Each dry season, Indonesia once again faces forest and land fires.\nWhen fires break out, everyone\u2019s attention turns to the number of\nhotspots, the area burned, air quality, and the capacity of the\ngovernment and companies to extinguish them.<\/p>\n
But what happens to the land after a fire? This is a far more\nimportant question that is often overlooked.<\/p>\n
When the popular phrase \u201cAfter the fires, palm oil emerges\u201d appears\nin public discussion, this question becomes significant. Forest and land\nfires have complex causes, and not all palm oil plantations are\nestablished on land that has previously burned. Nevertheless, the phrase\nshould be understood as a warning about land-based development\nmanagement. The central issue is not only whether fires are deliberately\nset to clear land; it is whether our economic, investment and\nland-governance systems allow environmental damage to make nature more\nattractive for development. If that remains possible, Indonesia has a\nstructural problem that needs urgent attention.<\/p>\n
The land-investment paradox<\/strong><\/p>\n Conventional investment thinking treats palm oil as a straightforward\ninvestment proposition. Investors calculate land value, development\ncosts, productivity, crude palm oil (CPO) prices, cash flow, internal\nrate of return (IRR), net present value (NPV) and payback period.<\/p>\n The basic question is how much investment is required and how much\nprofit it will generate.<\/p>\n Indonesia\u2019s palm oil industry has expanded significantly under this\nmodel and has made a substantial contribution to the national economy.\nBut the world has changed. Anyone investing in palm oil today must\nconsider not only prices and production, but also fires, deforestation,\ncarbon emissions, biodiversity, social conflict, market access,\nreputation, financing and regulation.<\/p>\n Plantations established in ecologically valuable areas, or exposed to\nmarket and financing pressures arising from sustainability risks, can\nbecome risky investments. As a result, the success of land-based\ninvestment can no longer be measured solely by financial returns.\nInvestment must now move towards Integrated Value Return, which takes\naccount of financial, natural and social value, as well as long-term\nresilience.<\/p>\n Fire must not become an economic instrument<\/strong><\/p>\n This is where the issue of fires becomes critical.<\/p>\n Intact forests and landscapes have high ecological value, but\nconventional economic models and market prices do not always reflect it.\nForests provide water, store carbon, protect soil, regulate local\nclimates, provide wildlife habitat and sustain people\u2019s livelihoods. Yet\nmany of these benefits do not generate direct income, so forests are\noften inadequately valued on investment balance sheets.<\/p>\n By contrast, a degraded area may lose some of its ecological value\nyet still be viewed as having significant economic potential. This is a\nparadox that must be resolved. Development systems must not indirectly\nsuggest that intact forests obstruct investment while damaged land\noffers an investment opportunity.<\/p>\n Environmental damage must not generate an economic incentive or\nprofit. Fire must not be used to reduce an area\u2019s ecological value and\nthen make it more economically attractive.<\/p>\n After a fire, an area must not automatically be treated as vacant\nland. The response should be: Assess \u2013 Protect \u2013 Recover \u2013 Restore \u2013\nMonitor. Not: Burn \u2013 Degrade \u2013 Convert.<\/p>\n Palm oil need not be linked to expansion<\/strong><\/p>\n We must also take an objective view of the palm oil industry. Palm\noil is one of Indonesia\u2019s strategic sectors. It drives regional\ndevelopment and local economies, and provides income for millions of\npeople. Discussion of palm oil should therefore go beyond a\nblack-and-white debate about \u201cpalm oil or forests\u201d.<\/p>\n The more important questions are where palm oil is grown and how it\nis produced, and how natural value can be maintained. The future of palm\noil will not be determined by the amount of land cleared. Instead, it\nwill depend on improved productivity, efficiency and technology; a\ncircular economy; collaboration with smallholders; lower emissions; and\nbiodiversity protection.<\/p>\n The paradigm must shift from the idea that more land produces more\npalm fruit to the view that better management creates more sustainable\nvalue. The concept of \u201cthe right land\u201d can begin with recognising\nnatural value as the basis for investment decisions.<\/p>\n Is this land suitable for development? This should be answered before\ndiscussing investment, plantation development or production. It is also\nnecessary to ask whether the land is accessible. The fact that land is\navailable does not prove that it is suitable for development.<\/p>\n Every land-based investment should consider legal status and\ncertainty, carbon value, biodiversity, ecosystem integrity,\nwater-management functions, fire risk, peatland risk, habitat\nconnectivity, community values, conflict risk and resilience to climate\nchange.<\/p>\n Based on this assessment, a landscape can be placed in one of three\ncategories: a Protection Landscape, with natural values that must be\nprotected; a Conditional Landscape, requiring further study and strict\nmanagement conditions; or a Development and Optimisation Landscape,\nwhich is legally suitable and, according to research, carries relatively\nlow ecological risks for development or optimisation.<\/p>\n The investment principle should therefore change to \u201cRight Land\nBefore Investment\u201d, using the Natural Positive Index: a new instrument\nfor land evaluation.<\/p>\n Natural Positive Index (NPI)<\/strong><\/p>\n Indonesia needs a tool that incorporates natural value into policy\nand investment decision-making. One proposal is the Natural Positive\nIndex. It can show the extent to which a landscape contributes\npositively to environmental sustainability, the economy and people\u2019s\nlives.<\/p>\n The index could combine several important factors. The first is\ncarbon value, indicating an area\u2019s capacity to store and absorb carbon.\nThe second is biodiversity value, reflecting species richness, habitat\nquality, and the presence of important species and ecosystems. The third\nis water and ecosystem-services value, which measures an area\u2019s ability\nto regulate water and provide ecosystem services. The fourth is\necosystem integrity, indicating the health, condition and resilience of\nthe ecosystem. The fifth is resilience to climate change and fires. The\nsixth is community value, encompassing social, cultural and economic\nbenefits for local communities. The seventh is nature connectivity: the\narea\u2019s role in maintaining links between ecosystems and habitats.<\/p>\n Each area could receive a Natural Positive Index score based on these\nparameters. A higher score would indicate greater strategic value as\nnatural capital.<\/p>\n Areas with a high Natural Positive Index should therefore not be\ntreated as land banks or development reserves. They should instead be\nregarded as natural assets that must be conserved.<\/p>\n From land banks to natural-capital banks<\/strong><\/p>\n Land-based companies have traditionally regarded their land banks as\nevidence of strength. In future, they should begin developing the\nconcept of a Natural Capital Bank.<\/p>\n Companies understand the natural value within and around their\noperating areas, as well as the amount of land they control. But how\nimportant is it to know the area\u2019s carbon value? How significant is its\nbiodiversity? How much land needs protection? Which water-management\nfunctions need to be maintained? What resources are needed for\nrestoration? How do all these factors affect investment risk and\nresilience?<\/p>\n Under this approach, a business portfolio would no longer consist of\nland, plantations, mills and infrastructure, but of land, production,\nnatural capital and community value. This represents a major change in\nhow investment is viewed.<\/p>\n Right Nature: Nature as part of investment<\/strong><\/p>\n If Right Land ensures that investment takes place in the right\nlocations, Right Palm ensures that the right plantation practices\ngenerate economic value.<\/p>\n Expansion would no longer drive growth. Higher productivity,\nreplanting, technology, precision agriculture, more efficient use of\nfertiliser and water, energy efficiency, waste utilisation, a circular\neconomy, lower emissions and collaboration with smallholders can all\ncreate economic value. Increasing production does not always require\ndeveloping new land. This is a more cost-effective and risk-resilient\nmodel for future palm oil investment.<\/p>\n Nature has often been seen as an obstacle to investment. In the\nfuture, it must be recognised as part of investment value. Economic\nsustainability depends on the services provided by forests and healthy\necosystems, including water, climate regulation, soil protection and\nresilience to disasters. Protecting areas with a high Natural Positive\nIndex is therefore not only an environmental responsibility. It also\nmanages investment risk and creates long-term value. When businesses\nprotect their natural resources, they are better placed to build\nresilience, earn investors\u2019 trust, gain access to sustainable finance\nand secure social legitimacy.<\/p>\n \u201cAfter the fires, palm oil emerges\u201d should become \u201cAfter the fires,\nrecovery emerges\u201d. Ultimately, the best investment is not the one that\nproduces the quickest profit. It is the one that generates economic\nvalue without undermining nature\u2019s ability to sustain life and future\ngrowth.<\/p>\n RIGHT LAND. RIGHT PALM. RIGHT NATURE. Invest in the Right Land. Grow\nthe Right Palm. Protect the Right Nature.<\/p>",
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"sponsor": "Okusi Associates",
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