Peatland Benefit Monetization Scheme to Attract Private Funds

Environmental Fund Management Agency of the Ministry of Finance (BPDLH of Kemenkeu) is currently designing an innovative financing scheme that is expected to attract significant private funds for peatland restoration. The mechanism, which is being discussed between BPDLH and the Ministry of Environment and Forestry (“LHK”) focuses on monetizing the results of peatland restoration.

“This is still in the design stage. We are still in discussions with relevant stakeholders,” said Director of Fund Collection and Development of BPDLH, Endah Tri Kurniawaty.

Endah explained that under this mechanism, the environmental benefits generated, particularly emission reductions known as carbon benefits, will be measured and turned into supporting projects with economic value. By converting them into investment assets, this scheme transforms conservation efforts, which have so far relied on public funds and grants, into initiatives with commercial appeal.

In order to mobilize funds from the market, BPDLH plans to develop a formal investment instrument, namely Collective Investment Undertaking (CIU). CIU will be issued and offered to both domestic and global investors. By guaranteeing the value of monetized carbon benefits, the funds raised through this scheme will then be channeled back to finance peatland restoration efforts.