62 Int. J. Environment and Sustainable Development, Vol. 2, No. 1, 2003 River water pollution in Indonesia: an input-output analysis Budy P. Resosudarmo Economics Division, Research School of Pacific and Asian Studies, The Australian National University, Canberra, ACT 0200, Australia E-mail: [email protected] Abstract: Data from global environmental monitoring activities have shown alarming environmental conditions in many developing countries. Environmental policies that could improve the environment significantly, while at the same time maintaining the growth of economic activities are needed. Using an input-output analysis, this paper researches such policies with a view to applying them to Indonesia’s river water pollution. Firstly, this paper reviews river water quality and current policies in Indonesia. Secondly, it develops future policies to control such pollution. Keywords: Input-output analysis; environmental economics; development economics. Reference to this paper should be made as follows: Resosudarmo, B.P. (2003) ‘River water pollution in Indonesia: an input-output analysis’, Int. J. Environment and Sustainable Development, Vol. 2, No. 1, pp.62-77. Biographical notes: Budy P. Resosudarmo is a Research Fellow in the Economics Division, Research School of Pacific and Asian Studies at the Australian National University. In writing this paper, the author received useful suggestions from Dr. Raksaka Mahi and Dr. Ari Kuncoro. Santi Budi Handayani is the research assistant for this paper. 1 Introduction Since the 1972 Stockholm Conference on the Environment, global and local monitoring programs to determine the status and trend of key environment issues have been established around the world. As a result, several publications this subject are available [1–3]. Data from these publications indicate that several environmental indicators in many developing countries are already above tolerable levels. Table 1 presents forest covers in some developing Asian countries. This table shows that countries, such as Indonesia, the Philippines, Malaysia, and Myanmar, experienced annual deforestation rates above 1% in the last 20 years. By 2000, Indonesia had lost approximately 20% of its 1980 forest cover, the Philippines 40%, Malaysia 30%, and Myanmar 25% [1,2]. These losses contribute significantly to the reduction of the world’s forest cover. Copyright © 2003 Inderscience Enterprises Ltd. River water pollution in Indonesia: an input-output analysis 63 Table 1 Forest cover and deforestation Forest area Average change (thousand km2) (% per year) 1980a 1990a 1990b 2000b 1980-90 1990-2000 China 126,398 133,756 145,417 163,480 0.57 1.18 India 58,259 64,969 63,732 64,113 1.10 0.06 Indonesia 124,476 115,213 118,110 104,986 -0.77 -1.17 Malaysia 21,564 17,472 21,661 19,292 -2.08 -1.15 Thailand 18,123 13,277 15,886 14,762 -3.06 -0.73 Philippines 11,194 8,078 6,676 5,789 -3.21 -1.42 Myanmar 32,901 29,088 39,588 34,419 -1.22 -1.39 Cambodia 13,484 10,649 9,896 9,335 -2.33 -0.58 Vietnam 10,663 9,793 9,303 9,819 -0.85 0.54 a Source: WRI [1] b Source: FAO [2] Table 2 exhibits the annual average of ambient air pollution in several large cities in the world. It can be seen that cities in developing economies have air pollution levels above the WHO air quality standards. It is suspected that air pollution in these cities causes a large number of human health problems, such as premature mortality, respiratory symptoms, and asthma attacks [4–6]. Table 2 Annual means of ambient air pollution (µg/m3) in several large cities in the world Country City City population Total suspended Sulphur Dioxide Nitrogen (thousands) particulates 1998 dioxide 1998 2000 1995 China Beijing 10,839 377 90 122 Guangzhu 3,893 295 57 136 Shanghai 12,887 246 53 73 Shengyang 44,828 374 99 73 India Calcutta 12,918 375 49 34 Delhi 11,695 415 24 41 Indonesia Jakarta 11,018 271 30 148 Japan Osaka 11,013 43 19 63 Tokyo 26,444 49 18 68 Malaysia Kuala Lumpur 1,378 85 24 N/A Thailand Bangkok 7,281 223 11 23 Philippines Manila 10,870 200 33 N/A Mexico Mexico City 18,131 279 74 130 USA Chicago 6,951 N/A 14 57 New York 16,640 N/A 26 79 Los Angeles 13,140 N/A 9 74 WHO standard < 90 < 50 < 50 Source: 2001 World Development Indicators 64 B.P. Resosudarmo Table 3 presents the median annual levels of Biology Oxygen Demand (BOD), Chemical Oxygen Demand (COD) and Faecal Coliforms in several major rivers in Asia. These rivers are used as a source of drinking water and the water quality of many of them does not meet standards [7]. This is a suspected cause of a significant number of human health problems such as premature mortality and diarrhoea [8,9]. In Indonesia, diarrhoea is among the top five causes of mortality [10]. Table 3 Water quality in several rivers in the world in 1991-1993 BOD COD Faecal Coliforms (mg/l) (mg/l) (no. per 100ml) China Yangtze River (Changjiang) 1 n/a 490 Yellow River (Huanghe) 2 n/a 3,500 Pearl River (Zhujiang) 1 n/a 260 India Bhima River (Takali) 5 24 0 Godavri River (Dhalegaon) 4 20 0 Sabarmati River (Ahmedabad) 66 168 1,000,000 Wainganga River (Ashti) 5 20 0 Mahi River (Sevalia) 1 9 200 Indonesia Banjir Kanal River 9 20 1,000,000 Citarum River 12 37 600,000 Sunter River (Jakarta) 21 36 1,000,000 Surabaya River 12 26 7,100 Japan Sagami River (Samukawa) 1 1 490 Shinano River (Zuiun Bridge) 2 n/a 320 Tone River (Tone-Ozeki) 1 3 490 Yodo River (Hirakata Bridge) 2 n/a n/a Malaysia Klang River 4 38 460,000 Sekudai River 1 21 50,000 Korea Han River 1 n/a 14 River quality standards for drinking water <10 < 20 0 Source: UNEP-GEMS/Water < http://www.cciw.ca/gems/intro.html> Better environmental policies are certainly needed in developing countries. However, it is important to analyse the impact these policies would have on the national economy, and particularly how they would affect the industrial sectors. Developing countries are seeking policies that could improve the environment significantly, while at the same time maintaining economic activities. This paper uses an input-output analysis to research such policy solutions in the case of river water pollution in Indonesia. Specifically, this paper will seek two categories of industrial sectors on which river water policies should be imposed as soon as possible. The first category is the heavy polluter group [11]. Industrial sectors in this group should be the target of regulations requiring industries to reduce their river water pollution. River water pollution in Indonesia: an input-output analysis 65 The second category is the potential polluter group [12]. Industrial sectors in this group should not be allowed to grow excessively. Two criteria determine inclusion in this group: Firstly, a unit increase in the output of industrial sectors in this group will result in significant pollution to surrounding rivers. These sectors themselves might not be heavy polluters. However, various sectors that provide material inputs to them are. Secondly, sectors in this group are not the key sectors in the economy. The method to achieve the aforementioned specific goal of this paper has been available since 1970 when Leontief [13] expanded an input-output table to include pollution generation and abatement. Since then, many other suitable methods have become available. For example, in 1994 Duchin and Lange [14] developed a dynamic input-output model for the case of freshwater consumption, in 1996 Resosudarmo and Thorbecke [15] constructed a Social and Environmental Accounting Matrix, and in 1999 Garbaccio et al. [16] built up a computable general equilibrium model, both for the case of air pollution. However, all these studies utilise sophisticated methods and require very extensive data that are difficult to obtain in developing countries. The technique implemented in this paper is a simplification of the Leontief environmental input-output model and uses data that are most likely to be available in many developing countries. The Indonesian government and other developing countries could easily implement the technique utilised in this paper every year. Hence, this paper, besides being of use to the Indonesian government, is also important for other developing countries. 2 River water pollution in Indonesia Before the economic crisis occurred, the Indonesian economy grew relatively fast. In the beginning of the 1990s, the economy grew at an annual average rate of approximately 7.5%, which is higher than the annual average growth rate of most other Asian countries, such as Korea, Taiwan, India, The Philippines, and Japan [17]. The main reason for this high economic growth was that its industrial sector (manufacturing sector) [18] developed rapidly. It grew much faster than the agricultural and services sectors, which is also true of other fast growing Asian countries. However, the industrial sector in Indonesia grew faster than that of most other fast growing Asian countries [17,19]. This high growth of the Indonesian economy caused environmental problems. One of the more important environmental problems is river water pollution. Table 3 indicates that pollution levels of Indonesian rivers, which are used as a source of drinking water, exceed the quality standard. Table 3 also shows that, in general, these levels are higher than those of China, Japan and Korea. Figures 1 and 2 exhibit river water pollution levels in several additional major rivers in Indonesia. Ciliwung and Bengawan Solo Rivers are in Java, Musi River is in Sumatra, and Mahakam River is in Kalimantan [20].