Assessing the monetary value of ecosystem services provided by Gaung – Batang Tuaka Peat Hydrological Unit (KHG), Riau Province

Peatland plays a pivotal role in providing natural resource production and environmental services for human welfare. However, many studies have mentioned the impact of dryland cultivation in peatland on the shifting carbon balance in the ecosystem that clearly will alter the interaction of these two ecosystem services. The goal of this study, conducted under the framework of the System of Environmental-Economic Accounting (SEEA) framework, was to monetary value the ecosystem services (ES) of provisioning and carbon regulating services of the Gaung-Batang Tuaka Peat Hydrological Unit (KHG). We focused on KHG in response to Regulation No.57/2016, which highlights ecosystem boundary as a new basis for peatland management. Under the SEEA framework, ecosystem services become a benefit when utilized by ecosystem beneficiaries. In this case, provisioning services will be valued only for cultivated land, while carbon services calculated for the entire study area (global beneficiaries). Our study showed that the provisioning services and carbon services are under the trade-off condition, where the monetary value of provisioning services increased at a slower rate (0.50 million USD annually) than the monetary loss of the benefit of carbon services (5.28 million USD annually), greatly exceeded the monetary value of provisioning services. We highlight two main strategies to increase the monetary value of the KHG towards a synergy condition, namely increased value-added by reducing the productivity gap among ES beneficiaries and large-scale adoption of a profitable cultivation system with minimum peat disturbance. The main enablers required include financing access and incentives (e.g., reduce tax) and disincentives to allow for peat-adaptive commodities to compete with dryland commodities in the future market.