Stakeholder and Economic Valuation Dynamics of Land-based Biological Carbon Sequestration Activity

Abstract: With a deforestation rate of 599,232 ha/year, the Indonesian government is pressured to bootstrap its ecosystem restoration process. The pressure also receives by the private sector to accelerate the process of their decarbonization, with the 2050 net-zero target as the main goal. Consequently, regulation stringency on corporate environmental responsibility and national environmental goals is rising. Private companies, such as Caterpillar utilise the ecosystem restoration project as one of their carbon removal strategies. Therefore, understanding the value of the restoration project and the role of stakeholders involved throughout the process is imminent for efficient ecosystem restoration. This thesis will address two research questions, discovering the economic valuation of the ecosystem restoration project from environmental, economic, and social standpoints, and discovering the stakeholder role throughout the process of restoring these degraded ecosystems. The mixed methodology employed in this research: the biomass and economic estimations and contingent valuation methods are utilized to gain insight into the economic valuation of the project, and interview content analysis is utilized to analyse the stakeholder role throughout the project implementation. From the analysis, it is discovered that over 20 years of estimation period, the Caterpillar project in Indonesia could sequester 10,085 tCO2, bring undiscounted 190 Mn USD of direct and indirect economic benefit, and have a non-use existence value of USD 70 Mn/year. On the other hand, overlapping stakeholder role is discovered. But the line can be drawn as the government are consistently being a supervisor, the private sector often being a driver and capital source for the restoration project, and other stakeholder fill in the gap that the two major stakeholders are lacking. In conclusion, both valuation and stakeholder roles often blurred and change following the political-economy dynamics of the restoration location both at the local and national level. The only way to correctly estimates the total economic valuation and understand the stakeholder’s role is by maintaining the continuous check-and-balance throughout the process of ecosystem restoration and conservation.