for suppliers who aligned with these values. This is in contrast to the other sectors targeted through

Aceh Green, such as REDD+, sustainable plantations, or renewable energy, where the market

incentives for delivering positive social or environmental impact were weak.

The coffee sector is also different in nature to the other components of Aceh Green because it is an

established industry, with a successful track record. The sector is dominated by local smallholders,

cooperatives and businesses, most of which have land tenure security, as well as business licenses and

permits in place. They produce a product that is well known in the global market and has a reputation

for high quality (Private sector interview No. 12 2014, 10 August). These factors reduce risks around

investments to expand production and develop value added processing infrastructure (Private sector

interview No. 10 2014, 10 August). This is in contrast to a sector such as REDD+, which:

… has no market, no security over resource rights, needs large amounts of money to get going, and no one actually knows for sure even how to get it going. No wonder it struggles to attract investment (International organisation interview No. 4 2013, 26 January).

A significant amount of external effort has been provided to make the coffee sector a success. Coffee

importers from Europe and the USA encouraged the certification process by providing advice and

training so that the local cooperatives and businesses could better align themselves with the needs of

the international market (Consultant interview No. 3 2013, 21 January). Service providers – such as

Fair trade USA, Fair trade International, and USDA Organic – also helped set up certification systems,

and were often being paid to do so by the international organisations who believed in the social and

environmental impact that this work would deliver (Private sector interview No. 9 2012, 10 June). One

example was the USAID funded Enterprise Development and Employment Generation Project for

Tsunami Impacted Areas of Sumatra. This initiative was implemented by service provider NCBA, who

helped establish a coffee farmer cooperative and credit union, improve access to quality seedlings,

created direct linkages to the market, and provided finance for farm rehabilitation. The cooperative

this program established, KBQB, is now the biggest and most successful coffee cooperative in Aceh

with 6,800 members covering over 7,500 hectares (Private sector interview No. 11 2012, 10 June).

Price premiums provided by the market were a key reason for external assistance to the coffee sector.

Importers got directly involved as they needed to gain greater confidence that the coffee they sourced

from Aceh could be on sold to retailers who were increasingly demanding certified coffee (Private

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sector interview No. 13 2012, 10 June). This in turn gained the attention of service providers who could

see an opportunity for regular demand for the certification services they provided (Private sector

interview No. 13 2012, 10 June). In this sense, market incentives set off a chain of events that

encouraged a range of actors to support the improvement of Aceh’s coffee sector.

It is also important to note some negative findings about Aceh’s coffee sector. Anecdotal information

from provincial government and civil society informants stated that some new coffee farms were

established inside the Leuser Ecosystem during the Aceh Green era (BPKEL interview No. 3 2013, 12

August). There were few barriers to discourage this encroachment as:

Farmers lacked clarity around exactly where the boundaries of the Leuser Ecosystem were, and there was little concern about crossing the boundaries anyway due to lax law enforcement (Private sector interview No. 9 2012, 10 June).

These farmers were not part of the certification schemes but still found it relatively easy to sell their

produce (Private sector interview No. 10 2014, 10 August). So the question remains whether

certification processes are driving positive economic, social and environmental improvements across

the coffee sector as a whole, or just within certified cooperatives. Respondents believed the impacts

across the landscape were mostly positive:

The fact that the certified cooperatives in Aceh have been seen to be doing well is starting to have a flow on effect to other cooperatives who are now eager to get certified for fear of missing out on the growing market opportunities (Private sector interview No. 11 2012, 10 June).

This insight was supported by another interviewee who stated that:

Certified cooperatives were able to pay their farmers higher prices, assuring that farmers would sell more coffee to these cooperatives over others, and thus forcing non certified cooperatives to gain certification or risk losing members and supply channels (Private sector interview No. 10 2014, 10 August).

These statements still require further corroboration, and additional research is needed to conclusively

determine whether certification processes are influencing the coffee sector as whole, and indeed to

what extent coffee driven deforestation is continuing or not.

An important lesson about the coffee sector that can be drawn from this research is that because the

market offered a price premium in favour of coffee that met high social and environment standards,

then a range of actors from producers, service providers, donors and financers were incentivised to

work together to meet these standards. There was a significant amount of external support provided

to Aceh’s coffee sector to enable it to match what the market demanded. This situation was certainly

helped by the fact that the coffee sector was already established, and had a good track record, thus

making it easier to attract investment finance. The contrast with the other sectors targeted through

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Aceh Green was stark. These other sectors – such as in forestry, palm oil, and renewable energy –

faced no such market incentive to improve their social and environmental impacts, and they

encountered a range of risks associated with starting new ventures, especially the problems of getting

access to land and business licenses. On top of this, these sectors did not receive significant early stage

support from donors and service provides (an issue that is addressed in greater detail in section 6.2).

5.2 Regulatory uncertainty and a lack of willingness for reform

Regulatory reforms that were at the heart of the policy reform process attempted through Aceh Green

were ultimately blocked. It was difficult to pass new laws due to the ambiguities between different

authoritative structures, and a lack of willingness for reform from government decision makers who

had a vested interest in the status quo. More details on these findings are provided throughout this

section.

5.2.1 The end of Aceh Green

Aceh Green proponents recognised that the local investment climate was not suitable for green

economy investors and, as such, proposed a number of amendments to Aceh’s regulatory framework,

as well as the creation of new government entities and public-private partnerships (Secretariat

interview No. 2 2012, 25 September). In the words of Governor Irwandi:

The new regulations were meant to establish incentives that would encourage investors who also believed in a vision of better social and environmental outcomes for Aceh (Irwandi Yusuf interview 2014, 3 October).

The emphasis for change came directly from the Governor, thus it had high level support, which

together with other critical junctures, provided the opportunity to shift Aceh’s development trajectory

towards a more sustainable model. The anticipated transition to a green economy did not, however,

eventuate. While Governor Irwandi presented a vision for a provincial wide green economy trajectory

that aligned with good practices suggested in the literature, the new entities, partnerships, and

regulatory reforms he proposed failed to gain traction. The Aceh Green policy reform agenda was not

supported by government actors at central, provincial or district levels. Ultimately, it was these actors

who had the power to block or facilitate the implementation of the reforms.

Aceh’s parliament did not pass any of Aceh Green’s proposed regulatory reforms concerning spatial

planning, plantations, forestry, land rights, investment, environmental management, and government

authority. The fact that Aceh Green’s attempted regulatory reforms never eventuated meant that the

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long term impact of the initiative was negligible. As a representative of one of the international

organisations assisting on Aceh Green stated:

Aceh Green managed to limit environmental destruction during the five years that Irwandi was in office, which was a significant achievement in its own right, especially against the backdrop of unprecedented post disaster reconstruction and the end of a 30 year conflict, but beyond that, it did not leave its mark on the utilization and management of land and natural resources in Aceh (International organisation interview No. 13 2012, 5 December).

The 2012 election campaign for Aceh’s governorship turned into a bitter intra-GAM battle between

Governor Irwandi and Partai Aceh, the political party formed by former leaders within GAM following

the previous election in 2006. On 9 April 2012, Partai Aceh’s candidate Zaini Abdullah, formerly GAM’s

foreign minister in exile in Sweden, was elected as the new Governor of Aceh with over 54 per cent of

the votes (Hariyadi 2012). Governor Zaini’s new Deputy Governor, Muzakir Manaf, was former

commander of GAM’s Armed Wing. Governor Zaini campaigned on a platform of job creation and

economic development through the construction of new ports and roads connecting local producers

to markets. He made no mention of environmental conservation (International organisation interview

No. 13 2012, 5 December).

After six months in office, Governor Zaini moved to implement his vision for the province, promoting

a revised spatial plan that represented a dramatic reversal from Aceh Green. Indeed, the spatial plan

proposed by Governor Zaini removed the protection status of both the Ulu Masen and Leuser

ecosystems (Linkie, Liswanto et al. 2012), and if implemented, would reduce the area of protected

forest from the figure of 60 per cent proposed under Aceh Green, down to 45 per cent (Secretariat

interview No. 3 2012, 23 October). The Governor Zaini sponsored spatial plan was signed by the Aceh

parliament on 27 December 2013, but at the time of writing it remains unclear whether this new

spatial plan will be accepted by central government. If the new plan is accepted then it would put an

end to both REDD+ projects, and the sustainable palm oil policies, envisaged under Aceh Green.

Instead, large tracts of land would be devoted to industrial oil palm, logging and mining operations,

and extensive new road networks, mirroring the extractive oriented development model seen

elsewhere in Indonesia. Governor Zaini’s spatial plan represents only a one per cent increase of

agricultural land allocated to local communities compared to the Aceh Green spatial plan, thus,

demonstrating an allegiance to big business rather than community oriented development

(Pedsalabkaew 2013). According to conservationists this new land use plan would decimate

populations of mega fauna – including, rhinos, tigers, elephants and orangutans. It would also pose a

serious threat to the sustainable development of local communities due to the likely increase in

devastating landslides and adverse changes in water supplies (Jacobson 2013).

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In addition to the lack of concern shown for sustainability in the new spatial plan there has also been

a significant upswing in environmentally destructive activities during Governor Zaini’s period in office.

Examples include a spike in illegal logging, illegal plantation development, illegal road construction

and illegal small and medium scale mining that is leaching mercury into the environment and

encroaching on critical watersheds and wildlife habitats (Linkie, Liswanto et al. 2012). Governor Zaini

and his administration have done little to counter these illegal activities. In fact, there are cases where

it has been complicit in these illegal activities, including the distribution of over 100 micro sawmills to

communities throughout Aceh (BPKEL interview No. 3 2013, 12 August). Furthermore, in June 2012

Governor Zaini dissolved BPKEL – the government body tasked with managing the conservation of the

Leuser Ecosystem – and transferred their authority to the provincial forestry department (Schonhardt

2013). Ex-members of BPKEL stated that this change made it much more difficult to monitor and

control what was happening in Aceh’s protected forest areas as the forestry department has shown

little interest in delivering on its new role (BPKEL interview No. 1 2012, 12 November).

Since his inauguration Governor Zaini has not publicly touched on or mentioned the term ‘Aceh Green’

(Secretariat interview No. 1 2012, 11 June). He has also demoted government administrators that

were involved in Aceh Green policy reform processes and refuses to grant meetings to advisors and

business interests that were previously associated with Governor Irwandi (Consultant interview No. 5

2012, 13 November). This has made it particularly difficult for former advocates of Aceh Green to

continue their work on pursuing a green economy, and has created a problem of consistency in the

Governor’s office and in government departments where the green economy related capacity and

support built up during Governor Irwandi’s term in office has now been lost (Secretariat interview No.

3 2012, 23 October). These findings point to the temporary nature of reform processes where there

is an absence of broad based support for regulatory reform. The remainder of this section now turns

to a discussion of why Aceh Green regulatory reform was so difficult to achieve.

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5.2.2 Contested authority and bureaucratic confusion

The Law on Governing Aceh (LoGA, Law 11/2006) and related political tension and contestations

between government actors at central, provincial, and district levels presented an underlying difficulty

for the achievement of regulatory reforms proposed through Aceh Green. The LoGA was intended as

a legal framework for effective self-government of Aceh, and includes empowering provisions

regarding public health and education, natural resource management, economic development and

investment, human rights, the armed forces, the police and the judiciary (May 2012). However, due

to unclear lines of authority, an absence of implementing regulations and a lack of support from

central and district levels of government, regulatory uncertainty prevailed, and the LoGA did not grant

Aceh’s provincial government with the regulatory autonomy that they believed was at their disposal.

This lead to ongoing bureaucratic competition, confusion and the continuation of historic centre-

periphery grievances that had a significant bearing on the realisation of Aceh Green.

As mentioned in section 4.2.1, the LoGA represents a political compromise between GAM and the

central government following the 2005 peace agreement. Governor Irwandi and the Secretariat

believed that special autonomy conditions granted to Aceh under the LoGA provided them with the

mandate to drive forward a green economy policy reform agenda (Irwandi Yusuf interview 2014, 3

October). They believed that the LoGA gave the government of Aceh, especially at the provincial level,

much more control over important natural resource management decisions concerning spatial

planning, plantation development, forestry, land rights, foreign investment, and conservation

(Secretariat interview No. 2 2012, 25 September). This premise underpinned Governor Irwandi’s move

to establish new organisational structures – such as the Aceh Green Secretariat, BPKEL, and APDA –

that he hoped would operationalise his Aceh Green vision (Irwandi Yusuf interview 2014, 3 October).

In his words:

We were trying to do something new and dynamic. We could not rely on the centralised bureaucracy of standard government agencies. The peace deal should have given us greater power to determine our own policy directions and set up the appropriate organisational structures needed for implementation (Irwandi Yusuf interview 2014, 3 October).

The problem that Aceh Green proponents encountered, however, was that before the self-governing

opportunities presented by the LoGA could actually be realised, implementing regulations were

required to be enacted by both Aceh and central governments (International organisation interview

No. 14 2013, 26 January). Without the formalisation of these implementing regulations, “the LoGA

basically had no teeth as its provisions had no legal standing” (International organisation interview

No. 14 2013, 26 January). Instead, other government actors at the central, provincial and district levels

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continued to refer to existing (pre-LoGA) legislation to guide their decision making and actions

(Consultant interview No. 7 2012, 10 July).

Negotiations concerning the LoGA’s implementing regulations have been ongoing. Different actors

hold very different interpretations of what special autonomy means. There was even disagreement

around a draft Presidential Regulation that determines the process for how agreement around the

implementing regulations will be obtained (May 2012). One of the fundamental points of contention

was based on the failure of the LoGA to clarify the distribution of functions between the different

levels of government (International organisation interview No. 14 2013, 26 January). Article 7 of the

LoGA states that:

The Governments of Aceh (province) and Kabupaten/Kota (districts/city) have the authority to regulate and implement government functions in all public sectors except government functions that are the authority of the central government.

Article 7 expects responsibility to be shared between the province, districts and cities in Aceh, but

without the implementing regulations there is no clear mechanism to delineate how this would

function in practice, leaving open the option for each level of government to claim regulatory and

implementation authority (CMI 2012). This is exactly what happened throughout the Aceh Green era,

as is explained by one of the consultants involved in helping to facilitate the negotiation process for

LoGA’s implementing regulations:

The lack of clarity on respective levels of authority ultimately meant that agreements could not be reached on the implementing regulations that would enable the LoGA to be put into practice. Each level of government wished to maintain as much political power as possible and it was difficult to make headway on this issue given the ambiguity of the guiding principles within the LoGA, and an apparent lack of willingness to compromise from entrenched positions. Given the overlapping laws and legal uncertainty, actors simply followed the regulation that best aligned with their interests (International organisation interview No. 14 2013, 26 January).

Former GAM leaders who were involved in negotiating peace with the central government argued

that the LoGA itself should be re-drafted because it failed to properly reflect the peace agreement

(International organisation interview No. 14 2013, 26 January), especially the first and arguably most

fundamental principle of the agreement, Article 1.1.2a, which reads:

Aceh will exercise authority within all sectors of public affairs … except in the fields of foreign affairs, external defence, national security, monetary and fiscal matters, justice and freedom of religion, the policies of which belong to the Government of the Republic of Indonesia in conformity with the Constitution.

GAM leaders anticipated that this principle would mean that the central government should only be

involved in the six core sectors listed in Article 1.1.2a, and that authority for all remaining government

functions should rest with the provincial government (May 2012). Commentators note that this would

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grant much greater authority to the provincial level parliament, as desired by former GAM leaders

who controlled these positions (International organisation interview No. 13 2012, 5 December).

Central and district level officials did not concur. More discussion of the underlying political and

economic issues that determined why various government actors took these positions is provided in

the following section. But first, the remainder of this section outlines the implications to Aceh Green

as a result of the contested authority.

Uncertainty over the division of authority created ongoing bureaucratic confusion and competition as

actors with political power made their own interpretations of the law to best suit their interests

(Government interview No. 5 2014, 10 September). An example from the forestry sector in Aceh

provides an illustrative example of the overlapping and conflicting claims for authority between

several different government agencies and levels of authority; a common problem across Indonesia

(as discussed in section 4.1.2) but made worse in Aceh through the ambiguity of the LoGA and the

history of conflict and contestation between the central government and Aceh. Box 4 below highlights

overlapping legislation related to Aceh’s forestry sector across various scales and agencies. Governor

Irwandi believed that he was empowered under the LoGA to control the management of Aceh’s

forests, particularly through Article No 149, which states that the Aceh government is responsible for

the management of the environment, and Article No 150, which specifies that the Aceh government

is responsible for managing the Leuser Ecosystem (Irwandi Yusuf interview 2014, 3 October). Governor

Irwandi and his supporters interpreted these provisions to mean that the provincial government of

Aceh, and the Governor in particular, is wholly responsible for Aceh’s protected area management

(BPKEL interview No. 1 2012, 12 November). As such, Governor Irwandi granted BPKEL authority over

the management of the Leuser Ecosystem and attempted to establish a similar arrangement for the

management and protection of the Ulu Masen ecosystem through the establishment of a new

management agency for this area. In practice, however, a host of other agencies claimed authority

over these forest areas as is discussed below.

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Box 4: Legislation relevant to the management of Aceh’s forests

Province/District

- Governor Regulation Number 52/2006 established BPKEL to manage the Leuser Ecosystem.

- Law 14/2002 on Forestry which states in Article 15 and 16 that the licenses for environmental service utilization shall be governed by Governor’s Regulation.

- Law 11/2006 on Governing Aceh (LoGA) contains a number of articles of particular relevance. Article 149 indicates that the Aceh Government and District Governments are to manage the environment. Article 150 states that the Aceh Government has the duty to manage the Leuser Ecosystem in Aceh. Article 156 (1) states the Aceh government and district/ municipality governments shall manage both land based resources in line with their authorities. Article 165 (3) states that the Aceh Government and district/municipality governments, within their respective authorities and following national norms, standards, and procedures, shall have the right to grant licenses related to forest management and enterprises.

- The regional governance Law 22/1999 gives autonomy to districts to make decisions concerning land matters, including the settlement of conflicts.

National

- Governmental regulation 26/2008 on spatial planning.

- National legislation for activities on Forest Land, such as Law 41/1999 on Forests, Law 5/1990 on conservation, and Law 13/1994 on hunting.

- Government Regulation 34 on the Management, Exploitation and Use of Forest Areas provides operational guidance for the implementation of the Forest Law. This regulation gives authority to the central government for deciding on timber concessions. Moreover, Regulation 25 gives the Ministry of Forestry the main authority to stipulate boundaries, functions and zoning of forest lands.

- Presidential Decree 33 of 1998 states that the Leuser Ecosystem is to be managed under the coordination of the Forest Ministry (TNGL) and the Leuser International Foundation (LIF).

- The legal framework is complicated by a number of related laws from other sectors that indirectly have an impact on the way in which forests are managed – for example, there are over 2,000 pieces of legislation, regulations and norms concerning land.

- In addition to laws, there are also a multitude of Ministerial Decisions, Ministerial Circulars and Government Regulations governing land use and tenure that are often in conflict. For instance, the Forestry Law explicitly banned open pit mining in forest areas but the Government Regulation in Lieu of Law No. 1/2004 allows mining operations in protected areas that had been approved by the government before the issuance of the Forest Law. Further, the Forestry Law requires districts to implement sustainable forest management practices, while Law 22/1999 requires them to use resources to generate as much revenue as possible to finance development programs.

Source: adapted from PEM and ECO (2010)

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At the provincial level, the Department of Forestry and Plantations believed they had primary

responsibility for forest management in Aceh, with some aspects of forest governance falling under

the jurisdiction of the Regional Development Planning Agency, and the Environmental Impact Control

Agency (International organisation interview No. 13 2012, 5 December). Department Heads were in a

problematic position as the Governor had the authority to remove them from their job, but they had

to report to their line managers in Jakarta (Consultant interview No. 2 2013, 16 July). At the central

level, the Ministry of Forestry insisted on the continuation of its forest management roles through its

technical implementing agencies – including the Nature Conservation Agency, the Watershed

Management Agency, and the agency managing the Gunung Leuser National Park – as well as

overarching authority for releasing land from the forest estate for production (EOA 2009). District

governments – whose authority over natural resources has increased significantly since Indonesia’s

move towards decentralisation from the late 1990s (as discussed in section 4.1.2) – believed that their

forest related responsibilities were not affected by the LoGA (International organisation interview No.

13 2012, 5 December), or the ambitions of Aceh Green, especially its proposed spatial plan (Meehan

2009). This led to cases where land use licenses for forested areas issued by government authorities

at the district level were not in line with the policy reform goals of Aceh Green (van Acker 2011). BPKEL

were heavily criticised for making matters worse. Government officials and civil society

representatives complained that BPKEL wanted complete control over the Leuser Ecosystem and

refused to collaborate with other agencies that believed they also had a role to play (Government

interview No. 2 2013, 7 March). An advisor to the government expressed a common criticism among

respondents: “BPKEL always tried to guard their territory and fight for influence and control instead

of reaching out to other actors” (International organisation interview No. 13 2012, 5 December).

Bureaucratic confusion and competition was prevalent between the new agencies established by

Governor Irwandi – the Aceh Green Secretariat, BPKEL, and APDA – and traditional government

departments. Because the legal standing of these ad-hoc agencies was not formally secured due to

overlapping responsibilities with other agencies and levels of government, they were intensely

competitive about proving their value and marking out their territory by limiting the ability of other

agencies to engage in similar activities (International organisation interview No. 13 2012, 5

December). The response of formal government agencies to these “power grabs” was to:

… ignore and downplay the efforts of the Aceh Green Secretariat and BPKEL; they just treated them as ad-hoc advisory committees with limited power or official mandate (Civil society interview No. 7 2013, 11 July).

This standoff led to a lack of recognition of Aceh Green policy reform objectives and initiatives in

formal government planning processes, which placed a major limitation on the ability of Aceh Green

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to secure funding through government budget allocations (International organisation interview No.

12 2013, 18 June). The Secretariat were advised by external consultants to incorporate the principles

of Aceh Green into the government’s five year (Medium Term) and twenty year (Long Term)

development plans (Consultant interview No. 4 2012, 22 May), but government officials refused to

collaborate with the Secretariat on this work, with one of the main reasons being, “that they did not

want to lose any of their own authority or mandate” (Secretariat interview No. 2 2012, 25 September).

There was a lack of consensus between government actors about the role of APDA and its relationship

with the provincial and district level plantations departments, who felt that APDA was imposing on

resource management responsibilities that were rightfully and legally theirs (Consultant interview No.

8 2013, 12 August). For example, APDA was designated a budget from the Governor’s office to support

5,000-10,000 hectares of oil palm smallholdings. No concrete progress was made on this initiative,

however, because as one of the consultants involved in the project stated:

Provincial level plantation department officials refused to cooperate on project activities that they had responsibility over, such as land clearing, sourcing seedlings, and making decisions on budget allocation. They simply did not want to see APDA succeed as it threatened their future management authority and budget allocations (Consultant interview No. 5 2012, 13 November).

A final example of how bureaucratic confusion and competition hindered Aceh Green can be seen

through the lack of cooperation between the Governor’s office and the National Land Agency (BPN,

Badan Pertanahan Nasional), who each had very different interpretations of how the LoGA regulated

land administration. Article 213.3 of the LoGA states that the Government of Aceh and the district

governments have the authority to issue titles for building rights and cultivation rights to domestic

and foreign investors. As the LoGA does not explicitly mention the transfer of authority for issuing

land ownership rights, BPN viewed Aceh’s land administration as limited to the two functions

mentioned in the LoGA. The Governor’s office, on the other hand:

… was of the opinion that handing over the regional offices for land administration to the local governments as mandated by the LoGA should include the transfer of all authorities in land administration to the provincial and district governments of Aceh, including the authority to issue land ownership rights (Consultant interview No. 7 2012, 10 July).

The confusion around government roles and responsibilities, and the ensuing struggles for power and

influence, had important implications for Aceh Green policy reform. At all levels of government and

across different sectors there was a lack of willingness to make decisions, especially concerning

innovative new ideas; decision makers were not certain who to listen to; “sectorial agencies, the

district head, the Governor, or the President” (Secretariat interview No. 2 2012, 25 September). For

example, the fact that it remained unclear who had authority over Aceh’s land administration meant

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that government actors in the respective land offices simply would not move forward on addressing

the myriad of land rights challenges facing Aceh (Secretariat interview No. 2 2012, 25 September). As

was seen in section 5.1.1 above, the lack of progress on getting clarity over land rights issues was a

significant stumbling block for attracting green investment, and promoting improved natural resource

management in general. Ultimately, Aceh Green came to a standstill due to an absence of clarity on

authority and lines of responsibility. The next section now turns to a discussion of underlying reasons

why vested interests blocked all reforms proposed under Aceh Green.

5.2.3 The resurgence of powerful vested interests against reform

Gaining political support for regulatory reform in Aceh, including the implementing regulations for the

LoGA discussed above, rested on the time, capacity and support of decision makers within various

levels of government (central, provincial, district), all of whom were unwilling to back Governor

Irwandi’s reform agenda. Three main reasons, both political and economic, underpinned the lack of

motivation for reform: 1) tensions between Aceh and the central government regarding the push for

autonomy; 2) vested interests associated with extraction oriented industries that would likely have

been obstructed through Aceh Green; and 3) intra-GAM contests between Governor Irwandi and

former leaders of GAM.

It is difficult to elucidate the central government’s position on the LoGA with certainty due to the

absence of a statement – official or otherwise – from the government officials involved. May (2012)

notes that some observers of the peace agreement process have hinted at the possibility that the

central government advised its negotiation team to accept potentially problematic provisions in order

to make sure that GAM would sign the agreement, but knew it could hide behind the central

parliament’s sovereign authority should the latter choose to reject the adoption of such provisions in

the law. Governor Irwandi’s viewpoint was that the central government was ultimately unwilling to

accept the level of autonomy demanded by Aceh because he:

… was too outward looking to foreign investors and international organisations, which does not align with business interests linked to central government actors that are looking to extract value from Aceh’s remaining resources (Irwandi Yusuf interview 2014, 3 October).

The nature of Aceh Green policy reform accentuated any concerns central government might have

had regarding political control and access to resources in Aceh. In particular, the REDD+ projects and

associated adjustments to the provincial spatial plan, the move to recognise customary land tenure, and

requirements for RSPO certification of any new oil palm plantations, meant that national business interests

would unlikely gain access to Aceh’s lowland forests (International organisation interview No. 1 2013, 11

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February), which have been coveted for a long time due to their suitability for conversion to oil palm

plantations (Government interview No. 2 2013, 7 March). The REDD+ projects would also reduce the

concession granting rights held by government agencies in Jakarta, especially the Ministry of Forestry

(Secretariat interview No. 1 2012, 11 June), who have consistently been battling REDD+ reforms that

reduce its ability to issue forestry concessions (Luttrell, Resosudarmo et al. 2012). As one respondent

involved in forestry sector policy reform at the central level noted:

The Ministry fears a scenario in which other actors – whether it be communities, district, or provincial government – has greater control over state forests because it will lose revenue creating opportunities and political influence (International organisation interview No. 8 2013, 21 March).

In the words of Governor Irwandi, “central government were not happy about the threat Aceh Green

posed to potential business opportunities, and their ability to levy taxes, licensing fees and bribes over

these businesses (Irwandi Yusuf interview 2014, 3 October). This viewpoint was supported by another

respondent who worked alongside central government in an advisory role:

Aceh Green policy reforms contradicted the central government’s interest in maintaining control of processes relating to national assets, including the issuance of concessions, permits and licenses, particularly related to investment and the exploitation of natural resources (International organisation interview No. 13 2012, 5 December).

Other respondents involved in developing REDD+ initiatives in Aceh stated that central government were

not supportive due to concerns that large scale financing through REDD+ would potentially enable Aceh

to further its separatist ambitions by reducing its budgetary dependence on central government

(Private sector interview No. 7 2013, 20 March). In fact, an aide to the President warned one of the

international actors involved in Aceh Green “not to let Aceh use REDD+ as a platform for greater

separatism from Jakarta” (Consultant interview No. 8 2013, 12 August).

Disputes regarding APDA provide another example of central government’s reluctance to relinquish

authority to Aceh. Governor Irwandi’s view was that the LoGA enabled him to deal directly with

Malaysian authorities in establishing this initiative (Irwandi Yusuf interview 2014, 3 October). Central

government required Aceh’s collaboration with Malaysia to be coordinated and sanctioned at the

central level. Their formal reasoning for this position was they did not trust that Aceh could implement

the scheme effectively without central level support (Secretariat interview No. 2 2012, 25 September).

Some of Governor Irwandi’s advisors noted, however, that the real reason was that central

government wanted to limit Aceh’s autonomy, which meant blocking Aceh from direct engagement

with other countries (International organisation interview No. 1 2013, 11 February). As soon as

Malaysia understood the initiative did not have central level support, their enthusiasm waned (Private

sector interview No. 2 2014, 30 June). The program finally came to an end when the central

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government put on hold a draft Memorandum of Understanding between APDA and the Malaysian

Federal Land Development Authority, FELDA (Secretariat interview No. 2 2012, 25 September).

There were no direct political or economic incentives for the central government to endorse Aceh

Green. Even central-local political party considerations, applicable in most other areas of Indonesia,

were not relevant. The central government has often supported local political aspirations across

Indonesia on the basis that they have a crucial role when mobilisations of support bases and networks

are required during national elections (Hadiz 2010). Governor Irwandi did not have this option to

appease the central government because he ran as an independent, with no party affiliations

(Secretariat interview No. 2 2012, 25 September). Hence, Governor Irwandi could not draw on the

patronage networks within political parties (discussed in section 4.1.2) available to other government

leaders throughout Indonesia.

Central government were not the only actors unhappy about Aceh Green. Governor Irwandi also

struggled to progress his proposed regulatory reforms due to a lack of support from the provincial and

district parliaments. A report by CMI (2012) emphasises that while some of the new regulations

targeted through Aceh Green depended on the central government’s approval of the implementing

regulations for LoGA, Aceh could in the meantime gain agreement for the new regulations at the

provincial and district levels, and thus be in a stronger position to gain agreement from central

government. Governor Irwandi failed to make the most of this opportunity as, “both district and

provincial parliamentarians refused to endorse Aceh Green” (Irwandi Yusuf interview 2014, 3

October).

An unsuccessful campaign in 2008 to separate Aceh Province into three different provinces – ‘Aceh’

in the north and east of the province, ‘Aceh Leuser Antara’ in the centre and southwest, and ‘Aceh

Barat Selatan’ in the west (Amir 2008) – highlighted district level discontent with provincial

governorship, and the intent of the districts to remove themselves from the umbrella of existing

structures of authority (International organisation interview No. 2 2012, 23 June). One of the main

reasons why the districts were trying to break away from Aceh Province was that they did not want to

compromise their ability to convert lowland forests to agricultural land, and to attract investment in

plantations, mining and other land use based industries (International organisation interview No. 5

2012, 10 December). There was also evidence of tensions between the districts and the province

concerning the allocation and management of Dana Otonomi Khusus (Special Autonomy Funds).

District officials accused the provincial government of monopolising the decisions surrounding these

funds, as well as their ineffective administration. Even if the campaign to split up the province and the

dispute about the Special Autonomy funds were not specifically about Aceh Green, they point to the

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multi-layered and complex backdrop against which Aceh Green reforms were attempted, particularly

in regards to ongoing disputes concerning the control of resources, which is further discussed below.

Respondents explained the lack of local government political cohesion and support for Aceh Green in

terms of the distribution of costs and benefits to be derived from the intervention. Governor Irwandi

devised his Aceh Green vision with a focus on alleviating poverty and protecting the environment,

namely through policy reforms and large increases in foreign investment (Aceh Green Secretariat

2008). Proponents of Aceh Green anticipated that the beneficiaries of this vision would primarily have

been rural communities (Secretariat interview No. 2 2012, 25 September). Foreign companies were

also set to benefit, especially if the REDD+ projects came to fruition (Private sector interview No. 1

2012, 21 November). Local government actors believed that they would receive a disproportionately

smaller amount of any benefits generated through Aceh Green (Government interview No. 4 2012, 10

June), and would in fact lose out from the displacement of their previous rent seeking opportunities,

which was ultimately the main reason for their anti-reform stance (Secretariat interview No. 1 2012,

11 June). As a respondent from the Secretariat concluded:

The hardest thing about gaining support for Aceh Green was getting the government bureaucracy on board, namely because their incentives were oriented towards extractive oriented business models. Government officials care more about how to position themselves politically and get personal benefits than the welfare of society (Secretariat interview No. 2 2012, 25 September).

Local government actors had little incentive to support change. Most government officials view

natural resources as an opportunity for exploitation for the purposes of improving development,

generating taxes to fund local government budgets, and for personal gain. This is clearly seen from

the government support shown to the new extraction focused spatial plan proposed by Governor

Zaini’s administration. An important point here (also discussed in section 4.1.2) is that elected officials

have often borrowed heavily to fund their campaigns and are under pressure to payback their

supporters during the four years of the election cycle while they are in office (Government interview

No. 5 2014, 10 September). In Aceh, as elsewhere in Indonesia:

This generally means capturing economic value through logging the forests, selling the timber, and then converting much of the land for plantations, local agriculture, or mining – the benefits of which are immediate and easily captured by local officials through the issuing of licenses or through the support of illegal extraction activities (Government interview No. 2 2013, 7 March).

This quote highlights the conflict between the short term (four year), personal interests of elected

government officials who are focused on generating benefits for themselves and their supporters as

quickly as possible while they are in a position of political power, and longer term, more broadly

dispersed returns on conservation and green economy related investments. For example, figures from

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Sumatra, Indonesia show that if only financial returns are considered, then forest management for

non-timber forest products employs 0.3 people a hectare per year and returns a net present value of

just US$5 a hectare, whereas oil palm cultivation employs 108 people a hectare per year and returns

US$114 a hectare (Tomich, Cattaneo et al. 2005). This challenge was clearly articulated by one of the

Aceh Green Secretariat members:

Local government can generate more immediate economic benefits through illegal logging and cash crop development, compared to the longer term benefits of avoiding deforestation or sustainable timber plantations, such as reducing the likelihood of future natural disasters and disruptions to water supplies, and revenues from carbon credits and timber sales (Secretariat interview No. 1 2012, 11 June).

These deeply rooted political-business dynamics are most prominent in land based natural resource

sectors in Aceh (Government interview No. 3 2012, 21 June). For government, the sector offers proven

opportunities that they already understand and often have connections to (Consultant interview No.

6 2012, 22 November). For business, there seems to be an insatiable demand – both internationally

and domestically – for Indonesia’s natural resources (Private sector interview No. 2 2014, 30 June).

For example, a report by Dobbs, Oppenheim et al. (2011) shows that the index price of 33 commodities

has increased so rapidly over the last eight years that a 100 year trend of downward prices has been

erased. This trend is being driven by an increase in human population and per capita wealth in both

Indonesia and internationally, which is generating high demand for Indonesia’s main commodities,

especially pulpwood, minerals, palm oil and cash crops such as rubber, sugarcane and coffee (Angelsen

and Brockhaus 2012). In 2013, for example, the world consumed 55 million metric tons of palm oil,

nearly four times what it used 20 years earlier, and this demand is expected to double or even triple

by 2050 (Rautner, Leggett et al. 2013). At the same time, global demand for timber and paper products

is also predicted to rise, with demand likely to triple the amount of wood currently being removed

from plantations and natural forests by 2050 (Taylor 2012). These market drivers had a significant

bearing on Aceh Green as businesses determined to get access to Aceh's natural resources colluded

with government actors to resist green economy reforms (Secretariat interview No. 1 2012, 11 June).

Government officials were thus not interested in providing assistance on community forestry

initiatives, but instead wanted to ensure that large tracts of land remained available for future

licensing to large scale plantations, from which they could extort bribes (Consultant interview No. 6

2012, 22 November).

The temptation for immediate economic gains through extractive businesses was reinforced by weak

law enforcement against illegal activities targeting Aceh’s natural resources. This is a common

problem across Indonesia (as addressed in section 4.1.2), and further highlighted by all respondents

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in this research, who each lamented the entrenched nature of corruption in Aceh. A quote from one

respondent sums up the situation:

Teachers, policemen, politicians, and judges all have to pay bribes to get their positions. They often need to take out loans from friends and family members to make these payments, and so when they finally get into a position of power they are under pressure to make a lot of money, much more than what their salaries are providing them with, so they can pay back their debts. This creates a system where government institutions are ruled by corruption (Consultant interview No. 2 2013, 16 July).

A number of reports attest to the problem of corruption in Aceh. Barron and Clark (2006) note that

Aceh’s local government institutions have been plagued by massive corruption both in the past, during

the decentralization era, and especially in the post tsunami and post conflict period. They show that

the benefits of corruption flow up and down the government system, ensuring everyone is complicit

in receiving a share of the rewards so that individual officials do not go against the status quo. EOA

(2009: 15) provide a specific example from the forestry sector:

[There is a] parallel system of forest governance in Aceh today: an informal or shadow system, often more powerful than the formal system, built around illegal logging and other dubious business deals, and sustained by wide spread, systematic corruption.

Under these corrupt systems, the benefits from lucrative illegal extraction activities far outweigh the

consequences of getting caught, especially when judges, police, even the military, can simply be

brought off and are often sanctioning the illegal activities in the first place (Consultant interview No.

5 2012, 13 November). This viewpoint is supported in a report by Aspinall (2009), who shows that

extractive business interests in post conflict Aceh had strong backing from all levels and departments

of government including the police, military and former GAM leaders who formed a new Aceh mafia.

These benefit structures created “a double edged sword”, where elites had little interest in reforms

that would limit their economic opportunities, and the lack of reform of the illegal timber trade kept

the price on wood low and further cut into the profitability potential of sustainable plantation

investments (Private sector interview No. 5 2013, 18 August). Ineffective law enforcement thus added

further obstacles to Aceh Green policy reforms (BPKEL interview No. 3 2013, 12 August).

Government actors are not solely motivated by personal economic gain. District level government

officials in particular are under significant pressure to deliver immediate results to their constituents.

The budgets available to district officials are generally insufficient to cover the basic costs of keeping

their administration running each year, and there is also the additional demands of politico-

bureaucratic actors who push for development projects in return for political loyalties (McCarthy

2006). Aceh officials are heavily dependent on resource rents, such as bribes to sign off on concession

permits, or revenue sharing from illegal timber sales, to meet these budgetary, development and

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personal demands (Consultant interview No. 2 2013, 16 July). As one of the Secretariat members

stated:

Opportunities to earn money through government contracts and deals with the business sector, like selling off land and licenses, is the oil that keeps the political machine moving forward (Secretariat interview No. 1 2012, 11 June).

The pressure on local government actors to generate economic opportunities as quickly as possible

was especially prevalent in post conflict Aceh due to the expectations of former GAM combatants.

After the peace agreement was signed and former GAM figures came to power across Aceh, “former

combatants had a strong attitude of entitlement where they assumed there would be a peace

dividend as payback for their years of sacrifice (Consultant interview No. 2 2013, 16 July). Former GAM

members who held prominent government positions at the provincial and district levels after the

December 2006 elections were pressured to look after their own, either by appointing their comrades

to lucrative jobs, thus enabling them to get a stake in Aceh’s economy via contracts and licenses, or

turning a blind eye to illegal activities (Barron and Clark 2006, ICG 2007, McCulloch 2008). Indeed, two

leading researchers on Aceh found that the former combatants came to dominate the local economy

through a monopoly over construction contracts and illegal extraction activities – namely, logging,

mining, and poaching (Aspinall 2009, Barter 2013). Since former combatants often held the District

head and vice-head positions, it was difficult to ensure that fellow former combatants were held

accountable for illegal activities (EOA 2009). There was tremendous pressure placed on those in

government to keep the flow of these benefits moving (BPKEL interview No. 1 2012, 12 November).

Promises of potential future benefits through Aceh Green simply did not match up against the

immediate, direct payoffs associated with extraction oriented businesses (BPKEL interview No. 1 2012,

12 November). The post tsunami/post conflict context had a significant bearing here; the local mind

set was simply not tuned to a long term perspective given the recent history of constant upheaval.

That is, “a dollar now was given significantly more value than a dollar at some stage in the future”

(International organisation interview No. 4 2013, 26 January).

Political tensions were also at the heart of why local government actors did not support Aceh Green.

As stated in section 4.2.1, Governor Irwandi was also a former member of GAM, and it was anticipated

by most respondents that he would be well placed to work effectively with other former combatants

in government given that he fought alongside many of them in the past (International organisation

interview No. 1 2013, 11 February). However, internal cohesiveness between former GAM leaders

began to fray before the first election, due to a dispute over who should run for Governor, and

intensified during Governor Irwandi’s time in office.

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In the lead up to the first election, former GAM leadership did not select a gubernatorial candidate

amendable to all internal factions, ultimately resulting in two ‘GAM candidates’ running for the

position – Irwandi Yusuf and Hasbi Abdullah. This created a political divide within the group of former

GAM leaders, which later deepened when Governor Irwandi publicly accused members of the

opposing faction of engaging in corruption (International organisation interview No. 14 2013, 26

January). This internal conflict ultimately created a situation where many parliamentarians refused to

consider or analyse how Governor Irwandi’s policies could benefit the people of Aceh, but instead

blocked any initiative linked to Irwandi (International organisation interview No. 1 2013, 11 February).

As Governor Irwandi put it, “the opposing faction wanted to see me fail at every possibility with an

eye for winning the next election” (Irwandi Yusuf interview 2014, 3 October).

A number of commentators noted that parliamentarians also refused to work closely with Governor

Irwandi due to personality clashes caused by his lack of diplomacy. One line of response often

repeated was that Governor Irwandi tended to operate as:

… a lone ranger, a sole fighter, with a strong independent streak, and was not often willing to reach out and make allies within parliament (International organisation interview No. 13 2012, 5 December).

One example that highlights this character trait – as well as a commitment to cleaner government –

relates to a specific dispute surrounding a ‘Pan Aspiration Fund’ that was proposed by provincial

parliamentarians. The Fund would have provided each Member of Parliament with US$500,000 of

discretionary funds to spend in their district on social and economic improvement. Governor Irwandi

vetoed the creation of this Fund as he anticipated that it would be wasted on corruption and personal

re-election campaigns (International organisation interview No. 12 2013, 18 June). A source close to

the Governor stated that the Governor’s lack of willingness to comply with the “give and take” attitude

of the Aceh parliament in regards to the Fund compounded his political problems and ultimately made

it impossible for him to gain parliamentary support (Secretariat interview No. 2 2012, 25 September).

Another point of contention was that many of the ex-combatant leaders thought that Governor

Irwandi was more willing to work alongside foreign businesses than to ensure that Aceh’s natural

resources were utilised for the benefit of former GAM comrades. As one respondent in government

stated:

Local elites who had fought for control of Aceh’s assets were very anti-reform as they did not want to just stand back and let western businesses take over Aceh (Government interview No. 4 2012, 10 June).

A similar concern was raised by provincial level government officials who thought their authority was

being undermined by proposed policy reforms that redirected natural resource management to new

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entities, namely the Aceh Green Secretariat, BPKEL and APDA (Government interview No. 2 2013, 7

March). It did not help that the international organisations that engaged on Aceh Green chose to

channel their efforts through these new entities, as opposed to reaching out to existing government

authorities (Civil society interview No. 8 2013, 11 July). This heightened the perception that Aceh

Green was externally driven (Consultant interview No. 4 2012, 22 May). In this sense, the institutional

structures being pursued through Aceh Green – i.e. who was in charge of the process, and who was

set to benefit – had a significant bearing on the support that it was able to engender. As one

commentator pointed out:

You would have thought that the proponents of Aceh Green would have been sensitive to the fact that Aceh had endured a civil conflict for 30 years, which in part was due to a contest over the rights to natural resources. A green economy initiative that was drafted, promoted, and oriented towards foreign led investment that ignored existing power structures was always going to be controversial (International organisation interview No. 4 2013, 26 January).

The clear conclusion from this analysis is that one of the main reasons that Aceh Green failed to gain

broad based political backing is that it posed a threat to vested interests of government officials due

to its promise of limiting extractive business activities, thus reducing the rent seeking opportunities of

government officials at central, provincial and district levels. The proposed reforms also attempted to

place resource management authority with a new set of foreign and local actors, which was especially

challenging given Aceh’s long conflict to gain greater self-autonomy and the tensions this created

within Aceh and between Aceh and the central government. These two factors – the potential loss of

both personal gain and political influence – led central, provincial, and district government actors to

resist change due to “concern that their authority and opportunities for funding would dry up, and the

benefits of the reform process would go to someone else” (Secretariat interview No. 2 2012, 25

September).

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Conclusion

This chapter highlights that Aceh Green failed to take root due to an existing investment climate that

was unsuitable to business models that align with the goals of a green economy. The main problems

were that investment risk, especially due to the challenges posed by corruption and uncertain land

and resource rights, were not adequately offset by profit opportunities, which were weak due to the

absence of a strong market for environmental services or sustainably certified commodities such as

timber and palm oil. There were insufficient financial incentives to trigger a change in capital flows

towards investments that could achieve the social and environmental goals targeted through Aceh

Green. The exception to this situation was in the coffee sector, which provides evidence that

businesses will address green economy goals where the economic rewards of doing so outweigh the

risks.

It shows that additional obstacles to the realisation of Aceh Green rested with existing regulatory

uncertainty and a lack of political will for reform. The main problem was that Aceh Green was

promoted by the Governor of Aceh and ad-hoc government agencies, neither of which had the

authority to determine policy reform outcomes. Laws could not be passed, or new programmes

initiated, without broader political support at central, provincial, or district levels. The fact that Aceh

Green attempted to move forward without such support lead to implementation problems associated

with bureaucratic competition and confusion. As Governor Irwandi stated:

We faced few technical difficulties, the strategy was simple – create sustainable jobs for communities outside of forest areas. The problems were mainly political. Government officials would not allow us to make the necessary regulatory changes needed to enable Aceh Green to succeed (Irwandi Yusuf interview 2014, 3 October).

Aceh’s political economy thus presented a fundamental barrier to reforming this situation given that

government actors at central, provincial and district levels had a vested interest in maintaining the

status quo. Aceh Green stalled because its proposed policy reforms threatened the personal benefits

and political influence that these actors exerted through the current political and economic system.

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Chapter 6: The difficulties encountered in building coalitions

for change

So far, the discussion has shown how the prevailing political economy thwarted the critical juncture

in which a ‘green governor’ had the willingness to pursue a green economy. We now turn to another

key aspect of the intervention’s failure: the need to capitalise on a critical juncture through the

development of coalitions for change that can counter current political economy constraints. As

discussed in Chapter 2, this involves encouraging other actors to align their beliefs with what is being

proposed under the reforms, and through the provision of new benefits. This chapter analyses Aceh

Green’s experiences and shortfalls in building coalitions in support of change.

6.1 The challenges of encouraging actors to align their beliefs with the

proposed reforms

This section argues that the proposed policy reforms failed to build pro change coalitions because a

broad range of actors were not actively engaged (see table 3 below for a summary of the position that

different actors took regarding the Aceh Green initiative). The reform process was impeded by limited

transparency, poor attempts at relationship building with both supporters and critics, inappropriate

framing and sharing of information, and capacity limitations that contributed to these shortfalls. This

made it difficult to align the beliefs of other actors, beyond the Governor and Aceh Green Secretariat,

with the reforms proposed through Aceh Green. Further discussion of these coalition building

challenges is provided throughout this section.

Table 3: Actor’s position on Aceh Green

Were Unsupportive of Aceh Green Provided Support to Aceh Green Implementers Central Government Fauna and Flora International

(FFI) Aceh Green Secretariat

Provincial Government

International Finance Corporation (IFC)

Badan Pengelola Kawasan Ekosistem Leuser (Leuser Ecosystem Management Agency, BPKEL)

District Government United Nations Development Programme (UNDP)

Local Non-Government Organisations Oxfam Other International Organisations (not listed as ‘Supportive’)

German Development Agency (GTZ)

Other Businesses (not listed as ‘Supportive’)

Sustainable Forest Management Ltd.

Global Eco Rescue Ltd. Carbon Conservation Ltd.

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6.1.1 Collaboration weaknesses

Aceh Green highlights the difficulties of achieving policy reform where there are minimal efforts made

to build coalitions of support through effective collaboration. Although Governor Irwandi had a

personal vision to transition Aceh Province to a green economy, his efforts were ultimately ineffectual

due to a lack of broad based support from different levels of government, the private sector, civil

society or the international community. Instead, implementation of Aceh Green was entrusted to ad-

hoc organisations – namely, the Secretariat, BPKEL, APDA – which did not have the authority or

capacity (both human and financial) to translate Aceh Green into practice. These groups failed to

actively collaborate with other actors that could have remedied these failings.

Almost every interviewee stated that the Secretariat’s general inability to secure wider support for

the proposed policy reforms was due to a lack of transparency through the reform process.

Government officials, especially at the district level, but also at the provincial level, frequently

expressed frustration about not being informed of the options, mechanisms and instruments to

operationalise Aceh Green and what their proposed role would be (International organisation

interview No. 13 2012, 5 December). “They simply did not know what Aceh Green was” (Consultant

interview No. 4 2012, 22 May). As one respondent put it:

From the outset of Aceh Green there was a genuine lack of focus on making sure other actors knew what the vision for change was, or had the chance to discuss it in detail and be part of a process of deciding how it should be taken forward (International organisation interview No. 4 2013, 26 January).

Even the Secretariat admitted that the majority of discussions around potential strategies, policies,

guidelines and implementation plans for Aceh Green were:

… mostly conducted internally within the Secretariat’s team … and there was little publicly available information on these subjects, especially during the early stages of the initiative (Secretariat interview No. 2 2012, 25 September).

Most actors outside of the Secretariat were unhappy about the lack of engagement, and this had a

significant bearing on why it was so difficult to secure support for Aceh Green (International

organisation interview No. 1 2013, 11 February). One of the consequences of the lack of engagement

was that it led many government actors to believe that Governor Irwandi and his inner circle favoured

the advice of foreign consultants rather than listening to the policy preferences of his fellow Acehnese

(EOA 2009). Indeed, government actors commented that:

Governor Irwandi spent too much time courting international actors and considering global opportunities and not enough time lobbying and reaching out to political and business allies in Aceh and Indonesia, especially District Heads (Bupati), the provincial parliament and central government (Government interview No. 4 2012, 10 June).

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The most obvious aspect of this problem was that instead of working closely with existing government

agencies to deliver on his policy reform objectives, Governor Irwandi favoured the establishment of

new, ad-hoc organisational structures – such as the Aceh Green Secretariat, BPKEL, and APDA – that

were perceived to be controlled by foreign advisors (International organisation interview No. 14 2013,

26 January).

Another complaint against Governor Irwandi’s inadequate coordination was that he had a tendency

to put himself at the forefront of government planning or licensing processes while overriding other

government actors who had official authority over such issues (International organisation interview

No. 13 2012, 5 December). These characteristics of Irwandi’s governing style alienated potential

government allies who ultimately had the power to thwart the implementation of Aceh Green. In the

words of one respondent:

Governor Irwandi, the Aceh Green Secretariat, and BPKEL were all too control oriented, too power hungry, and too secretive, and thus failed to collaborate effectively with other government agencies (International organisation interview No. 13 2012, 5 December).

For example, even though ‘coordination’ had been formulated as an explicit element of BPKEL’s

mandate, one respondent stated that:

They mostly operated as a stand-alone agency bypassing district authorities, other government agencies, and civil society, through top-down, command and control type tactics. One striking example of the lack of coordination is the frequent attempts by BPKEL to shut down the AFEP program because they felt that it undermined their authority to manage the Leuser Ecosystem, even though the purpose of the AFEP program was also to support conservation goals in the province (International organisation interview No. 5 2012, 10 December).

The absence of openness and collaboration created an environment of suspicion, mistrust and false

information. The impression of some actors within government was that the ad-hoc government

agencies, foreign investors and consultants involved in Aceh Green were already making millions of

dollars by selling carbon credits (Government interview No. 2 2013, 7 March). Although the truth was

that no carbon credits were sold, what determined people’s reactions was what they believed to be

happening, and in the absence of transparency and openness, they always seemed to assume the

worst (International organisation interview No. 2 2012, 23 June). The result was jealousy and anger

from those not involved in the process and who believed that the benefits from Aceh’s natural

resources were being captured by a small group of local and foreign elites (International organisation

interview No. 9 2013, 5 July). These feelings were exacerbated against the backdrop of the long running

conflict and its link with lost control over the management of natural resources (International

organisation interview No. 4 2013, 26 January).

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Reports focusing on the forestry sector provide further evidence of how ineffective collaboration

under Aceh Green hampered relationship building with both supporters and critics. EOA (2009)

describe the forest management model in Aceh as a top-down system that gave few opportunities for

input by other actors, including communities and other government agencies outside the forestry

department. Other research specifically related to the management of the Leuser Ecosystem

identified a deep frustration from district level government and communities about not being involved

in decisions that affect their lives (PEM and ECO 2010). The result was widespread feelings of

discontentment about forest management decisions and programme activities (International

organisation interview No. 19 2012, 12 May). This point is exemplified through a quote from Governor

Zaini’s spatial planning advisor, Abubakar, who stated that the idea of the entire Leuser Ecosystem

being designated as a conservation area was, “about outsiders trying to manage Aceh’s forests,

especially the NGOs and the central government” (Bachelard 2014).

As a direct consequence of the Secretariat’s inadequate collaboration with other government actors,

they failed to make the most of opportunities to ingrain Aceh Green principles and activities into the

government’s formal planning and budgeting processes, notably Aceh’s five and twenty year

development plans and guidelines for how to use the Special Autonomy Funds. Although section 5.2.2

explained that government actors were unwilling to engage with the Secretariat due to their own

vested interests, respondents stated that the Secretariat’s lack of collaboration exacerbated the

problem:

They [the Secretariat] were more interested in devising their own plans rather than seeing how their ideas and strategies could be merged with other government proposals and ambitions. There did not seem to be a willingness to discuss potential trade-offs between various economic development paths and to engage in a process of negotiation to find a path that all were comfortable with. As a consequence, they did not build relationships with other government actors and Aceh Green related activities could not gain access to funding from annual government budgets, which could have played a major role in formalising the vision over the long term (International organisation interview No. 12 2013, 18 June).

The Secretariat also completely failed to enact a formal or systematic discussion with local

communities who would likely be affected if Aceh Green was operationalised (International

organisation interview No. 4 2013, 26 January), especially those living inside or on the periphery of

the Ulu Masen and Leuser ecosystems, and those communities inside or adjacent to areas targeted

for plantation development. Given this context, local communities possessed very little knowledge

about what Aceh Green actually entailed (Civil society interview No. 6 2013, 8 July). A recent study on

the Ulu Masen REDD+ project found that local communities lacked understanding about climate

change and REDD+, leading to ongoing confusion and suspicion regarding the project (Anandi,

Resosudarmo et al. 2015). For example, there was a perception that the project would take over

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people’s land and access to resources, while in fact project proponents intended to do the opposite

by working to secure community and customary tenure to land and forest resources (Secretariat

interview No. 2 2012, 25 September).

Local NGOs felt particularly aggrieved by their lack of involvement in helping to formulate and

implement Aceh Green, which in turn meant they were not interested in endorsing it (Civil society

interview No. 7 2013, 11 July). In fact, they often did the opposite; openly criticising the initiative in

Acehnese media, as well as staging protests outside Aceh Green meetings and conferences

(Secretariat interview No. 1 2012, 11 June). This negativity led directly to some members of the

government bureaucracy losing confidence in Aceh Green (Government interview No. 6 2014, 10

September).

To some respondents, local NGO resistance to Aceh Green was confusing given its focus on sustainable

development goals (International organisation interview No. 6 2013, 23 June), but as explained by a

respondent from a local NGO, “we agreed with the actual concepts of Aceh Green but we were

disappointed at being spectators in the process of building it, rather than participants” (Civil society

interview No. 4 2013, 11 June). This view was shared by a number of civil society respondents who all

felt that information around exactly what Aceh Green meant in practice and how it would be achieved

was held by an exclusive group of people in the Secretariat and their advisors; it certainly was not

public property (Civil society interview No. 7 2013, 11 July). These concerns were well summarised by

a respondent from a local NGO:

We just wanted our voices to be heard. The lack of participation meant that Aceh Green was not inclusive, and was unable to inform and convince enough people of the proposed benefits of the vision so that they were willing to defend and carry it on. To most people it just seemed like nothing had changed from the past where the elites captured resources and the vulnerable had no say in the matter (Civil society interview No. 7 2013, 11 July).

The reasons why the Aceh Green Secretariat did not engage extensively with local NGOs were two

sided. Respondents from the Secretariat complained about the difficulties of engaging with local NGOs

due to their focus on, “complaining about problems, rather than working constructively towards

solutions” (Secretariat interview No. 1 2012, 11 June). A number of reports also point to the difficulties

of engaging local NGOs across Indonesia on policy reform processes, and explain that this is because

an active civil society is only just starting to emerge following the systematic repression and opposition

it endured under Suharto where opportunities for activism were tightly controlled (Ibrahim 2002,

Aspinall 2005b). Furthermore, while the decentralisation era saw a shift towards more political

openness, liberalisation of mass media, and freedom to associate, assemble and express opinions

across Indonesia in general (Buehler 2014), Aceh had a different experience as a result of the conflict,

where central government continued to try and keep civil society movements suppressed (Schulze

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2006). Acehnese civil society at this time focused primarily on more general issues of sovereignty,

human rights and peace, and were not active on engaging with government on specific policy reforms

concerning resource management (Miller 2009). This meant that when peace was finally secured,

there was a strong legacy of civil defiance, and anti-government protest, with limited capacity or

desire for more pragmatic engagement (Simanjuntak 2010). The policy reform process initiated by

Aceh Green was in fact the first time that civil society had the chance to engage directly with

government in the post Suharto/non-conflict era. All of this meant that NGOs were not prepared to

work alongside government on new policies and programmes (Civil society interview No. 3 2013, 5

July), and instead:

They were much more familiar, and therefore comfortable, undertaking campaigning work in opposition to government. To work with government would mean a separation from their roots where the government has always been the opposition given its repressive activities of the past. For a local NGO to step outside of this tradition they risk their relationships with other local NGOs who for the most part are firmly anti-government (Secretariat interview No. 2 2012, 25 September).

Local NGOs also had a similar ingrained anti-private sector sentiment given their negative experiences

from the extractive oriented business models that have been the norm in Aceh throughout recent

history (International organisation interview No. 1 2013, 11 February). The general feeling expressed

by respondents was that local NGOs believed that no matter how ‘green’ the private sector promised

their investments to be, the likelihood was that adverse consequences would occur. Thus, local NGOs

remained sceptical of green economy proposals put forward by business. That is, Aceh Green looked

to many actors as, “a continuation of business as usual under a fake green guise” (International

organisation interview No. 4 2013, 26 January). One commentator noted that this was a reasonable

position given historical experiences in Aceh, where previous private sector and government managed

interventions have shown little concern for transparency, or the interests of local communities and

the environment (International organisation interview No. 4 2013, 26 January). The fact that local

NGOs were not involved in the process of envisioning or designing Aceh Green only compounded their

suspicions regarding the private sector (Civil society interview No. 5 2013, 11 June).

Collaboration between the Secretariat and the private sector was also limited. The Secretariat did not

adequately reach out to the private sector as their attitude seemed to be that, “it is a privilege for the

investors to be in Aceh, hence the investors will be patient and do what the government wants them

to do” (International organisation interview No. 10 2013, 11 August). Given the difficulties of investing

in Aceh, respondents stated that more effort should have been made to build relationships with

investors and to encourage them to come and commit to Aceh by helping to reduce their perceptions

of the risks involved by, for example, guiding investors through the permitting process or helping them

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identify suitable land (Private sector interview No. 2 2014, 30 June). It was this intermediary role that

was missing, and which the Secretariat could have helped to fill by:

… ensuring effective dialogue between investors, potential donors, government agencies, and communities so as to help investors understand the needs, opportunities, and processes for delivering green businesses in Aceh, and thus potentially tipping the risk versus reward balance more in favour of a decision to invest (International organisation interview No. 1 2013, 11 February).

In the second half of Governor Irwandi’s term in office (2010-2012) the Aceh Green Secretariat

attempted to develop a collaborative spirit as they belatedly realised that their lack of engagement

with other actors was encumbering Aceh Green reforms (Secretariat interview No. 1 2012, 11 June).

According to the Secretariat, they purposefully took a step back from taking a direct role in the

implementation of Aceh Green related projects because:

Owning Aceh Green hindered our ability to gain support from existing government departments who felt left out of the [policy reform] process, and jealous of the benefits that they believed the Secretariat to be getting. We also realised that we did not have the financial resources or management capability to have broad impact over all aspects of Aceh Green and, hence, had to leverage the human and financial resources of existing government departments wherever possible. Hence, we became more of a ‘Think Tank’ that focused on promoting and facilitating links between government agencies, the private sector and civil society in support of Aceh Green’s aims (Secretariat interview No. 2 2012, 25 September).

From the Secretariat’s perspective, their eventual efforts at broader collaboration yielded results: “our

messaging helped convince civil society of the importance of achieving effective REDD+ programmes

not just for the sake of the environment but for water supply, flood control and sustainable

development for communities” (Secretariat interview No. 2 2012, 25 September). This sentiment is

supported by other commentators who concluded that discussions on climate change and other

environmental issues were particularly vibrant during the Aceh Green era (Mahdi 2012), which has led

to a level of awareness that now enables local NGOs to play a linking role between what is happening

at the community level and government policy processes (International organisation interview No. 1

2013, 11 February). Another Secretariat member believed that the benefits of the Aceh Green

initiative are ongoing in that their work:

… changed the mind sets of government agencies and has transformed the way they work. In particular, the draft regulations completed by Aceh Green – for REDD+, mining, and plantations – have been beneficial and are now ready to be turned into qanuns [regulations] (Secretariat interview No. 3 2012, 23 October).

This optimistic take on the benefits of the Secretariat’s later efforts at collaboration belies the fact

that the post Irwandi administration has done a complete about turn on the principles of a green

economy, and local NGOs are still struggling to engage effectively in policy debates and advocacy work

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related to sustainable development (BPKEL interview No. 2 2012, 10 June). That is, the collaboration

attempted in the later stages of Governor Irwandi’s term ultimately did little to get buy-in from a

broad base of supporters. This meant that Aceh Green’s policy reform agenda dissolved as soon as

Governor Irwandi was voted out of office.

The problem was that Government actors did not react well to the delayed collaborative efforts of the

Secretariat because they already felt too far removed from the process and were, “resentful about

initially being left out of the loop” (Consultant interview No. 4 2012, 22 May). By the time the

Secretariat reached out to engage with local NGOs there was so much hostility that no one stepped

out and actively supported Aceh Green, even if they believed in what it stood for, due to a fear of

being ostracised by other local NGO counterparts (Civil society interview No. 4 2013, 11 June). Even

the Secretariat acknowledged that “it was very difficult to turn the situation around when people

already felt marginalised” (Secretariat interview No. 2 2012, 25 September). In summary, by failing to

engage transparently and build relationships with other government, civil society or private sector

actors from the start of the reform process, the Secretariat could not build coalitions in support of

reform.

6.1.2 Making a case for reform

An important reason why Aceh Green struggled to gain a broad base of support is because it did not

build a case for the need to reform, or provide evidence that positive change was in fact achievable.

The research revealed that government decision makers with the power to impede the reform process

did not see the urgent need for change, and did not believe that a green economy could deliver on its

promised goals. The Aceh Green policy reform process did not effectively counter these beliefs.

The research highlighted that correlations between human wellbeing and environmental health are

poorly understood by many of the people who hold positions of responsibility over managing Aceh’s

natural resources. From the perspective of the Secretariat:

Most government officials were so fixated on the need for further development that they refused to discuss conservation issues, even where environmental degradation could impede their growth plans (Secretariat interview No. 2 2012, 25 September).

BPKEL’s (2009: 17) management plan further expands on this issue, stating that for government

actors:

Many of the economic benefits of conserving the Leuser Ecosystem are not fully understood or are grossly undervalued. Likewise, its role as a life support system for local communities is not fully appreciated. This lack of awareness is exemplified in the frequently heard slogans such as ‘conservationists think that elephants (or monkeys) are more important than people’. This

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illustrates the total lack of comprehension that all organisms have an important role in the functioning of ecosystems and these ecosystems are a source of support for development.

A criticism of the Aceh Green Secretariat is that they failed to bridge such knowledge gaps as part of

the process of shifting various actor’s beliefs in favour of the proposed reforms. As one of the

Secretariat members stated:

The justification for the need to transition away from a business as usual, extractive economy was absent [from the policy reform process]. There should have been a much bigger spotlight on issues that pointed towards the need to change existing business practices – including, concerns over community rights, governance, corruption, and the negative social impacts of environmental destruction such as landslides, flooding and human-wildlife conflict (Secretariat interview No. 3 2012, 23 October).

As a result of not setting out the rationale for Aceh Green, many government officials and civil society

actors believed that Aceh Green was too heavily weighted towards intrinsic environmental benefits,

missing the links between the proposal and the benefits for community wellbeing and economic

growth (International organisation interview No. 13 2012, 5 December). For example, there was much

disagreement about whether or not the plan actually put Aceh on a development path that would

meet the needs of its people (Civil society interview No. 3 2013, 5 July). Parliament believed, in

general, that too much land area was dedicated to forest conservation, and they were not confident

that sufficient land was being made available to provide local communities with an acceptable

standard of living (International organisation interview No. 14 2013, 26 January). These beliefs were

mirrored at central, district and community levels. Luttrell, Resosudarmo et al. (2012) write that there

is no clear consensus – in the national parliament or bureaucracy – regarding the role of forests as a

national public good. The loss of potential investment is a key concern. For example, the Presidential

moratorium on issuing new forest conversion permits has been heavily criticised within the national

parliament on the basis of its negative impact on the economy, and the associated threat to national

sovereignty (Priyambodo, 2011; Supriyono, 2011). Similar concerns were held by Aceh district officials

in relation to conservation of the Leuser Ecosystem; they believed that too much land area was already

under protection, and there was apprehension about additional areas being classified as protected

through the Aceh Green proposed spatial plan (PEM and ECO 2010). Likewise, local communities in

and around the Leuser Ecosystem were concerned about how a conservation oriented approach may

limit their short term livelihood options, even while holding a general concern about long term

environmental sustainability (Janssen 2010).

Concerns about the development limitations of “the conservation oriented objectives of Aceh Green”

(Government interview No. 4 2012, 10 June) were compounded by an absence of beliefs in the viability

and equitability of a green economy. For example, as one official from the local plantations

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department noted, “there is no resistance to the idea of sustainable palm oil in theory, but we have

just never heard of RSPO, nor its principles and criteria, and we have not seen it successfully trialled

or implemented in practice” (EOA 2007). Concerns also existed around the type of green economy

jobs that would likely emerge, especially through REDD+. In the words of a government respondent:

Unlike oil palm plantations that require agricultural labour, processing plants, transport operators and associated services, REDD+, on its own, creates few immediate local jobs beyond policing and monitoring. Indeed, most of the high paying technical jobs are likely to be secured by foreign consultants or well educated national elites (Government interview No. 2 2013, 7 March).

Indeed, many people from within government and civil society believed that far from bringing a range

of new benefits to Aceh, REDD+ schemes could in fact exacerbate existing grievances about unfair

access to natural resources and create new conflicts (PEM and ECO 2010). As one commentator from

a local NGO stated:

REDD+ presented a new type of dependency, whereby people living around forested areas are constrained from developing their own industries in exchange for limited incomes from the provision of ecological services that would make other people rich (Civil society interview No. 6 2013, 8 July).

District level government actors believed they would bear a disproportionate share of the costs

associated with forest conservation under REDD+ projects – for example, a reduction in new road

projects and the need to source timber from elsewhere when it is available locally – relative to the

benefits, which they thought would mostly go to ‘outsiders’, such as international conservationists

and carbon traders (PEM and ECO 2010). They were concerned about the distribution of costs versus

benefits they encountered at a local level vis-à-vis actors at the provincial, central or global levels and

whether these were equitable (International organisation interview No. 13 2012, 5 December). As one

local authority put it, “what is the point of being starving environmental heroes?” (van Acker 2011: 8).

These concerns were especially poignant in relation to the Leuser Ecosystem, which covers a

considerable area of 13 districts and 875 villages. In three districts – Aceh Tenggara, Aceh Selatan, and

Gayo Lues – it occupies close to 80 per cent of the land area and district heads were worried that the

proposed REDD+ schemes were solely concerned with environmental issues and would present a

barrier to further economic growth. The areas most disputed were of high economic as well as

protection value, such as lowland forest areas surrounding human settlements or with the potential

for estate crop plantations such as oil palm, or highland areas with potential for mining (PEM and ECO

2010).

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Respondents stated that the Aceh Green Secretariat could have framed and shared information to

counter the lack of desire for change, and to create support for the idea that a green economy was

the best way forward (International organisation interview No. 4 2013, 26 January) by:

… expounding what the plan for change was, including why it was necessary, what its proposed benefits were, how it was to be implemented, and by whom (International organisation interview No. 1 2013, 11 February).

In this sense, and with the benefit of hindsight, the Secretariat realised that they did not adequately

build a case for change. They now concede that more support could have been generated for Aceh

Green if they had properly identified and disseminated the shortfalls of Aceh’s existing development

trajectory, especially in terms of the risks posed by flooding and landslides as a result of deforestation,

or the likelihood that investment would be difficult to attract to the province without proper

regulatory reform addressing corruption and land rights uncertainty (Secretariat interview No. 1 2012,

11 June). “We could have been savvier in building public opinion in our favour” (Secretariat interview

No. 3 2012, 23 October).

Specific events and information readily available could have been more intensively communicated to

enable a clearer appreciation of human-environment linkages. During the Irwandi era, Aceh was badly

affected by a number of deathly landslides and floods that were connected to the rapid conversion of

forested watersheds to large scale mono-cropping. The devastating floods in Tamiang, East Aceh

District were the most striking example. Between 22 and 25 December 2006, muddy floodwater

washed through farmland and villages in seven districts in the eastern part of Aceh. In total, 69 people

died, 10,323 houses were severely damaged, and 367,752 people were displaced from their homes.

The agriculture sector was particularly affected; around 2,353 hectares of agriculture land needed

rehabilitation (World Bank 2007). The Secretariat could have drawn on these episodes to explain that

environmental destruction is not of benefit to local communities, and to justify the need for improved

forest conservation (Consultant interview No. 4 2012, 22 May). The Secretariat could have also drawn

on a number of Aceh specific studies to justify Aceh Green. For example, van Beukering, Grogan et al.

(2009) affirmed that, over the long run (30 year timeframe), Aceh’s main environmental assets and

economic sectors would produce more value to the province under a development path that adhered

to conservation and sustainable management strategies, compared to an exploitative development

path with high deforestation rates (table 4 presents the quantitative results of these comparisons).

Few efforts were made to draw on such data to help rationalise Aceh Green (International

organisation interview No. 5 2012, 10 December). One of the advisors to Aceh Green noted that this

type of data should have been utilised as a:

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… starting point, to be further analysed so as to pinpoint what impacts various development paths would have on various actors. Without this type of detail it was hard to get people, especially communities, to relate to broad statements about the need for change or how they would benefit. They could not envisage how the proposals would affect them personally, which was a stumbling block for getting their support for change (International organisation interview No. 4 2013, 26 January).

Table 4: Benefits of various environmental assets and economic sectors under deforestation versus conservation strategies (30 year time frame)

Sector Deforestation Value

(US$1,000,000) Proportion

(%) Conservation Value

(US$1,000,000) Proportion

(%)

Water supply 1,059 8.8 2,487 18.5

Fishery 2,025 16.9 2,49 18.6

Flood prevention 1,622 13.5 1,86 13.9

Agriculture 3,512 29.2 3,991 29.8

Hydroelectricity 15 0.1 26 0.2

Tourism 25 0.2 139 1.0

Biodiversity 103 0.9 582 4.3

Sequestration - 0.0 1,217 9.1

Fire prevention 183 1.5 225 1.7

Non-timber forest products 161 1.3 391 2.9

Timber 3,308 27.5 0 0.0

Total 12,011 100 13,408 100

Source: van Beukering, Grogan et al. (2009)

Most respondents stated that Aceh Green was too vague, and that it failed to provide adequate

assessments of economic and technical feasibility, or an analysis of whether or not the vision was

politically viable given the strength of vested interests in pushing for the status quo. A common

complaint was that, “the Secretariat focused on the what, while not explaining the why, or the how”

(Civil society interview No. 3 2013, 5 July). These frustrations were reinforced by another respondent:

There was no clarity around what was going on, what activities were needed, whether or not they were achievable, how they were going to be funded, and what was the likelihood that they could actually gain political support. The whole idea of Aceh Green was built around the delivery of new, innovative green businesses but there was a lack of analysis regarding what business opportunities were actually viable, and what were the best mechanisms and strategies for delivering on them (International organisation interview No. 1 2013, 11 February).

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The lack of faith in a green economy approach as a basis for Aceh’s sustainable development was

further fostered by the absence of concrete business plans. This was particularly apparent in the

forestry sector where there was insufficient progress made on developing a long term strategy for the

various components of this sector – including, conservation, restoration, large scale plantations,

smallholder production, and processing infrastructure (Civil society interview No. 6 2013, 8 July).

Instead, the only action taken was a moratorium on logging that stopped all major investment

activities in the forestry sector, except in regards to REDD+. As one private sector interviewee noted,

All eggs were put into one basket with opportunities for effective progress in the forestry sector completely dependent on the emergence of carbon markets (Private sector interview No. 3 2013, 5 June).

No clarity was given about the potential impact of REDD+ projects, both positive and negative, for local

communities; “from an outside perspective, and from the little knowledge we had, it looked like

foreign investors were going to capture the bulk of the revenues from any carbon credit sales” (Civil

society interview No. 6 2013, 8 July).

Efforts to set up APDA provide a further example of the limited progress made on Aceh Green plans

and strategies. Local NGOs in particular were sceptical that new plantations could avoid the poor social

and environmental consequences of previous plantation development in Aceh (Civil society interview

No. 3 2013, 5 July). This was because substantial aspects of APDA were unclear or inadequately

addressed, including: the structure and composition of APDA; whether or not it would have social

safeguards in place to ensure poverty alleviation was to be prioritised, and what these safeguards

would be; how APDA was to be financed; plans to enhance the Aceh government’s ability to administer

the scheme; the availability of suitable land; and, the steps the provincial government would take to

ensure that the project would be implemented in a manner consistent with the Governor’s declared

moratorium on logging (International organisation interview No. 14 2013, 26 January).

Almost all respondents stated that Aceh Green would also have benefited from on the ground pilot

activities that demonstrated the benefits of a green economy so as to help counter mistrust

surrounding its viability and potential impact, and to inform policy development with practical

insights. These viewpoints are supported by research conducted by Barron and Clark (2006), who

highlight that distrust of the government is extremely high in Aceh, and that one way of turning this

around is to showcase effective programmes that reach the local level. As one respondent noted:

Designing pilots in a way that delivered upfront concrete benefits to local communities could have generated greater buy-in to Aceh Green by demonstrating to all stakeholders that green economy strategies are tangible and deserve greater support (BPKEL interview No. 1 2012, 12 November).

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As an example, the review of the Aceh Forest and Environment Project (AFEP) suggested that greater

support for the conservation of the Ulu Masen ecosystem could have been achieved if a flagship forest

management and livelihood training centre had been established within the first year of the project.

This facility would have provided AFEP with immediate visibility, creating a dynamic learning

environment for bringing together different project stakeholders, rural communities and the forestry

department, and served as a model site for hosting project partners and donor field visits (FFI 2012).

A respondent involved in AFEP expanded on this idea, suggesting various pilot activities that could

have been attempted, including the delivery of a concrete REDD+ project over a specific concession

area to demonstrate viability of the model before pushing ahead with REDD+ projects over whole

ecosystems (International organisation interview No. 6 2013, 23 June). Another suggested benefit of

pilot projects is that they could have helped to build working relationships between government

agencies across different levels leading to improved systems of coordination, co-management, and

monitoring of Aceh Green projects (Civil society interview No. 1 2013, 11 June). In the absence of these

on the ground pilot projects, Aceh Green was considered overly ambitious:

The Secretariat remained stuck on trying to get big picture ideas over the line, such as province wide REDD+ projects and large scale agroforestry plantations. But most actors lacked confidence that these green economy interventions were in fact viable, and hence did not support them (International organisation interview No. 6 2013, 23 June).

The failure of the Secretariat to provide information outlining an adequate rationale for change, to

present a detailed plan and discuss its likely impacts, or to deliver any concrete pilot project examples,

meant that it was difficult to convince key actors from government, civil society or the private sector

of the necessity or viability of a green economy. This meant that a broad consensus on general goals,

as well as on options and opportunities for change, was not achieved. People were disgruntled with

what they saw as:

… unrealistic promises that large amounts of carbon revenues were going to be generated for the people of Aceh, with no real sign that Governor Irwandi was seriously delivering on his promise to bring new employment opportunities to the province (Consultant interview No. 3 2013, 21 January).

Most actors in decision making positions within government continued to believe that the only real

opportunity for Aceh’s economy to grow was through the traditional development path of extracting

natural resources and expanding plantations (Consultant interview No. 5 2012, 13 November). That

is, they had no faith that the benefits from REDD+ and other green investment related business

initiatives could match the financial returns, both to themselves and to others in Aceh, from competing

land uses such as oil palm or timber extraction (Consultant interview No. 8 2013, 12 August). This is in

contrast with the key premise of a green economy, which holds that a green economy approach in

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and of itself helps to build coalitions for change on the basis that it covers the broad needs of society,

and thus meets the interests of a range of actors (UNEP 2011). Instead, the case study faced the same

difficulties of previous natural resource management reform processes (see Fox, Adhuri et al. 2005);

the efforts of the Aceh Green Secretariat to shift actors’ beliefs in favour of the proposed reforms

suffered from a lack of focused effort on collaboration, as well as an inability to justify the need for

change, and to inform key actors about the potential benefits and viability of proposed changes.

6.1.3 Technical and financial capacity shortfalls

An underlying obstacle that contributed to the problems above was a lack of technical and financial

capacity (defined in section 3.1.2) within the Secretariat, as well as in government, civil society and

local business. Little assistance was offered from international organisations to help fill this void.

The Secretariat’s ability to collaborate effectively was encumbered by their lack of access to basic

information in order to devise proper implementation plans. While section 6.1.2 states that there was

ample information available about the general environmental benefits related to Aceh Green’s

proposed conservation strategies, corresponding information on best practice implementation

procedures and opportunities, economic benefits, and the viability of green economic activities was

absent (International organisation interview No. 4 2013, 26 January). In the palm oil sector, for

example:

Data on the productivity, labour force and financial aspects of existing plantation concessions and smallholder plantations was frequently unavailable or inaccurate. This proved to be a major shortcoming in creating a rational planning process for transitioning to RSPO certified palm oil (Private sector interview No. 2 2014, 30 June).

Often the government would have maps on land areas available for plantations, but when ground

surveys were made it was discovered that there was an existing plantation or village occupying the

area (EOA 2007). Likewise, the Secretariat had limited access to detailed carbon market information

that they could trust (International organisation interview No. 13 2012, 5 December). Instead, they

were being:

… bombarded with overly optimistic information from potential REDD+ investors who were thinking of their own interests and were desperate to get projects moving as quickly as possible due to the pressure on them from their financiers. These investors did not have the welfare of the Acehnese people at the forefront of their agenda (International organisation interview No. 7 2013, 1 July).

The absence of adequate neutral information and guidance reduced the confidence of the Secretariat

regarding how best to take the REDD+ initiatives forward, which in turn inhibited their ability to

communicate the plan to other actors. As one respondent from the Secretariat stated, “we were

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hesitant to present and discuss ideas with others until we had a better understanding of the issues

ourselves” (Secretariat interview No. 2 2012, 25 September). In this sense, the Secretariat simply did

not have the confidence to open up the discussion process any earlier as:

It took much longer than expected to gain clarity on even a basic outline of a plan because of the complexities associated with introducing a ground breaking, province wide, green economy initiative, and the fact that people’s understanding around what needed to be done started from a low level and was constantly evolving (International organisation interview No. 4 2013, 26 January).

While a shortage of proper information was only part of the explanation for the Secretariat’s

collaboration shortfalls – indeed, section 5.2.2 outlined that the Secretariat often chose not to share

what information they had due to power struggles with other actors – additional funding and technical

assistance could certainly have helped the Secretariat to better meet some of the extensive

collaboration needs (International organisation interview No. 1 2013, 11 February). The requirements

associated with engaging effectively with other actors were substantial. As one respondent noted:

Socialising a new policy reform agenda to decision makers in government as well as to civil society and potential investors is a huge task. You are trying to change their mind sets about the only path to economic growth they know. This requires significant funds and skills dedicated to countless meetings, presentations, trainings and even lobbying trips to demonstration activities both locally and internationally (BPKEL interview No. 1 2012, 12 November).

The Secretariat simply did not have the time, expertise or funding to fulfil the long list of functions

necessary for effective collaboration (Consultant interview No. 7 2012, 10 July). Instead, the

Secretariat would:

… jump from initiative to initiative; starting each one off at great pace but not seeing them through or manage them properly and, thus, ultimately they did not meet their goals (International organisation interview No. 1 2013, 11 February).

From the Secretariat’s point of view, there were significant opportunities for other government and

civil society actors to get actively involved in designing and implementing the plan for Aceh Green, as

well as being a part of making it happen, but:

It was just that the Secretariat did not have the financial or manpower resources available to facilitate other people’s engagement in the process … the needs were beyond our capacity (Secretariat interview No. 2 2012, 25 September).

On the few occasions that government and civil society actors were provided with the opportunity to

contribute to Aceh Green related discussions and planning, they could not engage constructively due

to their own inadequate knowledge of technical issues, program planning, budgeting, and

implementation procedures (International organisation interview No. 1 2013, 11 February). A large

number of reports detail the technical and management challenges Aceh faced in the wake of the

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conflict and the 2004 tsunami. These reports point to the fact that Aceh was weak at identifying short,

medium, and long term plans for allocating and managing resources in the best interest of its people

(Barron and Clark 2006, World Bank 2006, UNEP 2007, Meehan 2009). For example, the report by the

World Bank (2006) on Aceh public expenditure found that although Aceh’s district and provincial

governments received increased budgetary allocations of over 400 per cent through decentralisation

and Special Autonomy Funds, they failed to use this funding effectively. The report highlighted that

the government’s financial management skills and systems were lowest in the areas of planning and

budgeting, accounting and reporting, external auditing, public debt management and investments.

The general conclusion from these reports was that the Aceh government did not have the capacity

to address poverty alleviation concerns or to deliver effective resource management.

Reports were also compiled on government capacity specifically for Aceh Green related sectors. A

report by the UNDP (2013) focusing on REDD+ issues ranked Aceh as the second lowest province in

Indonesia in terms of government capabilities to facilitate and manage effective REDD+ strategies in

the province. One of the main recommendations from this report was that the Aceh government

needed to strengthen its capacities to ensure greater participation in forest management and spatial

planning processes. In the palm oil sector, an analysis of the opportunities for transitioning to more

sustainable approaches found that some of the main obstacles were the lack of government

understanding, awareness, and experience in the field of sustainable palm oil and specifically RSPO

certification processes (Fricke 2008). At the district level, a report by PEM and ECO (2010) found that

the government was ill prepared to put in place the necessary policies and strategies to deliver Aceh

Green. Regarding district level spatial planning, for example, a consultant involved in the process

stated that:

District level officials did not have adequate knowledge of land use considerations, and simply put forward any old plan that the advisors suggested without adding their own input and analysis (International organisation interview No. 12 2013, 18 June).

Government capacity limitations were compounded by the fact that there was very limited

discretionary funding available to implement new programmes; instead, 80-90 per cent of district level

government budgets were already tied to existing salaries and programmes leaving no room for

innovative new ideas to be supported (Consultant interview No. 2 2013, 16 July). The conclusion from

most respondents was that the government lacked appropriate knowledge, management systems,

and finances to engage constructively on the details of Aceh Green.

In a similar vein to government’s limitations, all respondents mentioned that that local NGOs also

lacked relevant knowledge of green economy issues under discussion. “They had almost no previous

experience or exposure to issues such as RSPO certified palm oil, REDD+ and renewable energy

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(International organisation interview No. 9 2013, 5 July). Without intensive guidance and trainings

these actors were not ready to engage in a constructive, detailed technical discussion of Aceh Green

policies and implementation strategies (International organisation interview No. 6 2013, 23 June).

Insufficient business acumen was a leading cause of why local investors did not engage in Aceh Green.

A UNDP (2012b) report on Aceh’s economy ranked local business capacity the lowest in Indonesia,

namely as a result of the structural deficiencies it suffered during the conflict, which were then further

accentuated as a result of the tsunami. In particular, local businesses and investors did not have the

necessary management skills – including, preparing business plans, establishing finance systems,

implementing best practice operating standards and technologies, understanding product quality

standards, and connecting with international trade networks (Private sector interview No. 3 2013, 5

June). They also lacked access to the capital required to turn ideas and opportunities into successful

businesses (Consultant interview No. 3 2013, 21 January). Where they did have the necessary

experience and networks, it was concentrated around traditional, extraction oriented business

models, and they “struggled to make informed choices about the potential benefits, costs,

requirements and risks of new green economy opportunities” (Private sector interview No. 3 2013, 5

June).

Palm oil provides a sector specific example of the barriers local businesses needed to overcome to

being part of the transition to a green economy. A report on local smallholders concluded that they

were not in a position to increase sustainable palm oil production without significant technical

assistance and financial support (Fricke 2008). During the conflict an estimated 85,000 hectares (33

per cent of total oil palm plantations) were abandoned or neglected as both companies and

smallholders were unable to stay on the plantations due to security concerns (EOA 2007). An

additional 21,000 hectares were partially or significantly affected by the tsunami. Secondary

processing plants, refineries, feeder ports or tank farms for storage, are all undersupplied in Aceh. As

a consequence, Aceh remains primarily a raw material producer with local prices relatively depressed

due to production and processing constraints (Fricke 2008). This in turn makes it difficult for

smallholders to meet the additional costs, documentation and legality requirements to even

contemplate getting their smallholdings certified, especially given the low price premium gained for

certified palm oil (an issue already touched on in section 5.1.1) (Consultant interview No. 6 2012, 22

November).

Plantation forestry provides another example of the challenges faced by local businesses. Aceh’s

provincial forestry agency allocated 661,150 hectares for community plantation forest development

as part of previous spatial plans, yet not a single plantation is currently in operation (Government

interview No. 4 2012, 10 June). Key constraints include the difficulty of accessing capital and financial

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schemes that are suitable for smallholder plantations (International organisation interview No. 10

2013, 11 August), as well as insufficient technical skills and experience to effectively manage forestry

projects – such as sales skills and information on the buyers, manufacturers and other downstream

members of the value chain (ADB, World Bank et al. 2012).

The Secretariat stated that ideally they should have been playing a bridging role between government

agencies, civil society and the private sector so as to ensure that everyone had access to adequate

information and were well prepared to engage in the policy reform process (Secretariat interview No.

2 2012, 25 September). For the Secretariat to play such a role, however, they first required:

More technical assistance around issues such as REDD+ markets, carbon accounting, and free, prior and informed consent processes, as well as legal expertise on drafting new regulations, and agro-economic issues related to the employment creation elements of Aceh Green – including, how best to improve the supply chains in agriculture, agroforestry, sustainable timber plantations, and Non-Timber Forest Products (Secretariat interview No. 2 2012, 25 September).

Given these constraints, an important question is why did other agencies not step in to better support

the Secretariat? Government budgetary support for green economy work was tied up due to political

reasons and could not be released without progress on the policy reform agenda, particularly the

formal establishment of implementing organisations such as APDA, or BPKEL (as discussed elsewhere

in sections 5.2.2 and 6.1.1). This left it to international organisations to fill the void. However, for the

most part they were unwilling or unable to play this role.

Section 4.2.1 explained that a number of international organisations, especially the UNDP, Oxfam, FFI

and the IFC, did try to provide technical and financial assistance to the Secretariat. Some respondents

believed that without this support the Secretariat would not likely have even been formed, or Aceh

Green attempted (International organisation interview No. 1 2013, 11 February). Ultimately, however,

the support provided by international organisations was insufficient to counter the capacity related

difficulties encountered by the Secretariat (Secretariat interview No. 2 2012, 25 September). These

shortfalls were well summarised by one respondent:

There was only a small amount of general support for the Aceh Green Secretariat and the completion of a few studies. This left massive gaps. International organisations failed to link with Aceh Green in a strategic way. More attention was needed to support the work that was already underway in the Governor’s office, and then link this up with existing post tsunami projects so that they were more aligned with Aceh Green. Much more attention was also needed on investigating the opportunities to get the private sector involved and to facilitate relationships with these actors (International organisation interview No. 1 2013, 11 February).

Respondents lamented that those few organisations that did commit to assisting on Aceh Green did

not do so over a sustained period of time, and did not have an adequate understanding of the political

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context in which they were operating. This meant that their contributions were inadequate to properly

tackle the barriers that Aceh Green encountered, especially in regards to the legal assistance needed

for regulatory reform (International organisation interview No. 14 2013, 26 January), the technical

analysis required to design and justify policy positions (International organisation interview No. 16

2013, 31 July), facilitating links between government and the private sector (International organisation

interview No. 1 2013, 11 February), and building the technical and management skills of local

counterparts (Civil society interview No. 8 2013, 11 July). For example, Oxfam’s contribution was cut

short at a critical point in late 2009, when the Secretariat were working to increase Aceh Green related

activities and would have benefited from greater assistance (International organisation interview No.

4 2013, 26 January). The IFC were criticised by Governor Irwandi for just:

… handing over more reports, all in English, without following through on concrete programmes that would have helped actually deliver on the recommendations presented in those reports (Irwandi Yusuf interview 2014, 3 October).

Specifically in the forestry sector, the EOA (2009: 22) recorded:

A general failure of the many international actors working in the forest management sector in post tsunami Aceh to promote the transfer of skills to their Acehnese counterparts. Rather, non-local actors have kept a hold on longer term planning of forest use in the province – an unsustainable situation.

The main conclusion regarding international organisation engagement on Aceh Green was that they

alienated local NGOs and government actors by putting themselves and their ideas at the forefront of

the policy reform process, instead of helping and facilitating Acehnese actors to take a leading role by

providing technical and financial assistance (International organisation interview No. 4 2013, 26

January).

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6.2 An absence of benefits in the early stages of the reform process

This section discusses how the absence of direct support and benefits to either civil society or the

private sector in the early stages of the policy reform process impeded the development of a coalition

in support of Aceh Green. The reasons why international organisations were unwilling to address this

problem are also presented. The consequences were that the private sector did not invest in new

green economy businesses as hoped for, and civil society had little interest in lobbying the government

to move forward on the reform agenda. Ultimately, government representatives with the power over

regulatory reform and natural resource allocation and management, had no incentive to back the

transition to a green economy.

6.2.1 Why early benefits are important

A central part of the process of building coalitions in support of change is to provide benefits that

incentivise actors to join the coalition (Angelsen and Brockhaus 2012). Aceh Green failed to provide

such benefits and, as such, was constrained in its ability to get support from either civil society – who

could have pressured politicians to push the reform process forward – or from the private sector –

who could have helped transform the economic system if they faced the right set of incentives.

Community perceptions on issues related to Aceh Green can be seen from two key datasets. The first

is a number of preliminary meetings held with Mukim3 leaders in 2010 concerning the Ulu Masen

ecosystem and the concept of REDD+, which are then built on in interviews conducted through this

research in 2013 with these same Mukim leaders. The second dataset is the significant piece of

analysis on socio economic conditions and general perceptions on environmental issues covering a

representative sample of inhabitants from 50 communities situated inside and around the boundaries

of the Leuser Ecosystem. This analysis was undertaken as part of the Leuser Ecosystem REDD+ Project

by GER staff, including myself, with the assistance of local and international consultants. This dataset

has not previously been used in any publications.

A respondent who was present during discussions with Mukim leaders in 2010 observed that they

were supportive of efforts to reduce large scale deforestation, which they understood led to natural

disasters such as floods, landslides, and increased human-wildlife conflict. Mukim leaders also

believed that REDD+ aligned with their goals of increasing local community management over forest

resources. However, after two or three of these meetings Mukim leaders became increasingly

3 The Mukim is an administrative/governance structure that was originally part of the Aceh sultanate system. A Mukim traditionally covers all villages that are linked to the main mosque in the area. It is loosely equivalent to a ‘sub-district’ found elsewhere in Indonesia.

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concerned that other actors – either the government, the private sector, or international conservation

organisations – would claim the benefits of REDD+. They were particularly concerned about forest

management rights, and whether or not project benefit sharing arrangements would be sufficient to

offset any lost potential for income generation from logging and agriculture activities (Civil society

interview No. 5 2013, 11 June). During additional interviews conducted through this thesis in 2013,

Mukim leaders confirmed their concern that a REDD+ project focusing on the Ulu Masen area would

diminish their livelihoods (Civil society interview No. 9 2012, 15 November ). A quote from a report by

the EJG (2011) covers this issue effectively:

For many forest edge communities [in the Ulu Masen area], illegal activities form the basis of subsistence living. They are afraid they will lose this under REDD, and say that they are not convinced that the benefits they currently enjoy from farming, hunting, logging, mining, collecting firewood and other activities in the forests will be replaced by money from this project to 'sell the wind' (which is how some local people describe the carbon trading concept).

Evidence of local community concern about the livelihood restrictions potentially imposed by REDD+

and other forest management initiatives can also be seen from research on communities in the vicinity

of the Leuser Ecosystem. To provide some context: at least 58 per cent of incomes in these villages

are derived from agriculture; 72 per cent of people from these villages had some form of agriculture

as their primary source of income; only one in three households had more than one hectare of land

(with one hectare being the minimum size that families considered necessary to live above the poverty

line); one in three households owned no land; and about 34 percent of households had no land and

no livestock. This dataset highlights the dominance of agriculture based livelihoods, and the fact that

land was particularly scarce. Within this context, the demand for additional land to expand agriculture

production was acute, and this was the main driver of community led deforestation. As such,

communities were concerned that REDD+ would further restrict, rather than alleviate, the livelihood

challenges they faced (Janssen 2010).

Another interesting point to note from the dataset on Leuser Ecosystem communities is that there

was widespread concern about the consequences of deforestation – namely, flooding and landslides

– and yet, only one in three respondents were worried that their welfare might be at risk from the

large number of new smallholder plantations and settlements being developed in previously forested

areas next to their communities (Janssen 2010). A possible conclusion to this enigma can be found in

the work of EOA (2007, 2009), who highlight that while community members in Aceh are concerned

about large scale logging and plantation activities conducted by companies, they are not troubled by,

or at least accept the need for, small scale, community driven forest conversion. To help prove this

point the EOA provides detailed accounts of community members’ frustrations with these large scale

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activities, especially due to land grabbing, water pollution and the increase in natural disasters that

large scale forest conversion creates.

What we can take from these datasets is that local community leaders were genuinely concerned

about environmental disasters caused by a continuation of large scale extractive activities, but they

also did not trust that REDD+ schemes and other green economy ventures would address community

livelihood needs. Important issues here are proof of concept about potential new benefits and their

timeliness. As one of the Secretariat members stated:

Communities are increasingly aware of the risks of deforestation, but are unsure about the benefits of alternative economic trajectories. They are used to seeing short term results from planting commodities, mining, or cutting down trees. They have short time horizons given the uncertainties they have had to deal with related to the conflict, and it is thus harder to convince them of projects that have long term benefits, such as tree planting. REDD+ was even less attractive because there was no certainty about what the benefits would in fact be, or when they would be received. Letters of Intent from buyers of carbon credits meant absolutely nothing to them. They needed to see concrete benefits in their hand (Secretariat interview No. 2 2012, 25 September).

The lack of benefits for local communities at the early stages of the reform process had a detrimental

impact on Aceh Green. Governor Irwandi believed that it was the main reason he was not able to

achieve the political support needed to win a second term in office, putting an end to Aceh Green (as

explained in section 5.2.1):

Communities are impatient. They want progress. I was unable to cut a single ribbon on the opening of any Aceh Green project. It was easy for the opposition to say that ‘Irwandi’s green approach had failed’. I had no proof to counter it. I could not show in a concrete manner that Aceh Green was going to benefit them. This is why I did not win the election, and why politicians did not feel compelled to support Aceh Green.

An absence of early stage support and benefits to the private sector was also a major barrier to the

reform process. Section 5.1.1 explained that the realisation of Aceh Green relied heavily on the private

sector to establish green businesses, but the private sector never fulfilled this function due to Aceh’s

inappropriate investment climate, which was not addressed due to the complexities of regulatory

reform. This created a paradoxical, ‘Catch 22’ situation where the private sector were not going to get

involved in assisting with the transition to a green economy unless there was comprehensive policy

reform and improvement in the investment climate, but policy reform was not supported by either

government or civil society because they were not convinced that a green economy was viable without

seeing it being delivered in practice.

To help counter this standoff, early stage support and benefits could have been provided to the private

sector, as was explained by one respondent involved in trying to get green businesses going in Aceh:

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We were first movers in the businesses we were attempting. There was so much uncertainty around the business models we were attempting and this was compounded by the fact that Aceh’s investment climate carried so many risks, both known and unknown. The market still does not have the willingness to pay the level of premiums needed to offset the costs of establishing environmentally friendly businesses. The timeframes to address these problems – both Aceh and the market – will likely be long. There will therefore continue to be inaction until there is more direct support to the private sector (Private sector interview No. 1 2012, 21 November).

Private sector respondents outlined a number of interventions that could have helped them to commit

to Aceh Green investments, including: early stage support for due-diligence of potential risks, the legal

context, and commercial viability of proposed investments (Private sector interview No. 7 2013, 20

March); technical and financial support to get through complicated licensing and land

purchasing/leasing processes (Private sector interview No. 3 2013, 5 June); and, guaranteed off-take

agreements for carbon credits (Private sector interview No. 1 2012, 21 November). Proponents of

direct support to the private sector concluded that such assistance should have been attempted

alongside the long term policy reform goals on the basis that they were complementary:

The upfront benefits would enable green economy pilot projects and investments to move forward, kick starting the transition to a green economy by demonstrating proof of concept and providing immediate, concrete benefits, which in turn would give reformers more confidence and support to move forward. In the medium term these reforms would then allow the green economy pilots to be scaled up (International organisation interview No. 4 2013, 26 January).

In this sense, it was thought that Aceh Green could have incorporated more traditional conservation

strategies – i.e. site specific ICDP, CBNRM, or PES schemes – so as to provide early stage benefits

alongside its big picture, landscape wide policy reform objectives (International organisation interview

No. 6 2013, 23 June). Indeed, most respondents concluded that the absence of early stage benefits

from the reform process was a dominant reason why it failed to build coalitions of support. The next

section now turns to a discussion of the barriers encountered in trying to generate early stage support

and benefits.

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6.2.2 Reasons why international organisations provided limited support

As mentioned towards the end of section 6.1.3, there was no government budget available in support

of Aceh Green. This meant that if any early benefits were to be provided they would have had to come

from international organisations. As this section outlines, however, these actors failed to provide

adequate support, except in the case of the coffee sector.

At least in official reports and media statements, international organisations saw the unprecedented

funding for the tsunami response as an opportunity to not simply rebuild assets and capacities directly

affected by the disaster, but to lay the groundwork for sustainable development by ‘building back

better’ (World Bank 2006, BRR 2009). The main mechanisms they targeted under this approach

included: bringing the long running civil conflict to an end; building the accountability, management

capacity and democratisation of local institutions; expanding access to services such as health and

education; reducing poverty and strengthening livelihood security; advancing gender equality; and,

empowering and opening up spaces for civil society (Da Silva 2010, Fan 2013). ‘Building back better’

did not, however, translate into comprehensive support for Aceh Green.

One of the main issues that hindered most international organisations from getting involved in

supporting Aceh Green was that they were unwilling to work side by side with government in a

constructive manner (Private sector interview No. 1 2012, 21 November), although the UNDP and FFI

are notable exceptions as discussed in section 4.2.1. The tsunami funds were largely executed by

international organisations, or channelled through the Reconstruction and Rehabilitation Agency

(BRR) established directly under the President, and generally failed to help build up technical or

management skills within local government (International organisation interview No. 1 2013, 11

February). Instead, most international organisations present in Aceh post tsunami were focused on

implementing their respective recovery programmes as quickly as possible with little thought for long

term sustainability of the programmes (International organisation interview No. 4 2013, 26 January).

These organisations wanted quick, visible results that they could report back to their donors about

with a focus on raising new funding for when the next disaster struck somewhere else around the

globe (International organisation interview No. 16 2013, 31 July).

Many international organisations present in post tsunami Aceh were not motivated to engage on Aceh

Green because they saw it as being conservation focused, and not directly aligned with the poverty

alleviation goals that were at the forefront of their ‘building back better’ agenda (BPKEL interview No.

1 2012, 12 November). Furthermore, many of the international organisations believed that the

conservation needs of the province were already being covered by the AFEP project, and there was

little need to add further funding to these efforts by supporting Aceh Green (International

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organisation interview No. 12 2013, 18 June). These perspectives were very different from those of

the Secretariat, who saw Aceh Green as a means to provide for the long term wellbeing of local

communities both in terms of increased economic opportunities as well as improvements in the

provision of ecosystem services, especially disaster risk reduction and water supply (Secretariat

interview No. 3 2012, 23 October). In the Secretariat’s view, if all had gone to plan, Aceh Green would

have been a central component of ‘building back better’ efforts by delivering long term employment

opportunities and ensuring the sustainable management of Aceh’s environmental resources long after

post tsunami donor funding had been used up (Secretariat interview No. 2 2012, 25 September).

Unfortunately, this message was not properly presented to, or heard by, international organisations

working in Aceh (International organisation interview No. 16 2013, 31 July).

Making it even more difficult for international organisations to contribute towards Aceh Green was a

range of funding allocation constraints. Many international organisations had already committed their

funding to post tsunami recovery projects by the time Aceh Green was launched, and were legally

bound to these existing projects (Secretariat interview No. 3 2012, 23 October). Other constraints

included the rushed nature of decision making by international agencies due to the pressure from

world media and local beneficiaries to spend money on immediate concerns rather than long term

goals (Oxfam 2009), and the fact that decisions were driven by media and public interest rather than

by assessment and need (Telford and Cosgrave 2007). Another challenge was presented by the fact

that local managers did not have discretion over the direction of their programmes and budgets, but

were instead mandated to follow a certain direction by their superiors higher up the management

chain, who were mostly outside of Aceh. This management structure limited opportunities to

reallocate funding based on emerging conditions and opportunities on the ground (International

organisation interview No. 12 2013, 18 June). Instead, decisions on funding direction were often made

at the head offices of international organisations based on what was important in terms of global

marketable causes, rather than the real problems that needed solving in the particular context of Aceh

(International organisation interview No. 13 2012, 5 December). For example, Oxfam’s policy and

advocacy team in Aceh faced internal difficulties to get their head office to agree to its engagement

on the sustainable palm oil aspects of Aceh Green due to the anti-palm oil stance of the global

campaigning team at the head office in the UK (International organisation interview No. 4 2013, 26

January). So something that could have potentially been positive for poverty reduction in Aceh was

not able to be supported by an organisation focussing on poverty alleviation because it could

potentially have led to a confusing media situation at an international level.

As it became obvious to the Aceh Green Secretariat that post tsunami funding was not going to be

available, they sought new, non-recovery related assistance from international organisations

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(Secretariat interview No. 2 2012, 25 September). Such assistance also did not materialise. One of the

reasons given was ‘donor fatigue’ – because so much assistance had already been pledged to Aceh,

many international organisations no longer had the motivation to provide further funding

(International organisation interview No. 1 2013, 11 February). The Secretariat were criticised for their

inability to turn this situation around:

They failed to make a professional pitch about the importance of Aceh Green policy reform so as to convince international organisations of its achievability (International organisation interview No. 16 2013, 31 July).

Governor Irwandi made things more difficult by failing to persuade potential donors, and refusing to

comply with standard donor operating procedures, involving central government review, sign off and

oversight of new grants or loans from international organisations. Governor Irwandi’s belief that Aceh

should link directly with international organisations without interference from central government

ended at least one large renewable energy venture concerning the development of geothermal

resources in central Aceh (International organisation interview No. 14 2013, 26 January).

Respondents noted that further international assistance was not generated for Aceh Green

fundamentally because of lack of political support from other government actors. As section 5.2

discussed, there was limited government buy-in for Aceh Green policy reform at the central, provincial

or district levels. Even Governor Irwandi started giving uncertain signals about how committed he

really was to a green economy. Respondents from international organisations stated that they

believed Governor Irwandi was just trying to attract the interest of donors whose assistance to Aceh

was winding down after the completion of the post tsunami reconstruction phase, rather than having

a genuine commitment to a green economy (International organisation interview No. 16 2013, 31

July). Another interpretation was that Governor Irwandi’s position on the status of Aceh’s forests was

not so much about environmental management but a way to assert Aceh’s autonomy over its

resources vis-à-vis central government; that is:

Any opportunity Irwandi saw to seek greater autonomy from Jakarta he would take, no matter what the implications. This motivation was at the centre of his environmental stance (International Organisation No. 13 2013).

The main challenge to Governor Irwandi’s commitment to environmental goals emerged in the second

half of his term in office (2010-2012) when it was uncovered that while he was publicly promoting the

Aceh Green agenda he was at the same time authorising mining and plantation licenses inside

protected forest areas. At the centre of the controversy was his sign-off of an oil palm concession for

PT. Kallista Alam in the Tripa Swamp – a forested peat swamp area on Aceh’s west coast that is one of

the last refuges of the critically endangered Sumatran orangutan (Bachelard 2012). This case was

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subject to significant national and international media attention and resulted in legal action against

the palm oil company (Gartland 2014). Indonesian environmental organization WAHLI argued that

Governor Irwandi's decision breached a presidential moratorium on peat land conversion, as well as

legislation protecting the Leuser Ecosystem, where the Tripa swamp is located (Fakhrururradzie 2011).

In Irwandi’s defence, some commentators have stated that he only issued these permits because he

eventually got worn down by the insistent lobbying efforts from local elites who had business interests

associated with the concession (Secretariat interview No. 2 2012, 25 September). Whatever the

reasoning, the end result was that international organisations doubted whether there was any

genuine commitment to Aceh Green within government, even from Governor Irwandi; its architect

(International organisation interview No. 16 2013, 31 July). Without such commitment, they feared

there would be insufficient political support to push through the proposed policy reforms, which

brought into question the long term viability of Aceh Green (International organisation interview No.

17 2013, 10 July). Interestingly, Governor Irwandi’s response to interview questions concerning these

issues was that he, “issued the permits out of spite that the international community did not back his

green agenda”. We return to the interplay between the lack of early support and the reversal of Aceh’s

transition to a green economy in the following chapter.

International organisations were also hesitant to back something that might put them out of favour

with other government actors outside of the Governor’s office, especially at the central level where

maintaining good relations is of maximum importance, particularly in regards to progressing major

trade deals and broader security issues (International organisation interview No. 16 2013, 31 July). In

fact, the central government had even been encouraging international organisations to stop focusing

on Aceh:

The reason they gave was that ‘Aceh has already had enough assistance’, but most people believed that the real reason was that the central government did not want to further encourage Aceh’s independence from Indonesia (International organisation interview No. 17 2013, 10 July).

Another fundamental barrier to international organisations’ engagement on Aceh Green was their

incompatibility in working with the private sector. International organisations understood the

important role the private sector could play in supporting the people of Aceh. Indeed, many of their

advisory notes to the government of Aceh promoted the need for improvements in the investment

climate to facilitate greater private sector investment. For example, the Donor Working Group on

Local Governance – which included the ADB, AusAID, CIDA, EU, GTZ, JICA, UNDP, UNORC, USAID and

the World Bank – drafted a briefing note to the government of Aceh that focused on improving the

regulatory framework in the hope that:

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A rules based system will, over time, encourage Acehnese to invest with confidence and will attract external investment positioning Aceh as a lead example for other provinces in Indonesia (Donor Working Group 2006: 1).

The problem, however, was that there were insufficient support mechanisms to realise these

proposed reforms, or to support private sector engagement if such reforms were not secured. It was

simply an impossibility that international organisations could work effectively with the private sector

given their internal bureaucratic systems, capacities and beliefs. As one respondent who worked for

various international organisations noted:

International organisations were encumbered by their existing frameworks, methodologies and programmatic interventions, which were not compatible with innovative new projects and businesses that required the need for trial and error piloting and longer time frames (International organisation interview No. 1 2013, 11 February).

There were a range of challenges regarding international organisation’s difficulties in engaging with

the private sector. Their funding approval mechanisms were mostly suited to large scale infrastructure

projects, not the small and medium size enterprises at the community level envisioned under Aceh

Green (International organisation interview No. 12 2013, 18 June). They did not show the willingness

to work aside their traditional programme parameters, the main reason being that program managers

are judged on delivering results, so therefore stuck with accepted programmatic approaches as

opposed to experimenting with new ideas in partnership with the private sector (Consultant interview

No. 4 2012, 22 May). Furthermore, international organisation staff did not have the appropriate skill

sets that would enable them to provide strategic advice on how to implement the economic and

business aspects of Aceh Green (International organisation interview No. 5 2012, 10 December).

Beyond these bureaucratic and capacity related constraints, international organisations were also

restricted by their beliefs, especially their overarching concern about political tensions around

deciding what local businesses to work with (International organisation interview No. 10 2013, 11

August), and an ingrained suspicion of private sector motives (International organisation interview No.

4 2013, 26 January).

At the heart of international organisations’ aversion to engagement with the private sector is a

concern about how their actions will be interpreted both locally and internationally (International

organisation interview No. 16 2013, 31 July). Donor funding is structured in a way that requires

implementing organisations to provide positive, non-controversial impact as quickly as possible so

they can ultimately report back to their funders about the success of the initiative and, thus, be better

placed to attract further work opportunities and funding (Consultant interview No. 6 2012, 22

November). The challenge associated with providing assistance to the private sector is that it almost

always faces a critical dilemma in that new businesses not only create winners but also tend to impede

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the wellbeing of others in society (WCED 1987, Rist 1999, Kanbur 2002). Historically, it has also been

the private sector that has been the driver of resource degradation. If international organisations

make a decision to support someone at the expense of another person, or the environment, then such

decisions are often seen by local actors as a political move, and complaints are made about local

sovereignty being breached (International organisation interview No. 13 2012, 5 December).

The two REDD+ projects attempted through Aceh Green provide good examples of the equity and

impact related sensitivities that international organisations faced when looking to engage with the

private sector. A number of aspects surrounding the two REDD+ agreements that the Governor

entered into were openly criticized by local NGOS and government officials. A particular concern was

that the companies involved were not wholeheartedly focused on positive social and environmental

impact, and would sideline these issues if it meant that profits could be improved (Civil society

interview No. 4 2013, 11 June). There was also a general belief that large cash flows in the magnitude

of hundreds of millions of dollars per annum might be created through avoided deforestation and that

the majority of this was going to be captured by foreign companies (Civil society interview No. 8 2013,

11 July).

It is understandable why people held concerns about the equity of the two REDD+ projects. There was

no bidding process for either of the REDD+ contracts; they were instead based on personal

relationships built up through linkages with local partners (BPKEL in the case of the Leuser Ecosystem

REDD+ project, and FFI for the Ulu Masen REDD+ project), and through direct lobbying of the Governor

through trips to exclusive international resorts (Private sector interview No. 1 2012, 21 November).

The agreement between SFM, and later GER, and Governor Irwandi saw these companies receive the

right to 49 per cent of all carbon revenues generated from the Leuser Ecosystem REDD+ project

(Private sector interview No. 1 2012, 21 November). Carbon Conservation’s agreement regarding the

Ulu Masen REDD+ project was less aggressive – they would receive 15 per cent from any sales made

in exchange for securing buyers for any carbon credits produced – but they did not have the

responsibility to develop or manage the REDD+ project (International organisation interview No. 6

2013, 23 June). A respondent from the Aceh Green Secretariat concluded that, with hindsight:

These deals were immoral because they stripped the benefits and management authority from Aceh’s resources and gave it to foreign companies. This ultimately made it too difficult to gain broad political support for these projects as the general perception from local NGOs and government actors was that the only real winners from the REDD+ projects in Aceh were the consultants involved, the companies that secured the agreements, and their financiers. (Secretariat interview No. 2 2012, 25 September).

For international organisations, the fact that there was risk of public backlash meant they were less

enthusiastic about providing support to the private sector on Aceh’s REDD+ projects (International

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organisation interview No. 13 2012, 5 December). This insight was further explained by one

respondent:

International organisations do not tend to get judged quite as severely regarding things they decide not to do, as opposed to things they do. Hence, they maintain a risk aversive stance where they avoid activities they could be criticised for at all costs (International organisation interview No. 4 2013, 26 January).

Given this context, international organisations were faced with the conundrum of recognising the

need for the private sector but not wanting to support them directly, especially because of the

likelihood that there would be a negative reaction from local civil society and government actors who

did not want to see businesses, and foreign businesses in particular, getting an unfair advantage, or

making profits at the expense of local communities or the environment. This point is highlighted by

the contrasting situation in Aceh’s coffee sector, where international organisations were more willing

to provide direct support because the sector was already established and made up of local

smallholders (International organisation interview No. 16 2013, 31 July). That is, there was less risk of

local backlash against unfair support to foreign businesses or risk that the support may lead to

negative social or environmental consequences because the sector was well established and its

impacts better understood. Other Aceh Green related ventures in the REDD+ or renewable energy

sectors were much more risky given the viability of the businesses were largely unknown due to lack

of previous examples, and the large role being played by foreign companies and individuals in the

projects. The differences between these sectors and the associated responses from international

organisations was well highlighted by one respondent:

Getting involved in the coffee sector was a much easier pitch to make to head office. We had all of the necessary information available on existing supply and market demand to make an informed decision on the viability of the businesses we were supporting, and all the beneficiaries were conflict affected, local smallholders, who are exactly the type of people that the aid industry wants to target to address poverty reduction goals. The contrast with the REDD+ sector is stark. There is still no [carbon] market! And the people asking for money were all foreign consultants and companies, which made it hard to justify giving aid money to these initiatives (International organisation interview No. 12 2013, 18 June).

All of these limitations surrounding international organisation engagement on Aceh Green – including,

a lack of willingness to work directly with government, the long timeframes required, insufficient

understanding of the human wellbeing components of Aceh Green, inflexible, and ill-targeted funding

mechanisms, inadequate political support for the proposed reforms, and an inability to work with the

private sector – led to insufficient and inappropriate support for Aceh Green. This was particularly

frustrating for many of the actors trying to assist on Aceh Green. One respondent succinctly summed

up the situation:

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Most international organisations with resources available decided to wait and watch how Aceh Green was going to put in place the institutional architecture to make it a reality, and thus failed to get actively involved to help make sure the Aceh government had the resources and skills to put such architecture in place (International organisation interview No. 1 2013, 11 February).

International organisations believed they played their part in ‘building back better’ by bringing a

technical fix to the reconstruction and rehabilitation effort, as well as helping to bring a change in

political relationships that put an end to the 30 year conflict (Levine, Peters et al. 2014). Ultimately,

however, they were not willing to go beyond these efforts to play an active role in helping to transform

institutions in the direction of a green economy. There were consequences as a result. Their position

of watching and waiting to see if Aceh Green generated local support or not, with little attention given

to helping to facilitate such support, meant that Aceh Green struggled to build coalitions of change

necessary for achieving effective policy reform.

Conclusion

This chapter demonstrates how Aceh Green’s attempted policy reform process failed to build pro

change coalitions. It first addresses Aceh Green’s difficulties in engaging a broad range of actors in

policy reforms due to: 1) collaboration failures; 2) the inability of core implementers to turn around a

general lack of confidence in the green economy model; and 3) technical, management and financial

limitations. Secondly, it highlights other challenges to the reform process, specifically the complexities

of providing new benefits that could incentivise broad based support for green economy reforms.

Aside from the prevailing political economy discussed in the preceding chapter, the challenges of

building coalitions of support were magnified by the lack of appropriate or sufficient assistance from

international organisations. The research highlights that the bureaucratic systems, capacities and

beliefs of international organisations were ill suited to engage with the Aceh Green Secretariat, and

especially the private sector. Their lack of support for Aceh Green was potentially a major opportunity

missed to gain traction towards improved sustainable development outcomes in Aceh. Instead, the

opposite occurred; key actors lost faith in a green economy approach and reverted to an extraction

oriented economic system.

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Chapter 7: Prospects for green economy from a political

economy perspective

Although previous policy reforms have had their difficulties (Keeley 2001), the reforms needed for a

green economy face particular challenges and complexities. The premise of a green economy is that

it helps facilitate the state, private sector and civil society to work together in harmony for mutual

benefit. The underlying assumption is that this model creates better opportunities for coalition

building because it addresses a variety of interests simultaneously – social justice, food security,

environmental improvement, and economic development. This departs from previous sustainable

development models with a single issue focus (Hawken 2010). The Aceh Green case study, however,

highlights the political complexities and challenges involved in this process. Instead of harmony, the

context in Aceh could more accurately be described as one of dissonance, where actors have pursued

their own self-interest in competition with others, and often resorted to bribing, rent seeking,

dispossessing, or avoiding action. There is a significant mismatch here between the interests and

priorities of green economy proponents and many of the actors in government, civil society, the

private sector, and international organisations, all of whom must play a role in the reform process,

given its cross sectoral and landscape level agenda. Contrary to the prevailing rhetoric, the ‘triple-win’

objective of a green economy was unable to rally these actors.

This thesis explored the underlying political economy that shapes green economy policy reform

efforts. The Aceh Green case study highlighted the constraints to ‘green’ business, and the

complexities of reforming the investment climate due to the barriers presented by vested interests

within government. Aceh Green proponents also encountered unsurmountable difficulties in their

efforts to build pro change coalitions. There is good reason to believe that these constraints would be

even harder to overcome elsewhere, given that Aceh had a ‘critical juncture’ to interrupt the status

quo, yet failed to achieve the intended green economy reforms. I examine in turn how these factors

might play out in the wider international setting.

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Research question 1: The viability and relevance of the green economy model

An integrated approach to a green economy has been proposed as a more effective pathway to

sustainable development than previous site and sector specific approaches. However, this also scales

up the level of collaboration and coordination required, for which the practicalities have not received

sufficient attention, as discussed in Chapter 2. As one of the world’s first attempts to put in place a

province wide green economy, Aceh Green provided an opportunity to better understand the

complexities of realising a green economy in practice. The case was in many respects exceptional: it

was a first attempt to realise a green economy at a province level; and was implemented under a

relatively favourable set of circumstances, where a critical juncture (the 2004 tsunami) ruptured the

status quo and created an opening for transformation as well as concentrating the attention of

international organisations on Aceh. Even in this context, however, the approach has failed, suggesting

that many questions remain concerning the viability of the green economy model.

It is questionable whether or not the comprehensive, cross sectoral strategies of a green economy will

be attempted in other contexts. It was a coincidence that a ‘Green Governor’ was elected in Aceh;

Irwandi came to power through his association with the separatist movement and his involvement in

negotiating the peace deal, not as an environmentalist. It was also unique to have so many

international organisations in Aceh, whose presence was leveraged to initiate reform. Indeed, as

Morrow (2012) concludes, failure to augment assistance from international organisations for a green

economy has been decisive in curtailing its implementation in other developing country settings. One

of the key problems here is that international organisations are often reluctant to engage directly in

innovative and long term reform processes (Heller 2005). On the other hand, Aceh Green encountered

significant obstacles in building a coalition for change given the tensions between Aceh and the central

government during Governor Irwandi’s tenure. There may be better opportunities for policy reform

in more unified settings where there is more trust and collaboration between different levels of

government.

It is likely that it will take another set of exceptional circumstances before other leaders will have the

motivation and support to attempt a restructuring of the existing economic system (Acemoglu and

Robinson 2012). In this sense, “the [green economy] model represents a triumph of hope” (Morrow

2012: 293). A green economy seems to comfortably accept that it will gain broad support due to the

triple-win benefits it promises. The approach fails to acknowledge, however, the complexities involved

in moving through the early stages of policy reform (discussed in detail through the rest of this

chapter) that would allow any of the approach’s proposed benefits to materialise. As it stands, the

green economy approach has limited viability or relevance as it mainly focuses on policy goals

(Kashwan 2017). If the approach is to have more relevance moving forward then green economy

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research and interventions should pay more attention to the enabling conditions and policy making

processes that translate green economy goals into practice.

Research questions 2 and 3: the influence of political economy

Chapter 4 considered how Aceh’s political economy shaped the framing of the Aceh Green initiative.

It argued that in both the Suharto and decentralisation periods, powerful government, business and

military elites managed to secure control over natural resource allocation and associated political and

financial benefits in Aceh. These imbalances intensified the strains between Aceh and the central

government and perpetuated Aceh’s 30 year conflict, resulting in deep social and economic

challenges. The conflict also enabled Aceh to retain large areas of forest. These intertwining factors,

coupled with a series of critical junctures – the 2004 Boxing Day tsunami and the consequent

international focus on Aceh, the peace deal, and the election of a ‘Green Governor’ that wanted to

greater political and economic independence from Jakarta – provided the impetus for Aceh Green.

Thus, the inequities of the status quo ironically created fertile ground for Aceh Green in the post

tsunami setting. However, these elite interests and structures were still very much in place. As

discussed in Chapter 5, powerful actors continued to undermine implementation of Aceh Green as

they manoeuvred for political and economic control. First, the private sector did not fulfil its

anticipated role of driving the transition to a green economy given an unfavourable risk versus reward

balance. This outcome runs counter to some contemporary green economy literature, which argues

that businesses will choose to adopt social and environmental practices because it is in their interests

over the long term so as to differentiate themselves from competitors (Robinson 2012). Aceh

investors, as has been the case in other settings (Campiglio 2016, Ghisellini, Cialani et al. 2016), were

instead more focused on short term incentives, and these were not conducive to investment. The

main problems were corruption and a lack of security over resource rights. Investors may have borne

these risks if there was sufficient potential to profit from the proposed green businesses. However, a

strong carbon market never emerged and price premiums for certified palm oil and timber were

negligible. The fact that progress was achieved in the coffee sector, where the risk versus reward

balance was more favourable, demonstrates the importance of immediate financial incentives to

trigger a change in private sector capital flows towards investments that can support the social and

environmental goals targeted through a green economy. Thus, a major plank of green economy

reforms – a private sector driven transition to a new economic system – was stalled by investment

climate realties. This finding adds further critique to neo-liberal approaches to sustainable

development that place blind faith in the power of the market without understanding the roles and

interests of powerful actors within government and the private sector that ultimately determine how

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capital is allocated (see also Büscher and Arsel 2012). The viability of a green economy is therefore in

doubt given that its main implementation mechanism is ineffective in the current political economy

context.

Second, the Aceh case highlighted how a green economy required a suite of regulatory reforms (e.g.

spatial planning, land and resource rights, and investment permitting processes) if the private sector

was to take on its intended role. Such reforms were, however, thwarted by government decision

makers who held a vested interest in the status quo, especially: 1) central level government’s unease

about Aceh’s economic and political independence; 2) competition between government agencies for

control over resource management; and 3) conflicts at the district level where the specific demands

for immediate development trumped potential green economy benefits. In this case there was a

mismatch between proponents of reform and the interests of government actors across multiple

scales who had the power to block the reform process.

Many scholars have documented the entrenched system of patronage across all levels of government

in Aceh, and Indonesia. This system incentivises extractive projects and industries – including new

roads, and large scale investment in oil palm, mining and logging concessions – based on the fact that

these industries have a proven record of delivering substantial benefits, over a short timeframe, to

those in power (Aspinall and Mietzner 2010, McCarthy 2010). Often government actors do not

support, and in fact actively undermine, reforms to natural resource management that could restrict

the flow of their tried and tested income streams (Luttrell, Resosudarmo et al. 2012). In this context,

competing political elites are not focused on how to reform society for the better, but on how best to

manoeuvre within a contested regulatory context so as to maximise and distribute political and

economic benefits amongst themselves and others in their elite networks (Hadiz 2010). Elite control

over resources and decision making power in government is not unique to Indonesia, but is the state

of play in many developing countries (Cotula 2012). The barriers to green economy reform in Aceh are

thus likely to be mirrored in many other settings around the globe.

The failure of Aceh Green highlights a paradox at the heart of attempts to transition to a green

economy in Aceh and beyond; the existing political economy favours continued resource extraction,

and works to actively block green economy reforms. This finding mirrors what Boettke, Coyne et al.

(2013) have termed ‘institutional lock-in’, which they describe as scenarios where historical

circumstances have moulded existing institutional regimes that are difficult to reform due to the

influence of vested interests who control the levers of change. The green economy model does not

adequately recognise the complexities of achieving reform in the face of such barriers.

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The viability of a green economy model then becomes doubtful because it ignores the complexities of

dealing with the conflicts, trade-offs and power struggles that it necessitates. Angelsen and Brockhaus

(2012) suggest that in an ideal scenario, gaining support for policy reforms would be achieved by

ensuring that there is something of benefit for everyone. That is, everyone would win, including

investors, civil society and local elites. In practice, however, there will always be winners and losers in

the policy reform process (Kanbur 2002). The green economy model fails to consider these realities,

ignoring the fact that policy reform is an elemental struggle between actors for how natural resources

and the benefits derived from them should be managed and accessed (Ostrom, Burger et al. 1999,

Acemoglu and Robinson 2012). Instead, the ordered technical solutions of the green economy model

align with what Scoones, Leach et al. (2015) has described as top-down, control oriented forms of

intervention that attempt to substitute ‘fixes’ for required structural transformations, which ride

roughshod over people’s rights and interests (see also Li 2007). The case study demonstrates that this

type of approach is clearly not robust.

Research question 4: building pro change coalitions

The case study highlighted that long term transformation of the kind envisaged in the green economy

model requires more than just a critical juncture and the specification of ideal institutional

arrangements. It relies on the development of pro change coalitions if there is to be any chance that

vested interests can be overcome and reforms sustained (Acemoglu and Robinson 2012). This is a

challenging task, however. Chapter 6 explained that the proponents of Aceh Green were not effective

at considering or addressing the competing interests of other actors. They focused too heavily on

idealistic reforms debated within the confines of the Governor’s office. There was limited

consideration, or articulation, of who the potential winners of the reform process would be, which

groups would likely face economic or political losses, what trade-offs this would require, and what

could be done to gain a broader base of support for the reforms. Even in this case where reforms were

facilitated by a ‘critical juncture’, more efforts were needed to engage with significant actors to build

the necessary coalitions and conditions to achieve a lasting overhaul of existing institutions.

Civil society has been shown to play a role in institutional change within Indonesia, and more broadly,

by building sufficient momentum for reform that overpowers the political and economic positioning

of vested interests (Erawan 2007). Civil society did not play this role in the case study as green

economy reformers did not prioritise collaboration. They did not adequately explain the rationale for

change, build agreement between different parties, or working through negotiations on potential

trade-offs. The fact that these efforts were absent from the Aceh Green reform process meant that

civil society refused to engage as they perceived the intervention to be another attempt by elites

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within government and business to capture resources for their own benefit. The case study findings

reinforce previous research that highlights that genuine coalition building requires a determined focus

on creating the opportunity for a broad base of actors to engage in decisions on the goals and

strategies of the reform process (Sayer, Sunderland et al. 2013). Collaboration is particularly important

in the process of transitioning to a green economy given the cross sectorial and coordinated

interventions that the approach calls for.

More direct efforts to collaborate with the private sector could also help build pro change coalitions.

Other studies have highlighted that providing initial technical and financial support to innovative

business ideas is an important mechanism for growing support and proving the viability of new

industries – for example, initial subsidies have helped drive the transition to renewable energy in many

developed countries (Srinivasan 2009). As was discussed above, existing investment climate

constraints blocked the private sector from moving forward on the implementation of Aceh Green.

Governor Irwandi thus failed to ‘cut ribbons’ on any new investments that he hoped would provide

much anticipated new jobs and economic benefits to the people of Aceh. This lack of progress was

one of the main reasons why voters did not back him for a second term, which ultimately put an end

to Aceh Green. Direct assistance to the private sector could have altered the risk versus reward

balance and led to more investment in green businesses. This support is needed to combat the circular

conundrum that the private sector will not engage in a green economy due to weak institutions, but

institutions are difficult to reform due to vested interests, and pro change coalitions will not emerge

to counter vested interests without proof that a green economy can deliver on its economic, social

and environmental goals.

Even if reformers are committed to more intensive collaboration and genuine coalition building, their

efforts are complicated by a number of issues. The fact that the green economy model is built around

significant private sector involvement presents an obstacle that faces a lot of momentum to

overcome. The case study identified cultural and historical enmity between local NGOs and investors.

This was heightened by the fact that most investors interested in Aceh Green were foreign investors,

and there was limited scope for local businesses to engage due to difficulties in accessing new

technologies, practices, markets and finance. Similar findings have been reported in other developing

country contexts where there has been strong backlash against foreign businesses acquiring large

tracts of land and other resources, even where these investments are shown to generate local

economic benefits (Fairhead, Leach et al. 2012). The lesson here is that a green economy will struggle

to gain acceptance from local actors where it relies on market led approaches, prioritizing foreign

investors, without putting in place structures to encourage and facilitate local involvement and

ownership of green economy interventions. These insights are reinforced by the relatively successful

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story of Aceh’s coffee sector, as well as the emerging work regarding ‘impact investment’ (see Koh,

Karamchandani et al. 2012). In both of these examples, efforts to build the capacity of local businesses,

and provide them with direct financial incentives tied to social and environmental objectives, have

encouraged local actors to embrace sustainable development goals.

Case study findings suggest that a major drawback of the green economy approach as it stands is that

it is perceived to drive further inequality, not alleviate it. Especially in countries like Indonesia without

a robust rule of law framework and unclear rights to resources, civil society sees green economy

interventions as an opportunity for foreign businesses and the local elite to further enrich themselves,

not alleviate the sustainable development concerns of the general population. As Kashwan (2017)

notes, the triple-win goals of a green economy are based on the notion that economic benefits for the

elite will also provide benefits to the poor and marginalized. But this theory of ‘trickle-down

economics’ has been debunked through the experiences of the past three decades, which have seen

the income and political power of a privileged few elites expand while the incomes and political

influence of a far greater number of the general population have stagnated (Lynn 2010). As the Aceh

Green case study highlighted, and the work of Brand (2012) and Morrow (2012) attest to, the green

economy approach will not gain support from the general population where it continues to align with

the elite over the marginalised.

If the green economy approach is to become more viable and relevant then it needs to gain more

support. To do that it must be more inclusive with specific goals, strategies, interventions, and

resources targeting a more equitable sharing of benefits and broader involvement in the reform

process. A key problem with the green economy approach is that it does not adequately set out the

need for direct interventions that comprehensively address inequality issues as part of the reform

process. Instead, the green economy approach continues to push a standard neo-liberal agenda where

the more growth the better, no matter who it is for (Ferguson 2015). Another stumbling block to more

equitable interventions through the reform process is that they require the active engagement of

international organisations. The response of international organisations to Aceh Green demonstrated

a strong aversion to risk. They preferred to wait until more appropriate institutional arrangements

were in place, instead of getting actively involved to help make sure these reforms became a reality.

This scenario is often repeated in the broader international context (Bourguignon and Sundberg 2007),

thus suggesting that green economy reformers will not be able to count on international organisations

for much needed funding and technical support in their endeavour to build more inclusive reform

processes that engender coalitions in support of change.

The findings of this thesis reinforce the persisting importance of political-economic settings in framing

the progress of green economy interventions. Even in seemingly supportive critical junctures, such as

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that seen in Aceh, green economy policy reform failed. This can be expected as a continuing pattern

where interventions take as a starting point a prescribed vision, rather than instigating a process to

build agreement and support for what this vision should be. If the reform process ignores the conflicts,

trade-offs and contests over power that a green economy model necessitates, then successful reform

is unlikely. That is, more consideration is needed of the processes required to implement green

economy reforms, rather than just a focus on end goals and aspirations. This is in stark contrast to

some emerging literature on sustainable development that questions the value of democratic

participation given the unfeasibly short periods to ‘save the planet’ (see Schmitz 2015).

More broadly, the insights from Aceh suggest fundamental problems with the market oriented

approaches of a green economy. The model pins its hopes on the ability of the private sector to deliver

sustainable development benefits, but underemphasises the role and interests of other actors –

governments, civil society, or international organisations – to establish the conditions necessary for

the private sector to transform the economic system. In this sense, the green economy model falls

into the same trap as other natural resource management reform processes of the past (ICDPs and

PES schemes, for example), in both Indonesia and globally, that have ignored political and economic

contingencies (McCarthy and Prudham 2004, Castree 2008). There remain fundamental tensions

within the green economy approach given that it underemphasises the trade-offs that it creates, and

the work needed to build coalitions in support of change. A more realistic appraisal of these challenges

is needed if a green economy is to have any chance of moving forward.

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Annex 1: List of interviews

The Governor

Irwandi Yusuf interview (2014, 3 October). Personal Communication.

Government respondents

BPKEL interview No. 1 (2012, 12 November). Personal Communication.

BPKEL interview No. 2 (2012, 10 June). Personal Communication.

BPKEL interview No. 3 (2013, 12 August). Personal Communication.

Government interview No. 1 (2013, 7 March). Personal Communication.

Government interview No. 2 (2013, 7 March). Personal Communication.

Government interview No. 3 (2012, 21 June). Personal Communication.

Government interview No. 4 (2012, 10 June). Personal Communication.

Government interview No. 5 (2014, 10 September). Personal Communication.

Government interview No. 6 (2014, 10 September). Personal Communication.

Government interview No. 7 (2014, 11 September). Personal Communication.

Secretariat interview No. 1 (2012, 11 June). Personal Communication.

Secretariat interview No. 2 (2012, 25 September). Personal Communication.

Secretariat interview No. 3 (2012, 23 October). Personal Communication.

Civil society

Civil society interview No. 1 (2013, 11 June). Personal Communication.

Civil society interview No. 2 (2013, 11 June). Personal Communication.

Civil society interview No. 3 (2013, 5 July). Personal Communication.

Civil society interview No. 4 (2013, 11 June). Personal Communication.

Civil society interview No. 5 (2013, 11 June). Personal Communication.

Civil society interview No. 6 (2013, 8 July). Personal Communication.

Civil society interview No. 7 (2013, 11 July). Personal Communication.

Civil society interview No. 8 (2013, 11 July). Personal Communication.

Civil society interview No. 9 (2012, 15 November ). Personal Communication.

International organisations

International organisation interview No. 1 (2013, 11 February). Personal Communication.

International organisation interview No. 2 (2012, 23 June). Personal Communication.

International organisation interview No. 3 (2012, 23 June). Personal Communication.

158

International organisation interview No. 4 (2013, 26 January). Personal Communication.

International organisation interview No. 5 (2012, 10 December). Personal Communication.

International organisation interview No. 6 (2013, 23 June). Personal Communication.

International organisation interview No. 7 (2013, 1 July). Personal Communication.

International organisation interview No. 8 (2013, 21 March). Personal Communication.

International organisation interview No. 9 (2013, 5 July). Personal Communication.

International organisation interview No. 10 (2013, 11 August). Personal Communication.

International organisation interview No. 11 (2013, 11 August). Personal Communication.

International organisation interview No. 12 (2013, 18 June). Personal Communication.

International organisation interview No. 13 (2012, 5 December). Personal Communication.

International organisation interview No. 14 (2013, 26 January). Personal Communication.

International organisation interview No. 15 (2013, 26 January). Personal Communication.

International organisation interview No. 16 (2013, 31 July). Personal Communication.

International organisation interview No. 17 (2013, 10 July). Personal Communication.

International organisation interview No. 18 (2012, 5 May). Personal Communication.

International organisation interview No. 19 (2012, 12 May). Personal Communication.

International organisation interview No. 20 (2012, 12 May). Personal Communication.

International organisation interview No. 21 (2012, 12 May). Personal Communication.

Consultants

Consultant interview No. 1 (2013, 12 June). Personal Communication.

Consultant interview No. 2 (2013, 16 July). Personal Communication.

Consultant interview No. 3 (2013, 21 January). Personal Communication.

Consultant interview No. 4 (2012, 22 May). Personal Communication.

Consultant interview No. 5 (2012, 13 November). Personal Communication.

Consultant interview No. 6 (2012, 22 November). Personal Communication.

Consultant interview No. 7 (2012, 10 July). Personal Communication.

Consultant interview No. 8 (2013, 12 August). Personal Communication.

Consultant interview No. 9 (2013, 12 August). Personal Communication.

Consultant interview No. 10 (2013, 10 November). Personal Communication.

Consultant interview No. 11 (2013, 10 November). Personal Communication.

Private sector

Private sector interview No. 1 (2012, 21 November). Personal Communication.

Private sector interview No. 2 (2014, 30 June). Personal Communication.

Private sector interview No. 3 (2013, 5 June). Personal Communication.

159

Private sector interview No. 4 (2013, 22 July). Personal Communication.

Private sector interview No. 5 (2013, 18 August). Personal Communication.

Private sector interview No. 6 (2013, 18 August). Personal Communication.

Private sector interview No. 7 (2013, 20 March). Personal Communication.

Private sector interview No. 8 (2013, 10 June). Personal Communication.

Private sector interview No. 9 (2012, 10 June). Personal Communication.

Private sector interview No. 10 (2014, 10 August). Personal Communication.

Private sector interview No. 11 (2012, 10 June). Personal Communication.

Private sector interview No. 12 (2014, 10 August). Personal Communication.

Private sector interview No. 13 (2012, 10 June). Personal Communication.

Private sector interview No. 14 (2013, 10 August). Personal Communication.

Private sector interview No. 15 (2013, 10 August). Personal Communication.

160

Annex 2: Semi-structured interview questions

Note that not all questions were asked to all respondent groups. The questions were tailored to the

background and likely areas of knowledge of each respondent.

General Questions

∙ What were the key achievements of Aceh Green?

∙ What were the main restrictions that limited the implementation of Aceh Green?

∙ What were some of the most important developments during the implementation of Aceh

Green?

∙ What were the main incentives for the actors driving these processes?

∙ What arrangements were put in place for cross agency collaboration in the implementation

of Aceh Green?

∙ What are the processes whereby actors discuss, negotiate, and collaborate on the

implementation of Aceh Green?

∙ To what extent did this help/restrict implementation processes?

Regarding the Aceh Green Secretariat

∙ What were the roles and functions of the Aceh Green secretariat?

∙ Did this change over time?

∙ What were the priorities of the Secretariat for moving the Aceh Green agenda forward?

∙ Why were these strategies chosen?

∙ What were the political and power related consequences of the Ulu Masen and Leuser

Ecosystem projects not going ahead as planned?

∙ How was the Secretariat structured in terms of who was involved and how it was formally

established?

∙ Did this have implications for achieving the goals of Aceh Green?

∙ What restrained the Secretariat’s ability to achieve program goals?

∙ What other actors did the Secretariat collaborate with?

∙ What implications did this collaboration have on the implementation of Aceh Green?

∙ How did Aceh Green attempt to collaborate with formal government agencies and their

programs?

∙ What enabled/limited their ability to do this?

Regarding BPKEL/DEVCO

∙ What was the importance of BPKEL in dealing with local political issues and other facilitation

needs?

∙ Do you think BPKEL was also a key feature in blocking the transition to a Green Economy?

161

∙ How did the green economy approach affect BPKEL’s ability to influence government

decisions around conservation issues? Particularly the DevCo?

∙ What were the political and power related consequences of the Leuser Ecosystem project

not going ahead as planned?

∙ How to drive change – affect values/incentives?

∙ Based on what you’ve seen how do you now the view the role of DEVCO in generating

political support for the environment?

∙ How to overcome elite resistance?

Regarding Aceh Green engagement with the Private Sector

∙ What were the main opportunities and complexities faced by the private sector in terms of

trying to deliver results in line with Aceh Green?

∙ What incentives did Aceh Green provide for private sector involvement? – i.e. what was

different about green economy approach that attracted private sector to Aceh?

∙ Do these new incentives counter some of the main risks involved with investing in

developing countries?

∙ What business models did the private sector adopt in its engagement with Aceh Green and

why were these particular business models chosen? What were the implications of this?

∙ How did Aceh Green impact on the opportunities and complexities for doing business in

Aceh?

∙ How did these issues affect the implementation of Aceh Green?

∙ Did this change over time? For what reasons?

∙ What did Aceh Green mean to domestic investors in terms of opportunities and complexities

for doing business in Aceh? Was there fear that new business opportunities would be

captured foreigners? What were the main barriers for domestic investors not engaging?

∙ Are domestic investors in traditional sectors better placed because they can deal with the

political/corruption issues more clearly?

∙ Did Aceh Green find opposition from anyone in the private sector? For what reasons?

Regarding Aceh Green engagement with Government

∙ How does government view the relationship between environment and development?

∙ How is this affecting policy decisions? Can you please give an example?

162

∙ Has Aceh Green had an impact on government decision making and ways of thinking about

the environment and development in Aceh?

∙ How have government actors across different scales – district, provincial, national – reacted

to Aceh Green?

∙ Has this changed over time?

∙ How did parliament react to Aceh Green in terms of instigating new laws or budgets? Why

couldn’t more government money be used?

∙ What encouraged or restricted their willingness or ability to do this?

∙ Did Aceh Green find opposition from anyone in Government? For what reasons?

∙ How did this affect the implementation of Aceh Green?

∙ What were the major factors that you think affected the government’s capacity to

implement Aceh Green?

∙ How did political support for Aceh Green change over time? And why?

Regarding Aceh Green engagement with Local and International NGOs:

∙ What role did NGOs play in Aceh Green?

∙ How did Aceh Green encourage or restrict NGO engagement in natural resource

management?

∙ What was the willingness of NGOs to engage in Aceh Green and on what terms?

∙ Did they have the capacity to do this effectively?

∙ Did Aceh Green find opposition from anyone in the NGO sector? For what reasons?

∙ What implications did this have on the implementation of Aceh Green?

∙ Did this situation change over time? What was driving this change?

Regarding Aceh Green collaboration with Donors:

∙ How did Aceh Green encourage donor engagement?

∙ What were the donors’ focus areas or aims in relation to Aceh Green?

∙ In what way were donors involved in implementation and why did they adopt this kind of

role?

∙ What issues enabled or restricted donor assistance to Aceh Green?

∙ Did this change over time? For what reasons?

∙ How did these issues affect the implementation of Aceh Green?

163

Annex 3: Aceh Green spatial plan proposed by TIPERESKA

(2008)

164

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