The Environmental Fund Management Model in Indonesia: Some Lessons in Legal Regulation and Practice

Abstract

Environmental Fund Management (EFM) is a government effort to optimize EEI (Environmental Economic Instruments), to preserve the functions of the ecosystem. Based on regulation, EFM is entrusted to the Indonesian Environmental Fund (BPDLH) through channeling, fund fertilization, and distribution. BPDLH is appointed a trustee to manage the environmental fund, especially the trust/conservation assistance finance. The existence of trustee agreements often requires follow-up from a legal aspect. This is because Indonesia’s legal system does not recognize the trust law essentially acknowledging the dual ownership of an asset/property. Therefore, this study aims to analyze the use of the trust model in environmental fund management from a legal perspective. It also aims to evaluate the reasons Indonesian law needs to propose a trust policy as the basis for any activity adapting to conservation assistance, including EFM. This study was carried out by using a normative and qualitative juridical analysis. The results showed that the model used in EFM was a legal adaptation of the trust law and was adjusted to the Indonesian constitutional system not recognizing dual ownership. This trust model emphasized an agreement as a legal basis and limited the trustee’s authority in managing funds, leading to suboptimal environmental finance management, especially in nurturing money. Meanwhile, the environmental fund managed by BPDLH was relatively small compared to the needs. This proved that the trust model was represented by individuals/institutions as beneficiaries, based on an agreement with the trustee. From this context, the presence of Indonesian Trust law was capable of ending the legal vacuum in the constitutional system of the country. By specifically regulating the principles of trust and incorporating the dual ownership concept into the proposed law, the goal of fund management was achieved, including environmental finance. The management goal also maximized the benefits for the beneficiaries, namely the environment