Carbon trading incentives based on emission reference in Salat Island, Pulang Pisau District, Indonesia
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Abstract. Ridwan M, Nurrochmat DR, Purwawangsa H, Ekayani M. 2026. Carbon trading incentives based on emission reference in Salat Island, Pulang Pisau District, Indonesia. Asian J For 10 (1): r100111. https://doi.org/10.13057/asianjfor/r100111. Indonesia is scheduled to commence international carbon trading in 2025. The effectiveness of this mechanism depends strongly on the design of emission reference levels that determine the allocation of incentives for mitigation actions. Under Indonesian Minister of Environment and Forestry Regulation No. 21 of 2022, multiple actors, including national and subnational governments, private entities, and communities. This study is analytically novel in that it explicitly compares emission reference levels across three scales, site-level (Salat Island), sub-national (Pulang Pisau District), and island-level (major Indonesian islands), to evaluate how scale-dependent reference designs influence the equity and effectiveness of carbon trading incentives. Using the Forest Reference Level (FRL) 2022, the study evaluates how regional characteristics of deforestation influence reference emissions and, consequently, access to carbon trading incentives. The analysis adopts a comparative approach across regions representing four deforestation typologies defined in the FRL: large forest areas with high deforestation risk, large forest areas with low deforestation risk, limited forest areas with low deforestation, and limited forest areas with high deforestation risk. Quantitative comparison reveals notable disparities in annual reference emissions, including 0.46% for Salat Island, 1.06% for Pulang Pisau District, 1.27% for Java Island, -0.05% for Papua Island, and a national average of 0.39%. The results demonstrate that regions with low or negative historical deforestation, particularly Papua Island, face limited access to carbon trading incentives when uniform reference periods are applied. To address this imbalance, the study proposes four alternative emission reference scenarios for low-emission regions, incorporating national benchmarks, sub-national averages, and proportional reference adjustments. These scenarios offer policy-relevant options to enhance equity, incentive compatibility, and environmental integrity within Indonesia’s forestry carbon trading framework. The findings underscore the need for a more flexible, regionally sensitive approach to emission reference design to ensure equitable participation across diverse forest landscapes. This study is novel in using specific emission references in regions with historically low emissions to obtain carbon trading incentives.
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