Green Prosperity

Definition

Green Prosperity is an MCC program of investments in activities that promote

economic growth and poverty reduction and that are consistent with Indonesia’s
national strategy on climate change and in line with existing policies, programs and
plans (PPP).

The Green Prosperity (GP) program will consist of projects that invest in low carbon,
environmentally sustainable, community oriented economic development and that are
supportive of entrepreneurship and private sector investment in economic growth
activities that enchance natural wealth and human and social capital.

Green Prosperity Activities

It is envisaged that the main activity in the GP program wolud be a financing facility.
This facility would secure a spesific, agreed upon level of funding for alternatif
economic activities that support low carbon development. It would also allow an
adaptive approach to project financing that would target project that meet MCC
invesment requirementa and other agreed upon criteria even if they are not fully
developed or subjected to due diligence by the time of compact signing. All GP
activities are envisaged to target the areas that were originally agreed upon by MCC
and the GOI as areas for elaboration natural resource management, energy resource
management and human resource management.

Facility design

This facility could be an on lending facility, a first loss facility, and / or a total grant
facility. This may require different governance, selection processes and delivery
mechanisms. The majority of funding in the facility would likely need to be managed
by an internationally tendered fund manager, though the level of management should
match with the level of implementation, so, for example, community level projects
might be managed through PNPM or a similar modality. This fund manajer would
administer the competitive selection process according to agreed upon criteria. The
form of the fund should be a good fit for the types of projects that are anticipated and
their level of implementation. As always, time is a constraint, and the size of the
grants and availability of potential projects should be carefully considered when
determining what can be done (and what can be spent) within 5 years. Other best
practises for funding facilities operations are available and should be considered as
the facility design is elaborated.

Core principles to guide project selection

1. Sustainable Economic Growth and Development: Project must have a clear

economic logic and sufficiently high economic returns to investment.
2. Consistent with national development strategy on climate change: Indonesia’s
national development strategy pays particular attention to climate change issues.
3. Well defined geography: GP projects need to have a clearly defined geographic
(spatial) focus in order to make smart choices about which alternative economic
 activities can have the highest returns and what uses of land a most economically
and environmentally viable.
4. A focus on result : GP project should reflect a clear understanding of the link
between proposed inventments and results interms of economic and social benefits
and poverty reduced, as well as an understanding of how results will be measured
and sustained beyond 5 years.
5. Adhering to safeguards: GP projetcs should be consistent with internationally
recognized environmental and social performance standars and safeguards, and
must be implemented in accordance with MCC requirement.
6. Addressing social and human, especially gender inequality: MCC will work with
GOI to incorporate design dan social protection measures into GP projectc to
ensure that women and vulnerable groups participate and banefit.
7. Partnerships for sustainabillity: finding leverage fo MCC fund is critical, so GP
will nurture productive partnership among sector, agencies, the private sector and
stakeholder groups that best integrate conservation and development objectives
and can be sustained beyond the 5 years lifetime of MCC support.
8. Consistent with USG framework: GP projects should focus on areas that both fit
within the USG framework on climate change and where MCC brings a
comparative advantage given our experience in other compacts and our
institutional knowledge and capacity.

Potensial projects to be funded

A general list of project ideas that are drawn from existing low carbon development
plans but that would adhere to the principles above might be:
- Agricultural intensification (estate and or food crops).
- Agricultural intensification / efficiency (palm oil), including use for current waste
streams.
- Aquaculture improvement, particularly in mangrove areas.
- Increased forest productivity / efficiency, including economic service values such
as water resource protection.
- Renewable energy, including micro and / or mini hydro or biomass / waste to
energy projects or geothermal.
- Access to credit (e.g. revolving credit, micro credit)
- Marketing knowledge and linkages including monetizing new technologies,
removal of policy barriers.

Please see the matrix of potensial activities on the next page for futher thoughts on
what the facility might fund

Other GP activities
Some of the work contemplated for this program may not be best suited to funding
using a facility mechanism. For example, we may need to reach agreement on the
allocation toward institutional, regulatory and policy work both at the nation and
regional (in selected provinces) levels.
 MATRIX of POTENTIAL FACILITY CATEGORIES IN EACH TARGET GEOGRAPHIC AREA

FACILITY POLICY, PROGRAM, AND PLANNING POTENTIAL

COMPONENT DESCRIPTION MECHANISM WHO BENEFITS
WINDOWS JUSTIFICATIONS PARTNERSHIPS
LAND A. Registra Estabilsh and operate a Stand alone National and Internationally, AMAN initiative for
REGISTRATION tion dynamic land and project regional • UN framework convention on customary domain
AND Mechanism coastal use registry goverments, local climate change communique, cancun rights registry
JURISDICTIONAL for Land and institution that can communities, 2010, annex 1 on safeguards REDD+ promoters
DELINEATION Coastal Use provide readily domestic and • Extractive Industries requiring the terms of
accessible information international Transparency Initiative (EITI) Annex 1, cancun,
on legal licenses, investors; law UNFCCC, to be met,
licenses in process ang enforcement Nationally, KFW, World Bank,
other land use claims institutions • Freedom of informastion act Norway, UK., ADB,
related to NRM; UU14 of 2008, and information USAID Voluntary
`Donors active in commision established by keppres. carbon investors
NRM, especially • Forestry act UU 41 of 1999 Dutch, Danish, Sida
renewable energy • Spatial Planning act UU 26 of supporting access to
2007 justice initiatives
• Spatial Planning for coastal region
Act UU 27 of 2007
• National strategy for access to
justice (May 2009), incorporated into the
national medium term development plan,
RPJMN (2010-2014)
• Ministry of forestry decree on
land use license tranparency
• BAPPENAS, ESDM and other
GOI agencies indicate the need to base
decision making on energy investments
on proper, integrated and dynamic
databases.

Regionally,
• Kalbar perda on transparency
2008
• Papua province plans for clearing
house agency for approval of all natural
resource management licenses in line
with spatial plan
B. Bounda Implementers undertake Competitive Regional Internationally, The Samdhana institute
 ry setting participative and award to work goverment from UN climate change communique, cancun the National network
between transparent boundary with provincial to 2010 annex 1 with respect to REDD+ for participative
district and setting process to BAPPEDA village levels impact on local and customary mapping (JKPP)
village delineate district and /BPN concerned with communities USAID-IFACS
juridictions village jurisdictions improved natural
resource Nationally,
governance and • Spatial planning act UU 26 of
management 2007
• Spatial planning for coastal
regions act UU 27 of 2007
• Forestry act UU 41 of 1999 re
Hutan Desa
• MoHA, MoPW, BAPPENAS
concern about boundary uncertainties
especially where jurisdiction have been
divided according to due process.

Regionally,
Village settlement geo location precedent
in spatial plan for Papua.
RENEWABLE Mini/micro Establish reliable Competitive Downstream and Development of renewable energy is ADB, KFW, USAID,
ENERGY hydro: renewable renewable energy award for upstream local regulated by Presidential decree No.5 / GIZ, UNDP-GEF
energy in major systems where there is implementers communities 2006 regarding the national energy policy. IMIDAP, IFC, US
watershed local demand and to build on This decree states that the contribution of Departement of Energy
linkage to upstream UNDP-GEF new and renewable energy in the 2025
forest conservation and integrated national primary energy mix is the
introduction of micro-hydro estimated at 17%, consisting of 5% biofuel,
electricity for income development 5% geothermal power, biomass, nuclear,
generation program 2007- hydro, and wind, and also liquefied coal at
2010 2%. To support the development of new
Agricultural Support investments in Competitiive Farming and renewable energy, the goverment has Dutch fund for biomass
waste use in private, small scale award for communities, bio issued several rules and regulations, energy in Indonesia –
major watershed process plants for waste implementers; energy enterprises consisting of Presidential Decree No. 5 / 14 grantees
palm oil build on 2006, on the National Energy Policy , Law
USAID-ESP No. 30/2007 on energy, law No.15/1985 on
example in electricity, Goverment Regulation No.
Aceh and 10/1989 which is renewed by Goverment
North Sumatra Regulation No. 03/2005 and No.26/2006
Geo-thermal Address linkage between TBD regarding the supply and usage of ADB, KFW
on going electricity, Ministerial Regulation No.
 explorations/plantexpans 002/2006 on the commercialization of
ion with off takers, and middle scale renewable energy power
local development plants, and minister of enegy and mineral
opportunities resources decree No.1122k/30/MEM/2002
on the spread of small scale power plants.
Currently the goverment is composing a
law on new and renewable energy which
includes and usage of new and renewable
energy along with its incentives. Since
2005 GOI decided no to utilize diesel
genset and only to implement locally
available renewable energy (if grid
extension not possible)
ESDM workshop
IMPROVED Natural resource Establish and support TBD Upstream and Environment Law UU 32 of 2009 Any on-the-ground
STEWARDSHIP stewardship pro-poor systems for downstream REDD+ initiatives from
OF NATURAL through encouraging stewardship communities Dewan Air notably, Norway-
RESOURCES incentives of natural resources. Indonesia, KFW, DFID,
Complement carbon REDD+ policy statements WAC (ICRAF), TNC,
offsets from REDD+ WWF, CI
and Voluntary Carbon BPDAS, BPSDAir,
Schemes with payment Dewan Air.
for full direct (timber,
non timber forest
products, fuel wood,
water) and indirect
(flood prevention, soil
conservation, river
transport) uses of natural
forest areas.
EDUCATION A. Researc 1. Community TBD Local USG Partnership “solusi”, UNESCAP
AND h, education, education awards for communities Green Growth, ILO Green Jobs
KNOWLEDGE and skills participation in relevant
BUILDING development natural resource co- goverment
stewardship – agencies, NGOs,
scholarships and Indonesian
apprenticeships Universities and
2. Skills Polytechnics
development for
green jobs matching
requirement of
 sectors.
3. Green growth
education.
Collaborative within
Indonesia and
abroad for
disciplines relevant
to GP, notably,
economics, law,
technology
4. Graduate
Scholarships. A
smaller component
should be dedicated
to providing
Indonesians with
scholarships to
attend US or other
overseas universities
and study topics that
will support green
prosperity and the
creation of
Indonesia’s own
capacity.
5. Low carbon
community facility:
A facility to promote
green
entrepreneurship.
B. Site- Competitive awards Competitive Rural and urban CLIMATE INNOVATION CENTRE
spesific systems disbursed Award System poor, local (CIC)
green growth through GP facility in through GP universities, CGIAR (CIFOR, ICRAF/WAC)
research and two tranches, the second Facility research divisions World Bank, ADB
extension disbursement contingent of sectoral
on performance re award ministries
system and quality of REDD+ partners
resulting research.
Includes, small “ideas
competition” for low
carbon growth concepts
or carbon neutral
technologies that would
be spesific to a given
geographic area