COST ANALYSIS FOR A CDM-LIKE PROJECT ESTABLISHED IN CIANJUR, WEST JAVA, INDONESIA 1 Subarudi, Haryatno Dwiprabowo, Kirsfianti Ginoga, Deden Djaenudin, and Mega Lugina 2 Abstract This paper presents details of a 17.5 ha project involving smallholders in the Cianjur district. The objective is to assist in the planning and implementation of the Clean Development Mechanism (CDM) in Indonesia. The costs of project design and implementation are presented and the costs per tonne of CO2 sequestered are estimated to range between $9.69 and $12.50. Lessons learned from project implementation and a survey of project participants are discussed and recommendations for future projects are presented. Keywords: smallholder agroforestry, CDM, carbon sequestration costs. Introduction Indonesian forestry development is a part of national development policy directed at contributing to prosperity by maintaining sustainable forest functions on a continuous basis, opening business opportunities, and providing employment for members of communities surrounding forests, many of whom are poor. At present, forest utilization in Indonesia depends mainly on wood as a source of national economic growth, while others forest benefits are being neglected. Such forest management, called "timber mining", depletes forests in terms of both quality and quantity. Purnama (2003) pointed out that the deforestation rate in Indonesia during the period 1987-1997 was 1.6 million ha/year, increasing to 3.5 million ha/year in 1997-2000. He predicted that the deforestation rate would increase further as a result of the introduction of regional autonomy. By understanding the existing problems, private forestry has an opportunity to contribute to the fulfilment of community needs and increase the quality of life directly from selling wood, while also obtaining other benefits and environmental services. There are several objectives for private forest management such as (i) to increase the use of critical land, (ii) to assist the community in providing wood for housing, industrial raw material and fuelwoods, (iii) to assist in cropping diversity for food security, and (iv) to increase the income of communities and, at the same time, improve water cycling, especially for communities living in protected uphill watershed areas. 1 Working Paper CC13, 2004. ACIAR Project ASEM 2002/066, http://www.une.edu.au/febl/Economics/carbon/ 2 Center for Socio Economic Research on Forestry, Indonesia