Impact of Indonesia's Forest Management Units on the reduction of forest loss and forest fires in Sulawesi

The establishment of Forest Management Units (Kesatuan Pengelolaan Hutan/ KPH) represents one of Indonesia's most significant forest governance reforms, covering the 120 million hectares of designated Forest Areas. Sharing features with the Landscape Approach, KPHs are expected to reduce deforestation and forest degradation through improved forest planning, oversight, open access avoidance, and fire prevention and response. This paper assesses the impact of KPHs on the reduction of forest loss, including forest loss due to fire, and the factors that influence this impact (e.g. KPH's primary objective, deforestation risk). We use remotely sensed data to estimate difference-in-differences models accounting for differences in baseline characteristics and multiple time periods. Our case study, Sulawesi Island, is primarily shaped by smallholder farmer land use, where KPHs can exert significant influence. We do not find evidence of an overall effect of KPHs on deforestation. However, we observe intriguing heterogeneous effects depending on the year, including significantly less deforestation in already-established KPHs during the El Niño years of 2015–16, and a notable impact on the reduction of forest loss due to fire in some early-established KPHs. These findings warrant further investigation.