Forest conservation in Indonesia for decades has focused on moral and ecological obligations, emphasising the role of trees in producing oxygen, maintaining water cycles, and preventing erosion. This approach is sound but is considered insufficient to address climate change and the development of the global green economy.
A report by the Intergovernmental Panel on Climate Change shows that the global surface temperature from 2011–2020 reached approximately 1.1°C above the 1850–1900 baseline level, primarily because of greenhouse gas emissions from human activity. In this context, forests, plantations, agroforestry, and fruit gardens are beginning to acquire a new economic dimension as carbon is recognised as part of Carbon Economic Value (CEV). Indonesia launched the Indonesia Carbon Exchange in September 2023 as a step towards formalising carbon trading.
Presidential Regulation Number 110 of 2025 now forms the basis for implementing CEV instruments and controlling national greenhouse gas emissions, replacing previous regulation from 2021. The latest regulation covers carbon allocation, CEV instruments, a transparency framework, and monitoring and evaluation. Financial Services Authority Regulation Number 10 of 2026 subsequently stipulates that carbon units traded through the exchange must be recorded in the Carbon Unit Registry System, indicating that the market is moving towards a system that is measurable and traceable.
The carbon economy system opens opportunities for farmers to earn income from various sources. Fruit gardens, smallholder plantations, agroforestry, and rehabilitation land can be viewed as a portfolio of ecological assets that generate income from primary products while also providing environmental services or carbon units. For example, Agrowisata Belimbing Ngringinrejo in Bojonegoro Regency, East Java, covers 20.4 hectares with 9,000 star fruit trees that not only produce fruit but also store carbon, although the stored carbon must be calculated according to a specific methodology before it can be converted into tradeable carbon credits.
Economic perspective also transforms understanding of deforestation, which is not merely the loss of timber but also the loss of an ecosystem's capacity to store carbon and regulate water. During the 2023 dry season, the Bojonegoro government distributed clean water assistance through 1,504 tanks to 73 villages across 19 subdistricts, with a volume of approximately 6.016 million litres, reminding us that ecosystem damage carries real economic consequences. Indonesia's biggest challenge is ensuring that the benefits of carbon trading reach millions of farmers with small plots of land, not just large companies.
