ARTICLE | doi:10.20944/preprints202209.0266.v1
Subject: Business, Economics And Management, Finance Keywords: trust fund; sustainable finance; climate finance; sustainability; Papua; Indonesia
Online: 19 September 2022 (07:27:03 CEST)
At the global level, trust funds (TF) have emerged from a portfolio of options as an alternative financing mechanism to help countries finance their sustainability agendas. Indonesia recently enacted wide-ranging legal arrangements on TF, including a law that encourages all sub-national governments to implement their own TF endowment model and a government regulation pertaining to special autonomy for sub-national jurisdictions in Papua for the implementation of TF – both of which enable TF to finance intended sustainability outcomes. Sustainability is of high-priority concern as the provinces of Papua and West Papua are responsible for stewardship of one of the world’s largest remaining rainforests, which is especially rich in biodiversity. These provinces operate under special autonomy, with special funds allocated from the central government and a decentralized arrangement that differs substantially to the unitary state arrangement applied nationwide; this poses challenges to implementing TF for sustainability in Indonesian Papua. In this paper, we examine TF challenges related to legality, finance, and capacity; moreover, in the context of these challenges, we assess three focus areas related to sources of funding, management, and distribution of earnings. We also discuss the implications these challenges have for operationalizing TF in Papua. This paper contributes to discussions on TF for sustainability by interlinking legal, financial, and capacity-related issues, demonstrated by a context-specific and globally relevant case study in Papua.