This weekend, Secretary of State Hillary Clinton signed an agreement with Indonesia's government to provide over $600 million in U.S. aid, more than half of which will be dedicated to a "green prosperity" program.
The US has pledged to provide $1 billion in financial support worldwide to reduce deforestation, which will be supplemented by similar commitments from other advanced nations.
The funds are intended to spark economic development through clean energy and sustainable management of Indonesia's natural resources, which will reduce both poverty and emissions.
A critical component of the package will be funding for projects that reduce poverty while also reducing deforestation and degradation of Indonesia's carbon-rich peat soils, by, for example, shifting palm oil development from the forest frontier to degraded lands and codifying forest communities' land rights.
Indonesia is the world's third largest greenhouse gas polluter, behind China and the US, primarily because of carbon emissions from deforestation and peatland degradation.
"It is impossible to curb global carbon pollution and avert a climate catastrophe without attention to avoided deforestation and increased reforestation. Forestry programs also offer one of the surest roads to capturing the economic benefits from this global challenge," says Dr. Andrew Light, Senior Fellow and Director of International Climate Policy at the Center for American Progress. "Protecting Indonesia's forests and peatlands will allow the country to grow sustainably while reducing emissions, protecting endangered wildlife, and helping ensure the health and economic well-being of the Indonesian people for generations to come."
Funding can also be used for renewable energy investments such as modest sized hydropower projects and geothermal plants, spurring business development and providing affordable, clean electricity in rural communities.
U.S. funds will help Indonesia make wiser land-use decisions by, for example, guiding future palm oil plantations away from pristine rainforests and toward abandoned, degraded lands, which are abundant.
Indonesia's runaway deforestation and wetlands destruction, driven by illegal logging and unchecked expansion of oil palm and pulpwood plantations, threatens its social stability, national security, environment, health, and future economic growth.
The country's forest economy is notoriously inefficient and corrupt, with profiteering and resource exploitation often trampling the rights of the rural poor. Pulp, paper, timber, and oil palm companies and powerful syndicates routinely seize ancestral lands of local communities causing dislocation, economic and upheaval.
Burning and clear-cutting Indonesia's forest and peat lands costs the country at least $6 billion a year. It threatens wildlife such as orangutans and Sumatran tigers with extinction and causes significant human repiratory and cardiac problems from the smoke that settles across the entire region every year.
Overbuilt pulp and paper mill capacity is driving illegal logging, destroying old-growth native forests and costing the government nearly $2 billion in lost tax revenue a year. Palm oil plantations replace healthy forests and wetlands - which could completely disappear within 30 years at the current rate of destruction.
The practice is reponsible for 85% of Indonesia's emissions, while the resulting oil palm and forest products sectors contribute less than 8% to its GDP. Fires caused by draining peat lands are a huge source of emissions, and cause $4 billion a year in economic losses, including major health problems in local populations through smoke inhalation.
The State Dept views these investments as essential to US national security. Indonesia is the third largest Muslim democracy, and is a pivotal partner in promoting democracy, and combating Islamic extremism and terrorism. The country is a major trade partner ($18 billion annually) with a large and growing economy (18th largest globally with 5% annual growth).