AIM

The Community-Led Forest Economy (CLFE) aims to improve the welfare of communities living in and around forests through the strengthening of inclusive and sustainable forest-based economies. Through this approach, communities are not only forest stewards but also active participants in creating economic, social, and cultural value aligned with ecosystem conservation.

WHERE

As a province with relatively well-preserved tropical forests and Indigenous communities living in harmony with nature, West Sumatra has been chosen as the pilot region for CLFE. With the growth of Social Forestry Business Groups (KUPS) across various sectors—from non-timber forest product processing, agroforestry, and sustainable agriculture to ecotourism—the province serves as a testing ground for community-based forest economy models that can be replicated elsewhere.

WHY

Lessons learned by the World Resources Institute (WRI) from tropical rainforests across the world, through its Three Basins Initiative (the Amazon Basin, the Congo Basin, and Southeast Asia), highlight their role in maintaining global climate balance, absorbing carbon emissions, preserving biodiversity, and sustaining millions of livelihoods. These insights also reveal that Indigenous Peoples and Local Communities (IPLCs), as frontline forest guardians, face up to three times higher economic vulnerability. Forests, which serve as the social, cultural, and economic foundations of IPLCs, have been deeply rooted in their lives for centuries.

For these communities, forests are more than a living space. They are part of identity and cultural heritage passed down through generations. Forests provide food, medicine, building materials, as well as spiritual and traditional knowledge that guide harmonious relationships with nature. In every sense, they are the true custodians of the forest.

However, despite their significant contribution to forest protection, IPLCs’ positions within formal forest governance remain weak. Many communities still lack recognition of their customary land tenure rights. They are often marginalized by top-down policies, limited access to finance and markets, and inadequate inclusion in decision-making processes affecting their territories. As a result, their immense potential as sustainable forest managers has yet to be fully realized.

As global pressures on natural resources—such as plantation expansion, mining, and infrastructure development—increase, forest communities face growing vulnerability. Without strengthened rights, capacities, and economic opportunities, the risks of forest degradation and social injustice will persist. On the other hand, there is now momentum for change. The Government of Indonesia has taken progressive steps through the Social Forestry Policy, providing legal pathways for communities to manage forest areas.

Since 2021, WRI Indonesia, in collaboration with the Governments of Indonesia and Norway, has supported the implementation of social forestry programs across various regions, including West Sumatra, Aceh, South Sumatra, and Riau. These programs focus on strengthening community tenure rights, building capacity for sustainable forest management, and creating knowledge-sharing platforms. These efforts form the foundation for advancing the CLFE initiative.

Partnering with SecondMuse, WRI Indonesia is developing the Community-Led Forest Economy (CLFE) to place communities at the center of sustainable forest economic development. CLFE affirms that forest economies can thrive when communities lead value chains, gain fair economic benefits, and protect ecosystem sustainability.

HOW

Vision
By 2030, in five pilot regions, a transformative community-based forest economy will emerge through:

  • The development and strengthening of dynamic economic sectors
  • The creation of policy incentives that support forest protection and community welfare
  • The mobilization of appropriate resources and financing to build businesses and economies aligned with forest conservation

Mission
To enhance the welfare of forest communities by supporting livelihoods, preserving culture, and ensuring ecosystems thrive in balance.

CLFE Implementation Strategies

  1. Empowering Indigenous and Local Communities
    Ensuring communities have the capacity, authority, and income access derived from forest resource management.
  2. Strengthening and Developing Related Sectors
    Connecting communities with markets by improving access and creating new ones, promoting socio-economic development, forest conservation, and climate resilience through sustainable, nature-based economies.
  3. Gaining Global Recognition and Support
    Positioning CLFE as a climate and development solution at the global level, opening access to financial markets, and securing international policy support.

Three Core Pillars of CLFE

  • Leadership: Ensuring tenure security, customary governance, and full community participation.
  • Economic Empowerment: Strengthening bioeconomy and social forestry value chains in Indonesia.
  • Global Engagement: Integrating CLFE into global policy agendas, advocacy, and support mobilization.

CLFE Design Process

In partnership with SecondMuse, WRI Indonesia adopts a collaborative economic design approach through:

  • Applying the Place-based Investment Framework, a structured and end-to-end methodology for designing and building economic systems that serve both people and the planet.
  • Using the Economic Design & Development Tool to assess markets, capital, support services, businesses, policy, culture, and public benefits within the target economy. This research identifies supply and demand opportunities for innovation.
  • Leveraging opportunities discovered during research to develop an Economic Design Blueprint for the community, detailing financial instruments, outcomes mechanisms, investment theses, as well as market-shaping and technical assistance strategies to be implemented with local stakeholders.

PARTNER

SecondMuse is a leading innovation organization dedicated to creating economic value through market-driven solutions that generate lasting impact. The organization collaborates with partners to foster sustainable growth while delivering measurable benefits for businesses, communities, and the planet.

For more than 15 years, SecondMuse has designed, developed, and implemented innovative programs and financial solutions that unlock new opportunities, expand access to capital, and drive economic transformation.

SecondMuse’s work spans over 185 countries and territories worldwide.