SustainablePublic Disclosure AuthorizedDevelopment,Public Disclosure East Authorized AsiaPublic and Disclosure Pacific Authorized RegionPublic Disclosure Authorized SUSTAINABLE COUNTRY ENVIRONMENTAL ANALYSIS 2009 INVESTING INAMORE Report No.Report 50762-ID

INVESTING IN A MORE SUSTAINABLE INDONESIA

COUNTRY ENVIRONMENTAL ANALYSIS 2009 . f c ther duce duce ndings, ndings, and Pacifi ce of the Publisher, The World Bank, World The of the Publisher, ce oor ce ce 62-21-5299-3111 Indonesia Building Indonesia Exchange Stock Tower 2, 12th fl Tower World Bank Offi World Jl. Jenderal Sudirman Kav. 52-53 Jenderal Sudirman Kav. Jl. Jakarta 12190, INDONESIA 62-21-5299-3000 Tel: included in this work. The boundaries, colors, denominations, and o denominations, colors, boundaries, The included in this work. of the International Bank for Reconstruction and Development/The World Bank. The fi The Bank. World Reconstruction and Development/The of the International Bank for paper) set (recycled c Region of the World Bank. World of the c Region

Printed on cyclus off Printed

portions promptly. of the work the Copyright to part information any with complete or reprint of this work, please send a request photocopy permission to For 1-978-750-8400, fax 1-978-750-4470, www.copyright 01923, USA, telephone MA Danvers, Drive, Inc., 222 Rosewood Center, Clearance com. the Offi including subsidiary to should be addressed All other queries on rights and licenses, rights, DC 20433, USA; fax 1-202-522-2422, e-mail [email protected]. Washington, 1818 H St. NW, The material in this publication is copyrighted. Copying and/or transmitting portions be without permission may Copying or all of this work is copyrighted. in this publication material The repro permission to normally grant and will dissemination of its work Bank encourages World The a violation of applicable law. Rights and Permissions 1818 H St. NW DC 20433 Washington, © 2009 The World Bank Group World The © 2009 October 2009 in Jakarta,Printed Indonesia All rights reserved Bank Group World The This study was prepared by the Indonesia Sustainable Development Unit of the Sustainable Development Department, the Indonesia Unit of the Sustainable Development by Development Sustainable East Asia study was prepared This Pacifi at http://www.worldbank.org/ online publication is available This citation: Suggested Asia East CEA Series, Sustainable Indonesia: Analysis. in a More Country 2009. Investing Environmental et al. Josef Leitmann USA 1-202-473 1000 Tel: 1-202-477 6391 Fax: Fax: www.worldbank.org www.worldbank.org/id DC: World Washington, Bank.Region. is a product of the staff volume This interpretations and conclusions expressed herein are those of the authors and do not necessarily refl ect the views of the Executive ect of the Executive the views refl authors and do not necessarily those of the are herein expressed and conclusions interpretations they represent. Bank or the governments World The of Directors the accuracy Bank does not guarantee of the data World The information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status o Bank concerning World The on the part judgment do not imply any of map in this work on any shown information of such boundaries. territoryany or the endorsement or acceptance Investing In a More Sustainable Indonesia ii iii Country Environmental Analysis c Region c of Maritime and Fisheries) Change) Climate for National Council Representative) Management Recovery and the Forestry for (National Movement Environment) Concessions) Area) Plan DALYs DALYs DFID Years Life Disability-Adjusted = DHS = Department International Development for DKP Survey and Health = Demographic DNPI = Departemen (Ministry Kelautan dan Perikanan DPL Iklim Nasional Perubahan = Dewan (The DPR Loan Policy = Development DR = Dewan Perwakilan Rakyat (House of DSM EAP Fund) = Dana Reboisasi (Reforestation = Demand Side Management EIA ENRM Pacifi = East Asia Impact = Environmental Assessment and Natural Resources = Environment FAO FCPF Organization and Agriculture GDP = Food Facility Partnership Carbon = Forest GEF Domestic Product Gross = GEG GFDRR Facility = Global Environment Governance = Good Environmental Reduction Disaster and for = Global Facility GHG GIS House Gas = Green GNI GNKL System Information = Geographic National Income = Gross = Gerakan Nasional Kehutanan dan Lingkungan GOI GTZ HPH of Indonesia = Government Zusammenarbeit. Technische = Gesellschaft für HTI Hutan (Natural Forest = Hak Pengusahaan IAP Industri (Industrial Forest Tanaman = Hutan IBSAP = Indoor Air Pollution ICCTF = Indonesia and Action Strategy Biodiversity ICEL Fund Trust = Indonesia Change Climate IDR Law Environmental for IDPL = International Center = Indonesian Currency Loan = Infrastructure Policy Development Program Program (Association of Indonesian Forestry of Indonesian Forestry (Association Businessmen) Association) (Indonesian Producers Biofuel Development Boards) Planning and Development (Regional Planning Nasional (National Development Agency) Jakarta Board) Coordination Unit) (The and the Assessment Agency for Technology) Application of Network Information Dioxide = Carbon 2 COPD COPD COREMAP Obstructive Pulmonary = Chronic Disease Reef Rehabilitation and Management = Coral COW COW CPS Works = Contract of CSO CVO = Country Partnership Strategy DAK = Civil Society Organization Organizations Voluntary = Civil DANIDA = Dana Alokasi Khusus (Special Allocation Fund) Agency = Danish International Development API APROBI Index = Air Pollution Biofuels Indonesia Produsen = Asosiasi ARI AusAID Respiratory = Acute Infection International Agency for = Australian BAPPEDA Daerah Pembangunan = Badan Perencanaan BAPPENAS dan Pembangunan = Badan Perencanaan BKSP BLU (Greater = Badan Kerjasama Pembangunan BPPT Services Umum (Public = Badan Layanan Agency Teknologi dan Penerapan = Badan Pengkajian CAIT CCGT Tool Indicators Analysis = Climate CDM Turbine Gas Cycle = Combined CEA Mechanism = Clean Development CED CI Analysis = Country Environmental CIESIN Emissions Decomposition = Carbon International Earth for Science = Center = Conservation International CNG CO Gas Natural = Compressed ADB ADIPURA = Clean City Program Bank Development Asian = ADO APHI Diesel Oil = Automotive Hutan Indonesia Pengusaha = Asosiasi Abbreviations in non-destructivecation Development Development testing ElectricityCompany) Development Driven (Community Programme) Lingkungan Dalam Pengelolaan Perusahaan Rating(Industrial Program) Performance Countries in Developing Degradation Forest Countries in Developing Degradation Forest Initiative Development Term Medium (Government’s Plan) Climate Change Climate Development in the Development Mitigation and Adaptive Lowlands Of Earth Indonesia) = Sulfur Dioxide 2 OECD Co-operation Economic for and = Organization PCN PEACE certifi = Personnel PLN PT Abadi Citra Enviro, Energi = Pelangi PM10 Listrik Negara (State-owned = Perusahaan PNPM 10 μm Matter = Particulate Masyarakat Nasional Pemberdayaan = Program PROKASIH Kali River Programme) Bersih (Clean = Program PROPER Kinerja Peringkat Penilaian = Program PSO REDD and Deforestation = Reducing Emissions from Service = Public Obligation REDDI and Deforestation = Reducing Emissions from RPJM Jangka Menengah = Rencana Pembangunan SO TA = Technical Assistance Technical = TA UN UNDP UNFCCC Nation = United Program Nation Development = United on Convention Nations Framework = United UPP USAID Program = Urban Poverty International Agency for States = United USD USDRP Dollar States = United VSL Project = Urban Sector Reform Development Bank WACLIMAD Change Climate Management for Water = Life of Statistical Value = World WALHI Hidup Lingkungan Indonesia (Friends Wahana = WB = WDR WHO Report Development World = WRI Health Organization World = WWF Institute Resources World = Nature for Fund Wide World = Gas ed Petroleum Development Study Development of the World Bank Group) World of the harvestthe right to timber ) Royalty Fee) Development Monitoring and Evaluation Program Ministry of Environment) of the MinistryIndonesia, a program of Environment) Dioxide = Million of Carbon ton 2 = Nitrogen Oxide x

MW = Mega Watt Mega MW = MOFr NEEDS = Ministry of Forestry and Environmental = National Economic NGO NO Organization = Non Government MDF MDG Foundation Dystrophy = Myotonic MFP = Millennium Goals Development MIH Programme = Multi stakeholder Forestry a Green = Menuju Indonesia Hijau (Towards IEA IFC Agency International Energy = IFCA (a member Corporation Finance = International IFES Alliance Climate = Indonesia Forest IHPH Election for System = International Foundation IHH paid for Hutan ( Fee = Iuran Hak Pengusahaan IHHT Royalty Fee) Hutan (Forest = Iuran Hasil IIED Forest (Additional Tambahan = Iuran Hasil Hutan IIEE and Environment = International Institute for ILGR ILGRIP Economics = Indonesian Energy Institute for Reform Governance Local for = Initiatives INFORM Project Reform Governance Local = Initiatives for and Media Campaign = Indonesia Forest IPCC JICA Change on Climate Panel = Intergovernmental KAP Agency Japan International Cooperation = KDP KGRIP and Practices Attitudes = Knowledge, Program = Kecamatan Development and Initiatives Reform = Kabupaten Governance Kl KLH Liquefi = Kilo Liter KWh Lingkungan Hidup = Kementerian (State LPG = per Hour Watt = Kilo MSY MtCO Yields = Maximum Sustainable NRM Management = Natural Resource Investing In a More Sustainable Indonesia iv v Country Environmental Analysis 26 40 24 41 14 17 19 31 8 38 42 29 30 xi 1 4 4 6 7 9 20 22 23 37 13 14 3 Sustainability ecting Environmental cance and Costs of Environmental Degradation Degradation of Environmental and Costs cance 5.1 Public Perceptions of the Environment of the Environment Perceptions 5.1 Public Priorities with Government Perception of Public 5.2 Compatibility Governance in Environmental Access the Quality5.3 Assessing of Public and Awareness Communications for 5.4 Key Partners 4.1 Main Revenue and Expenditure Trends Trends and Expenditure 4.1 Main Revenue Aff Policies 4.2. Key Fiscal 2.2 The 2.2 The Signifi 1.2 A Tool for Investing in Indonesia’s Institutions for Sustainability Institutions for in Indonesia’s Investing for Tool 1.2 A Challenges 1.3 Underlying Environmental Wealth ImportanceThe Indonesia’s for of Natural Capital 2.1 Framework and Policy Law 3.1 Environmental Management Environmental for 3.2 Institutional Framework and the Environment 3.3 Decentralization Level Management at the Local in Environmental 3.4 Advances Management Environmental Decentralized 3.5 Obstacles to 1.1 Key Characteristics of Indonesia’s Environmental Challenges Challenges Environmental 1.1 Key Characteristics of Indonesia’s 2.3 Summary Costs of Degradation 2.4 Distributional Consequences of Environmental Degradation Degradation of Environmental 2.4 Distributional Consequences Analysis the Country for Environmental 2.5 Selecting a Focus Chapter 5: Constituency, Awareness and Critical Partnerships and Critical Partnerships Awareness 5: Constituency, Chapter Chapter 4: Enabling Policies for Sustainable Development Sustainable Development for 4: Enabling Policies Chapter Chapter 3: Institutional Setting: Decentralized Environmental Management 3: Institutional Environmental Chapter Setting: Decentralized Chapter 1: The Context for Analyzing Indonesia’s Environment Environment Indonesia’s Analyzing for Context The 1: Chapter Degradation of Environmental Economics The 2: Chapter Executive Summary Executive TABLE OF CONTENTS TABLE SECTION 1: Priorities for Sustainable Development SECTION Sustainable Development for 1: Priorities SECTION Governance 2: Challenges of Environmental 45 78 52 77 88 47 48 53 54 58 60 61 65 68 75 80 84 90 63 ts of Adaptation 9.1 Options for Better Environmental Governance Governance Environmental Better 9.1 Options for 6.1 ImpactsIndonesia Change in of Climate Socio-economicThe Benefi and Costs 6.2 and Land Degradation 7.1 Deforestation Emissions and Carbon 7.2 Land Use Management Issues 7.3 Forest Context in the CountryDevelopment 8.1 Energy and Economic Concerns 8.2 Environmental Change Issues and Climate 8.3 Energy Climate a Changing 9.2 Options for Bank World the 9.3 A Role for Chapter 6: Adapting to a Changing Climate Climate a Changing to 6: Adapting Chapter Change and Climate 7: Land Use Chapter bibliography Chapter 8: Energy and Climate Change and Climate 8: Energy Chapter Sustainable Indonesia a More Towards 9: Chapter

SECTION 3: Sectoral Climate in a Changing Challenges Forward Way The SECTION 4: Bank Involvement World Increased ANNEX: Business Plan Scenarios for Investing In a More Sustainable Indonesia vi vii Country Environmental Analysis 33 10 87 xv 8 9 12 48 49 51 71 81 14 15 39 31 32 54 13 30 34 55 34 50 e) 59 e) 2 in 2004) 2 cations Table 9.1 Table Options Adaptation 9.2 Table and Activities Engagement Areas Table 8.1 Table Primary Reserves in Indonesia Energy and Production 8.2 Table Issues and Environmental Subsidies: Economic Energy 8.3 Table Programs DSM from Savings Energy for Potential 8.4 Table Report of Environment State 2007, Min Env, Biomass Potential Solar, Wind, 8.5 Table Emmisions (MtCO Fuel Indonesia: Fossil 68 64 65 66 Figure 2.1 Figure 2000) in Indonesia (percent, Composition Wealth Natural Table 2.1 Table Indonesia for estimates Wealth 2.2 Table of GNI, 2006) in Indonesia of Saving (percent Measures 2.3 Table Degradation Environmental Summary from Costs of Economic 2.4 Table Impacts Poverty Goal MDG Change by of Climate 2.5 Table Ranking A Preliminary Challenges of Environmental 5.1 Table Information Surveys with Environmental Perception Public 7.1 Table (MtCO Emission Estimates and Land Use Forest 2.2 Figure Classifi Land and Forest Table 1 Table Table Data Indonesia 2009 Environmental Figure 4.1 Figure 2001 = 100) (billion IDR, constant, and Expenditures Revenues Environmental 4.2 Figure 2001 – 2008 Expenditures Environmental 4.3 Figure Sector in Energy Carbon Low for Distortions Key Policy Impede Potential 4.4 Figure and Emission per Capita Use Energy Rates of GDP, Annual Growth Figure 4.5 Figure Subsidies Incidence of Fuel Figure 4.6 Figure Ministry Source by Revenue of Forestry 6.1 Figure map of Southeast Asia hazard Multiple Climate 6.2 Figure (in mm/100 years) 1900-2000 September-November Pattern Change of Precipitation Average The 6.3 Figure JakartaWarming: in 2050 Impacts Global Rise by Caused of Sea Level 6.4 Figure 49 2007) (CIESIN Zone Elevation Coastal Outside of a Low and Within Densities Population 7.1 Figure Deforestation and Degradation Indonesia: Deforestation 7.2 Figure Change Areas Cover in Indonesia 2000-2005 : Forest Cover of Forest Decrease Figure 6.5 Figure Map of South Vulnerability Asia List of Figures List of Tables List of 25 28 80 84 69 40 58 82 69 56 70 56 57 57 59 62 70 71 73 69 63 63 65 33 71 72 82 68 70 72 73 ning Capacity ning Emissions per Capita and Their Growth Rates Growth Their and Emissions per Capita 2 Emitters in 2004 Emitters 2 Emissions Decomposition Emissions Decomposition 2 Upstream Policies and Distortion Impede Progress and Impose Coston Society and Impose Coston and Distortion Impede Policies Progress Upstream Figure 8.8 Figure Rates 1994 – 2004 Growth Annual Average Figure 8.7 Figure and Emission per Capita Use Energy Rates of GDP, Annual Growth 8.9 Figure Rates 1994 – 2004 Annual Growth Emissions Intensity: Ave. 8.10 Figure CO Box 4.1 Box Supply Geothermal Energy Barriers to 7.1 Box 9.1 Box Sector Management Forestry Issues 9.2 Box Governance Environmental to Expanding Access Options for 9.3 Box Options Adaptation Prioritizing (REDD) and Degradation Deforestation Indonesia Emissions from and Reduced Box 3.1 Box Province Spatial Planning in Papua Sustainable More Figure 8.3 Figure Demand Projections Indonesia Power 8.4 Figure Based Emissions Indonesia Fuel 3.2 Box Management and Chaotic Forest Decentralization 5.1 Box Governance Environmental to Access Public Figure 7.3 7.3 Figure 2000 – 2005 Type, land Use by Loss Forest Figure 7.4 7.4 Figure (Percent) Land Forest on State Loss Forest 7.5 Figure 10), 2000-05 (Top and Province Type by Loss Forest 7.6 Figure 2000-05 Province during 2000-2005 by Loss Forest 7.7 Figure Sector and Land Used : Forest 8.1 Figure and Sector Type Fuel by Consumption Indonesia Fuel 8.2 Figure and Refi Domestic Productions Figure 8.11 Figure Sectoral (Shares) Emissions by Sources 8.12 Figure Combustion Fuel of Fossil Type Emissions by Figure 8.6 Figure CO Fuel Fossil Figure 8.5 Figure 25 CO Top Figure 8.13 Figure Sectoral (Shares) Emissions by Sources 8.14 Figure Electricity Use: Energy Emissions by Use 8.15 Figure Sector and Using Fuel Fossil Emissions by Figure 8.16 Figure Electricity Emissions from Sector of Future Estimates 8.17 Figure Fuels All Fossil Emissions from of Future Estimates Figure 9.1 Figure Sector Agriculture : Example for Phasing Adaption

List of Boxes Investing In a More Sustainable Indonesia viii ix Country Environmental Analysis

S). the vironment Coordinator, Indonesia Sustainable Development Unit (EASI Indonesia Sustainable Development Coordinator, vironment nancial support of the CEA Trust Fund managed by Poonam Pillai (ENV) and for World Bank budget Bank (ENV)World Pillai Poonam managed by and for Fund Trust supportnancial of the CEA rst phase of CEA preparation. Background studies were commissioned as building blocks for the CEA and were the CEA and were as building blocks for commissioned studies were Background rst phase of CEA preparation. The team is grateful for the fi for is grateful team The Analysis presented in this paper draws on inputs prepared by Timothy Brown and Kurnya Roesad (EASIS), Jan Bojo (EASOP), Kim Roesad (EASIS), Jan Bojo (EASOP), and Kurnya Brown Timothy by on inputs prepared draws in this paper presented Analysis with management (EASRE) assisted Dore rm of PT Qipra Giovanna Kualita. Galang fi EASIS), and the consulting DeRidder (Consultant, fi of the task during the the report.inputs were peer reviewing Additional for National University) Nakatsuma (Australian and Budy Resosudarmo (USAID) was done under Work Jaganatthan. Vijay and Sarkar, Sudipto Warlters, Michael Khan, Asmeen Jan Bojo, Chris Hoban, from received Country Director Sector of Sonia Amsberg, Hammam, Sustainable Development general guidance Manager (EASIS) and Joachim von Indonesia (EACIF). for support program. the EASIS work from We are indebted to Kulsum Ahmed, Gerhard Dieterle, Diji Chandrasekharan, and Tuukka Castren of the World Bank as well as Alfred Bank as well World of the Castren Tuukka Diji Chandrasekharan, and Dieterle, Gerhard Ahmed, Kulsum to indebted are We prepared by Isna Marifa Isna and Maria by Ratnaningsih. prepared Preparation of this report was managed by Josef Leitmann, En of this report Josef Leitmann, by was managed Preparation ACKNOWLEDGEMENTS Investing In a More Sustainable Indonesia x

xi Country Environmental Analysis

Rice fi elds Collection) Bank (World Rice fi Photo: Curt Carnemark Executive Summary Executive c cult (Chapter (Chapter nancial incentive nancial incentive oods, oods, droughts), and mining have shing ective in curbing illegal res). The GOI has policies, GOI has policies, The res). cient capacity; and specifi democracy and decentralization. democracy and decentralization. sheries and environmental impact sheries and environmental icting and sector-based regulations scal policy reform that uses taxation and that uses scal policy reform (Chapter 5). The environment is on the environment The 5). (Chapter nancial management and incentives, and nancial management and incentives, t higher income groups, while making it diffi groups, t higher income issues. on environmental roles cation of central-local have evolved to embrace embrace to evolved have policies, set of laws, is an impressive there Similarly, that as local institutions as well and national programs, resource and natural environmental for responsible are aspects many management. Over the past decade, management and natural resource of environmental the local level. to been decentralized management have aspects has had positive through local control Greater inter- political will, greater programs, reputational and agency community empowerment, collaboration, the At in spatial planning. of environment integration in obstacles to resulted has decentralization same time, management, including: inadequate good environmental with incentives, problems and enforcement; standards and insuffi empowerment fi issues with forestry, exist, including improvement assessment. Options for management, improved environmental geography-based fi governance, clarifi Enabling policies for sustainable development Enabling policies for purposes has environmental spending for 4). Indonesia’s environmental most of the decade, for low been relatively collection and natural resources has been low revenue and electricity subsidies Fuel underpriced. been have the budget and burden overconsumption, enhance benefi and fi Legal compete. to renewables for eff not been structures have as as well deforestation down and slowing logging distortions Policy degradation. in fi unsustainable harvesting to and patterns contributed illegal mining activities. In policy all sectors, distortions confl arise from decentralization. especially those involving national laws, an through policyThese distortions be overcome could fi environmental provide but also to raise revenues pricing instruments to sustainable behavior. more for incentives partnerships of the Indonesianradar screen population, especially (pollution, fl water issues concerning quality) air and forests solid waste, cities (cleanliness, fi illegal logging, (degradation, but these public priorities, for and programs investments that is one indicator as public concerns their persistence GOI is also The addressed. not been adequately they have climate e.g. public priorities, not yet that are pursuing areas clean biodiversity, and marine resources, coastal change, of level indicating a low wastes, and hazardous energy, key with four needed are Partnerships public awareness. communications actors who can bridge environmental and the public: the mass media, the government between and religious the legislature, civil society organizations, public participation and Promoting organizations. 4. and critical awareness Building constituency, 5.

ndings commensurate set by in light of the CEA fi ectively invest other types also caused by losses are cant economic “The Economics of Environmental Degradation” (Chapter (Chapter “The Degradation” of Environmental Economics about one that natural capital constitutes 2) indicates but this capital is being wealth total quarter of Indonesia’s while not being off rapidly depleted economic The capital. in human or produced investments the highest change represent of climate consequences in the long term, economy Indonesia’s to cost potential 2.5 and 7.0 percent annual losses of between amounting to and Inadequate water the end of the century. of GDP by short-term the the largest to cost sanitation constitute than $6 billion in at more estimated Indonesian economy, health impactsThe of GDP. than 2 percent 2005 or more been estimated and indoor air pollution have of outdoor of GNI. or about 1.6 percent at $4.6 billion per year Signifi deforestation, especially degradation, of environmental In degradation. total, soil depletion, and coastal/marine in the grow to likely are costs degradation environmental annual on par with the average currently and are future when one considers relevant more is even This rate. growth disproportionately costs impact the that environmental In short, matters management of the environment poor. development. and social economic Indonesia’s to The objective of this Country Environmental Analysis (CEA) (CEA) Analysis objective of this CountryThe Environmental and opportunities the underlying challenges highlight is to its management of and environment Indonesia’s for Bank support to World guide to in order natural resources sustainable development. more Indonesian for institutions it is important clarify at the outset that the CEA Thus, to Report – this type of of the Environment” “State is not a stocktaking publication of the is a regular environmental Ministry at www.menlh. and can be found of Environment context (Chapter the CEA sets the broader Rather, go.id. degradation environmental of costs 1) and economic challenges identify underlying to 2) in order (Chapter sets of two divided into are These and opportunities. governance environmental to priorities – those related Environmental sectoral in nature. more and those that are for framework the decentralized encompasses governance 3), enabling policies management (Chapter environmental sustainability resource and environment greater for constituencies 4) and building environmental (Chapter most sectoralThe challenges that are 5). (Chapter important vulnerability to Indonesian are development for change 6), land use and climate change (Chapter climate 8). change (Chapter and climate 7) and energy (Chapter sustainable a more reportThe with options for concludes World the how for Indonesia, including recommendations eff Bank can more 9). (Chapter sustainability? bother about environmental Why A challenging institutional setting of decentralization policies and institutions 3). Indonesian laws, (Chapter

1. 2. 3. Environmental Institutions, Policies and Policies Institutions, Environmental Matter Governance Investing In a More Sustainable Indonesia xii xiii Country Environmental Analysis cult to ndings of the ndings of the ts. Indonesia uses ts. ts ciently and in excess. On the ciently and in excess. ciency, cleaner technology or innovation or innovation cleaner technology ciency, ed to move the agenda forward. The World World The the agenda forward. move ed to ciency in the industrial, power, manufacturing ciency power, in the industrial, emissions. Even assuming a decrease in energy in energy assuming a decrease Even emissions. 2 The costs of environmental degradation and climate and climate degradation of environmental costs The diverted is so that less wealth lowered change are growth from to contributes management Good environmental impactspoverty reducing on the poor alleviation by sharing of benefi and better used sustainably while non- are Renewable resources investment for wisely developed ones are renewable capital in human and physical of and participating aware in are Citizens their issues directly or through environmental and other organizations. representatives • • • • (Chapter 8). In the future, fossil fuel emissions will be a fuel emissions will fossil 8). In the future, (Chapter use emissions. and land than forest concern greater diffi it will be more subsidies, energy current With effi promote benefi and climate environmental for fuel and electricity ineffi potential largest the countryother hand, has the world’s biofuels sustainable geothermal power, developing for and solar, wind, (hydropower, and other renewables fuel GHG emissions per capita While fossil biomass). increasing they are low, and emissions intensity are Industry of carbon source the largest is currently rapidly. the transportemissions, user of liquid sector is the largest the main contributor is currently fuels and petroleum to CO intensity, emissions from energy consumption will triple consumption energy emissions from intensity, Mitigating these emissions will 2005 levels. 2030 from by enabling a more pricing, energy realistic more require and resources, energy renewable develop to environment effi greater and transport sectors. sustainable Indonesia9). A more is one where: (Chapter this vision exist in both the toward moving Options for change. and climate governance of environmental areas and key actors in the table below summarized are These identifi are Bank has a long history of partnership with Indonesia on management issues. and natural resource environmental on forestry ongoing engagement has centered The conservationmanagement and biodiversity as as well the fi Given and marine resources. coastal opportunities partnerships are increased CEA, there for and climate governance of environmental in the areas annex. in the report’s presented change that are 8. challenge emerging change is an climate and Energy 9. Indonesia sustainable in a more investing Options for c rms to re control, greater res, and peatland res, ective demand for ective demand for oods, landslides, sea- landslides, oods, forest improved i.e. ts, ts and risks. (Chapter 6). Specifi change (Chapter

climate

to fewer and have their livelihoods; sheries for

change is climate damage from t of avoided nance such as REDD can provide an important such as REDD can provide nance t could reach 1.6 percent of GDP, compared to the to compared of GDP, 1.6 percent reach t could farming areas, coastal resources, water ect security, food ooding and/or landslides; dependent on climate-sensitive Land use and climate change constitute a recognized a recognized change constitute Land use and climate 7). High of rates sectoral (Chapter challenge fi forest illegal logging, deforestation, of source the single largest constitute degradation made gas emissions and have greenhouse Indonesia’s 10 provinces principal emitters. it one of the world’s of dry and 96 percent loss 78 percent forest for account with just emissions, as related loss as well of swamp forest KalimantanRiau, Central and South Sumatra accounting is Although there half of all losses and emissions. over for uncertainty there of such emissions, about the magnitude priorities key that forestry and land use are is consensus policyThe driving and institutional issues, mitigation. for and of forest costs impacts, and development forces, years many been well-known for have land degradation options exist that should be “No regrets” in Indonesia. benefi of climate pursued regardless realigned management and governance; enforcement, law fi timber harvesting for and processing incentives areas of Indonesia are highly vulnerable to multiple highly vulnerable to of Indonesia are areas fl (drought, change hazards climate modestly, only increase may While temperature rise). level rise will negatively rainfall and sea-level intense more aff and marine biodiversity, forests, livelihoods, and coastal especially vulnerable are and ecosystems health. People Bali, parts risks on Java, climate to and a large of Sumatra, the most impact change will have Climate Papua. of area be: to likely more on the poorest who are drought, to susceptible that are areas living in marginal fl or fi agriculture The with the impacts cope climate. assets to of a changing annual benefi 2100, the by 2050 and, by the annual cost exceed likely to benefi adaptation options exist Many of GDP. at 0.12 percent cost change vulnerability climate to Indonesia’s reduce help to to according be phased and prioritized which will need to benefi of costs, the magnitude sustainability; of improve restructuring and revitalization and land fi forest sector industries, forest and use decisions, equity and transparency in forest/land Forest of legal compliance. independent monitoring fi climate options. regrets” “no implantation of these for incentive vulnerability increasing awareness are essential for any development development any for essential are awareness increasing partnership build eff to that seeks sustainability. environmental 7. 6. Indonesia’s is a priority because of Adaptation Climate Change is a New National Priority National a New Change is Climate Potential Partners Potential Ministry of Finance, DNPI Ministry of Finance, Ministry PLN, & Mineral of Energy Resources, sector private Pertamina, Ministries of Forestry, Env., Agriculture, local Agriculture, Env., Ministries of Forestry, sector private govts., sector DNPI, private Ministry of Forestry, Relevant line ministries, Bappenas Relevant line ministries, Ministry line ministries, Bappenas, of Finance line minis- MinistryBappenas, of Finance, governments local tries, Ministry of Env., DPR, local govts. DPR, Ministry of Env., DPR, Ministry of Finance Min. orgs., DPR, media, religious GoI, NGOs, of Env. ciency and greater res, nancing mecha- nancing encourage pricing, cient energy governance through geography-based geography-based through governance and incentives, nancial management support to nancing in order and accelerate exible options exible agenda scal reform Environmental Governance Environmental Energy and Climate Change and Climate Energy Land Use and Climate Change and Climate Land Use Adaptation to Climate Change to Climate Adaptation Options for a More Sustainable Indonesia a More Options for cation of roles strengthen undertake coordinate, orts research, awareness, raise public to ts even without climate change, buying safety margins for new invest- for margins buying safety change, without climate ts even

investment to develop renewable energy resources, accelerate energy effi energy accelerate resources, energy renewable develop to investment in key emitting sectors, and take advantage of international fi of international and take advantage in key emitting sectors, costs of some of these options set the off nisms to ment scenario to reduce the emissions intensity of growth reduce to ment scenario accountability, equity and transparency in forest/land use decisions equity and transparency in forest/land accountability, options regrets” “no the governance, realigned incentives for timber harvesting, revitalization of forest of forest timber harvesting, revitalization for incentives realigned governance, fi of forest control sustainable basis, sector industries on a more local capacity, and increase the resilience of vulnerable groups the resilience increase and local capacity, tary eff resources, agriculture, forestry, coastal/marine, and health, including and in addi- coastal/marine, forestry, agriculture, resources, contemplated what is currently tion to benefi and fl reversible and favoring ments, Strengthen decentralized environmental environmental decentralized Strengthen undertaking fi an environmental participationinformation, in policy and decision-making and justice environmental management, local-level fi management, local-level environmental and a clarifi • • develop- carbon a lower for planning and coordination high-level Be guided by • effi more introduce plans to existing Go beyond • carbon fi of forest new sources Pursue • Implement “no regrets” options for forest law enforcement, management and enforcement, law forest options for • regrets” “no Implement • complemen- adaptation, including mainstream Implement to a phased strategy • of water in the key areas Undertake adaptation measures and proactive reactive actions that provide • regrets” “no emphasizing by adaptation options Prioritize • and and regulations, harmonizing laws enabling policies by more Introduce • environmental to as access as well expanding awareness by Build constituencies Investing In a More Sustainable Indonesia xiv xv Country Environmental Analysis 7 82 43 50 88 55 25 80 42 71 96 1.2 0.2 1.3 0.1 0.8 1.2 6.6 2.9 2.8 NA 511 11.0 93.5 41.7 47% 1905 4117 Lower middle-income group Lower 36 71 37 34 80 52 91 50 67 89 5.1 2.0 0.0 1.4 1.8 0.6 0.8 6.9 4.3 5.8 4.7 1.9 6.4 498 10.4 48.8 11.2 27.2 26% 181.0 $1650 121.77 12,578 1,811,600 81,000; 2.6 226 million Country Data $432.8 billion )8 3 ) 2 MARINE & COASTAL MARINE WATER & SANITATION WATER ENVIRONMENTAL HEALTH ENVIRONMENTAL LAND, POPULATION & ECONOMY POPULATION LAND, NATIONAL ACCOUNTING & WEALTH & ACCOUNTING NATIONAL ve mortalityve births) (per 1,000 live rate

gy depletion (% of GNI) damage (% of GNI) emissions per unit of GDP (kg/2005 PPP $) emissions per capita (metric tons) (%, 1990-2005) emissions growth 2 2 2 2 opulation reshwater withdrawal reshwater Urban (% of urban population) Net forest depletion (% of GNI) Net forest CO Diarrhea prevalence (% of children under age 5) (% of children Diarrhea prevalence Forest area (of total land) (of total area Forest annual %, 1990 – 2005) (ave. Deforestation GDP GNI per capita & BIODIVERSITY FORESTS LAND, land) land (of total Agricultural rural (people/sq km arable land) density, Population land) (% of total areas Protected only) EMISSIONS (energy-based CO Land area (sq km)Land area P Marine area (million kmMarine area CO CO Ener Gross savings (% of GNI) savings Gross Access to improved water source (% total population) (% total source water improved to Access Rural (% of rural population) Urban (% of urban population) population) sanitation (% of total improved to Access Rural (% of rural population) Agriculture (% of total freshwater withdrawal) freshwater (% of total Agriculture Mineral depletion (% of GNI) Overall density (people/sq km) of total) Urban population (% annual %, 1990 – 2006) (ave. Urban population growth Under-fi Population growth (ave. annual %, 1990 – 2006) (ave. growth Population Coastline (km), reef area (million ha) (km), area Coastline reef potency (million tons/year) Fisheries (million tons/year) catch allowable Total production (millions tons/year) Fish Internal freshwater resources per capita (cu. m) per capita (cu. resources Internal freshwater F Particulate matter (urb wtd ave, ug/m ave, (urb wtd matter Particulate Source: The Little Green Book 2009, World Bank Book 2009, World Green The Little Source: Table 1. Indonesia 2009 Environmental Data Table Data Environmental 1. Indonesia 2009 Table Investing In a More Sustainable Indonesia xvi 111111111 CountryCoCouunntrtry EnEEnvironmentalnviviroronmnmeenntatal AnAnalysisala yssisis SECTION 1: Priorities for Sustainable Development for SECTION 1: Priorities for Sustainable Development Investing a More Sustainable Indonesia In

2 Chapter 1: The Context for Analyzing Indonesia’s Environment

Fishermen (World Bank Collection) Photo: Curt Carnemark SECTION 1: Priorities for Sustainable Development 1.1 Key Characteristics of Indonesia’s 1.2 A Tool for Investing in Indonesia’s Environmental Challenges Institutions for Sustainability

Inadequate environmental management is a challenge The new Country Partnership Strategy provides a window for Indonesia that hurts the poor and the economy. For of opportunity. The ongoing policy dialogue and operational example, total economic losses attributable to limited access engagement suggest that the World Bank could play a to safe water and sanitation are conservatively estimated at 2 fundamental role in advancing the environment and natural percent of GDP annually while the consequences of climate resources agenda in Indonesia by sustaining its eff orts to change could cost the Indonesian economy between 2.5 and shift from a project-based approach to a programmatic one, 7 percent of GDP by the end of the century. The total cost of with a stronger focus on environment and natural resources environmental degradation, including climate change, is over management in the context of GoI decentralization, poverty 5 percent of GDP per year and likely to increase. These costs reduction and economic development programs. Therefore, are typically disproportionately borne by the lowest income the current phase of Bank engagement is intended to better groups because they are more likely to be exposed to pollution defi ne the Country Partnership Strategy (CPS) core engagement and less likely to be able to aff ord mitigation measures. area on environmental sustainability, particularly in the context of a new GoI medium-term development plan and political Natural resource challenges have persisted and become administration. more complicated in the context of decentralization. As an example, the forest sector has long played a pivotal role in 1.2.1 Objectives Investing a More Sustainable Indonesia In supporting economic development, the livelihoods of rural people and the provision of environmental services. However, The initial objective of the CEA exercise was to infl uence these resources have not been managed in a sustainable or the CPS by mainstreaming environmental and NRM equitable manner. Turning this situation around will require concerns. As key messages from the CEA were included in the a new vision, led by the Government, of what a viable and CPS during preparation of this report, the CEA can now serve environmentally sound forestry sector might look like. as an instrument for further developing the core engagement area on environmental sustainability by embodying the CPS The country’s administrative and regulatory framework philosophy of investing in Indonesia’s institutions. In light of cannot yet meet the demands of sustainable development. this context and the approaching of signifi cant milestones in This is in spite of a long history of support for policy and capacity the GoI business cycle, the CEA should strengthen and deepen development both from within the government and with the Bank’s current understanding of environment and natural international donor support. Indonesia’s ministries concerned resources management challenges, institutional and regulatory with environment and natural resources management have issues that bear directly on the sustainability of economic benefi ted from good national level leadership, and also from growth, their appropriateness and eff ectiveness in the context an active network of civil society organizations throughout of GoI policies priorities, and propose specifi c recommendations the country that are focused on environmental issues, with with short-to-medium term focus on how to achieve more signifi cant advocacy experience. Yet, improving Indonesia’s eff ective results on the ground. Thus, the revised objectives of 4 approach to environment and natural resources management the CEA are to support Indonesian policies and institutions for is diffi cult. more sustainable management of the environment and natural resources. Two immediate opportunities are to contribute to Implementation of policies and programs can mitigate the formulation of the new medium-term development plan progress towards more sustainable development. First, (2010-2014) and the policies of the new administration that will despite the substantial investment in environment and natural take offi ce in the fourth quarter of 2009. resources policy and staff development, actual implementation of rules and procedures has been poor and slow due to weak 1.2.2 Phased Approach and Building Blocks commitment by sectoral agencies, low awareness in local departments and offi cials, and capacity challenges at all levels. The CEA is being carried out in three phases: scoping, Also, awareness about the expected negative environmental analysis and dissemination. The fi rst phase of scoping the impacts of sustained economic growth and the mechanisms CEA was carried out between May and September 2007, and for stakeholders to hold government agencies accountable followed the preparation and review of the concept note for their performance are weak. Second, there is little which took place between February and April 2007. Phase integration of environmental considerations at the planning I was essentially a structured process for determining the and programmatic levels, especially in the public investment priority issues based on technical, economic, and societal rapid planning process and in regional plans for land and resource assessments. Also, it was meant to lay the foundation for more use. detailed stakeholder engagement and gap fi lling analysis to be undertaken in Phase II. The second phase, undertaken in 2008, involved consultation and the preparation of various building blocks that are described below. SECTION 1: Priorities for Sustainable Development

Consultative Process • Environmental degradation costs – a rapid assessment of the economic costs of environmental A series of consultative discussions with on environmental degradation was locally commissioned and upgraded issues and challenges in Indonesia were held between June with analysis by World Bank staff . and September 2007. These included meetings with key counterparts in Government, NGOs, and the donor community Public• awareness and perceptions – local working on environment and natural resources management consultants conducted a review of existing survey in Indonesia. The consultations involved a combination of data to assess public perceptions of environmental presentations and discussions particularly with civil society problems and priorities vis a vis GoI development and local and international NGOs, focused meetings with the priorities and strategies. Ministry of Environment, Ministry of Forestry, Ministry of Home Aff airs, Ministry of Finance, Bappenas, and/or bilateral donors. • Decentralized environmental management – a review and analysis was prepared by an international The results of the ongoing consultation process signaled consultant to assess the context and consequences of strong interest issues related to environmental sustainability Indonesia’s increasingly decentralized management in general. In particular, there was a focus on climate change of the environment. and its relevance for Indonesia, decentralized environmental management in terms of sharpening the defi nition of roles and Partnership and Dissemination responsibilities across tiers of government at national and local levels, and strengthening transparency and accountability The CEA involves a partnership with many stakeholders. for the implementation of laws and regulations pertaining The Ministry of Environment, Ministry of Forestry, Ministry to environment and natural resources management. It of Home Aff airs, Ministry of Finance, Bappenas, and select also emerged that there is concern and interest for better local governments are among the lead counterparts for the EnvironmentalCountry Analysis public participation and a stronger voice for civil society in preparation the CEA. For some of these counterparts (e.g. environment and natural resources management. Ministry of Environment, Ministry of Forestry, Ministry of Home Aff airs and local governments) the CEA will allow for In addition, the consultation process allowed for renewing and renewing and deepening existing partnerships. For others (e.g. deepening existing partnerships, and in the case of Ministry Ministry of Finance, Bappenas), the CEA serves as the basis for of Finance, and Bappenas, they are serving as the basis for strengthening the dialogue on governance in the environment strengthening the dialogue on governance in the environment and natural resources management sectors. This would and natural resources management sectors. In addition, the support and inform the capacity building eff orts that GoI is ongoing consultative process is also serving the purpose of currently carrying out in collaboration with local governments, supporting and informing capacity building eff orts that GoI is civil society and NGOs. currently carrying out in collaboration with local governments, civil society and NGOs. The concept/work plan was discussed at a stakeholder workshop to receive feedback as will be the draft report before Building Blocks fi nalization and offi cial release. In addition, the Indonesia 5 CEA exercise builds on the results and fi ndings of ongoing Following the consultative process, a number of building programs of bilateral donors, particularly the work of DANIDA blocks were prepared or incorporated in order to construct and AusAID, to help strengthen the collaboration with other the overall analysis. Key building blocks included: donors active in Indonesia. A fi nal consultation was held with GoI agency representatives in June 2009 to discuss the report’s • Water and sanitation – following guidance from analysis and fi ndings. management, the CEA team incorporated results from The Economic Impacts of Sanitation in Southeast Asia The third phase of the CEA will focus on dissemination of which was prepared by the EAP Water and Sanitation deliverables. This will include (but will not be limited to) a Program. dissemination workshop targeted on preparation of the new medium-term development plan and a public awareness • Climate change – the team was able to use workshop to disseminate information to a broader set of intermediate analyses being developed by the stakeholders. This document is being published in Indonesian Ministry of Finance, the National Climate Change and English. A series of policy notes are being prepared, based Council and the World Bank as part of the Indonesia on CEA fi ndings, to share with the incoming government later Low Carbon Options Study. in 2009. A general brochure on the overall results of the CEA is also being published to summarize its main messages for a • Donor activities – a special report was commissioned broader audience. These documents will also be disseminated to review and assess donor activities related to the through other channels, including the Internet and the national environment and natural resources management, as well as local media to broaden accessibility of its analysis and to compare their support with GoI budgetary and conclusions. An eff ort is also being made to synchronize priorities. CEA preparation with the Asian Development Bank, with the opportunity for producing a joint CEA document in late 2009. SECTION 1: Priorities for Sustainable Development

1.3 Underlying Environmental Challenges Indonesia’s environmental problems, from disaster risks to biodiversity conservation. Informed and The country’s administrative and regulatory framework aware citizens can take individual action to address cannot yet meet the demands of sustainable development. environmental issues, and can form constituencies for This is in spite of a long history of support for policy and capacity improved eff orts at the political and local government development both from within the government and with level. At a broader level, however, environmental international donor support. Indonesia’s ministries concerned values are not deeply embedded in societal values with environment and natural resources management have and attitudes, leading to undervaluation of natural benefi ted from good national level leadership, and also from resources and environmental services. Participation an active network of civil society organizations throughout and voice in decision making is an essential element the country that are focused on environmental issues, with of good governance. Recent environmental disasters signifi cant advocacy experience. Yet, improving Indonesia’s (fl oods, mud, fi res, erosion) have stimulated greater approach to environment and natural resources management environmental concern among the public at large, but is diffi cult. To date, issues that most seriously threaten progress further analysis of knowledge, attitudes and practices towards sustainable development in Indonesia include: would be needed to determine how far or deep this understanding goes outside of urban centers and • Gaps between policy and practice in decentralized what tools can best be used to build on this basic environmental management that could slow signifi cant awareness. The importance of constituency, public improvement in environmental quality. Under awareness and critical partnerships is elaborated in Investing a More Sustainable Indonesia In decentralization, the extent to which sub-national Chapter 5. governments feel bound by national guidelines in more than a vague way is being put to the test; • Benefi ts, risks and costs (social, environmental and the civil service is no longer part of a unifi ed chain economic) of alternative development paths in of command, regulatory bodies in many provinces a changing climate. Energy policy, forest sector and districts now fall directly under the command practices and climate change issues are intricately of the governor or district head, who is often also linked in Indonesia. Fossil fuels dominate energy the proponent of the projects or activities that must consumption in Indonesia both in rural and be regulated. Despite the substantial investment in urban areas and Indonesia is gradually increasing environmental policy and staff development, actual the proportion of energy produced from coal implementation of rules and procedures has been (approximately 40 percent in 2002). Indonesia is also poor. These problems are unlikely to get better under the second largest greenhouse gas emitter among decentralization unless a more eff ective approach to developing countries in the region; it generates regulation can be developed. Many provinces and nearly one-tenth of the world’s greenhouse gases, districts are making new interpretations of existing mostly from logging and forest/peat swamp fi res. rules, or else inventing entirely new regulatory National energy policies propose to increase reliance procedures. While some of these innovations on renewable energy sources, including biomass, 6 strengthen environmental controls, many relax geothermal, and hydropower. At the same time, them or bypass national standards entirely. These the GOI plans a large scale up in the use of coal to challenges are further developed in Chapter 3. reduce Indonesia’s dependence on oil imports. Increased coal use would lead to signifi cant negative • Perverse incentives that hinder the environmental environmental impacts associated with high sulfur sustainability. Natural resources are an important content and potential impacts on forests from land contributor to Indonesia’s GDP and GOI budget. clearing. Alternative energy solutions are necessary Agriculture, forestry, and mining contribute about 25 for more remote areas that are appropriately priced percent of Indonesia’s GDP and about 30 percent of and supported by the public sector. The relationship overall GOI budget revenue. Yet, Indonesia’s economic between development and climate change is further policies appear to favor resource depletion over explored in Chapter 6 (adaptation to climate change), sustainable use as they reward district governments Chapter 7 (land use and climate change) and Chapter on resource revenue and not performance or 8 (energy and climate change). stewardship, subsidize fuel and electricity, and under-tax forestry and fi sheries (relative to other To respond to these challenges, options for contributing to a natural resources). These fi scal and policy issues are more sustainable Indonesia through improving environmental assessed in Chapter 4. governance and responding to climate change are identifi ed in Chapter 9, along with possible World Bank support. • Public perception of environmental issues and the Government’s development priorities. Public awareness is an essential part of the eff ort to address Chapter 2: The Economics of Environmental Degradation

Palm Oil Factory, Jambi Photo: Bayu Rizky SECTION 1: Priorities for Sustainable Development

MAIN MESSAGES

• Natural capital constitutes about one quarter of Indonesia’s total wealth but this capital is being rapidly depleted while not being off set by commensurate investments in human or produced capital.

• The economic consequences of climate change represent the highest potential cost to Indonesia’s economy in the long term, amounting to between 2.5 percent and 7.0 percent of GDP by the end of the century.

• Inadequate water and sanitation constitute the largest short-term cost to the Indonesian economy, estimated at about $7.6 billion in 2007 or more almost 2 percent of GDP.

• The health impacts of outdoor and indoor air pollution have been estimated at $5.5 billion per year or about 1.3 percent of GDP.

• Signifi cant economic losses are also caused by other types of environmental degradation, especially deforestation, soil depletion, and coastal/marine degradation. These have not been quantifi ed due to lack of data. Investing a More Sustainable Indonesia In This chapter starts with an overview of the portfolio of wealth, Where is the Wealth of Nations? The approach is one of including natural wealth, available to Indonesia. It goes on to calculating the asset value across a portfolio, including the analyze the economic costs of environmental degradation, major natural assets1. to the extent that available data allows. In several cases, such data are not available and a more qualitative judgment The average Indonesian has a total wealth per capita of slightly about the signifi cance of environmental degradation will below $14,000 (table 2.1). This measure includes natural wealth have to be made. A short section discusses the distributional in the form of land, forests and subsoil assets, and intangible consequences of environmental degradation, and in particular capital—such as human capital and institutional capital—in the impacts of climate change. The chapter concludes with a addition to produced assets such as buildings and machinery. ranking of environmental priorities from the perspective of the Natural capital constitutes a share of 25 percent of total wealth, World Bank. being even higher than the share of produced capital. This makes Indonesia diff erent from the averages of its regional and 2.1 The Importance of Natural Capital for income group categories. Indonesia’s Wealth A breakdown of the diff erent types of natural capital – including This section provides an overview of the wealth of Indonesia, cropland and pastureland, timber and non-timber forest using the methodological approach of World Bank (2006c) resources, and protected areas – shows the critical importance 8

Table 2.1. Wealth Estimates for Indonesia Asset type Indonesia East Asia Lower & Pacifi c middle income $ p.c. (2000) (%) (%) (%) Subsoil assets 1549 45 28 44 Timber resources 346 10 6 4 Non-timber forest resources 115 3 2 4 Protected areas 167 5 3 4 Crop land 1245 36 56 35 Pasture land 50 1 5 9 Natural capital 3472 25 21 19 Produced capital + Urban land 2382 17 27 21 Intangible capital 8015 58 52 60 Total wealth 13869 100 100 100 Source: World Bank, 2006c, and World Bank staff calculations based on its methodology.

1 This section is an abridged and edited version of an unpublished note provided by Giovanni Ruta. SECTION 1: Priorities for Sustainable Development

Figure 2.1. Natural Wealth Composition in Indonesia that fi sheries are not included in the wealth estimates due to (percent, 2000) lack of data. Pasture land 1% Health damages from particulate matter emissions—a major Subsoil assets 45% indicator of overall air pollution—(in urban areas) amount to about 1.7 percent of GNI. While this is between the regional and income group average levels, the problem is likely to become even more acute in the next few years as urban population and traffi c increases. Economic growth, sectoral shifts in production, and technology changes will all impact the ultimate result in air pollution. Crop land 36% 2.2 The Signifi cance and Costs of Environmental Degradation PA 5% NTFR 3% This section briefl y discusses the available information about the Timber resources 10% magnitude of important environmental problems. Whenever possible, data on the costs of environmental degradation have Source: World Bank (2006c) and World Bank staff calculations. been included.

of subsoil assets and crop land for Indonesia (Figure 2.1): 45 percent of natural wealth are subsoil assets while crop land 2.2.1 Climate Change

accounts for 36 percent of natural wealth. EnvironmentalCountry Analysis As a tropical archipelago with a signifi cant dependence on Natural wealth constitutes a potentially large pool of resources agriculture and natural resources, Indonesia is highly vulnerable where renewable resources can be managed to supply to the eff ects of climate change. The expected impacts of sustainable rents, and non-renewable resources can be climate change on Indonesia are many, and diffi cult to quantify channeled to create produced and human capital. The way at this stage (PEACE (2007) and ADB (2009)): natural capital is transformed into other forms of capital is therefore essential for Indonesia’s development strategy. • Modest temperature increase: an increase in the annual mean of 0.30C has been observed since 1990. In order to develop policies for sustainable development, The annual mean temperature in the SE Asia region one must not only look at the composition of wealth but also is expected to rise by 4.80C by 2100 from the 1990 measure changes in its value. Broader measures of saving, level; which take into account capital accumulation as well as the depletion of natural resources, are useful in providing a clearer • More rainfall: an increase of about 2-3 percent is measure of a country’s sustainability. expected, and coupled with a shorter rainy season, 9 the risk for fl ooding will increase; As shown in table 2.2, Indonesia’s saving rate for 2006 declines by more than 90 percent (from 27.6 percent to 1.7 percent), • Crop production: soil fertility is expected to be once depreciation of produced capital, the depletion of natural reduced over time. Starting in 2020, rice yields are resources and damage from global and local air pollutants are expected to begin declining and could be 34 percent taken into account. There is reason to believe that even this is lower in 2100 as compared to 1990 levels. Other an underestimate, as the fi gure for net forest depletion does estimates (Cline, 2007) are less drastic, but point to not coincide with more credible estimates given elsewhere possible declines in agricultural productivity in the (see the more detailed discussion in Chapter 7). The driving order of 6-18 percent by 2080; forces behind this low adjusted net saving rate are high energy depletion and, to a lesser extent, mineral depletion that are not • Sea level rise: global mean sea level is projected to rise off set by higher savings in human capital or produced capital. by 28-43 cm (Nicholls et al in, 2007, in IPCC) or even Education expenditures are at 0.9 percent of GNI, which is 70 cm (ADB, 2009) by the end of this century relative very low compared to the relative income and regional group to the 1980-1999 and 1990 levels respectively. This averages. The policy message is that the current economic rise and storm surges coupled with land subsidence growth to a large extent is fueled by liquidating non-renewable is expected to increase damage to coastal areas; resources, but investing little in human capital, while infl icting sizable environmental costs. • Warming of the ocean will aff ect marine biodiversity: the 50,000 km2 of coral reefs represent almost one fi fth Indonesia depends heavily on agricultural land resources, but of the global total, but only six percent are classifi ed fi gures reported here do not include soil depletion, for which as “excellent” and further decline is expected; suffi cient information is not available. It should also be noted SECTION 1: Priorities for Sustainable Development

Table 2.2. Measures of Saving in Indonesia (% of GNI, 2006) National accounting aggregates, 2006 Indonesia East Asia & Pacifi c Lower middle income Gross saving 27.6 47.2 41.4 Consumption of fi xed capital 10.4 10.3 10.4 Net saving 17.2 36.9 31.0 Education expenditures 0.9 2.1 2.5 Energy depletion 11.4 7.1 11.1 Mineral depletion 3.1 0.9 1.1 Net forest depletion 0.0 0.0 0.0

CO2 damage 0.7 1.2 1.2 Particulate emission damage 1.2 1.3 1.1 Adjusted net saving 1.7 28.5 18.9 Source: World Bank (2006c) and World Bank staff calculations.

• Public health: water-and vector-borne diseases are More than half of the total cost estimate above refers to Investing a More Sustainable Indonesia In expected to spread further and intensify. Meanwhile, impacts on health, which includes estimated of sanitation- public health management can be expected to related diseases (primarily diarrhea) converted into Disability- become more effi cient in line with economic Adjusted-Life-Years (DALYs) and treatment costs. Impacts development. on water constitute about one quarter of the total cost, and includes household time spent treating drinking water, impacts The Asian Development Bank has recently estimated the on fi sh production, costs of fl ooding due to poor drainage, economy-wide cost of climate change in Indonesia as well impacts of the use of polluted water for irritation, and so forth. as three other SE Asian countries (ADB 2009). The results for The World Bank (2007a) study also includes estimates of time Indonesia indicate that, without global mitigation eff orts, less in search of sanitation sites, impacts on land values, loss of the costs are relatively low in the medium term but rise tourist income and foreign direct investment. signifi cantly in the longer run. By the end of this century, the annual economic cost for Indonesia could reach 2.5 percent While some of these estimates must be characterized as of GDP if only market impacts are considered; 6.0 percent of preliminary, it is clear that the magnitude of economic losses GDP if non-market impact is included; and 7.0 percent of GDP due to poor sanitation is quite signifi cant. In a second phase, when catastrophic risks are taken into account. These fi gures the Economics of Sanitation Initiative intends to analyze the are much higher than the global averages due to the fact that costs and benefi ts of particular interventions. However, at this the country has relatively long coastlines, a high concentration stage, such data are not available specifi cally for Indonesia. 10 of people living along in coastal areas, a high dependence on agriculture and natural resources, a relatively low adaptive capacity, and a tropical climate. 2.2.3 Outdoor Air Pollution4

Available data on sources of outdoor air pollution are 2.2.2 Water, Sanitation and Hygiene2 somewhat dated, but the situation in 1998 showed a strong 5 dominance of small particulate matter (PM10) and nitrogen

Improved sanitation coverage is improving along with the oxide (NOx) emissions from vehicles, with some 70 percent in economic development, and has reached about 57 percent in both categories. Industry was responsible for about a quarter

Indonesia in 2005. Focusing on human excreta management of emission of these two pollutants. For sulfur dioxide (SO2), and hygiene, a recent World Bank report (World Bank, 2007a) the situation was quite diff erent, with industry responsible for has estimated the major health, water, tourism and other welfare more than 70 percent, and vehicles emitting about one fi fth of costs associated with poor sanitation. The annual economic the total. impacts amount to about $7.6 billion in 2007, or almost 2 percent of GDP the same year. 3 Slightly more than half of the Air pollution monitoring is carried out in 10 cities in Indonesia. economic impacts are assigned to rural areas. Expressed in per This system provides information by way of an Air Pollution capita losses, the fi gure is about $29 per annum. Index (API) and ambient air concentrations. The development of the API is mixed across the nine cities for which data are

2 This section draws on World Bank (2007a) 3 This is recalculated from the source estimate of some $6 billion in 2005 using the infl ation rates and GDP data from WDI (2009). 4 This section draws on ADB (2006), unless other sources are noted. 5 Particulate matter with a diameter of less than 10 m. SECTION 1: Priorities for Sustainable Development available, but fi ve showed worsening air pollution in the early factor behind of indoor air pollution (IAP) (Desai et. al. 2004). In part of this decade. The concentration of PM10 in Jakarta Indonesia, approximately 44 percent of the households utilize shows levels of two to three times the WHO 2005 Air Quality fi rewood/straw for cooking (DHS, 2002/03). This percentage Guideline, but no clear trend from 2001 to 2005. varies signifi cantly between the rural (69 percent) and the shows a strongly increasing trend from 2000 and onwards, urban areas (16 percent). Similar percentage of households use reaching about fi ve times the WHO Guideline level for PM10. On kerosene (44 percent), but the rural-urban gap is inverted. a more positive note, the removal of lead in gasoline beginning in 2006 is expected to strongly improve the situation with The most important health outcomes that have a strong respect to this pollutant. association with the use of solid fuels for cooking are acute respiratory infection (ARI) in children under 5 years of age and Outdoor air pollution, and particularly particulate matter, is chronic obstructive pulmonary disease (COPD) in adults. The strongly associated with several respiratory illnesses, resulting impacts will depend very much on the cooking environment, in increased morbidly as well as some premature mortality. For about which little is documented. Hence, Bojö and Nuñez the entire country, the Indonesia Environment Monitor 2003 (2008) use several diff erent scenarios in their calculations of quotes an estimate of $400 million per year, but this fi gure is health impacts. not substantiated (World Bank, 2003)6. The cost of morbidity is estimated using a cost of illness An estimate of the cost of particulate emissions has been done approach (COI). This is composed of medical costs and the using the methodology of estimation of adjusted net savings value of time losses due to disease, but with no provision for (World Bank 2006c). Further detail on the derivation is given human suff ering. The cost of premature mortality is estimated in WHO (2004) and in a forthcoming paper by Pandey et al. In using two diff erent methods. One is based on the present value brief, a regression model is used that predicts the city-level of future income lost. The other is the VSL approach introduced Country EnvironmentalCountry Analysis concentration of PM10 based on information on population, in the previous section. Combining all these scenarios the result income level, economic activity, use of diff erent types of energy is an estimated total cost (2007) for IAP of some $1.6 billion sources, climate and geomorphology. The model is developed with a lower bound of $0.5 billion and an upper bound of $2.7 from actual annual average PM10 and Total Suspended billion. The central estimate is equivalent to about 0.4 percent Particulates (TSP) measurements from population-oriented of Indonesia GDP in 2007. monitoring stations in over three thousand cities worldwide for the period 1985 to 1999. Estimates of the burden of disease from urban outdoor particulate matter pollution are based on 2.2.5 Forests7 the contributions of three pollution-related diseases: mortality and morbidity from cardio-pulmonary causes in adults, from Forests in Indonesia are classifi ed in four main groups: lung cancer, and from acute respiratory infections in children under 5 years old. Attributable numbers of deaths and years- • Production forest which is earmarked to be selectively of-life lost for adults and children have been estimated using harvested, but to retain a forest cover through risk coeffi cients from a large US cohort study of adults and a long periods of re-growth. However, by the turn meta-analytic summary of fi ve time-series studies of mortality of the century about one third of this category was 11 in children. deforested.

The burden of disease, calculated in DALYs is converted into • Conversion forest, i.e. areas slated for clearing of dollars using a Value of Statistical Life (VSL) measure. This is not forests for other purposes. About half of this was a value of anyone’s particular life, but an expression of the value deforested by the year 2000. of marginal risk reduction. The derived fi gure is 0.9 percent of GDP, 2007. This amounts to about $3.9 billion per annum in • Protection forest: to maintain hydrological and soil environmental health damage. retention functions

• Conservation forest: for biodiversity protection. The 2.2.4 Indoor Air Pollution latter two categories maintained about an 80 percent forest cover by 2000. Although outdoor sources often dominate air pollution emissions, indoor sources frequently dominate air pollution The distribution of these forests types, as well as other land exposures. Exposure is a function of both the pollutant covering a total of some 186 million ha is shown in the fi gure concentration in an environment, and the person-time spent in 2.2. the environment. The household combustion of biomass (such as dung, charcoal, wood or crop residues), or coal is the main

6 The Monitor refers to a US Embassy website document, but this is no longer accessible. The Monitor also refers to an ADB study from 2002, but this source is not identifi ed in any note, and the Monitor lacks a list of references. 7 This section draws strongly on World Bank (2006b) SECTION 1: Priorities for Sustainable Development

Figure 2.2. Land and Forest Classifi cations fuel supply. However, sharply increasing costs of oil and its derivatives will increase the pressure on biomass a fuel. 30% 2.2.6 Crop Production and Land Degradation 33% Indonesian agriculture has maintained high levels of Production Forest productivity in the main categories of crops production, i.e. Conversion Forest lowland and upland rice, and maize. Rice is grown under intensive cropping with irrigation systems (lowland rice) and Protection Forest rainfed or upland conditions (upland rice). Under dependable Conservation Forest 8% irrigation two crops per year are commonly grown by farmers, 12% Other Land and occasionally up to fi ve crops can be planted in a 2-year period. The production of lowland rice is highly concentrated 17% on Java, followed by Sumatera and Sulawesi. The share of Source: Adapted from World Bank (2006a) harvested area and production of rice in Java from 1998 to 2002 has been nearly constant at around 50 percent. The average yield of brown rice grain was higher on Java (5 tons/ha) than Investing a More Sustainable Indonesia In Indonesia has the third largest area of tropical forest in the in the other regions (4 tons/ha). The total annual harvested world. Much of its impressive biodiversity is contained in area of lowland rice did not change much during the fi ve-year those forests. It is also an economically signifi cant sector, as period; it is about 11 million ha. forestry—defi ned here as including wood manufacturing and paper & printing industry— accounts for 3-4 percent of GDP. There does not appear to be any comprehensive and recent study on the impact of land degradation in the country. Between 1990 and 2000, some 21 million ha of forest cover were Magrath and Arens (1989) conducted an analysis of the on- lost, but some 12 million ha was added because or re-growth site costs of soil erosion for mainly upland rainfed cropping and planting. The net loss in area – not value – amounts to systems on Java, using the change in productivity approach. about 10 percent of the 2006 forest categories reported above, As net profi t falls for one crop, there will be adjustments. To after adjustment for deforestation. account for this, farm budgets for a variety of representative dryland cropping systems across Java were constructed, and The dynamics of forest areas are driven by a number of factors: used to estimate the eff ects the yield losses from erosion on net farm incomes. This was done comprehensively for a single • Transmigration from the 1970’s to the 1990’s moved year (1985). Assuming that the one-year loss in net income some 2.5 million people to sparsely populated recurs over each successive year, Magrath and Arens obtain a areas where they often cleared forests to provide a total present value of current and future losses. The latter fi gure 12 homestead and a couple of hectares of agricultural is their estimate of the on-site costs of soil erosion on Java. For land for each family. However, this program is now Java as a whole, this on-site cost of soil erosion in 1985 was discontinued. estimated to be approximately $ 327 million in 1985 or $562 million in 2007 dollars). This amounted to around 4 percent of • Roads provide better access to forested areas, and the total value of dryland crops on Java in 1985. can have important knock-on eff ects on habitation and forest harvesting. New roads require an EIA, but An important limitation of this type of calculations is that it upgrading old roads do not. omits any off -site impacts from downstream siltation. They could be strongly negative for hydropower plants and irrigation • Mining is sometimes taking place inside protection systems downstream. But enriched siltation also contributes forests. According to a Presidential decree (no. 41 of as natural fertilizer to downstream cultivation, so the impact is 2004) 13 mining companies are allowed to continue mixed. such activities. Eff orts to diminish oil dependence by relying more on coal may also induce extensive strip A later analysis by Lindert (2000) fi nds no evidence that mining. chemical land degradation of agricultural land in Indonesia has been a signifi cant problem. Reviewing the period 1940 • Forest fi res are sometimes quite widespread, and in to 1990, his overall estimate is that the average soil chemical 1997-98 some 10 million hectares burned. Controlled quality declined by 4 to nearly 6 percent. This decline was due burning is regularly used for land clearing. Fuelwood primarily to bringing new lands into cultivation in the outlying collection is not seen as a major driver behind islands—the soil quality index for the established agricultural deforestation as it often uses waste from tree clearing areas in Java and Madura may have increased by as much as and harvest, or wood from private lots designed for 10 percent. The area under cultivation more than doubled SECTION 1: Priorities for Sustainable Development between 1940 and 1990. Lindert concludes that overall there Pet-Soede et al (1999) undertook a cost-benefi t analysis of blast has been a strong increase in the soil quality index during the fi shing showing a signifi cant net loss over 20 years. The main time period studied. quantifi able costs are through loss of the coastal protection function, foregone benefi ts of tourism, and foregone benefi ts of non-destructive fi sheries. The economic costs to society 2.2.7 Coastal & Marine Environment8 are four times higher than the total net private benefi ts from blast fi shing in areas with high potential value of tourism and The Indonesian Archipelago consists of about 17,500 islands coastal protection. Mous et al (2000) reviewed the damage and has a coastline of about 81.000 km. Of its population of from cyanide fi shing, and concluded that this may not be as about 225 million, 60 percent live within 60 km of the sea. threatening to Indonesia’s coral reefs as blast fi shing or coral Indonesia has at least 50,000 km2 of coral reefs. This is roughly bleaching caused by global climate change. 18 percent of the world’s coral reefs. The Indonesian coastal and marine sector, and in particular the small-scale fi sheries supported by coral reef ecosystems, is a signifi cant productive 2.3 Summary of Degradation Costs asset for the country and the millions of poor., Healthy coral reef ecosystems can annually produce marine products worth on Natural capital constitutes about one quarter of total wealth average US$15,000 per square kilometer, and are an important in Indonesia—an even higher share than produced capital. source of food and livelihoods for about 10 thousand coastal This underlines the importance of sustainable management villages across the country. of natural resources as well as the need to off set depletion of natural capital with increased savings of human and produced Pervasive poverty in coastal communities is coupled with capital. extensive degradation of coastal resources. In the past 50 years, the proportion of degraded coral reefs in Indonesia has Climate change will result in a number of negative impacts EnvironmentalCountry Analysis increased from 10 to 50 percent. As a result, many of the small- on Indonesia, including reduced crop production, sea-level scale coral reef fi sheries in Indonesia have reached a level of rise, greater risks of fl ooding, coral reef bleaching, and further exploitation where the only way to increase future production spread of vector-borne diseases. The economic costs of these and local incomes is to protect critical coral reef habitats and impacts are projected to reach 2.5-7.0 percent of GDP by 2100. reduce destructive fi shing eff orts. Capacity at the district level to assist coastal fi shing communities to sustainably manage The major health, water, tourism and other welfare costs this important resource is limited. associated with poor sanitation have been estimated more than $6 billion in 2005, or more than 2 percent of GDP that Indonesia’s coral reefs are currently undergoing rapid year. destruction from human activities including: poison fi shing; blast fi shing; coral mining; sedimentation; pollution and The health impacts of outdoor and indoor air pollution have overfi shing. In a paper by Cesar et al (1997), these destructive been estimated to about $5.5 billion per annum or about fi gure activities are described and the private gains from these is 1.3 percent of GDP (2007). activities are compared with the costs to society. It is shown 13 that the social costs by far outweigh the short-term private With respect to forestry, the rate of deforestation from 1990 to gains. However, private incentives for short-term profi t remain 2000 has been estimated to about 21 million ha, but with some strong. 12 million ha as a balance by way of re-growth and plantations. Natural growth in standing forests contributes further to an increase in volume.

Table 2.3. Summary of Economic Costs from Environmental Degradation SOURCE OF DEGRADATION ECONOMIC COST ($ bn 2007) ANNUAL GDP LOSS (%) Climate change Increasing over time 2.5–7.0 (by 2100) Water, sanitation and hygiene 7.7 2+ Outdoor air pollution 3.9 1.2 Indoor air pollution 1.6 0.4 Forest degradation N/a N/a Soil degradation $562 million (Java, 1985) 0.13* Coastal and marine environment N/a N/a * Updated from 1985 estimate using GDP defl ator of 172 (1985 = 100)

8 This section draws on World Bank (2004) and http://www.zmt-bremen.de/fi les/Downlods/SPICE_Flyer.pdf. SECTION 1: Priorities for Sustainable Development

Estimates of the cost of land degradation—particularly water- • Low-income households are more vulnerable to induced erosion in uplands and salinization and waterlogging natural and anthropogenic disasters because they of irrigated areas— are not easily available, and the wealth are often located in higher-risk areas estimates quoted above do not include them. A partial estimate for Java is included below for comparison. • Poor people cannot aff ord to cope with environmental degradation as eff ectively as can wealthier segments Coastal zone and marine degradation is a major concern in of society. Indonesia, with it rich marine biodiversity. Some economic data are available with respect to coral reef degradation, For example, the livelihoods of 10 million of Indonesia’s 36 showing signifi cant losses per km2. However, further work is million poor are linked to the country’s forests; forest loss needed to assess how these localized estimates can be scaled undermines these livelihoods, ecosystem services and the up to a national perspective. ability to meet poverty alleviation goals (World Bank, 2006a). As another example, the eff ects of climate change will be felt most 2.4 Distributional Consequences of by the poorest Indonesians who are more likely to be: living in Environmental Degradation marginal areas that are susceptible to drought, fl ooding and/ or landslides; dependent on climate-sensitive agriculture or It is widely known that the poor suff er the greatest consequences fi sheries for their livelihoods; and have fewer assets to cope from environmental degradation for a variety of reasons: with the impacts of a changing climate (UNDP, 2007). Some of the poverty impacts of climate change in Indonesia, viewed Investing a More Sustainable Indonesia In • Livelihoods of many rural poor are directly tied to the through the lens of the Millennium Development Goals, are quality and productivity of natural resources (water, presented in Table 2.4. soil, forests, fi sheries) 2.5 Selecting a Focus for the Country • Poor families have the lowest rate of access to Environmental Analysis environmental services and benefi ts such as drinking water, sanitation and clean energy Chapter 5 reviews donors activities in the environment and natural resource management sector in the last 3-5 years, and

Table 2.4. Poverty Impacts of Climate Change by MDG Goal MDG Goal Potential Poverty Impact 1. Eradicate extreme • Degradation of forests, fi sheries, pastures, and cropland that many poor families depend on poverty and hunger for their food and livelihoods • Damage to poor people’s homes, water supply and health, which will undermine their ability to earn a living • Increased social tensions over resource use which can lead to confl ict, destabilized livelihoods and migration 14 2. Achieve universal • More children likely to be taken out of school to help fetch water, care for ill relatives or help primary education earn an income • Malnourishment and illness among children could reduce their school attendance and impair their learning while in class • Floods and storms destroy buildings 3. Promote gender equity • Greater vulnerability of women who are more dependent on the natural environment for and empower women their livelihoods • Women and girls will face a greater workload fetching water, fodder, fi rewood, and producing food during climate stress • Female-headed households with few assets will be particularly vulnerable to climate-related disasters 4. Reduce child mortality• Climate change could lead to higher mortality from heat waves, fl oods, droughts, and hurricanes. 5. Improve maternal health• Pregnant women are vulnerable to diseases spread by mosquitoes (malaria and dengue) or those spread by water (cholera and dysentery) which may become more prevalent 6. Combat major diseases• Same as 5 above • Quality and quantity of drinking water could be reduced, exacerbating malnutrition among children 7. Ensure environmental • Deterioration in quality and productivity of natural resources and ecosystems upon which sustainability the poor depend Source: adapted from Oxfam, 2007 SECTION 1: Priorities for Sustainable Development

Table 2.5. A Preliminary Ranking of Environmental Challenges Problem Economic Cost Comparative Already Addressed Impact Potential Financial Resources Advantage Climate change +++ ++ + +++ +++ Water, sanitation and +++ ++ + +++ ++ hygiene Outdoor air pollution ++ ++ ++ ++ + Indoor air pollution ++ + + ++ + Forest degradation + ++ ++ ++ ++ Soil degradation + ++ + ++ + Coastal and marine + ++ ++ ++ ++ compares them with the ’s priorities increasing donor and market resources available to tackle the in the same sectors. The main fi nding is that the top three climate challenge. Similarly, water, sanitation and hygiene categories in the donor list and the GOI list are identical, namely represent the highest short-term economic costs, the World (i) pollution and urban environment; (ii) forest, biodiversity, Bank has a long history of involvement in the sector, especially land and water; and (iii) coastal and marine. The top category sanitation has not been adequately addressed in Indonesia, alone covers about 40 percent of the funding from both donors the potential health and economic impacts of addressing the and GOI. Conversely, the bottom three—of six—categories in problem are tremendous, and relatively signifi cant fi nancial terms of revealed priorities are also identical in ranking, namely resources are available to address the problem. However, EnvironmentalCountry Analysis (iv) transportation, energy & mining; (v) global environment; water and sanitation have been the focus of many separate and (vi) national cross-cutting issues. The background report analyses that do not have to be repeated here and are already for the chapter concludes that “…there is no signifi cant incorporated in the work of the World Bank in Indonesia discrepancy in the prioritization of ENRM resources” (Ibid, p.15). through its infrastructure program as well as its Regional Water But what should be the priorities for the CEA’s focus? and Sanitation Program.

This chapter provides one basis for prioritization – the The other environmental challenges are still very important magnitude of the economic cost of degradation. This should for Indonesia’s sustainable development. However, for various be of overriding concern from an Indonesian perspective. reasons, they do not merit the same attention for a Country From the viewpoint of a development partner like the World Environmental Analysis, e.g. economic costs are an order of Bank, other selection criteria would include: the World Bank’s magnitude lower, the World Bank does not have a comparative comparative advantage to work on a particular problem, advantage to work on the issue, the problem is already being whether the problem is already being adequately addressed adequately addressed, the potential for achieving an impact by one or development partners, the potential for achieving in the short-term is constrained, and/or fi nancial resources to 15 signifi cant impact, and opportunities for mobilizing fi nancial address the problem are not readily available. It should also resources for change. Table 2.5 represents an attempt at be noted that an upcoming CEA to be prepared by the Asian applying these criteria to the environmental challenges that Development Bank will nicely complement the World Bank’s have been discussed in this chapter. analysis by focusing on water resource management and coastal/marine issues. Indoor and outdoor air pollution issues From this cursory analysis, the two highest-priority have also been a focus of the ADB and the World Bank does not environmental challenges would be climate change and water/ have a comparative advantage in lending to local governments sanitation. Climate change constitutes the biggest long-term where this pollution needs to be better managed. Soil environmental threat to the Indonesian economy. It is also an depletion has been a focus of previous World Bank and other area where the World Bank has a comparative advantage in donor initiatives, as has forestry (EC, 2005; World Bank, 2006). working, it has only recently drawn the attention of the GOI Thus, this report chooses to focus on the emerging challenge and development partners in Indonesia, there is signifi cant of climate change as related to adaptation (Chapter 6), land use potential for both mitigation and adaptation, and there are (Chapter 7) and energy (Chapter 8). SECTION 1: Priorities for Sustainable Development Investing a More Sustainable Indonesia In

16 7777777 17111117171717 CountryCoCouunntrtry EnEEnvironmentalnviviroronmnmeenntatal AnAnalysisala yssisis SECTION 2: Governance Challenges of Environmental of Environmental Challenges

SECTION Governance 2: Challenges of Environmental Investing In a More Sustainable Indonesia 18 Chapter 3: Institutional Setting: Decentralized Environmental Management

Prambanan Temple, Central Java Photo: Winarko Hadi ed the ed icts between cient capacity; ts nancial responsibilities of mine operators, of mine operators, nancial responsibilities Convention on Biological Biodiversity; Convention Biodiversity; on Biological Convention Convention three broad goals of promoting economic growth, growth, economic goals of promoting broad three to society ts benefi an equitable widespread providing and poverty(livelihoods reduction), and sustaining services/benefi environmental 2007 – this law Resources on Marine & Coastal Law coastal commercialize formally the right to creates zones. water a body to (No 30/2007) – creates on Energy Law achieving to policies and contribute energy oversee the problem Does not solve objectives. development legal and policy in framework of an uncoordinated sector. the energy on MiningLaw 2009 – sets clear rules on mining fi permits, to commit to mine investors while also requiring mineral processing. downstream a 31/2004) – provides (No. on Fisheries Law the industry, governing for framework broad permitting and harmonized with comprehensive confl but does not resolve regulations, management. authorities for local and central - focuses Resources Water on Management of Law of management, control resource on decentralized pollution, exploitation, conservation, and disaster control. of toxics control 1997 – lifecycle Wastes Toxic on Law of the transboundaryand prohibition of transfer waste. and toxic hazardous – Indonesia has ratifi International Agreements • • • • • • • tional programs, greater political will, inter-agency will, political greater tional programs, environmental management, improved governance, governance, management, improved environmental roles. cation of central-local ected impact assessment. sheries and environmental SECTION Governance 2: Challenges of Environmental ect the environment. and policies. ected of laws in a set Minister of Environment to issue national standards issue national standards to Minister of Environment a wide over and other minimum requirements that legally fall under other ministries’ range of areas jurisdictions, but nonetheless aff legal (No 41/1999) - Indonesia’s Law Basic Forestry management is based on Forest for framework Law on the Environment (No. 23/1997) - authorizes the 23/1997) - authorizes (No. on the Environment Law Constitution, 1945 - in 2002, Indonesia’s Constitution Constitution 1945 - in 2002, Indonesia’s Constitution, balanced emphasize of 1945 was amended to sustainability environmental through development and clarifi incentives, nancial management and to embrace democracy embrace to decentralization. and evolved institutions have policies and Indonesian laws, as local institutions that are and national as well programs, policies, set of laws, is an impressive there Similarly, management. and natural resource environmental for responsible management have and natural resource management aspects of environmental many Over the past decade, the local level. to been decentralized aspects reputa has had positive through local control Greater and specifi c issues with forestry, fi forestry, c issues with and specifi exist, including geography-based improvement Options for collaboration, community empowerment, and integration of environment in spatial planning. of environment and integration community empowerment, collaboration, management, including: good environmental to in obstacles has resulted decentralization time, the same At and insuffi empowerment with incentives, problems and enforcement; standards inadequate fi Framework Framework • • •

MAIN MESSAGES • • • • • •

3.1.1 Relevant Legislation Legislation 3.1.1 Relevant and environment to Although Indonesian related legislation management is both detailed and extensive, natural resources with the legislative vision or coherency, it lacks common These and contradictory. often overlapping framework the independent and often by been exacerbated have problems and subsequent implementations of spurious interpretations and districts often provinces where authorities, decentralized which at times directly contradict issue regulations central Key or nationally-issued regulations. national legislation includes: legislation a combination of economic, social, and environmental and environmental social, of economic, a combination This sustainable development. achieve to components is refl commitment 3.1 Environmental Law and Policy and Policy Law 3.1 Environmental sustainable development Indonesia to made a commitment on 2 Sustainable Development for in its National Concord January2004, as part Action of a Sustainable Development Millennium Development the country’s Plan containing refl philosophy development Indonesia’s Therein Goals. Investing In a More Sustainable Indonesia 20 21 Country Environmental Analysis sh nded by nded by sheries es areas c courses and c courses cation, coal bed cation, coal cant part of the national cally include environmental eld trips, specifi eld trips, - The current transport current The and - Energy to free schools are While Indonesia’s - Priority in agrarian policies and policies in agrarian - Priority sh catch management strategies, fi strategies, management sh catch and

- The MinistryThe of Maritime and Fisheries - shery resource supervisionshery and and research; resource cultivation management strategies; improved improved cultivation management strategies; fi control management, internal internal improved the recognized have They and administration. with other integration planning and better need for have and in this vein ministries and organizations, with the agreements collaborative made substantive Labor, Communications, Works, Ministries of Public and the as the Navy, as well Transmigration, and Police. Transport of fuel subsidy policies include a high level energy a signifi which consumes of these subsidies is the object budget, and removal policy national energy Indonesia’s debate. of intense conserving(2003-2020) calls for: crude oil reserves and use of their lifespan; maximize natural gas reserves to CNG and LPG in the transport sector; coal promoting industries; expanding small and medium sized by coal developing resources; coal exploration for gasifi household use; exploring coal small scale hydro-electricity sources, methane energy geo- plants; increasing power solar energy schemes, as plants, in small scale power sources thermal energy as hydro-electricity;well and utilizing nuclear energy environmentally in a manner that is economical, and safe. reliable friendly, - Education fi time for allocate the environment, to related educational material primarythe national curriculum for and secondary education does not specifi be already to considered as they are studies, physics, included in other subjects such as biology, Agriculture production of increase is to plans development of regaining in hopes rice, especially of crops, several eff by the are hindered orts but these ciency, self suffi very holdings and conversion of agricultural small size land non-agricultural to rice of especially wetland of new and the application varieties, New rice uses. but with mixed introduced, been have agrochemicals, remains the use of agrochemicals Moreover, results. use of is ongoing excessive and there uncontrolled, chemicals at the local level, both legal and illegal soil fertility in pollution and resulting problems. Fisheries plan identifi development (DKP) current manage the action to urgent in order requiring with recommendations sustainably, resources of Indonesian at the management directed fi including: fi • • • • ghting illegal SECTION Governance 2: Challenges of Environmental res, res, rehabilitation ective action on these le: Indonesia; Final Report, July 2005. Framework Contract AMS/451 Lot N°6, Request for Services N°6, Request for Contract N°2005/102581. A project AMS/451 Lot fu Report,le: Indonesia; July 2005. Framework Final ve goals, four of which concern of which concern four goals, ve cation; Basel Convention; Nuclear Nuclear Convention; cation; Basel However, eff 9 Additional biodiversity management biodiversity Additional 10 - Over 11 percent of the Republic’s land of the Republic’s - Over 11 percent ve priorities, including fi priorities, ve – the Ministry of Forestry’s current strategy strategy current – the Ministry of Forestry’s orts also undertaken are in botanical gardens, on International Trade in Endangered Species; in Endangered Trade on International Timber Agreement; Ramsar Tropical International Change Convention Climate Wetlands; on Convention for Convention Vienna Protocol; and the Kyoto to Convention Layer; of the Ozone the Protection DesertifiCombat of the Sea; on the Law Convention Treaty; Ban Test of the Prevention for and International Convention Ships. from Pollution eff and breeding safari parks, gardens, zoological Forestry The and arboretums. cultivation centers for bank” “genetic Ministry has also established a while the Department crops, of Agriculture food cattle and and plasma collectionmaintains a cell for MinistryThe has of Environment plants. agricultural the Indonesia and Strategy Biodiversity formulated implementation of the guide Action Plan (IBSAP) to 2020. up through program national biodiversity IBSAP includes fi creating greater public awareness, developing developing public awareness, greater creating conservation-oriented the and engaging attitudes, same the At issues. citizenry in governance nation’s is not a legally binding document, and IBSAP time, the Ministryconsequently cannot of Environment the Action Plan. enforce priorities is limited by lack of coordination and lack of coordination by priorities is limited national departments those between cooperation of government. levels as between as well responsible have It local governments has happened that even policies environmental government central rejected deemed unsound or too when they are and decrees unwise. Biodiversity 21.5 million hectares) (about has been declared area reserves, of nature either in the form areas, protected recreational nature national parks, reserves, wildlife which parks and game reserves, forest grand parks, Moreover, the Ministry by managed are Forestry. of Indonesia boasts an additional 6.3 million hectares of marine parks. Forestry of fi consists fi forest controlling logging, and conservation of forest resources, and both resources, and conservation of forest of the as decentralization restructuring as well forestry sector. Country Environmental Profi Country Environmental the European Union and implemented by A project implemented by MWH. Pp 29-30. MWH. Pp by A project implemented by Union and implemented the European Indonesia. April 2009 Fisheries, airs and Ministry Conservation for and Marine Director National Parks, of Marine Aff Dermawan, Agus Mr. • • 9 10 Many sectors engage in environmental management. The key The management. sectors in environmental Many engage as follows: are sectoral policies and programs 3.1.2 Sectoral Policies & Programs & 3.1.2 Sectoral Policies mostly nancially ces were ectiveness erent erent local cials directly cally for providing providing cally for facilitates and monitors and monitors airs facilitates Aff Home of – the role of the province of the province – the role government

manages a forest estate estate Ministrya forest manages of Forestry Ministry cally for environmental management. Provinces management. Provinces environmental cally for the development policies of local governments. The The of local governments. policies the development Ministry specifi has a directorate support spatial planning and and facilitation for development. in the context of regional environment the eff improving It for is also responsible for responsible organizations of local government management. environmental Provincial It is a fairly minor one. autonomy under regional in local governments across essentially coordinates than one carry more out the functions that involve environmental such as managing local government, to have Inexternalities. practice though, provinces also fi are Provinces do so. to be invited government the decline in central due to constrained district to and city transfers of in favor resources governments. Boards Regional Planning and Development regional for is responsible ) – BAPPEDA (BAPPEDA including integration planning, development diff across programs of development of includes integration agencies..This government budgeting spatial plans, in regional the environment management and montioring environmental for quality. environmental that technically encompasses nearly 70 percent of 70 percent nearly encompasses that technically is no of this area though a third mass, land Indonesia’s production, forest It for is responsible longer forested. conservation, protection, and riverbank watershed of the and development use, non-forest to conversion communities. industry forest-based as forest as well offi regional MinistryThe of Forestry’s and staff with the decentralization, dissolved The • The and provincial governments’ the local absorbed into • district forestry agencies. The • • Clearly, many other ministries have a direct impact on the other ministries have many Clearly, including environment, management and quality of Indonesia’s and Mines, Energy Maritime and Fisheries, Trade, Finance, Transport and Industry, Agriculture, 3.2.2 Role of Local Governments 3.2.2 Role of Local has been one of of local governments empowerment The in the past 10 years. most remarkable achievements Indonesia’s Indonesia result, has almost 500 subnational governments a As development in the country’s crucial players become that have specifi and, offi headed by and districts/cities now are accountable to their electorates. Relevant local institutions for for Relevant local institutions their electorates. to accountable include: the environment t, 11 12 er B.Sc. level level er B.Sc. SECTION Governance 2: Challenges of Environmental orts of the government is a coordinating is a coordinating Environment of airs: Ministry The • The and so forth. Currently several Indonesian NGOs are Indonesian NGOs are several and so forth. Currently curriculum national an improved for advocating in emphasis and depth a greater that incorporates off Universities studies. environmental and other forestry, biology, in agriculture, degrees Sometraditional sectors universities educations. while master courses, level master’s developing are management are in environmental programs degree popular. increasingly National Development Planning Agency Planning Development National long- developing for (BAPPENAS) is responsible budgets and increasingly range plans and associated integration greater mechanisms for augment seeks to and eff the work between agencies in order to mainstream environmental environmental mainstream to agencies in order current The management policy and practice. Plan 2004- Development National Medium-Term resources of natural the improvement 2009 stresses of environmental management and redirection benefi economic greater conservation give to environmental services and preservation.environmental ministry, which means that it has no responsibility which means that it has no responsibility ministry, MinistryThe sets standards, implementation. for the environmental regulates establishes policies, operates process, impact assessment (AMDAL) and collects ranking programs, environmental it has no direct data. However, environmental or district agencies, the provincial over control not are these local institutions and consequently standards implement the Ministry’s to compelled and policies. nanced environment-related programs through the through programs environment-related nanced Indonesia Country Natural Resource Environment Analysis. BAPPENAS. 2007. Pg 27. BAPPENAS. 2007. Pg Analysis. Indonesia Environment Country Natural Resource 11. Ministry State The 2008. Pg Report of Environment. of the Environment in Indonesia State 2007. The Environmental Management Environmental •

11 12 The central government institutions with perhaps the most government central The include the National concerns environment for visible role Planning Agency the Ministry (BAPPENAS), Development of some extent, and to the the MinistryEnvironment, of Forestry, Ministry of Home Aff 3.2.1 Role of Central Institutions 3.2.1 Role of Central In Indonesia, the government plays a central role in role a central In plays Indonesia, the government interventions with management processes, environmental environmental or funding for taking of either regulation the form quality activities, management of or the application 1983, Since methods. or technologies environment-friendly GOI has fi and evaluation of natural a) inventory budget targeting state land, b) preservation of forests, environment; in the resources and environment, of natural resources and water; c) oversight and geophysics. of meteorology and d) development 3.2 Institutional Framework for for Framework 3.2 Institutional Investing In a More Sustainable Indonesia 22 23 Country Environmental Analysis c ce ce ve years of years ve of environment of environment based on workload, ces ect enforcement law in the context impactect control environmental context of environmental carryingcontext environmental of capacities . all types pollution of for and controlling Monitoring hazardous air, (water, degradation and environmental change) climate wastes, of law and implementation Development with including coordination strategies, enforcement eff to other government impact assessments (EIAs) environmental Performing to eff of national standards services of environmental national standards Achieve capacity of local environmental strengthening by including observanceinstitutions, of national personnel and laboratory competency standards support instruments to economic Develop conservation; apply environmental environmental eco-labeling, (e.g., management systems economic technologies; environmentally-friendly and apply incentive/disincentive develop tools); Indonesia, Green Towards such as Adupura, schemes, and PROPER. promoting by governance Increase environmental community participation NGOs and and engaging sectorthe private Undertakeactivities additional including implementation of both de-concentration and special allocation funds, ces, as well as formalizes terminology so that local so that local terminology as formalizes as well ces, cations and educational levels for staff for cations and educational levels • • • • • • • eld, basic environmental training, and at least fi training, basic environmental eld, (Kantor Lingkungan Hidup). The law spells out specifi law The (Kantor Lingkungan Hidup). qualifi management board with heads of environmental agencies, in a relevant degree of a graduate a minimum have to required fi the importance also emphasizes law The experience. relevant issues citing that environmental cooperation, of interregional require boundaries and therefore administrative often cross cooperation them, urging address to approach an ecosystem address entities to and among local government between In short, local environmental agencies have received a received In short, agencies have local environmental the scope dramatically upgrade to mandate comprehensive and quality of their services and performance. In support 41 sets out basic principles the new Law of this goal, distinguishing institutions, establishing environmental for the functionbetween and Offi of Boards boards structure to internal guidelines for and providing and offi institutions either bear the title of Environmental environmental Offi (Badan Lingkungan Hidup)Board or Environmental ces ces cant cally ecting Institutions. Governmental Government of Local Reorganization concerning Minister airs and State of Environment airs and the State SECTION Governance 2: Challenges of Environmental . 13 cant extent, natural local - The environmental environmental The bodies - eld of environment including including eld of environment nancial incentives to local government local government to nancial incentives environmental

ce (Kantor Lingkungan Hidup). Environmental (Kantorce Hidup). Lingkungan Environmental assist the head of the local government to manage to local government assist the head of the impact analysis. environmental service operational and technical agencies develop policies in the fi management structures created by each district by or city structuresmanagement created Serviceeither an Environmental of take the form may Agency Hidup) (Dinas Lingkungan or Environmental Offi conservation of natural and rehabilitation prevention, and environmental and control, pollution resources, offi Environmental and regulations. mining laws Local Policy development, planning, control, and control, planning, development, Policy impacts (including environmental for monitoring conservation);biodiversity includes eff this of improvement coordination spatial plans to and evaluation of control, planning, integrated management, particularlyenvironmental in the in 2004, it became law nement of the decentralization Environmental Management Management Environmental Number 061/163/SJ/2008 and SE-01/MENLH/2008. Departemen Dalam Negeri. 2008 c functions of local government environmental environmental c functions of local government • • cooperation and inter-regional ng, airs, and Law 41, regarding regional apparatus organizations. apparatus organizations. regional 41, regarding and Law airs, 13 Minister Between of Home Aff Letter Joint Circular Minister of Environment, these new laws help to mainstream mainstream help to these new laws Minister of Environment, basic principles for providing development, environmental clarifying their tasks institutions, establishing environmental structure, internal guidelines for and functions, and providing staffi apparent that there were still important were operation gaps in the that there apparent and agencies at the provincial management of environmental government in 2007, the central Consequently district level. policystipulated of authority on the delegation both to the and regency/municipality for provincial governments implementation development purpose of environmental the distribution of government 38, regarding Law through aff the Minister of Home Aff jointly by stated As After refi After 3.3.1 Recent Laws to Strengthen Local Local to Strengthen Laws 3.3.1 Recent Indonesia introduced its decentralization law in 1999 which for which for in 1999 law its decentralization Indonesia introduced signifi to have local government rst time empowered the fi 3.3 the Environment and Decentralization decision-making authority their local and jurisdiction over a signifi to and processes, governance in an the country later these laws years revised Five resources. with even However weaknesses. some of the correct to attempt management remained local environmental these revisions, passed in 2007 specifi were weak, so subsequent laws targeting strengthening local environmental management local environmental strengthening targeting other by been augmented have laws These institutions. fi policies that provide policies. government central closely follow more to Specifi include: institutions now ective and ective rms to sign sign rms to rms in highly c fi ) – This program is program This ) – Adipura ( A similar program is the Superkasih A similar program - Program Kali Bersih - Program Programs 15 Program

River Cities

nding ways to encourage participation encourage to of local nding ways orts to comply with environmental management orts with environmental comply to Program (Clean River Statement Letter), which Letter), Statement River (Clean Program their acknowledges for industries and businesses eff factors. and administrative technical considering Clean an annual voluntary evaluation and ranking of the It performance. has attracted the environmental who participation 300 local governments of over according in categories recognition for compete local to given are Awards population size. to in a highly- the President leaders by government annual ceremony. publicized Inter-agency collaboration program community empowerment Green Spatial planning Industrial Performance Rating Program (PROPER) Rating Program Industrial Performance public environmental - PROPER is a national-level reporting promoting with an objective of to initiative with pollution control industrial compliance the adoption of and enforce facilitate to regulations, and to technology,” “clean practices to contributing system. management environmental a better ensure the mechanisms is built on the idea that program The transparency and accountability, of public disclosure and community participationin operations, will eff achieve to local communities empower practices. sustained pollution control Clean polluting industries; (2) getting those fi pollution reduce voluntary to of commitment letters timeframe; agreed within an 50 percent loads by and (4) applying subsequent results; (3) monitoring on those industries who do not comply pressure implementation of The commitments. with their own authorities with PROKASIH provincial is carried out by the support and with needed, agencies as of central encouraged media, NGOs and community groups participate.to (PROKASIH) or “Clean River Program” is a voluntary Program” River “Clean (PROKASIH) or (1) identifying specifi for program • • • • • •

3.4.1 Reputational Programs Programs 3.4.1 Reputational Ministry The considerable has demonstrated of Environment, inf fi creativity through programs management actors in environmental with national compliance that reward voluntary programs Some programs examples of these and goals. standards include: SECTION Governance 2: Challenges of Environmental ect decentralized environmental ect environmental decentralized . 14 Reputational programs will Political Funds State of the Environment Report of the Environment in Indonesia.State Pg12 Bank, http://wbln0018.worldbank.org/eap/eap.nsf/Attachments/062403-EnvMonitor2003/$File/indo+monitor.pdf World Monitor 2003, Indonesia Environment Management at the Local Level the Local at Management • •

14 15 nancial capacity in order to help bring them up to minimum help bring them up to to nancial capacity order in Deconcentration funds create incentives for district for and incentives funds create Deconcentration national policies into incorporate to governments provincial provincial which strengthen resources proving local practice, management capacity to and district environmental level Regulation 14 issued policies. government central represent out the lays Minister of Environment the State in 2007 by including funds, the use of deconcentration guidelines for level planning at the regional capacity for improving for issues; regency/municipality managing environmental for of Special implementation and monitoring coordinating and reporting water monitoring on river Allocation Funds; capacity at least one river; qualitybuilding in hazardous for law improving EIA systems; management: developing waste to related and complaints disputes managing to enforcement issues. environmental enable regency/ Special Allocation Fund Government’s The and roles their upgrade to municipality governments developing management by in environmental responsibilities these purposes, facilities and infrastructure for physical better fund The quality of water improvement. especially in the area average with below regions towards is especially targeted fi It is also helps sector. of servicestandards in the environmental their handling of local regional accelerate local governments strengthen as generally to as well problems, environmental fund The management. institutional capacity in environmental water has special emphasis on facilities and infrastructure for particularly quality of water quality in areas improvement, protection. resource and water pollution control, monitoring, This section covers some important section and This covers developments characteristics that aff management in Indonesia including: 3.4 Advances in Environmental in Environmental 3.4 Advances Other mechanisms for encouraging local governments local governments Other encouraging mechanisms for the policies are environmental with national comply to environmental introduction of fund allocations through and special 33 provinces, to funds provided deconcentration sector 468 regencies/ to environment allocation funds in the municipalities transboundary mandating the intervention and of the issues, Board, Environmental Provincial the through local governor, districts or more two or issues involve when environmental cities. & Special Allocation 3.3.2 Deconcentration Investing In a More Sustainable Indonesia 24 25 Country Environmental Analysis lems ts to ts to nmental he form of he form ments. vironmental vironmental -tourists. The The -tourists. resources and resources built around: mmunities and deforestation and deforestation as other forest goods as other forest transport appropriate t from: discussed Results were c region. t of coordinated collaboration between between collaboration t of coordinated conducted by an independent local academic institution. local academic institution. an independent conducted by demonstrates but it districtThe is not particularly wealthy, when the Yet, the environment. to a high commitment environmental all the progressive leadership changes, district’s with the departure evaporate management could of the existing of local advent it was the recent the same time, district At head. power. to come these leaders to elections that has allowed 3.4.3 Towards Inter-Agency Collaboration Inter-Agency Towards 3.4.3 the administrative issues transcend Most environmental whether at the agency, government jurisdictions of any formal few are there However, or local level. regional, national, jurisdictional between close collaboration ensure structures to problems environmental as Indonesia’s Nonetheless, entities. trend is a growing there in number and magnitude, increase inter-agency collaboration. towards inter-agency has emerged collaboration predictably, Perhaps issues that cross environmental around frequently more both inter- the need for typically forcing boundaries, geographic and inter-agency Itand collaboration. governmental is still not the most part and for practice, a common transboundary issues still lack the benefi transboundary issues are By law, stakeholder agencies. relevant the next of administration, up to level be referred supposed to enue, health and education, and other infrastructure for local co health and education, and other infrastructure for enue, erent development scenarios. Options were developed for key sectors (transport, for developed Options were scenarios. development erent orts of amberamo region that does not threaten forests that does not threaten amberamo region nancial incentives incentives nancial SECTION Governance 2: Challenges of Environmental ts is due to the fact that the sustainable scenario preserves forests that provide important that provide benefi the fact ts is due to preserves forests sustainable scenario that the ts. benefi in economic erence Expanding and improving air, river and sea transport river impact that had less adverse options on the environment; air, Expanding and improving impacts and social large-scaleMinimizing of several environmental mines; Scaling back large-scale it with community-based forestry; and replacing logging and in the M growth culturally appropriate Developing cant diff ts the environment are: the “Green Vision”, logging logging Vision”, “Green the are: ts the environment • • • • and enviro social groups for consequences development, economic to of its contribution in terms was the evaluated Each scenario an economic, social and environmental assessment of diff environmental social and an economic, En with support spatial planning legislation USAID’s revised from prepare being used to meetings and are stakeholder at several building. scenario Bappeda with training in GIS and capacity building for also involved initiative The Services Program. option was the sustainable development policies, development of existing is a continuation While the business-as-usual scenario impact. a range of social prob development, in unequal economic result would that the business-as-usual scenario indicated analysis The Box 3.1. More Sustainable Spatial Planning in Papua Province Planning in Papua Sustainable Spatial More 3.1. Box came in t response The spatial planning. Bank for World the from assistance requested government provincial In 2007, the Papua mining and forestry) as well the critical Mamberamo basin which is the largest unroaded forest in the Asia-Pacifi forest unroaded the critical Mamberamo basin which is the largest mining and forestry) as well (marginalization of indigenous people and lost access to forests and their resources), and environmental harm from large-scale harm from and environmental and their resources), forests to and lost access of indigenous people (marginalization natural exploitation of Papua’s extensive through development economic on promoting is because the option focused This mining. that supported development forestry invest major road and the mining industry basic development from while diverting funds away benefi potentially to opportunity the people of Papua a greater for provided scenario sustainable development The as well in forests health and education; the value of carbon stored to people with access isolated services poor, that provide and services; substantial rev mines that generate well-managed carbon and attracts eco stores that conserves biodiversity, forest lowland of a globally-recognized and protection governments; signifi of the scenario. cost overall the lower and because of biodiversity) carbon sinks, society (clean water, Bank, 2008 World SOURCE: the Governor of Papua to improve forest management for management for forest improve to of Papua the Governor sustainable local benefi moratorium and forest sector restructuring being undertaken and forest moratorium of the the plans and programs of Aceh; the Governor by degraded Kalimantan rehabilitate of Central to Governor eff carbon emissions; and the peatlands and reduce a district Bali has head with West Jimbrana, in district the At level, He makes regular the environment. to commitment a strong impact usually assessments, and active use of environmental In Indonesia, local governments may not conform to national to not conform In may Indonesia, local governments without fi and regulations laws environmental that level Some political will at the provincial examples of benefi 3.4.2 Political Will at the Local Level Level Local the at Will 3.4.2 Political some governors, However, of enforcement. or the threat demonstrated have and local parliamentarians mayors, bupatis, supportwill to and political responsibility considerable Whether management. good practices in environmental an enlightened to or in response wisdom, because of inherent environmental placed some local leaders have constituency, integrating of their priorities, top at the management concerns implementation of local planning and into concerns related inititiaves. orts cient cantly ect of nition of nition ective primarily ciency because they ect enforcement. Moreover, the Moreover, ect enforcement. to down reach goals often fail to ect national environment icts and overlaps between laws, but by and large there there and large but by laws, between icts and overlaps the local level because of the disruption in the line of authority the local level and local government. central between and accountability cannot possibly hope to cope with the variation in social and variation in social with the cope hope to cannot possibly regions. that exist between conditions environmental management environmental challenges of reforming The of public all areas germane to are autonomy under regional lack of clarity obstacles include continuing The administration. lack of capacity functions the that government, of local over new functions, administer to exist within local governments the eff have reforms proposed and ensuring that transparency and local level and deepening to contributing exaggerated issues are generalized more These accountability. often weak the environment’s to relating concerns deeper by and interests, and economic other political to position relative detaching themselves increasingly the prospect of regions to of interpretation their through government the central from existing rules. and regulations laws in developing the progress Despite be to continue not only does there the environment, for confl eff mechanisms to few still are disconnects with line created policies have decentralization district unresponsive ministries so that many leaders remain signifi more districts now Since are and policies. laws to their and given fund raising, for devices left their own to district heads local natural resources, managing over control generating income for make use of these resources frequently and other transactions. the districts concessions for through overall at the local level management Indeed, environmental be eff to very and tends remains inconsistent, suffi has created government if and when the central with national policies, conformity encourage to incentive or special allocation funds, deconcentration- such as through or when the local district about sound leader is conscientious eff In management practices. the meantime, environmental to eff Indonesia must by defi nition lack effi nition Indonesia defi must by 3.5.1 Systemic Obstacles 3.5.1 Systemic on the Most on Indonesian focus commentaries decentralization clarity of functions in the assignment between greater need for main culprits include weaknesses in The of government. levels defi a positive provide that fail to laws decentralization functions of harmonization pace in the slow local government government central The of sectoral laws. and decentralization making sectoral for adjustments to laws responsible is now of service the 11 standards setting minimum for and for obligatory functions. In the environment local government adjustment of the need for is a clear recognition sector there Management Act and its (23/1997) the Environmental to implementing regulations. SECTION Governance 2: Challenges of Environmental nance block grants for for block grants nance nancing, is operated by by is operated nancing, ts of decentralization should be ts of decentralization airs in 27 sub-districts and in Sulawesi nancing development of microhydro power power microhydro of nancing development cient service delivery that includes environmental Program Environmental Management Environmental

ective water management is a frequent motivator for for motivator management is a frequent ective water

One of the principal benefi 3.5 Obstacles to Decentralized 3.5 Obstacles to Decentralized effi more impact and environmental services, such as pollution control in a country systems of the size assessment. Centralized 3.4.5 Spatial Planning 3.4.5 Spatial to Indonesia using the spatial planning process is increasingly the Ministry 10 governors, WWF, issues. environmental address other stakeholders committed and many of Environment, undertake to themselves island-wide spatial planning in Aceh The biodiversity. and protect conserveSumatra to forests has supported Project the integration and Environment Forest management in district-level spatial plans of environmental planning agencyThe (Bappeda) in Papua province. in Aceh has undertaken business-as-usual and more of a comparison in the process and is now sustainable spatial planning options, 3.1). (see Box legislation into of translating the results 3.4.4 Green Community Empowerment Empowerment Community 3.4.4 Green (PNPM) community-driven program development Indonesia’s raise environmental to in rural areas component has a green build local capacity and fi awareness, environmental management. The rural program, which has rural program, The management. environmental fi nearly USD70 million in donor grant the Ministry of Home Aff Itislands. has a special Sumatra and Papua expanding to is now emphasis on fi management but also supportssystems resource natural neighborhoods is now urban for activities. A similar program activities by managed the PNPM that are for being developed Works. the Ministry of Public such that transboundary be districts two issues between to are districts the administration where the provincial by addressed lack the authority agencies insert to provincial However, reside. inter-district into and typicallythemselves must wait disputes, the districts. the dialogue by into invited until they are Eff including the Brantas River with examples collaboration, the Balikpapan in East Java, Basin Management Bay initiative River Basin Plan in and the Management Authority, Jakarta.and around a National is now there In other areas, Management a National Disaster Change Council, Climate Forestry and a National Council, Energy a National Agency, to discussion and response for of which allow all Council, and with agencies government issues across environmental solid waste the local level, At a wide range of stakeholders. metropolitan been planned for management agencies have Jakarta Jakarta and Bandung while a Greater Coordination forum (BKSP) has been set up as an intergovernmental Board transboundary address to issues. Investing In a More Sustainable Indonesia 26 27 Country Environmental Analysis ect cult to attract cult to nes or jail, but it is only but it is only nes or jail, cial contributions, foreign ception that with decentralization, that with decentralization, ception ectively. In the district of Bogor, for example, the local example, for In the district of Bogor, ectively. nancing to achieve environmental objectives at the local level. objectives at the local level. environmental achieve nancing to international focus. With perpetrators often in a position to oftenposition to in a perpetrators With focus. international with unoffi their way swing justice remain values while environmental wary, are investors unprotected. a local (ICEL), Law Environmental for IndonesianThe Center of the Indonesian members conducts for training courses NGO, and class action processes judiciary law, in environmental Court Supreme Indonesia’s head of The issues. other relevant the High to Court indicated has since that he recommends hear to ICEL training be appointed only judges with this cases. environmental is that neither the judicial system with cited Another problem the courts, nor the Ministry authorized are of the Environment convicted a company for even an operational license, cancel to courts The mete may regulations. of breaking environmental out traditional punishments such as fi in question that the ministry issuing the license for responsible rights. concession can withdraw Local: Incentives, Empowerment & Capacity Empowerment Incentives, Local: few have One of the biggest issues is that district governments management, what sustainable environmental for incentives and inadequate the center from enforcement with inadequate fi (with licenses issue concession to an incentive they have Rather, and good behavior) and enforce capacity monitor limited to short-termstimulate and activity economic fees generate to is a general per There taxes. bribery in being centralized has shifted from corruption and and districts. Jakarta the provinces to being decentralized to or government, the central from enforcement strong Without take a proactive driving local leadership to incentives strong and legislation national environmental to conforming in role at the local management in environmental success regulation, or political of commitment on the level depends largely level leadership without Local will of the individual leadership. management will sound environmental to a commitment opportunism economic a situation where inevitably lead to management while local environmental rules most decisions, do their jobs or both to capacity, agencies lack authority, eff only Rp allocated 100 million for recently government management activities, while simultaneously environmental allocating 20 times that amount (Rp support billion) to 2 sports activities in that same year. related that aff will, political in addition to other factors, are There management of environmental capacity and empowerment Uncertaintyat the local level. and funding about mandates capacity has limited building process in the decentralization capacity is Government institutions. of local governmental verypartly salaries are the fact low by limited that government making it very diffi sector, the private to relative the highest-performing in the workforce. people available uents guration SECTION Governance 2: Challenges of Environmental uents from upstream ective environmental c cases: local authorities ective is in establishing what ences has given government government has given ences airs, have a reputation for siding with for a reputation have airs, nancial contributions to causes that to contributions nancial ciently adequate for sustainable environmental sustainable environmental for ciently adequate are in their interest. Also, since the police report the police a central since to Also, in their interest. are and district authorities can provincial ministry, government specifi investigate to police only request Indonesia’s judiciary also has a reputation for failing to uphold judiciary failing to for also has a reputation Indonesia’s under a fact come in such cases, that has increasing the law and is not legal, both legislation and tradition generally requires and tradition generally requires both legislation and is not legal, be brought evidence substantial amounts of actual physical the court, which often causes complication a logistical before under the jurisdiction of Also the police, fail. to prosecutions the Ministry of Home Aff those who can make fi action police or support, require to for whether no power have enforcement. of law blocks or other means road raids, Moreover, although laws are eff are although laws Moreover, agencies the reputation for being involved in corruption and in corruption being involved for agencies the reputation the observation by is exacerbated that the This extortion. the opportunity creates authority and licenses issue permits to of environmental a waiver for in exchange gratuities receive to obligations. One of the greatest obstacles to eff obstacles to greatest One of the confi government with the current Another problem In Indonesia, generally deemed are the legal instruments be suffi to a serious weakness in remains there management, yet and agencies Government of the laws. enforcement basic law departments for responsible generally are tradition of inherited but the and prosecution, enforcement on-the-spot off settlement of National: Standards & Enforcement & Enforcement Standards National: no formal are management in Indonesia is that there performance in environmental local government for standards planning board, the central management. BAPPENAS, prospecthas examined the environmental of establishing be to this as has yet date but to performance indicators, mentioned above program Adipura The policy. into formalized of cleanliness cities based on standards for establishes indicators voluntary but these are and good management If national ideally indicators improve, management is to environmental but also on performance not only be based could standards, performance from or away of change towards rates measure established performance or standards Without measures. must simply improvise. local governments monitoring, and especially agencies, government is that none of the central enforce to the Ministry empowered are of Environment, the example, For protection. of environmental standards Ministry stations has pollution monitoring of Environment document effl to major rivers on several But the Ministry has no enforcement polluters. of Environment violation of performance is a if there standards, capacity so even All they can do is observed and enforcement. it has no basis for improvements link to to has no way monitoring The monitor. dumping effl in the practices of the businesses that are the river. into c , central central en parks l planning and s threatens the s threatens shing practices tares of industrial tares ogging. rol over millions of over rol overnments simply overnments ha from forest areas, areas, forest ha from al Land Agency have al Land Agency have icting claims. Box 3.2 icting Box claims. ected communities, though ected communities, ective, and to date several bi- and multi-lateral bi- and multi-lateral several date and to ective, sh species. Current threats to freshwater and freshwater to threats Current sh species. sheries include both degradation of the environment by by of the environment degradation sheries include both icts caused by these licenses, leaving concessionaires concessionaires leaving ictsthese licenses, by caused confl revert to Some concessionaires they may. them as solve to making aff the to either payment making are for arrangements concessionaires increasingly, of confl the areas joint management in chaotic situation. a picture of the current presents shery a subject sector is increasingly of fi Indonesia’s Likewise, NGOs raising concerns and regional with national public debate for specifi practices shing concern and fi with the unsustainable regional and fi regional fi reef as destructive fi as well pollution and siltation, such as bombing or poisoning. impact national assessments, environmental to regard With been established by have for guidelines and standards the Ministry implementation of the yet of Environment, impact under the jurisdiction assessments are of environmental and district) environmental for agencies (provincial the regional agencies these local previously, noted impact As assessments. and district heads, governors the to directly responsible are of the ministries of the central any and not to respectively, and accompanying though the law Even government. activities include a list of prescribed where regulations assessments impact required, assessments are environmental conducted. not consistently still are impact generally assessments are environmental Currently a completed external who have conducted consultants by the Ministry taught through with course of Environment, approval. for commission a review to assessments presented MinistryThe an is sometimes a member or of Environment be to continues process overall The observer at these reviews. as ineff viewed support provided to in attempts agencies have development the system. revitalize , May 15, 2009 and “Human invaders endanger park wildlife,” The Jakarta Post endanger park wildlife,” “Human invaders 15, 2009 and , May Local governments, emphasizing development over conservation, se over have emphasizing development governments, Local orts are improvement. improvement. The Jakarta Post cation schemes ll their coff ers. For example, National Park has been losing trees to illegal loggers, mining to illegal loggers, losing trees Park has been Kutai National For example, ers. ll their coff SECTION Governance 2: Challenges of Environmental rms hit new snags,” rms hit new snags,” ective for planning development, but lack planning development, ective for c Obstacles c

government to the provinces as part the provinces of decentralization. to government fi to as a way bursting with natural resources “local g within the park, park, inside the coal-rich live partly and 27,000 people now explore pushing to are because companies and illegal l been damaged because of development 200,000 ha have half of the park’s up to a result, As national laws.” ignore fi “Forestry from Summarized Forest industries. The Association of Indonesian Forestry Businessmen (APHI) says that widespread revision of land zoning rule of land zoning revision that widespread says Businessmen (APHI) of Indonesian Association Forestry The industries. Forest Box 3.2. Decentralization and Chaotic Forest Management and Chaotic Forest 3.2. Decentralization Box hec change the use of millions of to made proposals and districts have provinces Many continuity of forestry-based industries. 2 million Kalimantan exclude East to other purposes. has proposed (HPH) for concessions (HTI) and natural forest areas forest seeking cont Kalimantan are wrest 1.9 million ha in Central to and 1.3 million ha in North provinces of eight A total Sumatra. spatia revised triggered of new districts and provinces and the emergence autonomy regional over Euphoria hectares of forests. as the Nation as well Works and Public Defense, Agriculture, In addition, the Ministries of Forestry, in their regions. zoning in the harming investment management is potentially land Lack of clarity about forest areas. forest for planning procedures separate their own regulations. overlapping sector and has caused complicated murky in the past decade as authority has shifted 50 national parks has grown from the country’s over management. Control Park June 15, 2009

constrained by rigid legislation, weak enforcement, unwieldy unwieldy enforcement, weak legislation, rigid by constrained and a general lack of planning and management procedures, ethics among key actors. rural of the development to threat Another continuing land and natural resources. to access is limited communities and with concurrent not centralized, cadastral records With it is not agencies, government between lack of coordination issue authorities to government unrelated for uncommon forestry around no clear boundaries With licenses. overlapping often are land use patterns traditional or mining concessions, ictconcessionaires, with and confl competition by interrupted their livelihoods usually with the traditional users losing the has generally ignored government The in the process. Forestry issues remain among the most publicized the most publicized among issues remain Forestry rapidly issues facing Indonesia, as forest environment-related practices. disappear because of unsustainable management is responding national government Indonesia’s Increasingly, as using independent such measures introducing issue, this to conduct to compulsoryconsultants of concessions screening supporting sustainable practices, for certifi of forest make the level to and attempting NGOs, by introduced Unfortunately these eff harvests sustainable. more necessary experience and understanding of environmental necessary of environmental and understanding experience planning. environmental issues for 3.5.2 Specifi Also, government employee training is managed centrally, is managed centrally, training employee government Also, budgets or do not have institutions generally while local staff for responsibility take to mandates even at the local management environmental for Another problem lack the management organizations is that environmental level planning. development environmental real authority do any to within the domain of BAPPENAS, falls planning entirely Instead, BAPPEDA counterparts, the BAPPEDA. and their provincial be eff is seen to Investing In a More Sustainable Indonesia 28 Chapter 4: Enabling Policies for Sustainable Development

Protected Forest Wain River Photo: Ruth Walujan 8 6 4 2 0 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 08** 0 2220 7 000 20 Based on an annual 0006 2 5 groups, t higher income 000 20 , but have narrowed and possibly narrowed , but have 0004 16 220 03* 00 scal policy reform that uses taxation scal policy reform 2220 00002 2 (billion IDR, constant prices, 2001=100) prices, (billion IDR, constant 1 00 o oto otooto 200120 2002 2003* 2004 2005 2006 2007 2008** Total environmental expenditures (LHS) expenditures environmental Total T (LHS) revenues environmental Total ToTo incl oil/gas (RHS) revenues environmental Total To fuel subsidies (RHS) incl. expenditures environmental Total ToToTo 0 ective in curbing illegal logging and slowing down down and slowing ective in curbing illegal logging 8,000 180,000 6,000 4,000 2,000 pricing instruments to raise revenues, but also provides but also provides raise revenues, pricing instruments to change behavior. to incentives 4.1.1 Revenue & Expenditure Trends Trends & Expenditure 4.1.1 Revenue or based resource total natural from Revenues total expenditures exceeded revenues environmental 2001 and 2008 between Expenditures and Revenues 4.1. Environmental Figure average, environmental revenues have exceeded expenditures expenditures exceeded have revenues environmental average, per year. 2001 prices) 2.3 trillion IDR (constant an average by for the 2007-2008 gures preliminary fi and projected However, increased might have that expenditures budgets indicate reversed the trend in the past two years. in the past two the trend reversed icting sector-based regulations and national laws, especially icting and national laws, sector-based regulations SECTION Governance 2: Challenges of Environmental shing and mining – scal structure which be conserved. to and energy compete to energy renewable cult for icting sector – based regulations nancial incentive structures have not been eff structures have nancial incentive cient natural resource management. In the cient natural resource scal policy reform, which uses taxation and scal policy reform, ective to curb illegal logging and to slow down down slow and to logging curb illegal ective to Indonesia’s spending for environmental purposes has been relatively low for most of the decade, environmental environmental most of the decade, for low relatively purposes has been environmental spending for Indonesia’s been underpriced. have resources collection and natural has been low revenue the budget and benefi burden and electricity overconsumption, subsidies enhance Fuel Legal and fi Legal while making it diffi as degradation. as well deforestation harvestingto unsustainable and illegal contributed patterns shing and mining have distortionsPolicy in fi mining activities. In policy all sectors, distortions confl arise from those involving decentralization. those involving fi an environmental through policyThese distortions be overcome could and pricing instruments to raise revenues but also to provide incentives for more sustainable behavior. more for incentives provide but also to raise revenues and pricing instruments to ectiveness of institutions to apply environmentally apply environmentally ectiveness of institutions to

MAIN MESSAGES • • • • • •

16 2001 was chosen, because of the start reforms of decentralization diminishes the capacity of the government to invest in better in better invest to diminishes the capacity of the government services infrastructure, and utilization of natural environmental resources. the right scal policy does not provide regime A distorted fi effi for incentives 4.1 Main Revenue and Expenditure Trends Trends and Expenditure 4.1 Main Revenue purposes has been environmental spending for Indonesia’s account reasons Two most of the decade. for low relatively prioritizes traditionally the government First, this trend. for Second, plans. other sectors under its national development inadequate spending points to of environmental level the low collectionof and underpricing revenue environmental resources. environmental of the a matter spending priorities are While government planning framework, this chapter national development that it is the existing sub-optimalargues fi fuel and electricity the subsidies constitute sector, energy biggest distortions, over-consumption, as both policies enhance On groups. t the higher income the budget and benefi burden structures have existing legal and incentive the forestry side, not been eff deforestation. In other sectors - notably fi deforestation. policy unsustainable harvesting to distortions contributed have and illegal mining activities. Inpatterns policy all sectors, distortions confl arise from and national laws – notably decentralization laws. This reduces reduces This laws. – notably decentralization and national laws the eff sustainable policies. these policyOvercoming a comprehensive distortions requires fi environmental Investing In a More Sustainable Indonesia 30 31 Country Environmental Analysis ecting . Indonesia’s modest allocations of items. Indonesia’s . Figure 4.4 shows that from 1980 to 2004 1980 to that from 4.4 shows . Figure cantly. The former increased its share by 5.4 percent, 5.4 percent, by its share increased former The cantly. Environmental Sustainability Sustainability Environmental distortions: fuel and electricity subsidies emissions grew faster than energy use and energy use use and energy than energy faster emissions grew 2 Environmental expenditures remain a minor item in the a minor item in the remain expenditures Environmental in recent share the increased but have economy, overall as part expenditures government of total . Environmental years in the range of 0.6-1.2 moving small, relatively spending are GDP, overall to When compared of GDP in 2001-2008. percent in 2008. In terms, real percent smaller at 0.24 is even the share on an 30 percent around by grew expenditures environmental 2001 and 2008 basis between annual average government increased and growth Despite economic purposes spending on environmental expenditures, to other sectors, compared low comparatively remains out crowding and subsidies payments with interest other spending place taken sector have the environmental to resources 2008, context. 2001 and Between economic within a favorable while terms, in real growth Indonesia economic experienced of GDP also increased. share spending as a government total that the shows categories other spending into A breakdown budget allocation to increased has prioritized government their budget which increased education and government, signifi share a hefty In by the while the latter comparison, 11.8 percent. was only 0.6 the environment to allocated share expenditure are expenditures total Overall, during the same period. percent interest pay to commitment the government’s by dominated government subsidies: the central on domestic debt and to expenditures of total 30 percent an average budget allocates subsidies per year. fuel to 4.2.1 Macroeconomic and energy policy and energy 4.2.1 Macroeconomic became increasingly path growth economic Indonesia’s -intensive carbon CO In than GDP (Resosudarmo and Jotzko 2008). faster other grew intensity (energy/capita) energy grew, as the economy words, 4.1.2 Revenue-sharing a provides resources Revenue-sharing natural from to accelerate local governments for incentive strong sub- other than oil and gas, natural resources depletion. For of revenues 80 percent typically retain national governments in the case of sales and taxation (40 percent resource from local for an incentive provides This Fund). the Reforestation resources depletion of renewable accelerate to governments (mining, resources sheries) and non-renewable fi (forestry, Ideally, revenues. available increase to geothermal) in order about the long- should also be concerned local governments but this sustainabilityterm natural resource-based of revenues of the electoral the scope cycle. is usually beyond Aff Policies Fiscal 4.2 Key 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0% 8 uctuated 22002 7 (see Figure 4.2). In (see Figure 22002 SECTION Governance 2: Challenges of Environmental 220062 cantly, peaking in 2005 and cantly, 005 220 9.3 6.1 trillion to cant jump from al government revenues, natural revenues, al government 004 uctuations 2003 and 2005, between 220 0030 uctuations. The poor data qualityThe can be uctuations. 2 uctuate signifi 0020 2 1 a nvn N EnEn National environmental expenditures National environmental expenditures as % of total expenditures Environmental 00 2001 2002 2003 2004 2005 2006 2007 2008 cantly improved (see Figure 4.1) (see Figure cantly improved cantly, possibly reversing that trend. If fuel one includes that trend. reversing possibly cantly, 0 8,000 6,000 4,000 2,000 Revenue streams from natural resources use fl resources natural from streams Revenue has increased expenditure Nominal environmental during the period 2001-2008 substantially declining since then, while expenditures are moving in parallel in parallel moving are expenditures then, while declining since 107 around averaged Annual revenues trends. with revenue at 55 trillion, averaged while expenditures trillion IDR per year, trillion annually in 2001- 52 gap of around a positive leaving 2008. doubts on the validity in 2001 – 2008 raising considerably natural resource-based total On average, of some of the data. IDR annually during this 107 billion to amounted revenues the biggest chunk, constitute Oil and gas revenues period. revenues. natural resource total to 94 percent contributing centr overall In to relation partly the fact on environmental explained by that information spending is not environmental earmarked for that are revenues the Ministry at collected systematically of Environment. amounted expenditures 2008, national nominal environmental increase The 1.9 trillion IDR in 2001. trillion IDR up from 10.3 to fl showing was not steady, resource based revenues make up an average 24 percent per 24 percent make up an average revenues based resource of oil and gas based revenues high share The 2001-2008. in year collection in other sectors be could that revenue indicate signifi but this annually, 8 percent grew revenues On average, between of growth pattern erratic masks an extremely 55 by grew forestry revenues instance, For individual years. 46 percent in 2001, but then declined dramatically by percent a similar erratic showed years following The year. the following also exhibiting sheries, notably fi with the other sectors, pattern, the same extreme fl actually 2004. in expenditures decreasing with environmental In was a very 2006, there signifi trillion IDR. subsidies on the expenditures side and oil/gas on the revenue oil/gas on the revenue side and the expenditures subsidies on too, But here, be larger. to continue then revenues side, fl patterns revenue signifi Figure 4.2. Environmental Expenditures 2001-2008 Expenditures 4.2. Environmental Figure 12,000 10,000 bn IDR cant. cant. uctuated widely uctuated . 17 nancial crisis and lower global nancial crisis and lower uctuations are mainly caused by uctuations caused by mainly are ects. Higher mean that the oil prices ed yet, but are very likely to be signifi very likely but are ed yet, share of fuel subsidies in the budget has fl in the budget of fuel subsidies share

Fuel subsidies remain high, despite adjustments in 2005. despite adjustments high, subsidies remain Fuel The fl These 10 years. in the past subsidies Fuel rate. the exchange and oil prices international spending, of total 28.6 percent for peaked in 2000, accounting a executed as the government again in 2001 and decreased in October decreased 2000. Subsidies increase slight fuel price of appreciation result 2003, as a combined markedly in 2002 and of oil. prices of the international decrease of the IDR and a slight a sharply following In fuel subsidies increased 2004 and 2005, in 2004 of 97 percent (increase prices oil hike in international after again the reduction of 2003), and decreased to relative and Octoberthe fuel subsidy in March 2005 Fuel subsidy reductions in 2005 freed up around $10 billion around up subsidy reductions in 2005 freed Fuel were fuel subsidies in 2008 (World 2007). However, Bank of total percent 13 again to increased have to projected USD2 billion. Furthermore, or around expenditures government the global fi to in response price the regulated decreased the government fuel prices, 2008. IDR 5,000 in December IDR 6,000 to of gasoline from IDR 4,800 IDR 5,500 to cut from were prices diesel Transport In cut January to continued 2009, the government per liter. gasoline and transport 4500 IDR per liter. to diesel not impacts of the fuel subsidies have environmental The been quantifi suggests that distorted signals International evidence price products of petroleum consumption wasteful often lead to eff environmental with dire scal position, position, scal SECTION Governance 2: Challenges of Environmental cient use of energy cient use of energy uence uence downstream ects. on subsidies and heavily scal policies rely emissions grew even faster. This points to to points This faster. even grew emissions orts, and more widely available alternative alternative orts, widely available and more 2 scal policy ensure the GOI uses to instruments Summarized and Adapted from WB IDPL (2007) and from WB CEA (2009) WB IDPL (2007) and from from Summarized and Adapted

. Current fi . Current ciently

provide wrong price signals. Fuel and electricity subsidies are Fuel signals. price wrong provide the prime fi false economies Many consumers. domestic stabilityprice for these subsidies that are to can be traced and disincentives Upstream service obligation.” “public the by mandated infl and incentives policies on pricing investment and environmental outcomes, as illustrated in as illustrated outcomes, and environmental investment include ineffi 4.3. Issues of concern Figure GOI fi compromised over-consumption, resources, of subsidies ective targeting ineff unpredictable budget outlays, under-development of alternative poor consumers, towards leakages and adverse subsectors, energy and smuggling, and health eff environmental and inter-linkages the challenges complexities illustrate These change and climate on environmental ahead in making progress end of the policyissues at the downstream distortions. Analysts some parallel actions help with a suggested that would have sustainable fuel sector policy a more transition to framework petroleum toward move the GOI could (WB, example, 2007). For targeted better benchmarks, with international pricing aligned eff poor protection sources. energy a lack of investment in cleaner technologies in the energy the energy in in cleaner technologies a lack of investment sector. more use energy to disincentives Domestic policies create effi Figure 4.3. Key Policy Distortions Impede Potential for Low Carbon Options in Energy Sector in Energy Options Carbon Low for Distortions Policy Potential Impede 4.3. Key Figure also grew but CO also grew Investing In a More Sustainable Indonesia 32 33 Country Environmental Analysis lt in a far ctoring in . Subsidies . Subsidies s and higher red power plants power red e advantage in exploiting production. Under the red electricityred production energy xed electricityxed tariff cient and sustainable expansion in an cant comparativ cant renewable , but faces diff erent supply costs throughout costs throughout supply erent diff , but faces

ect true market prices in order to make renewable energy energy make renewable to ect in order true market prices . The removal of the fuel subsidy to PLN in 2005 to of the fuel subsidy removal The country. alternative ts associated with the geothermal option are estimated to be at to estimated with the geothermal option are ts associated which relies heavily on subsidies and thus provides no thus provides on subsidies and heavily which relies supply energy renewable to promote incentives of total 28 percent the electricityto for sector accounted subsidies in 2006. Electricitya direct of subsidies comprise an indirect and through subsidy PLN (11 percent) subsidy to (17 percent) prices at subsidized of oil derivatives the provision (World Bank 2007). subsidized PLN applies a national is that problem key The electricity tariff the near insolvency. into PLN plunging up, pushed the supply costs include all consumers, to expanded the PSO government The subsidies further PSO payments of pushing up the cost up. USD 3.5 billion in in 2004 to USD 400 million from increased fi of combination The 2007. production costs – due to higher fuel prices – will keep pushing higher fuel prices to – due production costs (World government Bank 2007). the of the subsidy for up the cost capacity with a limited to government the it leaves Moroever, power of the country’s in the much needed expansion invest infrastructure. distortions price energy hamper the development These of government’s energy blueprint 2005 – 2025 the share of blueprint 2005 – 2025 the share energy government’s 4.3 rise from to production is targeted energy renewable if is only achievable, this target However, percent. 17 to percent make options to incentives the price provides the government (see competitive production more like geothermal energy of the expansion favors the government Currently, 4.1). Box fi coal emissions-intensive but more cheaper, But if fuel Program. Track under its 10,000 MW Electricity Fast and environmental and electricity be removed subsidies would externalities with coal-fi associated low-emissions geothermal and other for, be accounted would viable.. more be commercially options would technology suggest estimates production. Recent with geothermal energy ts associated gy per capita m nn GD E E Emissions per capita Emissions per GDP per capita Ener SECTION Governance 2: Challenges of Environmental emissions, although it emissions, 2 red power plant can be supplied at 8.2 cents/kWh (assuming 90$/t of coal). The production price from from production price The (assuming 90$/t of coal). plant can be supplied at 8.2 cents/kWh power red apita Emission per C Emission per pricing regime, of the current a result extent cant competitive. competitive. in exploration. high initial costs make reduce risk mitigation mechanisms to Introduce projects. conduct ciently transactionspower of geothermal effi planning and management capabilities to government Improve in the sector. support capabilities to domestic technical Build up adequate growth long-term Improving overall economic incentives system: energy prices need to refl need to prices energy system: incentives economic overall Improving in Resosudarmo and Jotzo (2008) Box 4.1. Barriers to Geothermal Energy Supply 4.1. Barriers to Geothermal Energy Box effi a more options for one of the best alternative in Indonesia provides development Geothermal power Indonesia has a signifi potential, of the world’s nearly 40 percent With friendly manner. environmentally generation, which will resu power towards a small part potential geothermal energy even 27,000 MW of renewable of the estimated • • • • and benefi of the costs pricing be the proper key issue seems to The that electricity a 600 MW coal-fi from a 60 MW geothermal power plant is estimated to be at 11.9 cents/kWh. However, by reducing fuel and electricity reducing by subsidies and fa However, be at 11.9 cents/kWh. to plant is estimated a 60 MW geothermal power more optimal energy mix. However signifi cant investment and policy barriers need to be removed to spur the development of geothermal to spur the development and policyremoved to be barriers need cant investment signifi mix. However optimal energy more include: These supply. power the true benefi emissions, reduced counting by values accrued environmental ( JICA-GOI 2009) February selling price. the 11.9 cents/kWh / kWh, far outweighing 17.7 cents 17 Bank (2007). World (2007) and Dian and Fengler Cut Discussion on fuel and electricity Granado, subsidies is mainly taken from The increasing carbon intensity of electricity carbon intensity increasing production is The to a signifi decreased in the past two decades: in 1984 the share of oil in decades: in 1984 the share in the past two decreased 31 percent. to but in 2004 it fell emissions was 99 percent, total depleting domestic oil reserves reduction and is caused by This as oil reserves deplete, However, oil prices. higher international emissions coal: polluting more even to switches the economy during 53 percent 1 to from increased – based sources coal from 2008). the same period (Resosudarmo and Jotzo Figure 4.4. Annual Growth Rates of GDP, Energy Use and Use Energy Rates GDP, of Growth 4.4. Annual Figure In Indonesia, is still oil-based production and consumption CO of energy-based source the largest gap between domestic subsidized fuel prices and international and international fuel prices domestic subsidized gap between of fuel the budget share increasing larger, becomes prices an incentive present fuel prices subsidized Moreover, subsidies. Fengler Dian and Cut (Granado, smuggling and corruption for 2008). Source: International Energy Agency (2007) [http://www.iea.org/] quoted Agency (2007) [http://www.iea.org/] International Energy Source: 1980 1984 1988 1992 1996 2000 2004 0 3.0 2.5 2.0 1.5 1.0 0.5 nition Reforestation Fund 62% Fund Reforestation ows closely ows HPH & HTI License Fees 1% Fees HPH & HTI License Fines, Wildlife, &Tourism 0% &Tourism Wildlife, Fines, . The forestry law (41/1999) gives (41/1999) gives forestry law The . laws to an unclear relationship owing cult, forestry the and Source: World Bank (2006) World Source: Ministry of Forestry Revenues by Source (1999-2003) Ministry Source by Revenues of Forestry Figure 4.6. Ministry of Forestry Revenue by Source by 4.6. Ministry Revenue of Forestry Figure 27 percent on average. Licensing fees for the rights allocated allocated the rights for fees Licensing on average. 27 percent land generate claimed of state huge areas use industries to to been and this amount has revenues, of total percent less than 2 declining. sharing revenue decentralized of the But implementation scheme has been diffi decentralization and autonomy the regional between laws the central government control over forestry issues, while forestry issues, over control government the central authority to (22/1999) transferred laws autonomy regional central between has caused disputes This local governments. particularly authorities, in the initial and local government was there a result, As process. phases of the decentralization and the raise revenues to and taxes of local fees a proliferation up deforestation. speeding rights, of local logging issuance of re-distributing and has been slow process The revenues a cumbersome is mainly due to This sometimes not transparent. data from within the Ministry reconcile process to of Forestry the revenues Ministry then allocates The of Finance the regions. fund back and the reforestation fees license concession of forest and Resosudarmo (2005) report, Adhuri Fox, As regions. the to instructed companies logging have some local governments government the central to submit their contributions not to has This the district them directly to pay governments. but to fl revenue monitor authorities to central prompted districts. several issue warnings to and to of the revenue-sharingAn added complication scheme is to should be allocated of the DR revenues that 40 percent is a lack of clarity on the defi There regions”. “producing some districts leading to arguing region’, ‘producing of a In these proceeds. should receive districts’ ‘producing that Forest Resource Levy 27% Levy Resource Forest Interest on RF (DR) 10% Interest

t Rich 10 9 rms will not

8 ective electricity ective 18 SECTION Governance 2: Challenges of Environmental 7 6 5 4 consumption decile consumption ts the technically non-poor. Electricity non-poor. ts the technically 3 Household consumption decile Household consumption gures for the period 1999-2003). The forest forest The the period 1999-2003). for gures Subsidies go mostly to the richest go mostly to Subsidies 2 Share of fuel subsidy received by households in each households in each by subsidy received of fuel Share 1 12345678910 benefi Results from quintiles. ting the higher income cally in the power sector, the government needs to needs to the government sector, cally in the power Poor s in the long run. Without these, the private fi the private these, Without long run. s in the 0%

50% 40% 30% 20% 10%

18 Bank (2006) World from heavily section draws following The incidence analysis suggest that 89 percent of the fuel subsidy of the fuel subsidy suggest that 89 percent analysis incidence of of 5 percent households (an equivalent absorbed directly by budget) benefi the total although not as much as fuel also regressive, subsidies are 2007). Dian and Fengler Cut (Granado, subsidies. undertake investment in the power sector, unless they receive unless they receive sector, undertake in the power investment support of or other forms the government guarantees from (IEA 2008). and electricity socially regressive, subsidies are Fuel benefi Figure 4.5. Incidence of Fuel Subsidies of Fuel 4.5. Incidence Figure 4.2.2 Forestry and Land Policies 4.2.2 Forestry the forestry sector from revenues earns substantial GOI The The (non-tax revenue). main types of fees three through main forestry fees are for the licensing of forest concessions concessions of forest the licensing for are main forestry fees harvest the right to timber on both natural forest paid for (fee known in and timber plantation concessions, concessions Indonesian as IHPH and IHHT), the reforestation paid to fees known of timber harvested, as Dana fund (based on the volume (based on the volume fee royalty Reboisasi, DR), and the forest also knownof timber harvested, on as IHH or PSDH depending exactThe revenue in various years). system the name of the fee in Appendix 1. can bee seen sharing formulas 1985 to the sector from from contribution cumulative total The forestry sectorThe has contributed 2002 was about $6.5 billion. variations with slight GOI revenue of overall about 1percent the reforestation in the chart shown As below, time. over the largest earned on those funds constitute fund and interest far (>70 percent by sector revenues, forest to contribution fi using combined harvesting an additional levy also contributes resource (royalty) Specifi cost-refl implement that it needs to recognize Source: Agustina, Granado, Bulman, Fengler, and Ikhsan (2008) Bulman, Fengler, Granado, Agustina, Source: tariff Investing In a More Sustainable Indonesia 34 35 Country Environmental Analysis allows rmed by by rmed erent erent stakeholders rmed the right of the /2000 No.19 Law erent regional units regional erent icting interpretations of icting interpretations . Before 1999, Law 11/1967 on Mining Law 1999, . Before ow from the centre to the regions makes regions the to the centre from ow t from lucrative resource extraction. This creates creates This extraction. resource lucrative from t system ) (CoW cult for district governments, sub-districts districtcult for governments, and village icts between mining and forestry regulations have have icts mining and forestry regulations between mining in protected forests and the status was confi forests mining in protected

2000, with since mining operations has been stagnant to ows for the Constitutional Court in 2005, followed up by a Presidential a Presidential up by Courtthe Constitutional in 2005, followed to 13 existing concessions in 2004 which allowed Decree the Ministry of Mines Recently, forests. in protected operate Decree issue a Presidential a plan to has announced and Energy in protected operate to mining companies more allow to of 3 million IDR/ha (Jakarta against an annual fee forests Post, for forests orts to open up protected the eff 3/1/2008). However, CSOs and the Ministry many mining has been opposed by of Ministry The has also issued government of Forestry Forestry. on mining requirements 14/2006 which adds several regulation 4.2.3 Mining policy distortion key The the mining sector in is the legal confl uncertainty from arising which forestry laws mining and the decentralization, of certaintyundermines the long-term in the Contract Work established implementing regulations and the accompanying based on (CoWs) of individual contracts of work a system and the direct mining companies negotiations between with more laws decentralization The government. central local governments to delegated revenue-raisingpower then issued government The CoWs. undermined the existing which has confi 22/2001 on mining, Law mining contracts set the and to award to government central diff sharing among revenue for conditions investment real Resosudarmo 2005). However, Adhuri, (Fox, fl and conditions rating investment global mining companies 2006). (PricewaterhouseCoopers legal issues as main worries is cause revenue-sharing formula complex Relatively and regional government central between disputes for general for revenue-sharingThe formula governments. diff mining distinguishes between The penghasil) within same province. daerah areas/ (producing these distinguish between to lack of clear guidelines on how make to procedures complex units and the long, regional fl these revenues it diffi benefi heads to uncertainties mining operations on the ground, for investment local governments to an incentive as local frustration provides raise to and fees on imposing local taxes rely increasing to and Resosudarmo 2005). Adhuri (Fox, revenues process of decentralization the beginning since a result, As and of local additional taxes was a proliferation in 2001 there investment which has increased levies on mining companies of local devised an array have governments Local uncertainty. in individual requirements of payment on top and fees taxes governments regional (CoW). example, contract of work For by covered already issue new local mining rights on areas existing CoWs. Confl of uncertainty. added another layer t,” t,” and t from nes for nes for ts they cient to cient taxes ectively will t” should be t” sector ). Using a more a more ). Using 3 SECTION Governance 2: Challenges of Environmental /year, then unreported, then unreported, /year, forest 3 Both ts to industryts to $350- about are about $1.5 were illegal logging ts to . Indonesia’s forests are being are forests collection. Indonesia’s t). If there are distributional objectives, distributional objectives, are t). If there ts” could be taxed at a rate higher than the normal at a rate be taxed could ts” . Using simple estimates by assuming that by simple estimates . Using government c incentive instruments could include performance could instruments c incentive the ) and uncollected taxes are at least equal to $ 600 million, equal to at least are ) and uncollected taxes

3 environmental bonds should be set and managed in a way bonds should be set and managed in a way environmental and sustainable behavior logging long term that promotes or long auction, any transfer, management. Similarly, forest incentives provide to rules should be designed licensing term not a short run manage the land as a sustainable resource, to profi “excess or “rent” capture to If is a desire windfall. there forest earnings after long term should be linked to these taxes made and environmental are management investments revenue (rather than linked directly to damage prevented or short-run profi profi “excess Applying these instruments eff tax rate. corporate basic of enforcing depend on whether GOI is capable of course rules (Worldtax and payment Bank 2006). illegal revenue is at least equal to $3 Billion (based on $100/ to is at least equal illegal revenue m each year (based on tax revenue of $20/m of revenue (based on tax each year illegal logging is as high as 30 million m is as high illegal logging Earnings from illegal logging are huge and are not captured not captured huge and are are illegal logging Earnings from by practice, the producing province gets the 40 percent share, share, gets the 40 percent province producing the practice, and Adhuri districts among several causing frustrations (Fox, 2005). Resosudarmo bonds, tenure arrangements, auctions, and better arrangements, tenure bonds, inspection and enforcement. The current system of taxes and incentives is insuffi and incentives of taxes system current The Specifi complex and complete procedure, BAPPENAS-NRM-MFP (2004) procedure, and complete complex that annual profi estimated profi and excess billion per year and of taxes the modest levels to due $400 million per year the GOI (World set by Bank 2006). royalties capture. rent economic illegal logging and increase reduce forestry wildlife for infractions, authorized nes levies and fi Fees, less than hundreds for exports, account all together and tourism fi In particular, of thousands in earnings in most years. short-run depletion (World Bank 2006). forest Addressing policy distortionsAddressing should start viewing by as not merely instruments, as incentive fees and taxes revenue means for infractions are very small relative to the level of illicit earnings. of illicit earnings. the level to infractions very are small relative measures enforcement strengthen to highlights the need This activity. of illegal the costs recover as the means to as well timber is produce to potential their long term depleted: benefi along with the environmental being damaged, profi “excess that all or most Some argue provide. Others that earnings due to argue (“captured”). away taxed or socially desirable not be a sustainable depletion may forest depletion, forest reduce To revenue. of government source not (taxed), made expensive damage should be environmental regime tax and incentive timber harvesting. An appropriate services and future environmental the land’s should protect profi productivity not simply capture (next crop), tree ts ort icts eet. shing nding ort on ort . Brown, . Brown, growth ciency with which gures seem to show show seem to gures harvest ort this sector could for sh catch. catch. sh limiting shing is a diff use activity and landings shing is a diff sheries sector planners and mangers sheries is not commensurate with its sheries is not commensurate while shery resources. Estimates of maximum of Estimates shery resources. production, an indication et al (2005) are as reported in Fox regions, erent cult. Still, tax and non-tax revenues fi tax and non-tax revenues cult. Still, shery sheries is quite low. This may indicate that increased eff that increased indicate may This low. sheries is quite eet and now represent more than half the motorized fl the motorized than half more represent eet and now ndonesian planners could increase tax revenue by raising the by tax revenue increase ndonesian planners could tax administration and collection eff one However, collected. of revenue in terms yield high returns bear in mind that fi has to Indonesia, across so tax collectiontake place is relatively diffi fi from that tax revenue export to and its contribution contribution economic value. I ways to preserve more the catch and reduce spoilage through – through spoilage reduce and the catch preserve more to ways new markets Finding chains and processing. example - cold for also increase would in value added processing and investing on the the pressure without increasing the value of the catch resource. limited without can be achieved contributions Increases in tax revenue from contribution and non-tax revenue Tax in harvest.increases fi beyond the contributions of the individual sector. of the individual sector. the contributions beyond fi include would Increasing the value of the existing catch Bengen and Knight (2005) argue that this can be done in several Bengen and Knight that this can be done in several (2005) argue fi GDP, increase To ways. and processing improved value added through can increase linkages also increase to would improvements These storage. benefi ‘multiplier’ in which results of the economy, the rest fl in six times increased “boat tons” in capacity measured Fishing in pressure increase indicating an enormous the same period, fi on Indonesia’s sustainable yields (MSY) 5 and between roughly ranging vary, taking of the over- account However, per years. 6 million tons industry shing and illegal fi capacity of the domestic fi vastly under-reported actually and are are operations, catches This region. and above tons be in the 8 million likely to more 2007). Increasing confl (Patlis MSY estimates vastly exceeds shery coming from communities fi between disputes involving diff in eff increases Additional limits. approaching are that stocks in fi declines will likely lead to of policy added the value challenge is to increase key The fi marginal tax rate or by increasing the effi the increasing or by tax rate marginal taxes are collected (Brown, Bengen and Knight, 2007). collected (Brown, are taxes sh shery shery sheries SECTION Governance 2: Challenges of Environmental sheries production is used in numbers in the last 20 eet tripled sheries sector employs around 3 million around sheries sector employs sheries sector accounts for 2.4 percent 2.4 percent for sheries sector accounts shing fl shing rising numbers of boats and industrial vessels has rising numbers of boats and industrial vessels

shery important is the most of the fi component The cantly increased the industry’s capacity harvest to the industry’s fi cantly increased

years and now amounts to an estimated total of 460,000 vessels. of 460,000 vessels. total an estimated amounts to and now years of the segment growing the fastest boats are motorized Larger are stagnant or declining. Most fi or declining. stagnant are has importantThis implications not exported. directly as food, as status of Indonesians, and nutritional the livelihoods for in exports value or growth increasing the prospects as for well Bengen and Knight 2005). (Brown, rapidly Indonesia may that suggest that estimates Recent fi in the the limits to harvest growth approach sector. Fish culture is growing quickly, too, but inland fi too, quickly, is growing culture Fish sector. sector. signifi people or percent of the total workforce, according to the to according workforce, of the total people or percent survey 2007. in August the labor force data from available latest export of food 30 - 40 percent for account and shrimp Fish marine The export of total which is only 5percent values. value, fi capture of total GDP in 2007 (constant 2000 prices), making it the 2000 prices), of total GDP in 2007 (constant sector after largest crops in agriculture second non-food The (6.8 percent). fi 4.2.4 Fisheries 4.2.4 Fisheries the fi Economically, companies, including the possibility of new additional royalties. the possibility including of new additional royalties. companies, being discussed currently A draft is now law of the new mining will law that the concerned are Investors in the parliament. with shorter-term existing CoWs replace to provisions contain 27, 2008). Feb (Reuters, mining licenses leaving the Parliament, passed by has been A new mining law of the new key feature The of uncertainty. in a state investors schemes licensing existing work Mining current is that the law with permits be replaced to are agreements) (or contract of work length of the maximum with shorter Previously, time frames. of a maximum for allows new law The a lease was 30 years. This another 20 years. extend an option to with for 20 years, will raise some uncertainties point of view the provision from looking a – scale mining operations, for large in of investors will the government However, in tenure. guarantee secure regulations in issuing implementing spell out details of the law (Jakarta stakeholders in the the process and consulting Globe, 2009). stocks. The marine fi The stocks. Investing In a More Sustainable Indonesia 36 Chapter 5: Constituency, Awareness and Critical Partnerships

Children playing (World Bank Collection) Photo: Curt Carnemark rst ndings cally about cally ed the “gap a few years ago in Jakarta years a few ed that “pollution /environment” is the fi /environment” “pollution ed that or second greatest dangers in the world today. The The today. dangers in the world greatest or second identifi Indonesian largely respondents ethnic hatred” “religious/ and rich and poor” between When asked specifi threats. as the greatest Indonesian respondents 44 percent global warming, 43 to compared problem, “less serious” said it was a “very serious”. who said it was percent A market survey of middle-class Indonesians (CLSA Indonesia,sample size 2007) with a much larger Local view on environmental perception: surveys perception: on environmental view Local or attitude gauge the public awareness to designed particular or natural resources towards environmental remaining The (provinces). areas issues of one or more Most this category. list fall into surveys in the above a donor- to conducted in relation of the surveys were WALHI of the with the exception funded program, surveys. and Papua Survey that only Global Attitude found Pew The of Indonesian respondents about 30 percent identifi • • • Based on the above surveys, a composite pictureof the a composite surveys, Based on the above was pieced on environment perception Indonesian public’s picture was not Although a full and comprehensive together. the fi summarize to attempts the following obtained, on make a statement and to of the various surveys examined, on environment. public perception category does not ‘birds-eye view’ surveys the The that fall into priority is a top for sense that environment a strong provide that Indonesians do the reverse, nor does it show Indonesians, surveys two The show about the environment. not at all care does appear on the radar of the Indonesian that environment issue they be the most pressing but does not appear to public, face.

. 19 cally SECTION Governance 2: Challenges of Environmental cantly. In this study they cantly. sustainability. environmental ective demand for oods, droughts), cities (cleanliness, solid waste, air quality) and forests (degradation, illegal logging, illegal logging, (degradation, air quality) and forests solid waste, cities (cleanliness, droughts), oods, Birds-eye view: surveys not specifi cally designed to cally designed view:Birds-eye surveys not specifi but include a general views, environmental capture Global Attitude Pew The question on environment. fall and Mrs. Indonesia” “Mr. survey and the CLSA span, the In of geographic terms this category. into the world, around 47 countries survey covered Pew While the CLSA survey was including Indonesia. for Indonesia. cally designed specifi surveys perception: National view on environment opinion on public’s to obtain the cally specifi designed Only one survey this category, falls into environment. not all environment However, namely the KLH survey. only those covered; issues were and natural resources surveyed. portfolio were KLH’s to issues of relevance res). The environment is on the radar screen of the Indonesian population, especially issues concerning water water of the Indonesian issues concerning population, especially the radar screen is on environment The (pollution, fl public as but their persistence these public priorities, for and programs investments policies, GOI has The addressed. not been adequately they have that is one indicator concerns and marine resources, coastal change, climate e.g. public priorities, not yet that are also pursuing areas GOI is The of public awareness. level indicating a low wastes, and hazardous clean energy, biodiversity, between communications key actors environmental who can bridge with four needed are Partnerships and religious the legislature, media, civil society and the public: the mass organizations, the government organizations. partnership development any that essential for are public participation awareness and increasing Promoting build eff seeks to fi erentiated based on their treatment of environmental of environmental based on their treatment erentiated 3 categories: ed into study the purposes of this for c (and program-oriented) • •

MAIN MESSAGES • • • • •

19 of the CNG-fueled bajaj introduced assess their perception to survey and drivers of bajaj owners An example is Swisscontact’s The selected surveys were studied to compose a picture on the compose studied to selectedThe surveys were issues. on environmental the general public held by perception 5.1 describes the surveys this study. selected for Table of the surveys varies signifi nature The diff are surveysThe thus are scope. issues and their geographic classifi 5.1 Public Perceptions of the Environment Perceptions 5.1 Public identify past surveys was conducted to on public A search locate was made to An attempt on environment. perception not specifi i.e. in nature, generic surveys that were designed to support a particular program or project. The search search The support to designed a particular or project. program contacts with inquiries to in various search internet combined library. the Ministry and a visit to organizations, of Environment’s between a period covering found, of 24 surveysA total were relevant examined and only surveysThe were 1998 and 2007. too considered Some selected. surveyssurveys were were specifi Investing In a More Sustainable Indonesia 38 39 Country Environmental Analysis c jams (34.7 jams c Sample Size oods (24.5 percent). 1,517 respondents in DKI Jakarta1,517 respondents 2,292 respondents in DKI Jakarta2,292 respondents 3,450 respondents in 12 districts3,450 respondents in Papua 900 respondents in North900 respondents Sumatra, Central Java, Jambi, Jakarta,West Kalimantan 2,000 respondents from 2 provinces 2 provinces from 2,000 respondents ( and North Sulawesi) in DKI Jakarta1,000 respondents 20 big cities 41 kabupaten of the country 1,008 respondents spread in most part spread 1,008 respondents the demand for drought, landslides, ooding, wood exceeding legally produced wood. However, However, wood. legally produced exceeding wood “knowledge of particulars that this study also states Examples of respondents. among the was limited” particulars known amount not well are: that are destruction and the of forest rate needed, of wood management’. forest ‘sustainable actual meaning of conducted 2 surveysSwisscontact Jakarta in DKI on air pollution, particularly emissions. vehicular caused by “high that the Jakarta study shows The public has results on air pollution, but is ective and aff cognition practicegenerally reluctant to reduction” air pollution a 2003). A similar study in 2004 gave (Swisscontact, say of respondents About 70 percent picture. mixed impact of the negative of emission not aware they are that but felt human health and productivity, towards air pollution should be a main priority (66 percent). also indicates A survey conductedWALHI in Jakarta by identify issues able to that a random set of people are surveyThe in Jabodetabek. level ‘crisis’ at are they felt issues: garbage (40.5 top in the following resulted traffi air pollution (37.5 percent), percent), Kalimantan. The study concluded that the “public “public that the study concluded The Kalimantan. such of forestry issues”, aware well quite was already impact degradation, disasters on natural as on forest such as fl and fl percent) Papuans “more that showed Surveys Papua done in and rivers wildlife, of their forests, think the condition • • • Implemented by Systems (IFES) Systems WALHI Swisscontact Swisscontact INFORM program (PT. Insan Hita- (PT. INFORM program wasana Sejahtera) Natural Resources Management Natural Resources (USAID) Project CLSA Indonesia Morgan) (Roy (middle class) in respondents 21,000 Pew Research Center Research Pew State MinistryState (KLH) of Environment 22 cities and from 5,000 respondents SECTION Governance 2: Challenges of Environmental ed as the third topic of topic third ed as the orts of Natural Title ajor World Powers”, 2007 Powers”, World ajor (21,000) gives a more positive outlook. positive In a more this survey(21,000) gives was identifi ‘Environment’ of KAPThe that about 30 percent survey showed in East Kalimantanrespondents and North Sulawesi about water ‘very concerned’ they were indicated land. and forests pollution in general, (river/lake), on forestry issues in North INFORM focused The Central Java, Sumatra, Jambi, Jakarta,West “biggest concern” among Indonesian among middle- “biggest concern” after of respondents), 79 percent class (reaching (80 Security’ ‘Job and (81 percent) ‘Corruption’ ranked higher than even ‘Environment’ percent). (46 percent). ‘Crime’ and (55 percent) Education’ ‘Kid’s urban. sample was largely The 2007 campaigns public ness survey following awareness survey following public cam- survey following awareness paigns Monitoring and Evaluation” ease with M Survey Report - North and East Sulawesi Kalimantan" market survey Resources Management - Looking Upon Resources 2009"; 2006 c to the region, seem to indicate that Indonesians were that Indonesians indicate were seem to the region, c to • • 9 2003 Opinion Survey”, Public “Papua Election for International Foundation 5 "Report of Study on Jabodetabek Crisis", 6 2003; aware- “Laporan Segar Jakartaku”, 7 “Survey 2004 – Indonesia”, Campaign 8 and Media Campaign “Indonesia Forest 1 Un- “Global Survey: Global Attitudes Pew 3 on Eff Perception “Public 4 (KAP) and Practices Attitudes "Knowledge, 2 2007 commercial and Mrs. Indonesia”, “Mr. The local-view surveys, which addressed environmental issues environmental which addressed local-view surveys, The specifi an opinion on certain or give environment/ respond able to issues raised in the survey. natural resource The national view gives a closer look at the environment in a closer look at the environment national view gives The of 5000 respondents a sample size With of the public. the eyes the KLH survey that the in urban and rural locations, found be and air to rivers their cities, consider majority of respondents have percentage Only a small polluted. severely to moderately Only conditions. of their environmental perception a positive only 14 percent clean and green; their cities are say 22 percent feel of respondents clean; only 33 percent are their rivers say the air qualitygood. is Table 5.1. Public Perception Surveys with Environmental Information with Environmental Surveys Perception 5.1. Public Table ne process is process lowest level level lowest cknowledged illegal logging), res, ciently clear and explicit. oods, drought), oods, a number of weaknesses but ers from is because the national- and local- This cult. The Swisscontact 2004 survey Swisscontact The that about 70 indicates is most government that feel of respondents percent indicate and seems to air pollution, for responsible to take initiative they need to not feel does “public handle air pollution”. Water (pollution, fl Water air quality), solid waste, Cities (cleanliness, fi forest (degradation, Forests Government Priorities Government • • • • ectively communicated to the government. An analysis was An analysis the government. to ectively communicated The picture that emerges is one where the environment is on the environment one where is picture that emerges The defi to the radar of the Indonesian population. However, more clearly which environmental issues they are concerned concerned issues they are clearly which environmental more diffi about remains certain and did address to issues, designed view surveys were an opinion an opportunity give to not provide respondents for issues and natural resources of environment on the whole array Indonesia. by If to faced the fact positively that they responded certain indicative raised in the survey issues can be considered conclude then it is possible to that matter, for of their concern about: that the public is highly concerned into a deeper investigation does not allow data available The In sub-topic. fact, on each environmental the perceptions to claim that the majority cult of is only Indonesians it is diffi lacking more However, sub-topics. about the three concerned of the analysis data, the rest and comprehensive compelling sub-topics as the best-estimate. will use the three 5.2 Compatibility of Public Perception with Perception of Public 5.2 Compatibility concern agenda and public government between Compatibility is that public concern is seen as an indication on environment eff sectoral environmental law and local environmental a and local environmental law sectoral environmental e. However, the guarantees given in respect of the fulfi llment and upholding in respect of the fulfi given the guarantees However, e. Yes, but the legislation and regulations are insuffi are and regulations but the legislation Yes, law? Indonesian c information ? From the cases studied, it was found that the practice of upholding the principles it was found the cases studied, ? From practice in under

SECTION Governance 2: Challenges of Environmental Indonesia in guaranteed ciently clear and explicit. upheld principles access principles three waterways have deteriorated over the past 5 years years the past 5 over deteriorated waterways have “more And yet, improved)”. they have (than think and oceans seas and of their air, think the condition the past 5 years”. over improved soil have are KAPThe Survey that natural resources found of food as a principle source “primarily regarded direct family money for be sold for to or resource natural towards attitude of respondents The welfare”. attitude towards to compared low is still resources And although the daily needs and family welfare. the is high”, natural resources protect to “desire natural of political participation to level with regard in with 61 percent variable, is quite issues resources in East KalimantanNorth and only 34 percent Sulawesi claiming participation. willing are that respondents INFORM study found The participateto stop in actions or activities prevent, to destruction,as they do as long forest and overcome “assigns the public Further, cant risks. not bear signifi agency as the responsible manage to the government utilization of when it concerns except the forests, a role”. play want to communities products, forest are the are

the

• • of these rights were insuffi of these rights were How All of the legal instruments studied, including general environmental law, including general environmental All of the legal instruments studied, participate to justic and to information, and enshrined the right to Are BOX 5.1. Public Access to Environmental Governance to Environmental Access 5.1. Public BOX strong but participation at the project and licensing levels is weak. Access to environmental justice suff justice environmental to but participationstrong is weak. Access levels at the project and licensing parties. third NGOs and interested standi to has been made in expanding locus progress participation information, to access guaranteeing lling the principles? Legislation poor performance in fulfi factorsWhat lead to Indonesia’s rights can access on how guidelines provide to is required clear and explicit legislation the public, For lacks clarityand justice and enforceability. rights. uphold access and public bodies to the public is a lack of capacity for there Also, be upheld and enforced. 2008 SOURCE: Murharjanti et al., concerned information on corporate compliance and environmental performance. Public access to participate to access in the policymaking Public performance. and environmental compliance on corporate information concerned varies greatly by case and geographical area. The highest level of access to information was on environmental status while the on environmental was information to of access highest level The area. case and geographical by varies greatly

The surveys indicate that the Indonesian public is quite aware surveys the Indonesian that aware The indicate public is quite and environment of natural resources of the general condition studies several However, surroundings. in their immediate or specifi that understanding of technical show weak. ect and solutions are eff on cause, the Indonesian public does not demonstrate attitude, Regarding or natural protection environmental attitude towards a strong conservation. interest be seems to Although there resource political participationin these issues, and personal action is as the party Most still identify the government limited. most environment. the resources/ managing for responsible Investing In a More Sustainable Indonesia 40 41 Country Environmental Analysis ectively. ectively. . Energy, on the other on the . Energy, 21 decision-making – this in – every person has the right rmed at the 2002 World Summit World rmed at the 2002 – the existence of a mechanism – the existence justice participation

to to

ned as: ned includes access to participation to includes access in making decisions participation policies and programs, on environmental and participation process in makingin the legislative particular decisions based on an environmental in the subjectmatter; interest and Access• public can directly which members of the uphold by information, should their rights to law environmental participation of a healthy and/or enjoyment be infringed. environment Access to information Access and up-to-date accurate full, access information to about the environment; Access• ective implementation of these principles. These are are These ective implementation of these principles. lling the three access principles. The Indonesian Center IndonesianThe Center principles. access lling the three Environmental Governance Environmental • These access principles were part principles were of the 1992 Rio access Declaration These subsequently reaffi and were other as through as well on Sustainable Development agreements. international Initiative, Access The by has been developed A set of indicators performance assess governmental to of NGOs, a global coalition in fulfi has recently a member of the Initiative, Law, Environmental for in the an assessment based on these indicators completed Kalimantan, East Java, West of Riau, provinces representative of the results The and North Sulawesi, Sulawesi. Central 5.1. in Box summarized assessment are 5.3 Assessing the Quality of Public Access in Access Quality of Public 5.3 Assessing the the application of the requires governance Good environmental participation in and accountability principles of transparency, to rights planning and decision-making. Public environmental participation essential prerequisites information, are and justice the eff for further defi hand, generally is not seen by the public as an ‘environmental’ ‘environmental’ as an the public is not seen by generally hand, Hazardous public surveys. in does not emerge issue and thus the by be understood seem to issues never and waste materials of information. nature technical the highly likely due to public, fairly represented In issues of public concern with conclusion, that conclude to agenda, it is safe in the government well eff does occur public-to-government communication about or concern still lacks awareness the public However, This as important. regards government some issues that the and natural environment of that public awareness indicates in breadth. is still limited resources change (WorldPublicOpinion.org, 2007) change (WorldPublicOpinion.org, SECTION Governance 2: Challenges of Environmental nancial support the national from to address the issues); address to ed in the previous chapter. Each issue was Each issue was chapter. ed in the previous 20 Atmosphere (global warming, greenhouse gases, gases, greenhouse (global warming, Atmosphere substances); depleting ozone and marine resources; Coastal Biodiversity; and energy); (clean-coal, alternative Energy and waste. materials Hazardous ectiveness of the above programs in ameliorating the programs ectiveness of the above Data was only available for budget allocations, are used, in this study, as indication of government concern and intentions. concern as indication of government in this study, used, are budget allocations, for Data was only available certain exclude questions. report to The that local survey the discretion states partners given were • • • • • trends in environmental degradation; in environmental trends agenda in the government inclusion (or exclusion) and budget of programs the existence by (represented allocations eff available). data are situation (where ect, the programs are too limited in scope to produce produce to in scope limited too are ect,programs the 20 21 undertaken that uses the three environmental issues of public issues of undertaken environmental the three that uses identifi concern evaluated with regard to: regard with evaluated a. b. It is noteworthy that several items on the government’s on the government’s It items that several is noteworthy to as issues of concern agenda do not appear environmental the Indonesian public including: However, when compared to data on environmental trends, trends, data on environmental to when compared However, to continues of the environment it appears that deterioration programs that government concludes analysis This proceed. degradation. of environmental the rate outpace to unable are have to slow either too are means that the programs This eff and/or that demands and pressures improvements, systemic development from resources) (and natural on the environment and programs government fast for too activities evolve keep pace. to legislations The analysis, available in the cited background paper, indicates indicates paper, background in the cited available analysis, The the key environmental has addressed that the government and in place, are Programs the public. to issues of concern of fi some degree most have government. c. Although some of the topics above were excluded from the from excluded were above Although some of the topics conclude to it is fair of the surveysscope used in this analysis, of these awareness the Indonesianthat, in general, public’s and marine resources, Coastal is limited. issues and concern in the KAP ranked low surveys conducted example, in East for change of climate Kalimantan and North Awareness Sulawesi. in Bali end of the UNFCCC since just be developing issues may 2007. It opinion survey is curious that a world that included Indonesia, the question about climate did not ask respondents ne res, oods, oods, garbage, res, fl erent types, but for the but for types, erent cial pro-environmental attitude cial eld, NGOs/CVOs have played an played NGOs/CVOseld, have ed into diff ed into c and/or policy research, c) communityc and/or policy research, of Indonesian media coverage indicates indicates of Indonesianmedia coverage 22 eld, their main mission or activitieseld, include: a) that news items and public service and public items that news advertisements on over-exploitation and disasters, degradation, environmental in both the years, over increased have of natural resources TV in-house electronic stations broadcast and print media. fi forest logging, documentaries on illegal in Jakarta was also launched recently Radio” “Green A etc. Radio geared (previously Kayu), Utan with all its programs And print media awareness. environmental building towards reporting usually issues, on various investigative features fi forest oods, certainsurrounding as fl incidents (such Change in Bali, on Climate UN Conference The etc). landslides, an important 2007, also provided December momentum for issues. of environmental a wide array cover media to increased have may on environment Although media coverage coverage to proportion relative and emphasis, in Indonesia, it’s In the socio-political it is still miniscule. issues, on conventional stabilization of the economy, by is dominated the news arena, in in democracy (represented exercise anti-corruption drive, But local elections, political parties, etc). parliamentarians, of electronic coverage and print media the dominant features productentertainment, and consumer are infotainment in the media totem position low advertisements. Environment’s only a superfipole creates among the Indonesian if at all. public, the to of media in channeling public concern role The the surveys From limited. more be even may Government East Kalimantan and North examined in this study, Sulawesi claimed they use media as the last resortrespondents in going and prefer aspirations, their environmental expressing institution government the relevant to directly or writing letters defi be misleading to it may 2001). However, (KAP survey, for preference the public’s of media solely through the role role media’s The complaints). (or conveying communication which includes media picture, complete must be seen in a more on environment. of NGOs voice coverage Swisscontact survey (2004), TV the main sources surveySwisscontact and radio were (2004), outdoor by followed the clean air campaign, on of information found Swisscontact and billboards). posters media (banners, a lesser role. play and magazines that newspapers observationCasual 5.4.2 Civil Society Groups fi In the environment management was environmental important since ever role agenda in the mid-1980s. in the development incorporated NGOs/ CVOs classifi are environment fi environment b) scientifi advocacy, education, d) public awareness/ empowerment, development/ on public perception respect to With and e) conservation. NGOs/ CVOs important at least two play environment, roles, the for information of environmental namely as: a) Source ning ective (and SECTION Governance 2: Challenges of Environmental ects that the media have on ects the media have that uence public perception, the public perception, uence nd statistics on news coverage on environment/ natural resource issues. natural resource on environment/ coverage nd statistics on news ective. Among Jakarta ective. of the respondents Indonesia, the three actors are undergoing a undergoing actors Indonesia,reformasi are the three Awareness

22 fi study was unable to This Mass communication literature states that “agenda setting “agenda that states Mass literature communication eff is one of the most prominent information to public responds The (Yin, 1999). public opinion” “the public is likely furtherYin quotes in the media. presented certain of them as important issues and consider be aware to if the mass media”. by highlighted these issues are In identifying the factors that infl of information KAP survey that media was the main source found both North and East Kalimantanfor respondents. Sulawesi TV is although TV, and newspaper, Media includes radio, important more than in urban areas. in rural areas considered TV eff INFORM survey is more that The also found media and radio per head), while printed likely the least cost be less eff seems to 5.4.1 Mass Media 5.4 Key Partners for Communications and Communications Partnersfor 5.4 Key in bridging a key role actors play three democracy, In any the government, the public and between communications Besides and civil society. legislative, namely mass media, work, each other’s actors reinforce the three individual links, branch of the executive for mechanisms especially as control government. In post- and their roles multi-dimensional transition – one that covers and who they must to who institutions cater responsibilities, both with other institutions relationships to, be accountable consolidation” “democratic term The and vertically. horizontally in 2003 as quoted (Diamond, some researchers is used by a new that will lead to which implies a process Susan, undated), and its people act the nation equilibrium in how and react to the pillars the demands of the time or situation. In this period, freedom of democracy expression, of political — freedom being developed, – are of the press of speech and freedom of this democracy, The players rmed. and reaffi strengthened branch, judicial branch, legislative executive government challenged with branch, civil society and the mass media, are and redefi their allegiances and reestablishing realignment their constituencies. in their role and section actors, This will discuss the three and concerns environmental the public’s communicating and possibly An additional, aspirations on the environment. namely religious will also be explored, player, an emerging Each section of the player institutions. will discuss the role well as in channeling public uencing public opinion as in infl This part of agenda, if any. government uence infl opinion to and interviews review based on literature is largely the analysis in Attachment (a list is provided persons with selected resource survey examined in results was available, information Where B). as additional evidence. quoted this study were Investing In a More Sustainable Indonesia 42 43 Country Environmental Analysis c erent erent Musrenbang Musrenbang to ective way c interest groups groups c interest rms this assertion. nes, elaborates or elaborates nes, icting interests from diff from icting interests ort with constituents. communicate to eld, parliamentarians face a wide range parliamentarians face eld, erent topics. These exchanges became one of the exchanges These topics. erent elds and are employed on a full-time basis. The chairman of The on a full-time basis. employed elds and are stakeholders. Newly-electedstakeholders. quickly parliamentarians need to Members of the opinions. own their learn the issues and form a radio-talkshow initiated that Province Java West DPRD of as a crash-course issues, environmental current addressed Guest speakers from parliamentarians. for on environment invited agencies were academia, NGOs and local government discuss diff to again However, draft when reviewing legislations. references Many of individual parliamentarians is tested. the persistence draft reviewed not having unprepared, parliamentarians come institutes how a political party a political how institutes interacts with their constituents. than individual rather become with constituents Relationships An interview with a (http://forum-politisi.org). in nature systemic confi Province Java West DPRD member from with parliamentarian claims that communication veteran This commitment the public is very individual’s dependent on each the hours attending spend to and willingness members DPRD Many sessions or other community meetings. and such meetings, for ceremonies the opening only attend (Bawono, discussions begin the substantive before leave individual 2008). Furthermore, personal communications, support do not obtain any members of the parliament their from political party in their eff short-term for every gains use constituents to tend 5 Parties 2008 and during elections (LGSP, namely getting votes years, is relations’ ‘constituent term The http://forum-politisi.org). with specifi as building relations understood 2008). elected candidate (LGSP, that can help get a legislative to devices members left their own to legislative With on what obtain information to with the public, communicate is not surprising that the legislature it the public needs or wants, with the executive in debates base their arguments to little have the paucity is further by This aggravated branch or other parties. and “background of meaning provision support”, “intellectual of explanation of a – sifting and systematic specialist information and district (Sherlock,provincial the 2003). At mass of material” assistants at or hire research members must do their own levels, 2008). personal communications, expense (Bawono, their own A member of DKI Jakarta on members rely parliament also says as input as well their knowledge city, of their of living conditions personal communication, them (Mukhayar, others around from parliament of structure in the way 2008), indicating the absence aspirations of their duties in representing for members prepare members parliament, do Only at the national level the public. Environment, VII (for Commission The intellectual support.have is supported a 6-member by Technology) and Research Energy, The of expertsteam gather data and conduct to analysis. in relevant degree at least a Master’s have members of the team fi of expertsVII said the team was an eff Commission including reviewing amounts of information, sift large through (Hartarto, the Commission by received grievances written 2008). personal communication, fi In the environment of scientifi a combination – all of which involve of topics confl and frequently information is no mechanism or regulation that defi that or regulation is no mechanism SECTION Governance 2: Challenges of Environmental political parties are, and parliament participate to in the 2009 cation process ne more clearly their comparative advantage as ‘mouthpiece’ ‘mouthpiece’ advantage as clearly their comparative ne more factions each carryingerent in the house, what is supposed Political parties have not yet developed the infrastructure or developed parties not yet have Political There of serving public aspirations. culture for as a vanguard 5.4.3 Legislature the parliament (at of the Soeharto the downfall With regime, itself having and district found levels), provincial the national, with it, higher expectations and, mandate, stronger a clearer, parliamentarians where the days Gone are the public. from plans development branch’s rubber-stamped the executive an informed expected have to parliamentarians are – now the days Gone also are being discussed. opinion on the topics – now a monolithic voice the parliament was largely where with multiple opinions from faced are parliaments at all levels diff constituents. their respective aspirations from contain to mushroomed political parties, this are which have to Attached in the Soeharto 3 (three) 34 (thirty-four) a mere to era from which passed the verifi general elections. NGOs have also been challenged to improve their accountability, accountability, their improve also been challenged to NGOs have as funding of management of activities, as well both in terms donors and sponsors have International arrangements. while contributions, nancial reportingdemanded better of fi from themselves distance NGOs to others see the need for “It is also important that the philanthropic donors. international sector expands in Indonesia, so that civil society organizations in and funds, in Indonesia foreign less dependent on become Indonesian directly to start increasingly that process relate to developments” local to responsive being more stakeholders, 2005). et al, (Antlov In this new setting, environmental NGOs will be challenged to to NGOs will be challenged environmental In this new setting, defi the public or certain Political of the public. for components a claim they have parties particularly, and parliamentarians, and views the public’s in representing role legitimate more that Granted aspirations. of trying still in the process establish credibility to at present, and personal scandals), the cases corruption (amid myriad discriminating in selectingpublic can be expected be more to their aspirations. represent who to In recent years, the role of NGOs in the post-reformasi period of NGOs in the post-reformasi the role years, In recent started ask have to “Politicians under scrutiny. has come NGO legitimacy much they and how questions regarding et.al, (Antlov of their constitutents” the interest represent really is no longer public watchdog of “role the 2005). Furthermore, The with other actors…” but shared NGOs, by monopolized of NGO positions vis-à- “reformulation is challenge of the time in a setting other sectors and various vis the state society”, in among but distributed centralized is no longer “power where political parties such as parliament, centers, and new power 2005). et.al, (Antlov judicial institutions” public; and b) Agent for bringing public’s environmental environmental public’s bringing for b) Agent public; and be will roles These attention. the Government’s to aspirations the following. discussed in

Gerakan Pratama Nahdlatul , Mangunjaya (Moslem kyais Gadis National orts, compost- Batang that the tradition of protection protection that the tradition of nd the message of conservationnd the leaders. A study of the scripture A study of the scripture leaders. in the Province of Nusa Tenggara Barat, for Barat, for Tenggara of Nusa in the Province in Northern the designation Sumatra proposed ), as the group is known, change Jakarta aims to ), as the group Peduli e 2006, which dedicates its programs to environmental environmental to its programs e 2006, which dedicates uence towards the public’s environmental behavior cannot behavior environmental the public’s towards uence of US-based Conservation CI initiated liate International (CI). Park (Mangunjaya, personal communications, 2008). personal communications, (Mangunjaya, Park Tzu In the other major faiths in Indonesia, the Buddhist group as an protection environmental as promoting Chi is recognized the poor, on assisting the partintegral of its mission. Focused activities holds routine with communities, Chi organization Tzu eff regreening/replanting recycling, covering a also owns organization The (www.tzuchi.or.id). making, etc. in Jakarta broadcast TV, TV and Medan station, DAAI private sinc preachers) and pesantren preachers) indicates and hadith literature a does exist in Islam. As etc) animals, land, (forests, of nature fi Moslem preachers result, messages of gender to example, for compared, acceptable, ( heavy debate to prone which are equality, with work 2008). Based on the personal communications, , CI has observed kyais and discussions with pesantrens actionpockets of increased and participation to with regard A kyai environment. his surroundings, for program a regreening initiated example, and a pesantren of conservation known now the as area, Kemang groups, youth Ulama and Muhammadiyah Gempita ( Indonesian and others. Christian Church Iman values are religious “As management habits. waste people’s can help social change religion human behavior, connected to says behavior,” civilized more guiding human beings to by in an interviewAndang Binawan (Jakarta 17 July 2008). Post, leaders’ religious and institutions’ religious ectiveness of eff The infl materialize. to take some years and may as yet, be measured can awareness in building environmental involvement Their adding another important development, be seen as a positive may, in the matter their interest However, the arena. to player in fact, a frustration on the part signal leaders/ of religious an unsolvable issues remain intellectuals that environmental the urgency impacts despite and dire they have problem, the the Indonesian population. On the other hand, for created leaders include religious to initiative and NGO’s government message can also be seen as a the environment in spreading partly the public, reach admission of an to attempt desperate campaigns. after decades of environmental inability, their own topics (Jakartatopics 2008). 6 May Post, that, an interfaith a by was established from Aside group such with other groups priest in alliance Catholic concerned Life Clean and Healthy Institute, Wahid as Maarif Institute, Interfaith Dialog Foundation, Lantan Bentala Movement, Indonesia Pluralism, the Institute for Society, sensitive to environmental issues and include environmental and include environmental issues environmental to sensitive their sermons (www.menlh.go.id). messages in the Indonesian by embraced also been leaders have Religious affi conservation on Islam and a discourse among Hidup) , Muhammadiyah NU) established a Lingkungan SECTION Governance 2: Challenges of Environmental , have signed signed Ulama, have Ulama ( Lembaga in the Indonesianuence society and Nahdlatul cooperation with the Ministry of Forestry, with the Ministry cooperation of Forestry, cally, the two largest Moslem organizations, Moslem organizations, largest the two cally, infl cant overall cial “intellectual support”, legislative members have members have legislative support”, “intellectual cial . With 15,000 pesantrens spread throughout throughout spread 15,000 pesantrens With . Pesantren

5.4.4 Religious Institutions a role not traditionally known play institutions are to Religious public opinion public aspirations or forming in representing It as a group discussed in this analysis is in the environment. with signifi aims to develop an environmental movement that is based movement an environmental develop aims to While on Islamic values. legislations in question, let alone doing their own research. As a As research. their own question, let alone doing in legislations DPR, the quality of discussion, in the national-level even result, and Committees in most Commissions and questioning debate is poor (Sherlock, 2003). Lacking offi views exchange to forum or other informal networks developed DKI JakartaThe DPRD members participate in and information. local media representatives, which includes NGOs, a network Java, West In agencies and community groups. government factions, in a caucus that crosses linked DPRD members are Such and regions. political parties, Commissions, crosses crosses the Ministry by a caucus was initiated in 2002 – of Environment keep DPRD members to among forum as an informal intended in the agenda in all discussions in the parliament. environment the Ministry date, boasts of 20 DPRD member caucuses on To (www. 85 districts/cities and provinces covering environment, of the caucuses the fate formed, once However, menlh.go.id). of the individuals involved again depends on the commitment much supportand how the DPRD obtain from they manage to or the government. recent interest in environment. The role of religious institutions of religious role The in environment. interest recent of the surveys examined in this study, in any was not addressed and review on literature relies and thus the discussion below persons. interview with resource proclaimed institutions have religious several years, In recent engaged in environmental mission or their environmental activities. Specifi and Nahdlatul Muhammadiyah Memorandum of Understanding with, respectively, the Ministry Memorandum of Understanding with, respectively, and the Ministryof Environment of Forestry. Institute ( its Environment through time, given Indonesia, million students at any and about two awareness ally for a strategic considered are pesantrens pesantren create aim to Not only does the program building. it also hopes to practices, good environmental as a model for of the schools) who are leaders (graduates religious develop called National Movement for Forestry and the Environment and the Environment Forestry for called National Movement has a wide range of objectives, GNKL), (Indonesian acronym increase NU members, of the welfare which include improving management, and in sustainable forest their involvement policy inputs for makers. providing also engaged with schools have Islamic boarding Many called the Ministry a program through of Environment Eco- program designed to cater to its 45 million members, 65 percent 65 percent its 45 million members, to cater to designed program to or another, one way linked, and are in rural areas of which live NU’s areas. forested Investing In a More Sustainable Indonesia 44 55555 4544444454545454545 CountryCoCouunntrtry EnEEnvironmentalnviviroronmnmeenntatal AnAnalysisala yssisis SECTION 3: Sectoral Challenges in a Changing Climate

SECTION 3: Sectoral Climate in a Changing Challenges Investing In a More Sustainable Indonesia 46 Chapter 6: Adapting to a Changing Climate

Coastline, East Nusa Tenggara Photo: Endro Adinugroho . ect oods, landslides, landslides, oods, C) 1990 and has since o 0.00 - 0.04 0.04 - 0.09 0.09 - 0.14 0.14 - 0.18 0.18 - 0.24 0.24 - 0.31 0.31 - 0.39 0.39 - 0.47 0.47 - 0.60 0.60 - 1.00 Country Boundary Legend Index Hazard Multiple Climate Celsius ( Celsius 0 ts and risks oods, landslides, sea-level rise) except cyclones. rise) except sea-level landslides, oods, isks on Java, Bali, parts isks on Java, area Sumatra, and a large of occurred in all seasons of the year, relatively consistent if not consistent relatively in all seasons of the year, occurred than the expectation due trend of the warming slightly lower 1990s was the warmest decade and a The change. climate to Annual mean temperature in Indonesia has been observedAnnual mean temperature 0.3 around by as increasing Indonesia is susceptible to all major climate change risks all major climate Indonesia to is susceptible fl (drought, increase temperature modest Indonesia will experience intense rainfall and sea-level rise will negatively aff rise will negatively rainfall and sea-level intense ooding and/or landslides; dependent on climate-sensitiveooding and/or landslides; SECTION 3: Sectoral Climate in a Changing Challenges t of avoided damage from climate change is likely to exceed the annual cost by 2050 and, by by 2050 and, by cost the annual exceed change is likely to climate damage from t of avoided t could reach 1.6 percent of GDP, compared to the cost at 0.12 percent of GDP at 0.12 percent the cost to compared of GDP, 1.6 percent reach t could sheries for their livelihoods; and have fewer assets to cope with the impacts cope assets to of a changing fewer and have livelihoods; their sheries for fl (drought, change hazards multiple climate to highly vulnerable of Indonesia are c areas food security, water resources, coastal areas, farming and coastal livelihoods, forests, marine biodiversity, and marine biodiversity, forests, livelihoods, and coastal farming areas, coastal resources, water security, food health r climate especially vulnerable to are and ecosystems People Specifi sea-level rise) sea-level more modestly, only increase may While temperature Many adaptation options exist to help reduce Indonesia’s vulnerability to climate change which will need to be which will need to change vulnerability climate to Indonesia’s help reduce to adaptation options exist Many benefi of costs, the magnitude to according phased and prioritized 2100, the benefi of Papua living in be: likely to most impact the more Indonesians are on the poorest who change will have Climate fl drought, to susceptible that are areas marginal fi or agriculture climate annual benefi The

• MAIN MESSAGES • • • • •

Source: Yusuf and Francisco, 2009 and Francisco, Yusuf Source: Figure 6.1. Multiple Climate Hazard Map of Southeast Asia Hazard 6.1. Multiple Climate Figure 6.1 Impacts Change in Indonesia of Climate and (Yusuf the Southeast region Asia for analysis Recent 2009) suggests that Indonesia vulnerable is highly Francisco, various aspects to of a warming climate. within the region portions and western Java, eastern of densely-populated The of much of Sumatra, parts and regions the coastal of western islands all rank northern Papua and southeastern Sulawesi, 6.1). Figure map (see hazard highly on the multiple climate Investing In a More Sustainable Indonesia 48 49 Country Environmental Analysis ee, ee, ve- < -100 -100 - -75 -75 - -50 -50 - 25 -25 - 0 0 - 25 25 - 50 50 - 75 75 - 100 > 100 level rise at 1 cm/yr level 2007) (ITB, Blue = inundation due to sea Blue = inundation due to loss of The ected 426,000 hectares of rice. agriculture and thus food security. The droughts caused by the caused by droughts The security. and thus food agriculture 1997 El Nino aff event a fi deviation from the percentage as production (measured year moving average) in eight El Nino years between 1965 and 1965 and between in eight El Nino years average) moving year variability during 1963- Production 4 percent. 1997 averaged chages due mainly to (13.5percent maize for 1998 was greatest harvested (World particularin area Bank, regions, 2008). For with a very be higher: an area the losses may East Java/Bali, the January- for short be 18 percent to monsoon, is predicted 2007). April harvest et al., (Naylor Important income-generating such as coff crops non-food Projected 1996). ected (FAO, also aff and rubber were cocoa vary could yields in Asia changes in crop -22 percent between century the end of the by of a in the event +28 percent to (Reilly, concentrations doubling of atmospheric carbon dioxide 1996). A model simulating the impacts change on of climate UK Meteorological Studies, Institute of Space (Goddard crops ects on SECTION 3: Sectoral Climate in a Changing Challenges ooding. ooding. C (above the 1961 – 1990 average) the 1961 – 1990 average) C (above o water and soil moisture; hence will have eff will have hence and soil moisture; water 1998 increase of almost 1 1998 increase Indonesia will experience more intense rainfall. Climate change change Climate rainfall. intense Indonesia more will experience per rainfall more 3 percent to in 2 percent result to is predicted 6.2 in Indonesia year (Ratag Figure 2007). As 2001 in Susandi with the country rainfall, the entire more experience will shows, rainfall is increased The change being in the Moluccas. largest in a result change, climate to due and, expected continue to with in a year), days number of rainy shorter (fewer season rainy in the risk of fl cant increase signifi made it the country’s warmest year in the century et warmest year (Hulme, made it the country’s 1999). al., climate by in Indonesia will be threatened security Food Indonesia with regards for concern the largest change. Perhaps food the impactsto change is the risk of decreased of climate evaporation, precipitation, change will alter Climate security. run-off Figure 6.3. Impact of Sea Level Rise Caused by Global Warming: Jakarta in 2050 Warming: Global Rise by 6.3. Impact Caused of Sea Level Figure SOURCE: Ratag, 2007 SOURCE: Ratag, Figure 6.2. The Average Change of Precipitation Pattern 1900-2000 September-November (in mm/100 years) September-November 1900-2000 Pattern Precipitation Change of Average The 6.2. Figure >1,000 500-1,000 250-500 production. sh and prawn ect fi ect 25-100 100-250 <25 ect would be to reduce potential average income. income. average potential reduce ect be to would of rice output, and about 940,000 tons sh, shrimp and prawns centimeters (cm) per year. The average depth of inundated inundated depth of average The (cm) per year. centimeters and 4.17 in 2050 (Meliana 0.28 varies between 2005 in area with the land surface coupled This decline as Susandi 2007). as observed can have in the Jakarta Bay, high as 0.8 cm per year, impacta tremendous on urban productivity and infrastructure, in rural 2005). Also, 6.3 (Priambodo in Figure as visualized reduction a 95 percent districts and Subang, Krawang such as as a result is estimated 300,000 tons) supply (down in local rice In the same districts, maize zone. of inundation of the coastal about half of this due 10,000 tons, by be reduced output would inundation. to University Columbia by analysis recent the national scale, At Indonesia rise to risk of sea level the extensive has indicated than 1,000 people with a density of more 6.3). Areas (see Figure , kilometresYogyakarta, such as Jakarta,per square rise sea level which will get hit the most by areas are Surabaya, 2007). In 41,610,000 Indonesians within ten total (CIESIN, live the most vulnerable are They sea level. of the average meters 2007). changes (IIED, sea level to Sea- livelihoods. farming and coastal rise will reduce Sea level aff also be likely to rise would level In the Krawang and Subang districts, the loss is estimated at In Subang districts, and the loss is estimated the Krawang (valued at over respectively and 4,000 tons, 7,000 tons over rise could Citarum Basin, sea-level US$ 0.5 million). In the lower in the inundation of about 26,000 ha of ponds and 10,000 result of of 15,000 tons in the loss result could This land. ha of crop fi production. eff overall The farmer the rice cost reduction of yield would estimated The within LECZ outside LECZ Persons per sq km Persons ect Population Density within and outside of a 10 meter low elevation coastel zone (LECZ), 2000 zone elevation coastel Density low and outside of a 10 meter within Population Climate Climate SECTION 3: Sectoral Climate in a Changing Challenges ect water resources. ect resources. water 1997/98 El Nino- The ects. res disrupt destroy habitats, habitats, disrupt destroy res JAKARTA ects of drinking the availability water, res in Indonesia are closely related to a closely related are in Indonesia res . In El Nino years, the total area of land and area the total . In El Nino years, res in Indonesia have been classifi ed as one of the been classifi Indonesia in res have

ce) shows a decrease of crop harvest in West and East Java. and East Java. West harvest of crop in a decrease shows ce)

especially for cities. On the other hand, heavy with rainfall On the other hand, cities. especially for facilities, turbidity processing associated will damage water of water the costs and increase supply the water contaminate 2007). (GoI, treatment zones. coastal productive rise will inundate Sea level pollute watersheds, reduce biological diversity, and increase air and increase diversity, biological reduce watersheds, pollute health eff pollution, with consequent peat fi related 1907 and 2007, between in the world natural hazards ten top with the direct indirect and value of damages and economic 2007). $17 billion (OFDA/CRED, totaling losses potentially Rainfall aff variability will negatively aff in rainfall will adversely and increases Decreases both generation and drinkinghydroelectricity supply, water reservoirs. water supply from of which depend on steady that eight dams during six El Nino indicate Data from years Shortage normal. plant output was below of hydropower in reservoirs also aff water increased due to sea level the average change will also increase The caps. and the melting of polar ice of the sea water volume in the Jakartamean sea level as high as 0.57 will increase Bay Offi soil fertility long-term 2 by change will likely reduce Climate of rice decreases in projected resulting 8 percent, to percent and maize 10 percent, by soybean per year, 4 percent yield by and Nih, 2004 and Parry 1992) (Amin, 50 percent by fi Land and forest as did carbon cantly, changing climate signifi re increased fi ectedby aff forest fi These 2007). emissions (GoI, Figure 6.4. Population Density Within and Outside of a 10 m Low Elevation Coastal Zone (CIESIN, 2007) (CIESIN, Zone Coastal Elevation of a 10 m Low and Outside Within Density 6.4. Population Figure Investing In a More Sustainable Indonesia 50 51 Country Environmental Analysis res res rst time as res are estimated estimated are res mildly vulnerable (0.18 - 0.42) mildly vulnerable (0.18 - 0.65) vulnerable (0.43 moderately - 1.00) highly vulnerable (0.66 Source: Yusuf and Francisco, 2009 and Francisco, Yusuf Source: Legend (Country std) regions Vulnerable rmed that warmer temperature rmed that warmer temperature Philippines cant economic damage and loss of livelihoods. For For damage and loss of livelihoods. cant economic rm perceptions of an increase in extreme weather events, events, in extreme weather of an increase rm perceptions in fatalities. an increase thus leading to handle, cult to Climate change will intensify water- and vector- borne diseases. borne diseases. and vector- water- change will intensify Climate with associated El NinoIn and La Nina 1990s, the late were Malaria has spread of malaria, dengue and plague. outbreaks the fi it was detected for elevations where high to high as 2103 m in the highlands of Irian in 1997 (Epstein, Jaya strain of virulent 1998). In that a more et al., 2004, it appeared emerged. have virus may deadly dengue fever the potentially and killing faster has been spreading more Dengue fever especially during La Nina (GoI, victims years than in past years, 2007). and health change and these diseases climate links between The Assessment Fourth IPCC’s The is poorly researched. problems reliably Reportlittle data to is too that there (2007) stated confi perhaps However, reporting. increased be due to which may the rise in the number come, of what is to as a forewarning seasons in Indonesia, cases during the rainy of dengue fever been partiallyparticularly warmer have could caused by in Java, has confi Research climates. making mutation of the dengue virus, has led to cases more diffi in but result Impacts the country, across will be uneven signifi fi impacts the economic of forest example, and fi droughts an annual US$ 9 billion from cost to costs related haze 2006) and US$ 4 billion from May (Applegate, 2003). Center, Research (International Development of coral of coral 2 Indonesia Malaysia SECTION 3: Sectoral Climate in a Changing Challenges ected (Wilkinson, site ect marine biodiversity. ect marine biodiversity. C. The 50,000 kmThe C. o Vietnam Cambodia bleaching. This puts the Bali Barat This bleaching. Laos Thailand & Nih, rise (Parry sea-level sh farms due to and fi elds or prawn reefs in Indonesia, about 18 percent of the world’s total, are are total, of the world’s in Indonesia, about 18 percent reefs El Nino in 1997 – 1998 alone The event straits. in dire already 16 percent bleaching to caused coral have to was estimated of 6 percent only Insurvey, a 2000 reef. coral of the world’s 24 percent condition, in excellent are reefs coral Indonesia’s in fair to are 70 percent and the remaining in good condition, 2003). Terangi, (Johnpoor condition Hopkins and University that a majority found A survey in the Bali Barat National Park than half of the More in poor condition. were reefs of coral coral was due to degradation as a catastrophically-aff National Park Islands Thousand in the island, 2000 in Setiasih, 2006). In Pari found were reefs of the coral 50 – 60 percent National Park, later, bleached in 1997 (Irdez 1998 in Setiasih, years 2006); ten 2007b). (GoI, 90-95 percent to this had increased Climate change will subject Indonesia’s ocean water to an to water ocean change will subjectClimate Indonesia’s 2.5 of 0.2 to in temperature increase The warming of ocean water will aff water warming of ocean The 1992). US$ 10 to US$ 17 annually, the soybean farmer US$ 22 to US farmer US$ 22 to the soybean US$ 17 annually, US$ 10 to US $130 annually. farmer US$ 25 to (corn) $72 and the maize in the cause, would It in yield that the decrease is estimated lose their to Subang District about 43,000 farm laborers alone, look to have 81,000 farmers would In than addition, more jobs. the inundation of their rice due to of income other sources for fi Figure 6.5. Vulnerability Map of Southeast Asia Vulnerability 6.5. Figure change for climate from damage avoided t of t could reach 1.6 percent of GDP, compared to the to compared of GDP, 1.6 percent reach t could Indonesia and For the costs. ts of adaptation far outweigh because Indonesia has a long coastline, high population high population because Indonesia long coastline, has a on agriculture high dependence density areas, in coastal and capacity, adaptive low relatively resources, and natural no furtherWith or mitigation 2009). (ADB, climate a tropical non- market and mean GDP losses from adaptation measures, 2100. If by the chance 6.0 percent market impacts reach could go as high could they is also considered, events of catastrophic of GDP. as 7.0 percent Benefi of adaptation the cost in Southeast Asia, other countries three the construction (mainly of zones and coastal agriculture for and heat-resistant of drought- and the development seawalls 2020 on average. by per year be about $5 billion would crops) annual benefi The Indonesia is likely to exceed the annual cost by 2050. By 2100, by the annual cost Indonesia exceed is likely to the benefi 2009). It should be stressed of GDP (ADB, at 0.12 percent cost that further the projected mitigate entirely adaptation cannot by change and must be complemented climate damage from the avoid to gas emissions global mitigation of greenhouse change. impact climate of future greater ts ts SECTION 3: Sectoral Climate in a Changing Challenges of Adaptation

Economic impacts of climate change will be high in Indonesia. impactsEconomic change will be high in Indonesia. of climate non-market impact risks, considering and catastrophic Without This 2100. by 2.5 percent reach to mean GDP loss is projected the global mean GDP loss of 0.6 percent times four is over 6.2.2 Economic Costs and Benefi Costs Economic 6.2.2 With 65 percent of its population living in coastal areas, Indonesia areas, in coastal of its population living 65 percent With and other hydrometeorological rise sea-level is vulnerable to that when one considers greater is even exposure This events. as as well nearly half the population depends on agricultural (Yusuf analysis 2007b). Recent (GoI, livelihoods forest-based of people to the exposure 2009) has evaluated and Francisco, to threats as climate change in Southeast as well climate Asia vulnerability are ecological When human and areas. protected important in Indonesia will be population centers considered, at risk, Bali, parts especially on Java, of Sumatra, and a large 6.5). (see Figure Papua of area 6.2 Socio-economic and BenefiThe Costs There is no proven evidence yet that intense and more frequent frequent and more that intense yet evidence is no proven There causing climate or are by caused El Nino are and La Nina events looking for proxy can be a good events But these change. The change. climate due to occur could at the damage that will get as the world the norm become could events rare permanently warmer. 6.2.1 Vulnerability Investing In a More Sustainable Indonesia 52 Chapter 7: Land Use and Climate Change

Land clearing for oil palm plantation, Sumatra Photo: Heri Wibowo re 2006 - 000 2000 7 - 9 he size and location of the issue. and location of the issue. he size 997 ts, i.e. improved forest law law forest improved i.e. ts, - 1 Rate (M ha/year) Rate 90 that in but also show rm that judgment, erent periods based on when satellite periods based on when satellite erent gure to the right compares average areas areas average the right compares to gure 990 nition of forest and interpretation of land cover, of land cover, and interpretation nition of forest - 1 82 Deforestation 1982 - 1990 1990 - 1997 1997 - 2000 2000 - 2006

0

1.5 1.0 0.5 3.0 2.5 2.0 Million Ha per Year per Ha Million information was gathered by diff erent organizations. The organizations. erent diff by was gathered information a clear indication that 2000, shows since period, most recent only a be may rate current The is declining. deforestation data from These in the 1990s. estimated rates of average third developed been have below) gure (and see fi mapping analyses and analysis and detailed images sophisticated using more results These 2007). (Hansen, et al., systems new satellite from depend on defi is going down is a clear indication that deforestation but there monetary During the period of the years. crisis recent in more (1997-2000) in Indonesia, and decentralization most analysts (World was increasing Bank, et al., that deforestation believed data confi These 2006). be only a third may of deforestation the rate years, recent more . More recently, data and analysis data and analysis recently, is Declining. More Loss Forest of in the rate an improvement show 2008) in MOFr, (cited fi The deforestation. during diff deforested Figure 7.1. Indonesia: Deforestation and Degradation and Degradation Deforestation 7.1. Indonesia: Figure res, and peatland degradation constitute the single largest largest the single constitute and peatland degradation res, res, and peat land res, SECTION 3: Sectoral Climate in a Changing Challenges gures are uncertain are and gures nance such as REDD can provide an important incentive for implantation of these “no regrets” regrets” “no implantation of these an important for can provide such as REDD nance incentive

23 kindserent of forests). ected in the national development focus on focus ected in the national development rms to improve sustainability; restructuring and revitalization of forest sector industries, forest and land fi forest sustainability; sectorindustries, of forest improve rms to restructuring and revitalization High rates of deforestation, illegal logging, forest fi forest illegal logging, High of deforestation, rates control, greater equity and transparency in forest/land use decisions, and independent monitoring of legal monitoring and independent use decisions, equity and transparency in forest/land greater control, compliance. fi climate Forest options. source of Indonesia’s greenhouse gas emissions and have made it one of the world’s principal emitters. made it one of the world’s gas emissions and have greenhouse of Indonesia’s source as related loss as well of swamp forest dry of percent loss and 96 78 percent forest for account 10 provinces half of all losses and over Kalimantan for with just Riau, Central and Southemissions, Sumatra accounting emissions. forestry that and land is consensus is uncertainty there Although there of such emissions, the magnitude about mitigation. priorities for key use are and land degradation of forest costs impacts, and development policy driving forces, The and institutional issues, in Indonesia. years many been well-known for have benefi climate of regardless options exist that should be pursued “No regrets” enforcement, management and governance; realigned incentives for timber harvesting and processing timber harvesting for and processing incentives realigned management and governance; enforcement, fi

MAIN MESSAGES • • • • • •

23 an overview of t for this section on land use change and deforestation focuses still under review, Because emissions data are res, depth/subsidence of peat, deforestation vs. degradation, degradation, vs. of peat, deforestation depth/subsidence res, In recent decades, Indonesia high rates has been known decades, In for recent fi forest illegal logging, of deforestation, of greenhouse high rates to All of these contribute conversion. exactThe emissions fi gas emissions. or factors measured that must be because of the many disputed of timing/severity (e.g., sound estimates develop to estimated fi in diff carbons stocks renewed focused have gas emissions estimates Greenhouse in the context of the forests on Indonesia’s attention sustainable forest However, change debate. global climate of concern has long been a topic management and governance and peat of forest of conversion in Indonesia, as the rate as well been the issues have These plantations and other uses. land into Bank, et World (see years many subject for of study and debate sector change issues). Climate an overview of forest 2006 for al., another rationale provide on carbon emissions and the focus of policy this raising the level to and management attention for unlock up to to especially as it has the potential set of issues, the preservation for of standing a billion dollars of payments just another symptom/ emissions are house gas Green forests. management of the underlying issues of forest indicator and environmental growth, economic equity, improved for projection, as refl pro-growth.” pro-jobs, “pro-poor, 7.1 Deforestation and Land Degradation 7.1 Deforestation 7.1.1 Overview Investing In a More Sustainable Indonesia 54 55 Country Environmental Analysis cult res and res ect a shift activityre is ndings into an ndings into od practices (Bappenas-ADB, od practices (Bappenas-ADB, nal analysis. Forest cover cover Forest nal analysis. pproaches that can eff pproaches ns in terms of health and greenhouse of health and greenhouse ns in terms . Emissions estimates . Emissions estimates Estimates res has been lower than in 1997-98 has been lower res c range in the fi nition of forest and methods used (e.g., used (e.g., and methods nition of forest Emissions of erent types of soils and forests). Assumptions about the about the Assumptions types of soils and forests). erent ect on the emissions estimates. The period before 2000 not period before The ect on the emissions estimates. REDD incentive scheme being negotiated under UNFCCC. under UNFCCC. scheme being negotiated REDD incentive Comparison a specifi elaborate to conducted analysis satellite from was developed information with South Dakota State in collaboration Ministryby of Forest a for analysis This 2007). al., 2008; Hansen, et (MOFr University 2000-2005 loss during that forest indicates period recent more 1.3- ha/yr vs. (0.7 million of prior estimates was about one third Estimates 2007 and other sources). 1.9 million ha/yr in FAO vary the defi to due deforestation of images). In though, lower resolution general, estimates lower lead to period would in the newer estimates in international estimates emissions than previous of overall and assumptions other considerations Several publications. including emissions estimates, overall to also contribute for (which can be disaggregated of the carbon stock estimates diff a substantial of burning also have depth of peat and the rate eff fi forest but also more deforestation, only included more that the number of hot shows analysis recent More hot spots. fi spots and range of forest these fi incorporating for approach The period. projections country future and a baseline for overall estimate is at the heart and discussions going of analytical concerns inside and carbon analysts forest among Indonesia’s on now outside of government. from forest loss and land use change are subject a wider loss and land use change are to forest from range of assumptions and uncertainties than those coming employed a range of assumptions are Since fuels. fossil from diffi more it is relatively at various points in the analysis, erent erent re in peat re , and could perhaps , and could SECTION 3: Sectoral Climate in a Changing Challenges ort the translate to 24 ts res and peat land drainage on res ective law enforcement policies, the policies, enforcement ective law culty of accessing unexploited forest forest unexploited culty of accessing erent forest and soil types have diff and soil types have forest erent res have been a more important of been a more source have res found on large estates, not smallholdings, however (WWF/Eyes on Forest 2008). Further, there are clear societal and global gai are there (WWF/Eyes 2008). Further, however not smallholdings, on Forest estates, on large found a enforcement or law regulations, incentives, policies, should be placed Priority these practices. changing gas emissions from 1999). Some hold that alternative practices are more expensive, would undermine profi ts, and hurt poor small holders. Evidence shows that most fi and hurt shows Evidence ts, poor small holders. undermine profi would expensive, more practices are 1999). Some hold that alternative toward less destructive and emissions-producing practices. less destructive and emissions-producing toward explain to has been conducted and publicized cial analysis 24well-understo a number of contained through and reduced for planting is not legal in Indonesia and can be for land clearing re of fi Use Other areas . This Section analyzes deforestation SectionThis deforestation analyzes . and Fires Swamps Peat is not a perfect deforestation guide to However patterns. emission because diff latest information on forest cover loss into estimates of GHG estimates loss into cover on forest information latest based emissions are Since of change. emissions and rates be to can be shown on land use change and deforestation can it levels), of prior estimated perhaps a third declining (to forest-based of Indonesia’s estimates be expected that lower emissions will emerge. that peat of emissions show estimates Many carbon content. drainage and fi multiple benefi have would conversion The Ministry of Forestry is currently preparing to implement Ministry to The preparing is currently of Forestry forestry sector. Indonesia’s emissions from reducing a plan for part As an eff will be of that work, there do not happen every year Fires emissions than deforestation. vary may of this source by so estimates with same severity, These account. taken into are methodology and which years of air pollution and health in terms costs emissions also create countries the local population and in neighboring risks to the use of fi 1999). Reducing (BAPPENAS-ADB, areas, or some other combination of factors. or some other combination areas, increasing cost and diffi cost increasing or less than the average rates in the late 1990s. However, no However, 1990s. in the late rates or less than the average offi it is still unclear whether Thus, in deforestation. the drop eff the decline is due to Reported by Mr. Hermawan Indrabudi, Min Forestry’s Center for Forest Inventory Mapping. and for Forest Center Min Forestry’s Indrabudi, Hermawan Reported Mr. by and Climate Change in Indonesia. Jakarta, Aug 27-28, 2007. GTZ & GOI. on Forestry National Workshop Modis - SDSU/SUNY-ESF analysis - SDSU/MoF Landsat analysis Modis pre-processing - NASA/UMd/SDSU - USGS/GPW/UMd Landsat data provision - MoF Indonesia land cover Landscape classes Natural forests water No data (clouds) and inland Forest cover changes area cover Forest Figure 7.2. Decrease of Forest Cover in Indonesia 2000-2005: Forest Cover Change Areas Change Cover 2000-2005: Forest in Indonesia Cover of Forest 7.2. Decrease Figure be achieved at negative cost (that is, overall, society would society would overall, (that is, cost at negative be achieved after the implementation cost even this change, gain through peat fi However, is considered). part considered of the not currently are land without trees Land Type on i otect Pro n on i at rv tation on mineral soil, though tation on mineral soil, se n ective law enforcement. enforcement. ective law ow o Swamp Sw Lowland Lo Conservation Protection on i ) are facing heavy lahan gambut) are s r e v n Con cient or ineff ected, overall emissions from this area could could this area from emissions overall ected, Note that production and conversion areas areas that production and conversion Note n 25 o i are allocated for liquidation to non- liquidation to for allocated are Forests are allocated for permanent production for allocated are Forests ooduct r ProductionP Conversion gure also shows that both “dry land forests” (i.e., most most (i.e., land forests” “dry that both also shows gure igure 7.4. Forest Loss on State Forest Land (Percent) Forest on State Loss 7.4. Forest igure F 5.0% 0.0% areas have been allocated for economic exploitation through exploitation through economic for been allocated have areas selectiveharvesting conversion liquidation and through or In protection contrast, plantation uses. or agricultural to better less damaged, relatively are and conservation forests protected. fi The on (forests forests” “swamp Indonesia) in and areas forest often peat, or wetlands, is critically importantThis emissions for pressure. deforestation times more several contribute forests because peat swamp though a even Thus, GHG emissions than dry areas. forest land is aff smaller area be higher. well accounted for almost all of the forest loss on swamp/peat land loss on swamp/peat all of the forest almost for accounted in this analysis. Production selective such that the timber can grow harvesting, through However, some long period. back and be harvested again over on these is occurring of deforestation that the highest level note deforestation, is unauthorized This lands. production forest illegal practices, management poor forest from resulting and insuffi behavior, Reducing emissions on these lands would mean addressing the mean addressing Reducing emissions on these lands would at analyzed been that have of deforestation underlying drivers (Worldlength in other sources Bank, 2006). et al., Conversion planned losses within means these are This uses. forest planned These management framework. forest Indonesia’s on state- deforestation of overall 25 percent losses contributed and agriculture used for lands are Converted claimed land. timber and a high proportion to is converted plantation crops, some of the fastest which are (pulp) and oil palm plantations, land uses in Indonesia. also that Other shows growing analysis important are pulp plantations and oil palm plantations to is swamp forest Some of this converted economies. regional 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% ort t n Fores i Estate t o erent forests forests erent SECTION 3: Sectoral Climate in a Changing Challenges rotection rotection cation Protection Not in Forest i t re type. type. re . The data available on on data available The . r w Swamp Forest Change 2000-05 (Ha) Forest Swamp S 2000-05 (Ha) Change DrylandDrDr Forest nservation Conservation nversion Land Use / Forest Classifi / Forest Land Use o gures are more widely accepted (since they can (since widely accepted more are gures of diff in the carbon content erences n gure 7.2. shows, most forest losses in recent years years losses in recent most forest 7.2. shows, gure uctio orts to reduce emissions. Following deforestation is a deforestation Following orts emissions. reduce to Findings emissions vary by forest, soil, and fi soil, emissions vary forest, by od Production Conversion

25 defores times higher than emissions from on peat soil can be ten deforestation that emissions from (2008) indicates MOFr/IFCA Figure 7.3. Forest Loss by Land Use Type, 2000-2005 Type, Use Land by Loss 7.3. Forest Figure 0

reasonable approach, because deforestation is clearly linked to is clearly linked to because deforestation approach, reasonable exactly, areas track deforestation Emissions will not emissions. because of diff example, For as the method of deforestation. as well and soils, emissions more burning contributes through deforestation and further Deforestation drainage of peat directly and quicker. gambut in Indonesian) or lahan creates land (mainly swamps, the high carbon storage due to emissions per unit area more would however, of emissions, An analysis ability of these soils. over the ongoing debate given be subject much uncertainty, to as well peat lands and burned areas, of emissions from the level Indonesia and frequency is in the process as the rate of burning. as a as well its Second National Communication, of compiling Facility. Partnership Carbon the Forest submission to ‘readiness’ on the forest consensus more should lead to processes These future judging as a baseline for as well sector emissions levels, reductions. Land Use by Deforestation such as on a number of issues, informative are deforestation is most deforestation the locations and types of land where an eff for likely targets be the most would These prevalent. some and achieve emissions, hence deforestation, reduce to Although compensatory of international payments. level the still under study, are deforestation emissions from total fi deforestation imagery) satellite directly from and the basic relatively be read clear. reasonably values are and relative trends the fi As These land. forest on production conversion and occurred A more disaggregated analysis of deforestation locations and of deforestation analysis disaggregated A more Indonesia and where can much about how can reveal trends make eff 7.1.2 Disaggregating the Deforestation the Deforestation 7.1.2 Disaggregating 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 Investing In a More Sustainable Indonesia 56 57

Country Environmental Analysis

p pung pu

Lampung

o outh o

Kalim South Kalim

W West W

Kalim West Kalim

a ambi a

Jambi

E East E

Papua East Papua

E East E

Kalim East Kalim u

rth Forest Swamp from Lost Area Cumulative Cu Dry from Lost Forest Area Cumulative CuCu

No No No certain displace cient to other kinds of

Sum North Sum

u u

outh o o that (right-most bar) indicates above gure considerable deforestation is also deforestation considerable Forest

Sum South Sum

n ntral n State Top 10 Provinces Account for 83% of Forest Loss 83% of Forest for Account Provinces 10 Top

(Total Loss = 3.5 M Ha, IFCA Analysis & Assumptions) & M Ha, IFCA = 3.5 Analysis Loss (Total

u

Kalim Central Kalim

Riau Ria

0

and the role of local governments in allocating and creating in allocating and creating of local governments and the role – as be considered to have would land conversion for incentives management or traditional in forest improvements opposed to methods. enforcement law Outside Figure 7.6. Forest Loss During 2000-2005, By Province 2000-2005, By During Loss 7.6. Forest Figure occurring. The fi The occurring. (with associated lost there were a million hectares of forest that Note emissions) during the study period 2000-2005. clearing and After also subject change. are to land categories such as plantations or agriculture, other uses, permitting for and area forest the state from removed are forests conversion early decentralization During the area. non-forest become area, forest the state from removed were areas large period, portion cover. though a large even still had good forest or blocks, be in large may forest land outside the state Forested agroforestry small holders (mixed by controlled in smaller areas remote The or local governments. operators private areas), in less swamp area indicates sensing behind this analysis be under may this category of land use; these swamp forests Plantation however. of clearing and conversion, threat greater on non of deforestation expansion is the main driver crop local governments by with permits granted areas, forest state less central GOI exercises The Bank, 2006). World 2000; (Casson, Actions to lands. which include private in these areas, control be based on to have would in these areas deforestation reduce lands under to appropriate the legal authorities and incentives control. local and private carbon market a forest through payments above, noted As allow that would of revenue a source provide could (REDD) drivers. underlying deforestation address to the Government REDD values, of carbon and land Under some combination be suffi would payments economic activities, beginning with those of lower value. value. with those of lower activities, beginning economic

3.5 3.0 2.5 2.0 1.5 1.0 0.5

Million Ha Lost 2000-2005 Lost Ha Million

g

un u

Lampung

th

ou o ered ered the o

Kalim South Kalim

W West W

Kalim West Kalim

SECTION 3: Sectoral Climate in a Changing Challenges

mbi Jambi gure 7.3., it can be seen gure r

Swamp Forest Loss, 2000-05 (Ha) Loss, Forest Swamp Sw 2000-05 (Ha) Loss, DrylandDrDr Forest E East E

have not suff have Forests

Papua East Papua t

d SDSU

E Eas E

Kalim East Kalim

o orth o Protection

). These categories represent represent categories These ). lahan gambut Sum North Sum

u

outh ou and o of policy suite erent interventions become may

2000-05 Sum South Sum

t

n ntral n

Kalim Central Kalim

Riau Riau gures in this section also show that substantial deforestation in this section deforestation that substantial gures also show source: Modis Analysis by MOFr and SDSU Modis Analysis MOFr by source: The IFCA process and report on REDD readiness provide and report provide on REDD readiness IFCA process The controlling of the issues and options for analysis extensive 2007). and land use (MOFr/IFCA, deforestation emissions from Substantial however. worth key points are summarizing, A few These estate. forest in the deforestation from emissions come management on forest focusing by emissions can be reduced the However, of deforestation. practices and the drivers fi to planned land conversion from coming (and emissions) are plantations, of those operation plantations and the continued of this source address To on both mineral and peat soil. a diff emissions, large and rapid deforestation on other classes of forest land on other classes of forest and rapid deforestation large set aside to in areas much is too deforestation – though any Looking only at and biodiversity. heritage preserve Indonesia’s in the fi the state-claimed areas, forest lands (the four on state of deforestation that only 8 percent and protection in protected occurs gure) left most bars in the fi lands managed under the on while two-thirds occurs areas, Another 25 percent harvesting. of allowable system concession non-forest to liquidation, conversion for on land slated occurs of watershed protection for allocated areas are These ). uses. services and conservation and landscapes. of biodiversity of land use licensing the role example, important.more For land on peat soil ( land on peat Conservation only 5-8 million ha of land, but are likely among the most among the most likely but are ha of land, only 5-8 million of high Because per hectare. of emissions sources intensive lead to may smaller areas soil, in peat carbon concentrations “dry or on mineral soil, deforestation higher emissions than here, deforestation reduce to wanted If the Government land”. the policy forest reconsider of authorized to have it would purposes. economic for clearance Figure 7.5. Forest Loss by Type and Province (Top 10), (Top and Province Type by Loss 7.5. Forest Figure

0

0.2 0.4 0.6 0.8 1.0 1.2 Millions of Hectares of Millions

The er spent on state assets. assets. state degraded as a result as a result degraded ervices, such as water change. A range of use production, of jobs, terms ts in land and . Land use change and forest loss are are loss . Land use change and forest re, are summarized in the Table below. below. Table in the summarized are re, cial consultative processes. processes. cial consultative 26 rms, plantations, tax losses, and indebtedness. and indebtedness. tax losses, plantations, rms, forests (National Action Plan on Climate Change, 2007; Change, le (National Action on Climate Plan from profi ed as important management fundamental issues of forest National Development Planning Response to Climate Change, Change, Climate Planning Response to National Development 2007) 2008, MOFr/IFCA, Ministry of Environment is developing Indonesia’s Second Ministry Indonesia’s is developing of Environment while on GHG emissions, UNFCCC to National Communication the Ministry a plan and baseline is developing of Forestry Emissions on Reduced a national initiative for estimates MinistryThe (REDD). and Degradation Deforestation from Information Resource Forest a is also developing of Forestry global A System. Accounting and a National Carbon System holds UNFCCC, REDD framework, under negotiation through GHG markets for through payments provide to the potential lands. forest emissions reductions from on the has emerged consensus considerable However, importance of forestry and land use emissions in Indonesia’s overall from eff orts to reduce forest loss. These few provinces have have few provinces These loss. forest orts reduce to eff from sector forest Indonesia’s the most to contribute to the potential a billion up to yield potentially which could GHG emissions, if successful. annually, dollars in payments 7.2 Land Use and Carbon Emissions and Carbon 7.2 Land Use still being use emissions are and land forest Indonesia’s offi through tabulated key mitigation issues and the GOI is placing a high prioritykey mitigation issues and the GOI is placing on and implementation preparation this issue and working toward this detailed of a national REDD Initiative (REDDI). Because carbon study incorporated this low is ongoing, sectoral work fuel and energy with fossil comparison and for results available preliminary forestry and land use data are These sector results. National Communication as the Second and will be improved by the end of 2009. and submitted nalized is fi Emissions estimates of emissions from deforestation and land use change, and land use change, deforestation of emissions from estimates fi by including conversion ect outcomes, including revenue, forest cover, exports, and employment. exports, and employment. cover, forest including revenue, ect outcomes, c ts scal policies) aff cient and ts far beyond forest boundaries. Weak forest governance damages the investment climate, rural climate, damages the investment governance forest Weak boundaries. forest ts far beyond SECTION 3: Sectoral Climate in a Changing Challenges ective, effi ective, scal mechanisms, with poor incentive structures and low revenue recovery. Illegal logging, under-reporting Illegal logging, recovery. revenue structures and low with poor incentive scal mechanisms, ective resource deployment deployment ective resource under-performing to fi contribute ciency governance and weak cient fi cient . Looking at deforestation at the . Looking at deforestation Province

ective approaches to reducing deforestation. deforestation. reducing to ective approaches by Indonesia and emissions reduction ts for benefi orts to reduce it can be targeted to a few places, where where places, a few to orts it can be targeted reduce to of harvest and underpayment of tax/non non-tax obligations have all been identifi of harvest of tax/non non-tax obligations have and underpayment The forest sector employs ineffi sector employs forest The are and competitiveness industrial output, employment, and performance practices, in the sector, of past policies, a result As and governance. Over-exploitation,declining. ineffi Much has been written about Indonesia’s forest sector. Forests are a national asset that provides economic benefi economic a national asset that provides are Forests sector. forest about Indonesia’s Much has been written Box 7.1. Forestry Sector Issues 7.1. Forestry Management Box s loss hurts and ecosystem rural livelihoods Forest Indonesians. millions of the poorest for as livelihoods as well and trade, and soil fertility benefi regulation that provide be bett that could and diverts the state public revenues crime robs Forest competitiveness. and Indonesia’s potential economic and is an essential issue of governance. and decentralization development ects equity, management aff resource Forest goals. development fi mechanisms (forest management and incentive Forest and been deforested of lands that have rehabilitation and reforestation to sums GOI has been allocating large years, In recent that damaged misbehavior private correct being used to public funds are In exploitation practices. other words, of poor forest decrease management, forest can improve designed, properly Fiscal incentives, to the REDD discussion. relevant highly scal policies are fi Forest sustainable management. promote emissions) and (and associated deforestation

orts to reduce deforestation. A cost-eff orts deforestation. reduce to

nancial benefi nancial Deforestation for the whole globe. The converse is also true: continued continued is also true: converse The the whole globe. for puts at risk the opportunityinaction provinces few in these the terms of REDD payments, In scale. a large ts on benefi for gain the most to is highest have deforestation where places island and province level, reveals that deforestation is most that deforestation reveals level, province island and on Sumatra and Kalimantan. mainly places, in a few prevalent dry loss and 78 percent forest for account provinces Ten loss in the 2000-2005 period (see of swamp forest 96percent loss forest ow from GHG emissions fl noted, 7.5.). As Figure (with higher emissions per unit and swamp land disturbance are these 10 provinces Thus, burning). of peat land and for loss and land use forest GHG from of emitters also the largest Kalimantan, Of Riau, Central and Southchange. these, Sumatra losses during the period, half of overall over well for account forests As degraded. areas swamp forest including most of the a increasingly will become Papua in the west, scarcer become deforestation for a center and hence harvesting, forest for focus highlights the importantThis that specifi role in the future. to in contributing have and local governments provincial eff well-targeted REDD initiative should focus most attention on attention most should focus REDD initiative well-targeted (and emissions). of deforestation sources the largest loss means of forest distribution geographic concentrated This that eff of actions and Targeting known. well are and trends the drivers eff interventions more lead to can and more cost-effand more However, it must also be realized that forest law enforcement enforcement law that forest it must also be realized However, the same are These a challenge. remains and governance the most timber produced times, in recent that have, provinces based on and illegal logging, harvesting, timber processing and other studies (Worldpast estimates Bank, 2006). et al., create to the potential have places changes in a few A few fi Investing In a More Sustainable Indonesia 58 59 Country Environmental Analysis over-estimate (1997-1998) may res Sources and Period Sources re and degradation is being reduced in is being reduced and degradation re erent emissions estimates; some including emissions estimates; erent CAIT-WRI 2005 (annual) 2005 CAIT-WRI Indonesia) 2006 (annual) Hooijer et al. (annual) 2007 PEACE IFCA/MOF 2008 (annual average for 2000-2005) for average IFCA/MOF 2008 (annual 2000-2005) Ministry for (annual average of Forestry 2006) van der Werf, et al, PNAS, 2008 (annual average for 2000- for (annual average PNAS, 2008 et al, Werf, van der Houghton (based on annual FAO deforestation rate for for rate deforestation FAO (based on annual Houghton res, deforestation (dryland and/or swamp forest) and/or both. (dryland and/or both. deforestation and/or swamp forest) res, There is an important caveat on forestry and land use data. is an important on forestry and land use data. There caveat sources international reputable, 7.1, several Table in noted As reported diff have fi use changes are that data on land it must be noted However, subject some uncertainty to emission estimated and the total depends on a number of assumptions about land area level that include peaks in Estimates and emissions per hectare. with fi years emissions from especially contribution, annual emissions average Indonesia’s fi loss due to if forest e) 2 1400 1860 1425 n.i. n.i. n.i. 469 SECTION 3: Sectoral Climate in a Changing Challenges erent methods and focus. methods and focus. erent Deforest-ation Fires and Peat Forest le. le. 502 768 n.i. studies in support of the REDD initiative. Total erent periods of activityerent and diff 159620002398 1596 2563 n.i. 538 1138 768 469 502 26 and scientists workingthe Ministry with GTZ), NGOs, on technical of Forestry DFID, of donors (WB, is a coalition (IFCA) Alliance Climate AUSAID, Indonesia Forest res that have been estimated to have caused a global spike in caused a have to been estimated that have res Modifi ed and expanded from WRI State of the Forest ReportForest 2002 WRI State of the ed and expanded from Modifi In Indonesia, 2006 Assistance Options for Forest WB Strategic Figure 7.7. Forest & Land Use Sector : Upstream Policies & Distortions Impede Progress and Impose Cost on Society and Impose Cost & Distortions Sector Progress Impede Policies & Land Use : Upstream 7.7. Forest Figure The wide range of estimates is because estimates are based on are is because estimates wide range of estimates The diff In particular, the 1997-98 El Niño-SouthernIn particular, Oscillation period and drought and caused widespread was especially severe fi orts to look carefully eff 2002). Even et al., GHG emissions (Page, all not capture change may and land use at deforestation and drying. peat land degradation Indonesiaemissions from of peat soil (lahan gambut), which are areas has extensive particularly Indonesia’s to a key contributor rich in carbon and emissions profi overall Table 7.1. Forest and Land Use Emission Estimates (MtCO Emission Estimates and Land Use 7.1. Forest Table nancial incentives erent fundamental fundamental erent ered in the past. The The in the past. ered fundamental issues of management and governance that have that have and governance issues of management fundamental gas change and greenhouse Climate some time. for existed diff but not add a new lens, considerations been off than have options or solutions payments for the potential especially change angle, climate and degradation, deforestation from emissions reduced for and fi new political will create help to may of the some 7.6 illustrates Figure changes. implementing for emissions reducing to on the road faced challenges that will be deforestation. from ned through through ned SECTION 3: Sectoral Climate in a Changing Challenges gure below summarizes some of the key summarizes below gure be refi to GHG emissions will continue re

Forestry and land use issues in Indonesia have been analyzed been analyzed in Indonesia and land use issues have Forestry fi The years. many for in Indonesia. It deforestation to contributing issues and drivers storyis a complex of underlying policy issues, and institutional rise to causes that give proximate as a range of more as well GHG emissions To address ects on the landscape. visible eff the address to Indonesiaforestry will have and land use, from 7.3 Forest Management Issues Management 7.3 Forest recent years. Formal reporting the is done through on GHGs Formal years. recent Convention the UN Framework to National Communications such reporting latest The from (UNFCCC). Change on Climate of forest, 1994. Estimates with data from Indonesia 1999 is from peat and fi ongoing processes (the Ministry of Forestry’s Readiness Plan Readiness Plan (the Ministryongoing processes of Forestry’s of the Second development and the Ministry of Environment’s that all estimates however, ItNational Communication). is clear, – potentially larger and land use are forests of emissions from of the combustion emissions from – than the total much larger as reported 8). in Chapter (336 MtCO2e, fuels fossil Investing In a More Sustainable Indonesia 60 Chapter 8: Energy and Climate Change

Coal-Fired Power Plant, East Java Photo: Endro Adinugroho t. 14% 18% 17% 50% 2005 a H r H TraT HH Transport 7 d o 99 n P Ind I Power Industry 48% 11% 21% 19% 1 cult political-economic issues 990 1 1990 1997 2005 42% 13% 22% 24% or innovation cleaner technology ciency, HH - Household Reviewing some alternative and renewable energy energy and renewable Reviewing some alternative the perspective of from issues and alternatives and policy change, and climate environment the perspective rather than from enabling conditions, or cost/benefi supply, energy to of contribution Describing some practical actions or feasible that the situation, while be undertakencould improve to the diffi recognizing and pricing. access energy with poverty, associated

0

70 60 50 40 30 20 10 Million kiloliters Million • • ciency in the industrial, power, manufacturing, and transport manufacturing, ciency power, industrial, in the 5 ciently and in excess. 64 64 00 Ga A Gasoline ADO 18% 27% 43% ts. 2 tatistics SECTION 3: Sectoral Climate in a Changing Challenges 52 997 M Ke MFO Kerosene 19% 21% 42% 1 1997 2005 ergy Econ O Av ID Avtur Avtur IDO 33 33 24% 20% 36% 1990 1990 ndbook o

0

70 60 50 40 30 20 10 Million kiloliters Million Demonstrating how energy sector and policies energy Demonstrating how impacts to on contributed structures have incentive change as climate as well outcomes, environmental and potentials at the same time diminishing options, opportunities such as the development in other areas, sources. energy of alternative sector issues and contributions Discussing energy change position climate Indonesia’s to as they relate and opportunities In the future, fossil fuel emissions will be a greater concern than forest and land use emissions. and land than forest concern will be a greater fuel emissions fossil In the future, effi promote to cult diffi it will be more subsidies, energy current With for environmental and climate benefi and climate environmental for Indonesia uses fuel and electricity ineffi On the other hand, the country has the world’s largest potential for developing geothermal power, sustainable sustainable power, geothermal developing for potential largest the countryOn the other hand, has the world’s and biomass). solar, wind, (hydropower, renewables biofuels and other rapidly with coal increasing they are low, intensity GHG emissions per capita and emissions fuel are While fossil fastest. emissions growing the transportIndustry of carbon emissions, fuels user of liquid sector source largest is the the largest is currently emissions. CO2 to the main contributor is currently and petroleum 2030 from will triple by consumption energy emissions from intensity, in energy assuming a decrease Even 2005 levels. develop to enabling environment a more pricing, energy realistic more Mitigatingrequire these emissions will effi and greater resources, energy renewable sectors. • •

MAIN MESSAGES • • • • • • • •

The purpose of this chapter is to examine energy, environmental, environmental, examine energy, is to purpose of this chapter The change issues and linkagesand climate by: Sources: Indonesia Handbook of Energy Economics Statistics (2005); Indonesia Oil & Gas Economics Statistics for 2005 Indonesia Handbook of Energy Sources: Figure 8.1. Indonesia’s Fuel Consumption by Fuel Type and Sector Type Fuel by Consumption Fuel 8.1. Indonesia’s Figure Investing In a More Sustainable Indonesia 62 63 Country Environmental Analysis 2020 2016 2012 . Additional growth could be could growth . Additional 2008 eee LN PLN 2006-2015 plan (Growth: 8.5% /yr) PLN 2006-2015 plan (Growth: 6.2% /yr) Beicip study 2002-2025 (Growth: 2010 then 6%) Nexant 2005-25 (10% /yr to PLPL BeBBeBBB NeNeNNNN capacity 20042

cantly higher volume of kerosene used kerosene of cantly higher volume Bii F system 000000000 2002-2025, Nexant study 6% for 2005-2025 2002-2025, Nexant study 6% for 20202020 996996 Annual GDP growth: PLN 7.3% for 2006-2015, Beicip study 5% for 2006-2015, Beicip study 5% for PLN 7.3% for Annual GDP growth: 1996 2000 2004 2008 2012 2016 2020 available 0 Source: PLN, Nexant, Beicip Franlab PLN, Nexant, Source: Figure 8.3. Indonesia Power Demand Projections Demand Power 8.3. Indonesia Figure 8.1.2 Electricity Generation has been rising electricityin demand for (power) Growth each year. percent 6 around at growth along with economic state-The will continue. that this trend indicate Forecasts electricity Listrik Negara, or PLN) has owned utility (Perusahan reliability, improve generation capacity, increase struggled to Some capacity generation and manage the rising demand. of the the reliability still risks to are but there is being added, report analysts Many in the interim. supply system power that electricity supply-demand undermine could imbalances (WB, 8.3.) growth economic 2007). (See IDPL, 2007; IIEE, Figure in the is forecast 9 percent of 7 to demand growth Annual growth no corresponding has been but there next decade, in household is made in providing progress if greater foreseen without of the population currently connectionsthird the to approached demand has progressively Peak electricity access. inadequate. now are reserve until margins capacity, available particularly occurring, on Blackouts and load-shedding are (WB,the islands outside the inter-connected system. Java-Bali DPL4, 2007). and social to economic to electricity contributes access Low disparities. Over 70 million people in Indonesia, mostly the such as the signifi such as the that also countries with other even in Indonesia compared price kerosene lower substantially The apply heavy subsidies. mixing of these fuels has likely led to diesel, say to, relative It will ultimately costs. consumers’ reduce to (adulteration) and engines of automotive life diminished economic lead to air pollution. Similarly, street-level exacerbate meanwhile challenge the introduction of competing oil fuel prices low of the broader the development thus hampering technologies (WB 2008) economy. energy 400 300 200 100 6 0 2200 5 0 2200 04 2200 ciencies 03 2200 -consumption 02 ning capacity 2200 cient outcomes ning Capacity Capacity ning 01 SECTION 3: Sectoral Climate in a Changing Challenges 2200 elds with declining 00 2200 199919991111 2000 2001 2002 2003 2004 2005 2006 8 98 1199 7 9 1199 96 1199 95 1199 4 9 1199 93 1199 nery Production nery Capacity nery ruru 92 RefiReR CrCrCC RefiRe Refi Production Crude Oil and Condensate . Aging existing oil fi . Aging stagnant 1199 Indonesia Oil & Gas for 2005. Statistics 1 Development Context Development 1991199 1992 1993 1994 1995 1996 1997 1998 rce: Indo 0 ning capacity over the past decade, which has led to which has led to the past decade, ning capacity over

Source: Indonesia Handbook of Energy Economics Statistics (2005) ; Economics Indonesia Handbook of Energy Source: Figure 8.2. Domestic Production and Refi and Production 8.2. Domestic Figure 1.0 0.8 0.6 0.4 0.2 1.8 1.6 1.4 1.2 Demand is increasingly met through higher imports higher met through Demand is increasingly as domestic oil productionwhile refi is falling remains day per barrels Million 8.1.1 Fossil Fuels Fuels 8.1.1 Fossil with a is large, in Indonesia domestic oil market The fuel high proportion Petroleum products. of high-value 64 million kiloliters 2005 had reached or by consumption Diesel Oil (ADO), Automotive day. per about 1.1 million barrels of make up nearly 90percent together gasoline and kerosene on the other hand, Gasoline consumption. and kerosene, total transportation used for and household exclusively almost are been uses have Transportation respectively. consumption and industry expense of household at the relative growing generation has power into of oil fuels going share The use. (WB, grow to also been rising and domestic demand continues 8.1.) 2008). (See Figure This section looks at trends in the energy sector, focusing on focusing sector, section in the energy This at trends looks electricity fuels, importance generation, the increasing fossil energy and alternative renewable for and the potential of coal, sources. ineffi leads to economic fuel subsidy regime The 8.1 Energy in the Country Economic and Economic in the Country 8.1 Energy production and a shortage in new exploration of investments Indonesia also has not expanded its main reasons. the are refi The imports increasing fuels demand. meet domestic to production prospects and rising of unfavorable combination in Indonesia a net becoming resulted domestic consumption oil importer in 2005 (WB, 8.2.) 2007). (See Figure curtail Over that higher growth. prospects for ineffi fuel products is leading to of subsidized 347 MW nanced by PLN without by nanced 20 54 13,622 292 1,174 217 1,093 6,047 6,231 7 GW that could be exploited that could 7 GW 24,974 6,814 nancing sources. Note that Note nancing sources. . The Government has instructed Government The . 27 - - 645 226 721 4,479 5,337 142 3086 cial than any stand alone environmental program. program. environmental stand alone cial than any red power plants to be ready in the next few years in the next years be ready few to plants power red - - - 2 1 67 security (reduced reliance on oil) than on a desire to improve improve to a desire on oil) than on reliance security (reduced on coal). performancereliance (increased environmental in the last increased has change attention climate Though made sector plans and decisions were most energy year, carbon for gas emissions and the potential greenhouse before at the 2007 of attention a result As became an issue. payments in Bali, Indonesia to is beginning Change Conference Climate phase and a second carbon options analysis a low develop renewables. on reliance greater expansion plan with PLN to diversify its fuel mix by expanding the utilization of its fuel mix by diversify PLN to No (Perpres decree generation. Presidential power for coal the intention Management states 5/2006) on National Energy use energy of overall 24 percent from use of coal increase to (almost a 40 percent 20 years use over of energy percent 33 to increase). 10,000 MW of develop to a program GOI has initiated The coal-fi 71/2006). It questionable whether Decree remains (Presidential fi this expansion can be adequately Some of the the Government. from of assistance some form still are though there under construction, even plants are uncertainties supply and fi in coal and promoting alternatives, ciency, effi improving options for be more could technologies cleaner coal to shifting investment benefi 8.1.3 The Increasing ImportanceIncreasing of Coal The 8.1.3 Indonesiaand is a major exporter. reserves has vast of coal alternative a cheaper remains coal rising, are prices Though that about $40 estimates generation. PLN power than oil for investment billion in generation, transmission, and distribution and to growth demand with power keep pace to needed are reliability maintain system - - - 24 24 165 ected by PLN’s ected PLN’s by - - SECTION 3: Sectoral Climate in a Changing Challenges - 6 64 20 Coal Natural Gas Oil Geothermal Hydro Biomass 5,885 1,180 200 MTOE MTOE MTOE MWe MW 13,558 425 1,551 5,433 5,489 6,433 19,533 1,817 1,822 10,027* 41,436 41,651 s set below cost, PLN faces a PLN faces cost, s set below cation strategies, supportedcation strategies, critical s and subsidies playing nancial viability and the enabling cation (access) is aff cation (access) Java. Java. (WB, expansion needs DPL4, 2007). System TOTAL erentiated erentiated electrifi Bali 1 Java 8 Papua 67 Nusa Tenggara Maluku 34 Sumatra 5 Kalimantan Sulawesi 2

No. Major Islands

with more development. Source: Ministry of Energy and Mineral Resources, Indonesia Ministry Source: Resources, development. and Mineral with more of Energy red power plants. A second program of 10,000 MW will rely of 10,000 MW will rely program A second plants. power red 27 years. in Indonesia been negligible in recent sector have in the power investments Private Less has been done on environmental sustainability. Though Though sustainability. been done on environmental has Less a shift plans mix, these in the energy on paper for plans are energy improved need for on the perceived based more are commercial disincentive to connect new customers, especially connect to new customers, disincentive commercial off in rural areas commercial incentives, with tariff incentives, commercial tariff With local governments. by roles. Because cost of supply varies across regions, one avenue one avenue regions, across of supply varies Because cost roles. electricity to include expanding household access would for diff regionally Table 8.1. Primary Reserves in Indonesia and Production Energy Table in the face of growing demand have lead to the short to lead demand have run of growing in the face build 10,000 MW of coal to program” “crash of the development fi In extent on geothermal and other renewables. greater a to gas in greenhouse an increase this will lead to the near term, in emissions intensity. emissions and an increase of electrifi pace The conditions. Given the potential for a looming power crisis, crisis, power a looming for the potential Given conditions. the take some rapid action to address to have PLN will now taking while also concerns prudent action immediate for sector of the support to development long term the growing (WB, IDPL, 2007) economy. of electricity areas on three sector GOI is working reform: The and environmental household access, expansion, system sustainability poor, still do not have access to electricity. About 80 percent About 80 percent electricity. to access have still do not poor, over and in rural areas electricityof those without live access and of Java centers of the dominant economic outside half live Bali. Increasing electricity in Indonesiaimportant is an access the quality that will improve growth inclusive for consideration (WB, IDPL, 2007) the poor. of of life sector have in the power investors private Potential assurances, further or requested hesitated Government uncertaintydue to about fi * total geothermal potential that is presently ready for commercial extraction. There is an estimated additional potential of 1 extraction. There for commercial ready * total geothermal potential that is presently Investing In a More Sustainable Indonesia 64 65 Country Environmental Analysis s e n ppin ip l i cient INDONESIA Ph X O N a nna i CCh cient production cient orts to improve orts improve to O C CO NO cient and polluting a ia d n I m aam . Air pollution resulting from industrial from . Air pollution resulting n et ie V ciency. ciency. a i from petroleum use petroleum from s 2 O ne C CO on dd n IndonesiaI Vietnam India China Philippines Consumption Consumption ed as one of the key reasons. Relative levels of per capita emissions with Indonesia’s emissions = 1 emissions with Indonesia’s of per capita emissions levels Relative 0 1.2 1.0 0.8 0.6 0.4 0.2 Figure 8.4. Indonesia’s Fuel-Based Emissions Fuel-Based 8.4. Indonesia’s Figure A summary of environmental as well as economic concerns is concerns as economic A summary as well of environmental 8.2. Table in presented emissions, power production, and motorized vehicles creates creates vehicles production, and motorized power emissions, Key pollutant levels in Indonesia are high compared with other in Indonesia high compared Key pollutant levels are fuels has been use of petroleum Excessive countries. Asian identifi quality is declining Air 8.2.1 Environmental Concerns from Over- from Concerns 8.2.1 Environmental Encourages excess energy consumption with associated with associated consumption energy excess Encourages not used to are Resources and excess: Waste emissions. of not equal social costs costs Private returns. maximize pollution and ineffi structuralBroader distortions: buy less fuel effi consumers furthercars or live their workplaces than if facing true from opportunity of fuel); Industries cost use ineffi less competitive technologies, the into and technology introduction of innovation Slows performance environmental improve which could sector, services or environmental for resources available Also reduces protections increasing gas emissions, than optimal greenhouse Larger ineffi Carbon emissions intensity. expensive far more become to likely are production choices globally priced when carbon emissions are eff undermines any rule of law Weak compliance environmental cient cient ts. ts. ciently provide a ciently ciently and in ciency contribute SECTION 3: Sectoral Climate in a Changing Challenges as global markets, t from scal and incentive issues scal and incentive Concerns Targeting ciency and Implications Environmental , and can be attractive options for islands, and can be attractive options for outer Economic Effi Economic scal space, the resources available to government to to government to available the resources scal space, the t from increasing the share of renewables in power in power of renewables the share increasing t from red power generation can contribute to acid rain. acid rain. to generation can contribute power red

Ineffi social safety net social safety thepoorandthusineffi cient intargeting Hinder competitiveness and private investment, if only SOEs are if only SOEs are investment, and private Hinder competitiveness cost. below products at prices energy delivering to authorized fi Reduce in infrastructure or human investments through growth promote stability because expenditures Undermine macroeconomic capital. increase oil prices when world increase Undermine ability participate to or benefi makes carbon eventually the global regulatory and trade regime products less desirable. or carbon intensive costly emissions more opportunities and smuggling of products corruption Create for or in neighboring or sectors, zones high price to price low from the rule of law. thus weakening countries, Distort price signals for industry ineffi Distort for signals households toward price and less fuel effi choices: uncompetitive and internationally Highproduction and transport fuel and technologies. approaches means higher subsidy outlays. consumption . Consumption demands are rising faster than supply rising faster are demands . Consumption excess and ineffi consumption expansion. Excess air Locally, issues. global environmental and regional, local, to Regionally, pollution and particulates concern. a health are coal-fi greenhouse fuels contributes use of fossil excessive Globally, change. climate to – contributing the atmosphere gases to pollution policy pricing and subsidy The excessive leads to and also imposes substantial that damages the environment fi address Initiatives to health costs. benefi environmental also have sector would in the energy 8.2 Environmental Concerns Concerns 8.2 Environmental Indonesia uses fuel and electricity ineffi switching away from the largely diesel-based generation in diesel-based the largely from away switching however, exploit these resources, To these locations. of many action and a strategy address to plan develop is a need to there hinder barriers that presently and commercial policy, technical, progress. Biomass and hydro resources are abundantly available in available abundantly are resources Biomass and hydro most of generation. Indonesia has nearly 40 percent of the world of the world generation. Indonesia has nearly 40 percent be a viable which could resources, geothermal potential generation. baseload power for addition or alternative at a scale that would can be developed Geothermal generation keep rising. prices especially if coal feasible, be economically Indonesia is rich in renewable energy resources and could and could resources energy Indonesia is rich in renewable benefi 8.1.4 Renewable and Alternative Resources and Alternative 8.1.4 Renewable Table 8.2. Energy Subsidies: Economic and Environmental Issues and Environmental Subsidies: Economic 8.2. Energy Table ecting gas. PLN has . Increased coal . Increased coal natural of environmental cant negative supplies 730 MW 910 MW 160 MW 760 MW 2,560 MW Potential Savings Potential reliable

red generation and associated emissions. emissions. generation and associated red ed provided that the environmental impacts that the environmental ed provided GHG emissions (mentioned from Aside ed. ciency. Government subsidies for petroleum petroleum subsidies for Government ciency. sound alternatives. ective and environmentally red power generation for base load could be base load could generation for power red Develop clean coal-based power clean coal-based Develop signifi lead to use would and impacts with high sulfur content associated land clearing. from impactspotential on forests Expanding use and export to has the potential of coal mining – aff strip extensive much more lead to already threatened forests in Kalimantan and Sumatra forests threatened already mention the direct pollution impacts. Coal- – not to fi justifi assessed and thoroughly of such expansions are in accordance implemented are mitigation measures Cleaner and regulations. laws with environmental promoted should be progressively technologies and economically feasible they are whenever justifi localized also leads to use of coal increasing above), pollution such as acid rain. Develop already constructed nearly 3,500 MW of combined constructed nearly 3,500 MW of combined already but has been plants, cycle gas turbine (CCGT) power facilities are These gas supplies. secure unable to a key factor in the high cost using diesel, presently Resolving the gas supply of supply in Java-Bali. cost more shortage toward will be necessary move to eff • • 8.2.2 Concerns over Plans to Shift Fuel Mix Plans to Shift Fuel over 8.2.2 Concerns that can be resources Indonesia of energy has an abundance by the fuel mix is dominated generation, yet power used for the fuel mix improve hopes to Government The fuels. fossil effi enhance to energy. in alternative investment hindered products have diesel from away a switch has proposed Government The utilization of coal, greater generation towards based power this goal in an realize To energies. and renewable natural gas, issues will the following sustainable manner, environmentally be addressed: need to relying on coal-fi relying most are suggests that DSM measures International experience in price-basedwith incentive when complemented successful 8.3.) (WB,Table of consumption regulation IDPL, 2007). (See . 28 icts cant ective SECTION 3: Sectoral Climate in a Changing Challenges ed water as one of the key risks water ed On-going Programs . Energy savings measures measures ciency savings . Energy emissions in Jakartafuel from were effi 2 and and SO x supply and will strain water expansion program) red

orts are already underway. It that Demand- is estimated orts underway. already are

28 sector development. energy this issue is not primarily tied to quality water in Indonesia Though is poor, Effi FTL) cient lighting(CFL, Street lighting Street conservation industrial and building energy for Partnership appliances labeling for Energy Reduction of Capacity Requirements Total Bappenas (2007) has identifi availability Decreasing use grow. and energy as development confl be seen in the growing “can need to relative of water of more especially during the advent resources, water over of cost the increasing by compounded droughts, frequent utilities). Availability public water (by production” clean water Indonesia, with 65 Java, varies spatially across and of water be short to of the population, has high potential of percent cope to is growing water the demand for Meanwhile water. population and escalating industrial growth. with increasing 10,000 sector expansion plans (e.g., that power IIEE (2007) notes fi MW coal transport especially on Java. systems, Conservation negative impacts on people’s property and health – including impactsnegative on people’s air quality can also require Degraded respiratory diseases. proportioncover to of their income greater allocate “to people 2007). Although the air (Bappenas, of medical treatment” costs the all areas, reached quality has not yet network monitoring poor air quality to increases. related number of health problems 8.4.) (See Figure quarters three that over estimated it was During the 1990s, of the NO consumption, mostly transport. Additionally, some 90 percent some 90 percent mostly transport.consumption, Additionally, while fuel vehicles from emissions were of the carbon monoxide two-thirds of the particulate which for emissions, use accounts Such countries. cantly higher than in neighboring signifi are impose signifi conditions environmental deteriorating study that estimated a recent by as indicated costs economic the the health impact air pollution can cost to attributed of $400 million every (WB, year in excess Indonesian economy of on the costs detail more 2007) See 2 for Chapter Paper, Fuel degradation. environmental generation power for is essential quantity Water provide opportunities for relatively quick and cost eff quick and cost opportunities relatively provide for and some capacity expansion needs, reducing options for eff being already that are Side Management (DSM) measures power reduce to the potential have or implemented considered If these of 2,500 MW. generation capacity needs upwards this their full potential, scaled-up and realize are programs without expanding generation capacity, be equivalent to would Source: Econoler International Econoler Source: Table 8.3. Potential for Energy Savings from DSM Programs DSM from Savings Energy for 8.3. Potential Table Investing In a More Sustainable Indonesia 66 67 Country Environmental Analysis . Biofuels 30 bers, bers, could ects of biofuels are al Resources. September. September. al Resources. ects depend on the type of feedstock, erent for each feedstock and production each feedstock for erent In land. particular, and agricultural ects on forests ts should be evaluated on a case-by-casets should be evaluated basis since cant eff cant have become a hot topic globally – and in Indonesia globally – and in a hot topic — as become have to resources energy renewable develop to strive countries security energy improve gas emissions, greenhouse reduce highs near all-time oil prices With fuels. fossil for and substitute and developing and high import both developed dependence, scale production of liquid actively pursuing large are countries transportation. mainly for Inbiofuels, Indonesia, Presidential Management on National Energy No 5/2006) (Perpres decree 1.3 from “biofuels” the use of quadruple to the intention states in the increase) percent use (a 400 energy of total 5 percent to same period. and development that the concern expressed have Analysts implications (positive will have of biofuels commercialization the rural For on the poor and the environment. and negative) and land implications include impacts prices on food poor, livelihoods. opportunities as as well improved for tenure, include potentially and land use implications Environmental signifi oil palm for that the push in Indonesia, is concern there of existing pattern the biofuel will follow for development and manufacturing purposes: food for oil palm development oil to forests of natural conversion and unregulated increasing that agricultural is also the concern There palm plantations. production will be converted food to devoted lands currently production interfere with food this could biofuel crops, into of forests additional conversion stimulate or even or prices, lost. However, the lands that are replace to agriculture into are there along with these land management challenges, smallholders as poor opportunities generation for income for globally. production increases bioenergy and social eff environmental, economic, The widely debated. These eff These widely debated. The the changes in land use. and used, the production process be need to and against biofuel development for arguments expanding biofuel some favor example, For evaluated. carefully thereby on imported reliance fuel sources, reduce production to technology, current With security. energy to contributing security energy enhance biofuels can only marginally however, because domestic harvestsin individual countries of feedstock a few are There meet only a small partcrops of fuel demand. Second-generation such as ethanol in Brazil. exceptions, fi and grass using wood liquid biofuel technology, but security, energy to make a higher contribution potentially independence. energy still will not be the only solution to fuels fossil for that substitution of bioenergy Some also argue the However, gas emissions. greenhouse reduce help to may benefi they will be diff of the fuel, the whole life should cover analysis The processes. it will transport to market. Also, production processes to from such as cutting look at changes in land use, to be imperative Biofuels Development: Threat or Opportunity or Threat Biofuels Development: t t the ts to ning the ed and more ed and more uctuations. ciently conducted SECTION 3: Sectoral Climate in a Changing Challenges ect other alternative energy energy ect other alternative cant engagement in helping the cient domestic technical capacitycient domestic technical elds have been identifi elds have cient economic incentives, proper risk proper incentives, cient economic . Indonesia is rich in renewable . Indonesia is rich in renewable resources . Indonesia has the world’s largest geothermal largest . Indonesiathe world’s has 29 nance transactionnance of the Lahendong geothermal Promote the development of abundant renewable renewable of abundant the development Promote energy benefi and could resources, energy and alternative generation. of renewable the share increasing from actions Scaling sector to up in this will require barriers and commercial policy, technical, address hinder progress. that presently Energy Resources Energy Source: GEF PIF For Geothermal Power Generation Development Program. Prepared by WB in Partnership with Min.WB in Partnership and Miner Energy by Prepared Program. Generation Development Geothermal Power GEF PIF For Source: 2007 WB PCN on Biofuels. WDR, 2008, and from Adapted emissions of GHGs in greater plants – resulting power red • ectively engage investors through effi through ectively engage investors 29 30 nancing and is likely to fall far short to nancing and is likely increasing of its goal of power development potential, estimated to be about 27 GW. be about 27 GW. to estimated potential, development power fi 60 geothermal So far, The key barriers that have hindered GoI’s eff ortto scale-up eff GoI’s hindered key barriers that have The include: (i) lack of a policy geothermal development framework suffi that provides than half are ready for detailed exploration or exploitation – detailed exploration or exploitation for ready than half are In has been developed. of this potential percent but only a few open up new to Law 2003, GOI passed the Geothermal Energy this, Despite opportunities and public investments. private for and in attractingIndonesia major hurdles investors still faces fi doubling of electricity a projected With 2008. 1200 MW by the be met through mostly to demand in the next 10 years, shortfall any fuels, in the expansion of expanded use of fossil be met through generation capacity would geothermal power coal-fi pollutants. and conventional and regulatory certaintymitigation, sector coordination, (ii) lack of government in geothermal power; investing for implementing capacity and to management, planning, eff 8.2.3 Potential Benefi ts from Alternative Alternative ts from Benefi 8.2.3 Potential Geothermal transactions; (iii) insuffi and – in areas of planning and managing, as well as resource as resource as well of planning and managing, – in areas and construction.assessment, equipment manufacturing, kinds which aff These of barriers, project, which will provide lessons for further lessons for refi project, provide which will sources, will need to be removed before Indonesia will be able before be removed will need to sources, be which could resources, energy exploit its vast alternative to benefi and environmental sizable economic providing alternative geothermal and other local, Developing country. security energy and Indonesia’s will enhance resources energy fl fuel price a hedge against global fossil provide greater on identifying barriers that prevent In analysis addition to the Bank is facilitating in geothermal, of investments levels a carbon fi The geothermal policy for reform. program Government’s Bank also has a signifi World in the infrastructure sector expand investments Government partnerships, also benefi public-private which would through geothermal power development. development. geothermal power

ey

k rk rk rk rk

Tu Turk

Turkey

2

wan

aiw aiw

Taiwan

n nd

la

Pola Pola Poland il

a az

Bra Br Braz Deforestation Deforestation Brazil

(estimated 2000) (estimated

a abia ab ab

Ar

a ain

pain

Spa Sp Spain

Saudi Arabia Saudi

sia

ne ne nesia

methods of erent Indonesia

emissions due to emissions due to frica

Afri Af 2 Af

a

ra rali ra

t

st st South Africa South

an Australia

Ir I Iran Iran

co 1.1 MW co

445 MW

12.1 MW

exi exi

Me Mex Mexico

ance an

Fran France

Installed Capacity a

ore

Kor Ko Korea

y

It It Ital Italy

K

U UK UK

da

when counting EU as one country. Many Many EU as one country. when counting

na

Emitters in 2004 na

ana

th an

2 Canada

man ma many

a

Germany

ndi Ind Ind India

ap ap apan

Jap Jap Japan

ia

uss us

Ru Rus Russia

. When considering only fossil fuel only fossil When considering Emissions. a

hin

Chi Context China

USA USA 0 /yr 2 deforestation and land use change are included, Indonesia included, and land use change are deforestation It is important emitters. among the top then rises to note to of emissions data from questions on the reliability are that there diff and land use change due to deforestation emitters, or ranked 16 emitters, There is an increasing eff ortconstruct and small scale to micro eff increasing is an There useful are These facilities at the community level. hydropower grid the overall do not add much to but generallly locally, capacity mix. and national energy that notes 2008) Report of Environment (Min State Env, The environmental is an sources energy of alternative development expectations performance below for remains Yet, priority. mix. (see table the national energy to contribution increased noted are investment 8.4.). Some increased of the obstacles to of conventional (in the face the return to relative as the high cost and investors, private among interest pricing), the low energy the capability and service the domestic energy of companies. ministryThe air pollution problems that emissions and notes as a portion cannot grow of energy if renewable will increase supply. national energy overall Source: International Energy Agency [www.iea.org] (2007) International Energy Source: 8.3 Energy and Climate Change Issues Change Issues and Climate 8.3 Energy section with associated This change issues highlights climate pathway. development energy Indonesia’s Emissions in Global Fuel 8.3.1 Fossil Overall 2004, Indonesia 25 CO since is among the top combustion, countries in this range have only a slightly higher or lower level level only a slightly higher or lower in this range have countries position (rank) of emissions than Indonesia, making Indonesia’s if CO However, small changes. to sensitive /day 2 5,000 4,000 3,000 2,000 1,000 Figure 8.5. Top 25 CO Top 8.5. Figure Mt CO 49.8 GW 3-6 m/sec Equivalent to Equivalent 4.8 kWh/m t smallholder SECTION 3: Sectoral Climate in a Changing Challenges Indonesia ts and risks. being suggested and quotas are incentives scal Renewable Resource Renewable

olar

Biomass Wind S Table 8.4. Wind, Solar, Biomass Potential 2007, Min Env, State of Environment Report of Environment State 2007, Min Env, Potential Biomass Solar, Wind, 8.4. Table farmers by generating employment and increasing rural and increasing employment generating farmers by be used that could fuel sources current However, incomes. of economies fairly large demands require meet energy to because of the complexity of scale and vertical integration the same time, At in the distilleries. the production process scale also poses a number of biofuels on a large developing and issues surrounding prices in food including increases risks, the undermine which could and land acquisition, land tenure of the poor unless handled carefully. livelihoods – in Indonesia biofuel development is actively promoting of a full evaluation of the benefi advance 1.5-1.8 million kiloliters between producing of biofuel is already plan, biofuel promotion Under the government’s per year. 5.3 biofuel to of its consumption Indonesia increase will need to million kiloliters in kiloliters 2010 and 9.8 million 2015. As by by fi other countries, Biofuel National Indonesia’s the sector. stimulate as means to make the government has suggested Committee Development of the 2.5 percent 2 to it mandatory constitute biofuels to for equal 1.2 million to would This fuel consumption. total nation’s Industry have 1.5 million kiloliters representatives (kl) per year. of in the form incentives provide the government suggested businesses in the industrial sector using for tax exemptions known locally diesel fuel with biodiesel added (a formulation Association IndonesianThe Biofuel Producers “biosolar”). as make biofuel use demanded the government (APROBI) fuel consumption total mandatory of the country’s at 1 percent World The the industry help develop to (Krismantari, 2008). these issues investigate to analyses Bank is conducting several Indonesia. to and the options appropriate Indonesia mentioned, has the largest Biomass. As Solar, Wind, and is actively seeking in the world geothermal potential to wind, for In the potential contrast, these resources. develop MinistryThe of and less developed. biomass is lower solar, (Ministry 2008) reportsEnvironment that of Environment, 11.8 from mix droped energy in the power of hydro the role in 2006 and is expected to 9.6 percent in 2004 to percent declining share is This 2010. decline further by 7.8 percent to plants, hydropower large of the lack of investment is due to plants. construction the continued of conventional to relative forests, draining peatland, and forest conversion caused by caused by conversion and forest draining peatland, forests, ts of biofuels benefi The production. changes in agricultural a closer scientists took attack as under increasing come have of their production cost environmental look at the global Society, 2008; Royal (Science, studies 2008). Recent (Rosenthal, production processes or inappropriate 2008) suggest that poor centuries. for savings the carbon emission can cancel that biofuels can benefi also argued it is Finally, Investing In a More Sustainable Indonesia 68 69

Country Environmental Analysis EU-25

emissions grew emissions grew USA 2

Change in fossil fuel emissions Change in fossil Ch GDGD GDP growth ChCh Change in emissions intensity (Emis/GDP) South Africa South

emissions growth varied with emissions growth

2 Mexico Mexico . To understand better what understand better To . Time

emissions per capita has risen faster emissions per capita has risen faster 2

nancial crisis which reduced GDP but nancial crisis which reduced countries developing bar) and rst, grey Brazil over . Intensity is a measure of the level of of the level . Intensitymeasure is a

gure below shows that CO shows below gure

/$GDPppp) is similar to that of the world that of the world is similar to /$GDPppp) India 2

Intensity Intensity China /person by 3.3 times. (See Figure 8.7.) (See Figure 3.3 times. /person by 2

faster during the earlier 1994-1999 period than during the later during the later during the earlier 1994-1999 period than faster Figure 8.8. Average Annual Growth Rates 1994-2004 Growth Annual 8.8. Average Figure In Indonesia, structure and technology. changes in the energy of CO rate annual growth Emissions activity emissions per unit of economic by (as measured fossil fuel changes in compares to the right gure fi The GDP). countries several and emissions intensity for GDP, emissions, like India countries and China have Developing and regions. (fi rates high GDP growth bar) yellow emissions (second, growing faster generally have GDP In most countries, nations of Europe. than the developed so emissions fuel emissions, than fossil faster has been growing bar). In Indonesia, brown time (third, intensity declines over than faster grew combustion fossil emissions from contrast, by intensity 2004, so emissions GDP during the decade 1994 to 1997/98 fi The increased. play. to a role much had consumption did not change energy from strongly emissions intensity also increased But Indonesia’s 8.8.) (See Figure per year. 1999-2004 – at nearly 2 percent emissions intensity is uncommon. increasing Internationally, and industrializing developing fast-growing many However, to which will tend coal, shifting to are increasingly countries emissions of Indonesia’s level The emissions intensity. increase intensity (kgCO Source: International Energy Agency (2007) [http://www.iea.org/] International Energy Source: person. Comparing 1980 to 2004, the growth rate of GDP/ rate 2004, the growth to 1980 person. Comparing 2.1 by 2.3 times and energy/person by person has increased CO In the meantime, times. average, and still below the non-OECD and still below average. average, Emissions happened during the 1994-2004 period, it is possible to look it is possible to happened during the 1994-2004 period, at the pre-separately and post-crisis periods: 1994-1999 and fi The 1999-2004. than those of energy use per capita; indicating carbon intensity use per capita; indicating than those of energy 2004, the 1980 to Comparing as well. has increased of energy 2.1 times and use/person has increased of energy rate growth CO

2 0 Indonesia 8 6 4

-2 -4

25 25

U- U EU-25 gy per capita

s rr

P

SA emissions

USA US USA 2

Emissions per capita GDP per capita Ener EmiEE GDPGG EEneE

ca

i

frica fr

SECTION 3: Sectoral Climate in a Changing Challenges

South Africa South

co co

ico

x xi Mexico Mexico

(20 An

zil zil

ra ra Emissions per Capita and Their Their and per Capita Emissions Brazil ency 2

. Indonesia’s fossil fuel GHG emissions fossil . Indonesia’s

emissions per capita from fossil fuel fossil emissions per capita from

2

d dia

ndia India

na

hi

Growth Rates Growth hina

China Emission per Capita

sia esia

Emissions/person (t, 2004)Em 1994-2004 (%) Annual emissions growth Indonesia 8 6 4 2 0 Source: International Energy Agency (2007) International Energy Source: Source Figure 8.6. Fossil Fuel CO Fuel 8.6. Fossil Figure Emissions per Capita from fossil fuel combustion will most likely be much more will most likely be much more fuel combustion fossil from and land use important deforestation by than that caused change. with other countries. in comparison still low per capita are energy (for to the right gure as can be seen in the fi However, 1994 till fast. From relatively not forestry), it is growing only, CO 2004, Indonesia’s In the future there should be a tendency for slower deforestation deforestation slower should be a tendencyIn there for the future due to will be slower of deforestation emissions as the rate use and energy Meanwhile, areas. forest available decreasing unless as GDP grows fuel emissions will keep growing fossil mitigating actions taken. In are the long run, CO estimation. More recent estimates of deforestation provided provided of deforestation estimates recent estimation. More (See a substantial decline in deforestation. the GOI indicate by 8.5.) Figure From 1980 to 2004, annual growth rates of energy consumption consumption of energy rates 2004, annual growth 1980 to From slightly less than those of GDP per increased per person have combustion grew faster than China’s and India’s. (See Figure (See Figure and India’s. than China’s faster grew combustion 8.6.) Source: International Energy Agency [http://www.iea.org/] (2007) International Energy Source: Figure 8.7. Annual Growth Rates of GDP, Energy Use and Use Energy Rates of GDP, Growth 8.7. Annual Figure 1980 1984 1988 1992 1996 2000 2004 20 18 16 14 12 10 0 3.0 2.5 2.0 1.5 1.0 0.5 200320032003 emission. rms have emission, emissions 2 2 2 es Residential R 199919991999 i 199519951995 gure 8.11 shows that 8.11 shows gure ra 199119911991 nds that the contribution Transport T cant number of fi cant 2007) [h 198719871987 emissions by type use emissions by of energy 2 cant gas exports. 198319831983 d IndustriesIn emissions in 1984 to 53 percent in 2004. in 2004. 53 percent emissions in 1984 to 2 E 197919791979 CO of the level presents below gure emissions by sector, the fi sector, emissions by 2 197519751975 Combustion ElectricityEle It per unit of energy than gas, depending on the quality gas, than per unit of energy 2 each observe emissions for of need to the level we cantly, 971971971 19711 1975 1979 1983 1987 1991 1995 1999 2003 0

60 40 20 80

160 140 120 100 Figure 8.11. Emissions by Sectoral Sources (Shares) Sectoral Sources by 8.11. Emissions Figure To understand why carbon intensity in Indonesia has increased why understand To signifi role The sources). energy (or by fuel combustion type fossil of in the electric of coal as a prominent generating sector emerges time. in emissions intensity over factor in the increase Source: International Energy Agency [http://www.iea.org/] (2007) International Energy Source: 8.3.2 Emissions by Type of Fossil Fuel Fuel of Fossil Type by 8.3.2 Emissions fi The Overview. it can be gure, this fi From technology. of fuel and combustion have fuel combustion each type of fossil seen that emissions for gas and coal emissions from However, with time. increased Since oil combustion. than that from faster grew combustion fastest. grew combustion coal 1995, emissions from of CO the shares Comparing Meanwhile, the contributions of coal increased from 1 percent 1 percent from increased of coal the contributions Meanwhile, of gas in 2004, while the contribution 26 percent in 1984 to in the same period. 21 percent 14 to from moved basically shows system energy in Indonesia’s trend broad The CO of that although oil is still the main contributor of CO been the main source industrial activities have the share of oil is decreasing as domestic reserves are as domestic reserves are of oil is decreasing the share of the share In the meantime, rises. and oil price exhausted of oil in the stationary the role and replacing is increasing coal remains of gas roughly the share whereas sector, energy signifi are as there constant Looking at CO One of the reasons is that a signifi One of the reasons by the type of fossil fuel used. Note that the numbers shown shown that the numbers Note fuel used. type the by of fossil the amount of energy not amount of emissions, the for are fuel, fossil is the most emissions intensive Coal consumed. twice the amount roughly releases Coal then gas. oil, by followed of CO one fi in 1984 and 2004 (not shown), 85 contributing has been declining from oil combustion from CO of total percent 2

Mton CO Mton

)

P) P

y y

i it

sit =

gure gure Wprld PP y=y= y=Y/P e= e=E/Y c= c=C/E

(Emis/GDP)

) )

y y India

ity ity Emissions intensity intensity Emissions

sity

(Emis/energy) SECTION 3: Sectoral Climate in a Changing Challenges China 9

1994-199919 1999-2004 19

P) P)

Carbon intensity intensity Carbon y y

sity sit

with other comparing gure,

Vietnam (Energy/GDP)

Energy intensity intensity Energy

D DP

GDP GDP Thailand

emissions intensity in Indonesia had been

2

g gy

rg Emissions Decomposition

e

2 Philippines Energy emissions in Indonesia carbon is the increasing 2

1994-2004

Malaysia

n ns

on

Emissions Indonesia Source: International Energy Agency (2007) [http://www.iea.org/] International Energy Source: Figure 8.9. Emissions Intensity: Ave. Annual Growth Rates Growth Annual Ave. 8.9. Emissions Intensity: Figure

(Source: IEA 2007) (Source: Figure 8.10. CO Figure intensity. The average annual growth of carbon intensity of in annual growth average The intensity. Long Indonesia is much higher than those in other countries. intensity in Indonesia annual change of energy is in the term and Vietnam than in right direction, less progressive albeit 8.10.) China. (See Figure 1999-2004 period, though energy use grew faster. So although faster. use grew though energy 1999-2004 period, of 1994-2004, the rates from intensity increased energy intensity Carbon progress. which indicates declined, increase of carbon intensity rates the increasing as well: has progressed of see that the rate to not surprising It hence, declined. is, period in the later of emissions intensity was lower increase to although the situation related Thus, than the earlier one. use and CO energy increasing during the 1994-2004, the rates of these increases increases of these during the 1994-2004, the rates increasing 8.9.) (See Figure declining. been have fi following The . Emissions Decomposition Carbon presents the average annual change of population, GDP per annual change of population, GDP the average presents Indonesia and carbon intensity and for intensity, capita, energy this fi From other countries. several for driver it can be seen that the main long-term countries, CO increasing 0 2 8 6 4

-2 -6 -4 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Investing In a More Sustainable Indonesia 70 71 Country Environmental Analysis ort red red gure gure 8.15 e l n Tr I E R Residential Transportion Industry Electricity 74% 48% 71% 80% 170% 9% 2004 2004 23% 41% 27% Emissions growth ‘94-’04 growth Emissions ciency be taking that may place 23% 35% 15% 27% 4 100% red power generation for energy security energy and generation for power red Emissions 1984198 20% 25% 42% 13%

eet and the low price of liquid fuel products of liquid price eet and the low igure 8.13. Emission by Sectoral Sources (Shares) Sectoral Sources 8.13. Emission by igure 100%) (to Emissions of Share F Source: International Energy Agency (2007) [http://www.iea.org/] International Energy Source: categories the main consumption oil and gas) and for (coal, and Residential). IndustryTransport, is Electricity, (Industry, further but of emissions, analysis source the largest currently most responsible which subsectors determine are is needed to Electricity time. increasing is the fastest over growing or fastest in the increases is mainly due to This major component. expansion of coal-fi by electricity being fed demand, eff decades and the increasing generating capacity in recent from other sectors. It other sectors. from also highlights the important of looking taking plans, into generation development at power carefully impacts economic and implications on the costs, account endowments. resource fi The Emissions Decomposition. Fuel Fossil the main product categories for GHG emissions summarizes oil-fi replace to in coal increase has been almost a 5-fold There reasons. price 1994. use since growth due to user of liquid fuel, is the largest Transport fl in vehicle mask subsidies) (due to transportation. fuel prices for Low effi in vehicle improvements or user of coal sector is not a large residential The time. over of kerosene the combustion mainly from Emissions come gas. home cooking. for 2004 Sub-sectoralPreliminary the IEA database for Using Results. sub- that a dozen indicates analysis and Indonesian sources,

2 2 A GASG 2003 orts ] in 2004) 2 1999 COALCO i 995 1 SECTION 3: Sectoral Climate in a Changing Challenges / L By Fossil Fuel Source Fuel By Fossil I OILO tt 1991 [h plants). Eff power red 7) emissions from residential residential emissions from 2 - 78.0 - 78.0 - 41.0 9.0 50.0 987 31.9 35.4 50.7 118.0 86.8 179.6 69.6 336.0 54.9 25.2 9.9 90.0 1 1983 ect generating capacity. on the need for cation. The household sectorThe is not a cation. 9 7 19 ciency at the household and manage demand 5 7 9 1 tricity emissions from the transportation emissions from steadily sector grew 71 2 9 By Consumption GroupBy Consumption Coal Oil Gas Emissions Total Fuel of Fossil Share 1971 1975 1979 1983 1987 1991 1995 1999 2003 Transport Industry Residential Elec Total Source: IEA, 2004 IEA, Source: Table 8.5. Indonesia: Fossil Fuel Emissions ( MtCO Fuel Fossil 8.5. Indonesia: Table Figure 8.12. Emissions by Type of Fossil Fuel Combustion Fuel of Fossil Type 8.12. Emissions by Figure from electricity than the proportionfrom faster of CO sector grew but less so than the industrial sector. It that is interesting but less so than the industrial sector. the electricity (steepest emissions from the fastest sector grew CO the mid 1990s. slope) since CO their own electric power generators. The types that The of energy generators. electrictheir own power use will fuel of industrial fossil they use and the determinants of work. phase in a second thoroughly more be investigated Source: International Energy Agency (2007) [http://www.iea.org/] International Energy Source: sector grew the slowest, perhaps refl ecting increasing levels ecting levels increasing perhaps refl the slowest, sector grew of household electrifi primary issue in itself, but should be considered in how it in how but should be considered primary issue in itself, in electricity and how demand, growth the overall to relates coal-fi that electricity is supplied (e.g., of emissions in the electricity on shares 8.14 focuses Figure much use in electricity that coal shows has grown This sector. 2004, proportion by Hence, sources. than in other energy faster use in electricityof coal sector was much higher than that in that the proportion reason is the main of CO This other sectors. The Figure 8.13. shows emissions shares by sector. This conveys conveys This sector. by emissions shares 8.13. shows Figure The the same points: industry electricity is largest, is fastest around by been growing emissions have While total growing. electricity by the emissions from grew annually, 7.5 percent decades. in the last two 11 percent around to improve effi improve to some eff will have level 8.12.) (See Figure 0

60 40 20 80

200 180 160 140 120 100 2 Mton CO Mton emissions will 2 emissions from emissions from 2 a o Gas Coal Oil G C O 2004 2004 28% 10% 63% emissions from energy use increase as use increase energy emissions from 2 1% 19841984 22% 77% emissions grow by about 5 percent annually, while annually, about 5 percent by emissions grow 2

Others Percent / Share (to 100%) (to Share / Percent annually. about 7percent by grow coal emissions from 2 be around four times the level in 2005 as can be seen below. in 2005 as can be seen below. times the level four be around CO Total Future Emissions Trend and Scenario. If the trend from the If from the trend and Scenario. Trend Emissions Future CO 2030 total by 1971-2004 period continues, There are many assumptions imposed on this trend, such as assumptions imposed on this trend, many are There proportion used in the electricityfuture of energy sector and and coal, oil, use among renewables, of energy composition the International by the same as those predicted which are gas, 8.17) 8.16. and Figure Agency (SeeEnergy Figure IEA predicts a intensity. of energy with the exception (IEA) 2.5 percent around intensity by energy of reduction in the rate and internationally which is very high compared annually, energy in Indonesia rate where much higher than the historical the For the last decade. intensity has actually over increased 1percent around intensity declines by energy projection here, in line with the global average which is roughly annually, intensity in the past. of energy reduction rate it can be expected intensity, in energy assuming a decrease Even will triple in the consumption energy that emissions from 2030. Itperiod to is important that CO note to fossil fuel combustion under this projection roughly double under this projection roughly fuel combustion fossil CO every 15 years. CO Indonesia’s GDP grows and the proportion of households with GDP grows Indonesia’s In the electricity increases. of income medium and high levels level 3 times the emissions will be around 2030, total by sector, electricity emissions from of increasing main driver The in 2005. combustion. coal is emissions from tial n Gas Gas gures gures id i l eside ts of action Gas Coal Oil Ga Co Oi OilOil SECTION 3: Sectoral Climate in a Changing Challenges 53% 31% 16% ransport 2004 2004 Compont T Largest Single Largest y Coal Coa Fastest Fastest ectricit Growing Growing Electricity Residential Transport Component 1% 99% 19841984 y

ective interventions these that can be pursued in

Electricity Sector ustr Percent / Share (to 100%) (to Share / Percent d n Industry Source: International Energy Agency (2007) [http://www.iea.org/] International Energy Source: Figure 8.14. Emissions by Energy Use: Electricity Use: Use Energy 8.14. Emissions by Figure Largest Using Using Largest c industries. These may be good targets for policy for and be good targets may These c industries. ndings suggest that non-metallic minerals (cement), that non-metallic minerals (cement), ndings suggest shing have relatively small emissions from fossil fuel use (and fossil emissions from small relatively shing have 0 Source: IEA 2004 in MtCO2e Source: exceed the costs. the costs. exceed transport road user is the largest the transportWithin sector, roughly Emissions are and nearly the only one of consequence. In gasoline and gas/diesel. the use of motor split between almost entirely emissions are residential sectpr, residential cooking), with minor emissions use (mainly for kerosene from public services and generate the use of LPG. Commercial from and Agriculture use of natural gas. emissions mainly from fi dwarfed land use emissions). by and fi and and beverage food pulp, making steel textiles, and rolling, of the manufacturing/ high emitting segments fertilizer are need further of the kindsThese investigation industrial sector. eff of cost specifi emissions – assuming reduce ciency, effi actions increase to and with the economic that these actions also compatible are needs of the countrydevelopment and the benefi sectors account for about half of emissions. Preliminary fi Preliminary about half of emissions. for sectors account Figure 8.15. ID: Emissions by Fossil Fuel and Using Sector and Using Fuel Fossil Emissions by 8.15. ID: Figure

20.0 40.0 60.0 80.0 100.0 120.0 140.0 Investing In a More Sustainable Indonesia 72 73 Country Environmental Analysis % % 5 2 23% 35% 42% 23% 3 4 0 203 5 2025 202 0 2020 202 015 2 2015 0 01 2 2010 % % Fuels 3 26% 53% 21% 21 26%26%26% 5 5 2005 200

Figure 8.17. Estimate of Future Emissions from All Fossil Fossil All Emissions from of Future 8.17. Estimate Figure Agency (2007) [http://www.iea.org/] International Energy Source:

200 800 600 400

2 /yr 1.400 1.200 1.000 CO Mt 72% 12% 16% 2030 2030 2025 SECTION 3: Sectoral Climate in a Changing Challenges 2020 2015 2010 60% 29% 11% Sector 2005 00

50

2 100 300 250 200 150 /yr CO Mt Figure 8.16. Estimate of Future Emissions from Electricity Emissions from of Future 8.16. Estimate Figure Source: International Energy Agency (2007) [http://www.iea.org/] International Energy Source:

SECTION 3: Sectoral Climate in a Changing Challenges Investing In a More Sustainable Indonesia 74 5555555 75777775757575 CountryCoCouunntrtry EnEEnvironmentalnviviroronmnmeenntatal AnAnalysisala yssisis SECTION 4: The Way Forward Way The

SECTION 4: The Way Forward Way The SECTION 4: Investing In a More Sustainable Indonesia 76 Chapter 9: Towards a More Sustainable Indonesia

Off -shore Bunaken, North Sulawesi Photo: Winarko Hadi ces ces to ve regional offi regional ve cient spending patterns. cient spending patterns. c tasks or activities, but it . Another challenge incentives ce of Ministry ce is in of Environment and nancial management and incentives, management at nancing environmental nancing picture, it takes so long for central central it takes so long for nancing picture, scal reform. Income coming from taxes is taxes from Income coming scal reform. nancing options, such as DAK and BLU, could be could and BLU, such as DAK nancing options, cation of roles. management exible fi exible address such problems. For example, the Leuser Ecosystem in Ecosystem the Leuser example, For such problems. address and North Sumatra) North (Aceh provinces Sumatra spans two offi but the closest regional away. some distance quite Pekanbaru, Financial management, local-level fi management, local-level and a clarifi One management. environmental Geography-based should be management is that environmental recommendation Indonesia’s As such as a watershed. based on geography unitary, be managed within to water for allows resources on water law that could is a precedent there the context of watersheds, land management. such as other resources, be applied to administrative management follows environmental Currently Transboundary boundaries. boundaries rather than geographic issues get kicked authority the next of administrative up to level at the next authorities up level but seldom do environmental the problem. address to or resources power adequate have MinistryThe has only fi of Environment management is the fact environmental decentralized for basis so get their funding on a yearly that local governments further To long-range investment. no facility for they have the fi compound actually the local governments, to reach transfers government spending takes of local government 80 percent an estimated most no money for Having in the last quarterplace of the year. spend money quickly to and then having during of the year very nal quarterfor makes ineffi the fi fl More fi for fully utilized more the local level. Ministry lookingThe is currently at of Environment fi environmental specifi not earmarked to currently not being considered. externalities are Similarly, be. could opportunities is also mention of better incentives There for deconcentration through provided grants matching through c sectoral options. SECTION 4: The Way Forward Way The SECTION 4: nancing opportunities. nancing ndings of the CEA, ts; Renewable resources are used sustainably while non- are Renewable resources investment for wisely developed ones are renewable and capital; in human and physical of and participating aware in are Citizens their issues directly or through environmental and other organizations. representatives The costs of environmental degradation and climate and climate degradation of environmental costs The diverted is so that less wealth lowered change are growth; from to contributes management Good environmental impactspoverty reducing on the poor alleviation by sharing of benefi and better The World Bank will realign its activities and partnerships to support Indonesia’s options for better environmental environmental better for options its activities and partnerships Bank will realign support to World Indonesia’s The of environmental in other areas its engagement change while continuing and climate governance importance. Mitigation of energy-based emissions can be achieved through high-level planning and coordination such as a and coordination planning high-level through Mitigation can be achieved emissions energy-based of as specifi as well strategy growth carbon low Options for better environmental governance include strengthening decentralized management, implementing management, implementing decentralized include strengthening governance environmental better Options for of stakeholders. and access policies and expanding the voice enabling more options that need to and proactive of reactive a range be pursued through can climate a changing to Adapting time. and phased over be prioritized options that can be regrets” “no a number of through Mitigation land-based emissions can be accomplished of carbon fi supported new forest by Environmental Management Management Environmental Governance • • • •

• • MAIN MESSAGES • • •

Options for strengthening decentralized environmental environmental decentralized strengthening Options for environmental include geography-based governance 9.1 Options for Better Environmental Better Environmental 9.1 Options for Decentralized 9.1.1 Strengthening Options for moving toward this vision are outlined in the outlined this vision are toward moving Options for governance, environmental sections which cover below and forestryuse, and land change, climate adaptation to Bank has a long history of partnershipWorld The energy. and natural resource with Indonesia on environmental ongoing engagement has centered The management issues. on forestry conservation management and biodiversity as well the fi Given and marine resources. as coastal opportunities partnerships are increased there for in the areas change that are and climate governance of environmental in the Annex. and elaborated in this chapter summarized The previous analysis suggests that a more sustainable that a more suggests analysis previous The Indonesia is one where: Investing In a More Sustainable Indonesia 78 79 Country Environmental Analysis

cant ective t the rich t the scal reform s. An example s. scal system for the for scal system s do benefi scal policy instruments ects, a continued gradual gradual ects, a continued . In order to overcome overcome agenda. In to order housing s based on location and overall such as the scal parameters nance (Climate Investment Funds, Funds, Investment (Climate nance reform opportunity, revenue potential ers a huge scal fi tariff current The s in the medium and long run. c cases to the public eye and government’s attention, attention, and government’s the public eye c cases to environmental

and fi ectively if economic more than the poor. Any program of a national gradual subsidy of a national gradual program Any than the poor. more connection subsidies with targeted be coupled reduction could tariff poor or subsidized the to characteristics (IEA 2008). off REDD program The without a functioningbut it will not work fi projects and for payments for REDD will allow forestry sector. emissions. carbon policy forest-based actions that reduce will depend on system carbon compensation any However, scal distortionsforestry in the sector. erasing the underlying fi distortionsThese and environmental arise as true economic is a need to there Thus not captured. are values of forests collection and monitoring royalty a transparent develop the incentives provide instruments that could Policy system. management include performance sustainable forest more for arrangements and auctions. Similarly, tenure better bonds, fi of climate other sources will not function etc.) programs, bilateral Fund, Adaptation eff be to pricing continued or fuel and power climate investment distorted. 9.1.3 Expanding voice and access and access 9.1.3 Expanding voice an important in raising played role historically NGOs/CVOs have specifi with legislature However, using the media as their ally. largely (and political parties) carving solid position in this out a more of in their role scrutiny increased NGOs will face democracy, clarify their to NGOs will have aspirations. people’s representing management and solidify their capacityconstituent-base for NGOs/CVOs data. will also have of environmental and analysis if they establish or assertto aggressively, more their credibility these policy barriers, the government needs to engage in a engage in needs to these policy the government barriers, fi environmental gradual and reform long–term set up a objectives of such an agenda should be to The agenda. incentives which provides regulatory framework and economic external environmental for accounts change behavior, to revenue conservation and improve resource enhances costs, collection mechanisms. identify the optimal mix of fi key is to The these various between synergies potential which can create short-termgoals and minimize trade-off with fuel subsidy experience successful be Indonesia’s would cash and unconditional with conditional reductions coupled that fuel Given at poor households. targeted programs transfer eff regressive largely subsidies have applying a carbon of fuel subsidy reductions or even program options in the medium and be politically feasible tax could long-term. cost-refl introduce needs to the government Similarly, electricity tariff structure prevents private investors to undertake to signifi investors private structure prevents with fuel production. As energy renewable in to investments electricity low tariff relatively subsidies, An gure gure SECTION 4: The Way Forward Way The SECTION 4: ecting local c sectors not cant challenges cant the existing nancing, policysheries sectors, . Across sectors the key problem sectors the key problem . Across icting sector-based regulations tion is a mechanism for leverage. leverage. for tion is a mechanism framework the reduce scal instruments is not capable to . One of the more signifi . One of the more roles of legal

scal regime for natural resource management is natural resource for scal regime the up cation Clean incentives for illegal logging and to fully capture the economic the economic fully capture and to illegal logging for incentives activities. – based economic with forest associated rent currently biased towards unsustainable resource extraction. unsustainable resource biased towards currently fuel and electricity subsidies distort price sector, In the power more invest to and limit the capacitysignals of the government the production. In energy the forestry sector, in renewable of fi system current Indonesia’s fi Indonesia’s 9.1.2 Enabling policies mechanisms. There may also be incentive mechanisms mechanisms also be incentive may There mechanisms. such as national assets for measures assistance special through Deconcentra national parks. management environmental capacity for of building regional now are small—there too units are is that the management in Indonesia, and this fi nearly 500 local governments With regard to law on local government fi on local government law to regard With Clarifi clarify roles to is In recommendation this light, a suggested on focus could government central The and responsibilities. standards, advantages of setting policies and its comparative identifying and disseminating and reporting, monitoring assistance, technical providing qualitygood practices, control, on focus could governments Local and capacity building. accountable in an implementation of policies and programs on issues then focus would governments Provincial manner. Were than one district more within a province. that transcend be gradually it could course, pursue this to the government districts to and in a manner that allowed implemented maintain maximum opportunities local participation for and governance. better environmental taxation policy as it is based is poorly designed environmental who perform companies rather than taxing those on revenue, management practices. badly in their environmental government central same time, the At time. over increase may a tendency with provincial deal primarily to agencies often have under the functions of the provinces However, governments. often and they are been restricted have autonomy regional act clear-cutunable to where with authority environmental even challenge the frequently governments Local externalities arise. matters intervention higher authority of a on environmental work to instead or national), preferring (whether provincial sometimes with support keen of donors who are individually, of the source as close as possible to their assistance place to the problem. is that national policies and laws governing specifi governing is that national policies and laws contradictions but also overlap only contain within sectors, aff and regulations laws with decentralization in mining and fi cally, Specifi use. resource distortions confl arise from be to a priority would Thus, laws. and the decentralization base a better provide to and regulations these laws harmonize collection local and and – sharing between revenue improve to national governments. on the cient to to cient articipate llment of access icting interests. This will This icting interests. participation information, to lling access llment. uid, it may take at least another cycle of executive- it may uid, environment. a better clearly) their demands for ne more legitimate player, and can be expected to strengthen its mark its and can be expected strengthen to player, legitimate should also and district/level legislature Provincial in the future. political situation with the institutional/ suit. However, follow being so fl the democratic culture see whether appointments to legislative fruit, and whether the will bear public interest of representing the learning accelerate able to members will be legislative curve environment. with respect to complete build a more to the public itself needs Finally, issues and their contribution understanding of environmental It is insuffi environment. the or destroying in protecting know the visible or physical manifestations of environment and of environment manifestations know or physical the visible understand to begin the public must problems; natural resource and natural resource of environment the interconnectedness decisions and each and the impactsissues, of government’s articulate learn to public also needs to The actions. individual’s (or defi it, other parties about public Without make assumptions may decision-makingaspirations which will only confuse area in an multiple confl by burdened already as outlined in expanded access pursuing options for require 9.1. Box 9.2 Options for a Changing Climate 9.2 Options for to a Changing Climate 9.2.1 Adapting options can help Indonesia adapt. Reactive and proactive and anticipatory the range of responsive 9.1 indicates Table change with actions climate adapt to be taken to that can SECTION 4: The Way Forward Way The SECTION 4: cient information ective mechanisms to communicate communicate ective to mechanisms principles. on issues of access. the performance scrutinize of government and continuously Actively impact an adverse including making have likely to issues, of decisions that are environmental to it pays Increase the attention Encourage a process of legal reform so as to bring the de jure and de facto line. situations into bring the de jure so as to of legal reform a process Encourage groups. marginalized especially for access, capable of guaranteeing system an integrated Provide of the necessary , the provision infrastructure and of specially trained staff the assignment the capacity of its institutions through Develop funding. and the allocation of adequate facilities, the fulfi encourage to the potential other stakeholders that have as as well with the media and NGOs, collaboration Improve and justice, and encourage the adoption of policies that better guarantee their fulfi guarantee the adoption of policies that better and encourage and justice, environment. situations can be bridged. the de facto that the gap between and de jure ensure so as to of legal reform Monitor the process access. better encourage and other stakeholders so as to with Government Collaborate participate to justice. and to information, to access public demand for heightened Encourage p to information, to access secure to particularly and the capacity groups, of the public, capacities, own marginalized Develop Work with other stakeholders to monitor and appraise the performance institutions in fulfi monitor of its own with other stakeholders to Work and to justice. and to • media need to: The • • • • • • need to: Organizations Non-Governmental • • • Government needs to: Government BOX 9.1. Options for Expanding Access to Environmental Governance to Environmental Expanding Access 9.1. Options for BOX • 2008 Murharjanti et al., from SOURCE: Adapted

uencing public behavior. Their eff ectiveness, however, is however, ectiveness, eff Their behavior. uencing public

want to continue to play a role in building public awareness awareness in building public a role play to continue want to environment. demand for and public of solidifying itself as a key is still in the process legislature The established political more The process. in the democratic force parties, in an advantage with a nation-wide network, have to parties yet Newer public. with the have communicating and eff a culture develop an important play future, in the may, They with constituents. not but this will probably in channeling public aspirations role convinced political parties have happen before and legislature transition the democratic As sincerity. the public about their can be expected at all levels of legislature the role progresses, strengthen. to mainly in player, an emerging institutions are Religious infl is insuffi there evident. Furthermore, not yet the in channeling public aspirations to their role determine to or in the future. at present government, an important play does in transmitting TV, role Media, especially tend messages But environmental on environment. information the dominant messages of development, out by drowned be to and entertainment. channel consumerism a medium to As strongly. does not feature the media public aspirations, the Indonesian public in who represents In summary, transition. In issues is undergoing the past, environmental the present, At an instrumental role. played NGOs have as the exert to themselves is beginning national legislature Investing In a More Sustainable Indonesia 80 81 Country Environmental Analysis and planta- of food cation Proactive/Anticipatory cant public action orts to raise public awareness about climate climate about orts raise public awareness to and intensifi cation systems early warning re Eff build a consensus change and its impact to in order signifi for climate to of species resistant cation/development • Research and monitoring of coasts and coastal ecosys- and coastal and monitoring of coasts Research tems and monitoring Conservation of water catchment areas catchment of water Conservation cies monitor- and drought controls ood of fl Development ing insect/pests)salt, corridors versity tion crops change mainstreaming for and possible measures planned The orts. • management zone coastal Integrated • planning and zoning coastal Better • protection coastal for of legislation Development • • systems of early warning Development • disease/vector surveillance Better and/or improved • quality of environmental Improvement • and housing design Changes in urban • water use of recycled Better • • management of water system Improved • including pricing and irrigation poli- policy reform Water • • (to drought, crops of tolerant/resistant Development • and development Research • management Soil and water • Diversifi • protected and biodi- areas of parks/reserves, Creation • Identifi • market free tax incentives/subsidies, measures, Policy • warning systems of early Development • assessment of the vulnerability Better of ecosystems • Monitoring of species • of seed banks and maintenance Development fi • Forest begin, what to scale up and how to link actions over time (see link actions to over up and how scale what to begin, the for proposed this is being of how 9.2). An example Box An 9.1. in Figure sector in Indonesiaagriculture is provided in important invest in prioritization will be to consideration risk in at greatest the populations that are protect to measures Selectivity of health and livelihoods. terms can also be guided the choosing options that have through analysis economic by value. present net greatest and return highest economic complementary will require of adaptation Mainstreaming eff be complemented will need to change adaptation in climate by: re manage- re orestation SECTION 4: The Way Forward Way The SECTION 4: Reactive/Responsive erent cultivars erent

Public awareness to enhance protection of coastal and protection of coastal to enhance awareness Public marine ecosystems vegetation and littoral sea grass, management of soil and water including con- systems of management Improvement and aff reforestation, of deforestation, trol Dam construction for irrigation Dam construction for vices water supply systems water ment plans

• health management reform Public • housing and living conditions Improved • emergency response Improved • infrastructure of economic Protection • • and beach reinforcement Building sea walls • , reefs, of coral and conservation Protection • on conservation programs and Educational and outreach • • Erosion control • Erosion • • Changes in fertilizer use and application • crops Introduction of new • Soil fertility maintenance • Changes in planting and harvesting times • diff to Switching • goods and ser- forest improve to agroforestry Promoting • fi of national forest Development/improvement • resources of groundwater Protection • of existing and maintenance management Improved • areas catchment of water Protection • supply water Improved • harvesting and desalination and rainwater Groundwater • in forests of carbon storage Improvement

Health Coastal/Marine Forestry Agriculture Water Resources Water re management, protection of biodiversity); coastal marine coastal of biodiversity); management, protection re SOURCE: Adapted from UNFCCC (2007) in ADB (2009) UNFCCC from SOURCE: Adapted Phasing and selectivity of adaptation measures are are Phasing and selectivity measures of adaptation country any take to for is an enormous agenda This needed. It to will be necessaryon all at once. where think through to regards to water resources, agriculture, forestry, coastal/marine coastal/marine forestry, agriculture, resources, water to regards incorporated already that are options The and health. resources, Change Climate Action National Plan Addressing in Indonesia’s to Planning Responses 2007a) and National Development (GoI, not all As in bold. highlighted 2008) are Change (GoI, Climate in Indonesia, been considered have of the adaptation options resources additional emphasis on: water for is scope there and policy recycling, management, water (groundwater harvest (changes in planting, and cultivars, agriculture reforms); better and early warning); forestry (agro-forestry, policy reforms fi zone coastal integrated of infrastructure and more (protection living conditions housing, (improved management); and health health reform). and public and urban design, Table 9.1. Adaptation Options 9.1. Adaptation Table st the nancial luding 2030 n environment n environment 2025 cation, protection of assets and protection cation, ooding patterns or crop insurance to to insurance or crop ooding patterns . REDD off ers new fi Options. REDD off ’ Regrets

No economic diversifi economic 2009). (ADB, strategies other coping Improved forest law enforcement, management enforcement, law forest Improved asset management and improve to and governance collection sector. within the revenue ts even without climate change. These exist in almost everyThese change. without climate ts even 2020 • centre areas whenever possible to allow for increasing increasing for allow possible to whenever areas centre planting index and productivity 9.2.2 Forests, Land Use and Climate Change and Climate Land Use 9.2.2 Forests, ‘ Forestry incentives for improvement of forest management practices, management practices, of forest improvement for incentives not or outcomes, is only based on performance, but payment performance in improve To improvements. plans or projected and independent analysts both GOI sources sector, the forest Bank, World 2006 and 2007; (Min concluded Forestry, have is a need for: 2006) that there • Develop new irrigation facility production in vulnerable rice • Develop other uses in Java, elds to 2015 SECTION 4: The Way Forward Way The SECTION 4: nancing ective technical solutions ectivetechnical 2010 stand-by funding, insurance system insurance funding, stand-by varieties consumption • Set up policy to limit conversion of rice fi of rice • Set up policy limit conversion to • Expand the rice growing areas to less vulnerable areas, new less vulnerable areas, to areas growing • Expand the rice food Diversify in the upstream cover forest • Maintain and increase Increased resilience of poor households and other Increased resilience through e.g. shocks, climate to vulnerable groups and sound strategies that go beyond technical technical that go beyond and sound strategies livelihoods, social protection, solutions (migration, governance) promote Multi-agency and planning to coordination adaptation, e.g. to interdisciplinaryapproaches linking risk reduction with disaster adaptation local capacity plan and implement to Strengthened central- including improved adaptation measures, planning and fi local coordination, More research to better understand the local impact better to research More cost-eff change, of climate e forecast Give priority to “no regrets” investments and policy benefi options that provide investments regrets” “no priority to Give transaction and/or political will. lack of information, costs due to not be implemented sector but may of building a higher dam or inc costs the marginal e.g. resilience, climate increase to new investments in margins” “safety Buy scenarios as well as the programs according to new information. to according as the programs as well scenarios additional groups in a social protection scheme. in a social protection additional groups new fl to anticipate zoning restrictive urban Examples include exible options. and fl reversible Favor higher frequency farmers against a projected protect of drought. and adju programs investment review under a wide range of possible futures, strategies Assess analysis. Plan based on scenario Year: 2005 Year: • • • • ciency Box 9.2. Prioritizing Adaptation Options Adaptation 9.2. Prioritizing Box change in a climate adapting to options for prioritizing guide to Report a useful four-step Development provides World 2010 The of uncertainty: 1. 4. Bank, 2009 World SOURCE: 2. 3.

effi activitieseconomic climat

• Improve crop management crop • Improve irrigation facility and irrigation • Improved opportunity more alternative for • Provide • Adjust the cropping pattern following the following pattern the cropping • Adjust Figure 9.1. Phasing Adaption : Example for Agriculture Sector Agriculture : Example for 9.1. Phasing Adaption Figure Investing In a More Sustainable Indonesia 82 83 Country Environmental Analysis ed nancing in countries in countries nancing orts, including the need ed reductionthe national in . One of the key options . One of the key options coordination conserve use to the low cient energy and options. Bappenas (2007) has identifi orts, the National Council has commissioned orts, has commissioned the National Council planning sectoral

with regard especially change response, ective climate c c policy options that may help Indonesia “to reduce reduce “to c policy help Indonesia options that may nd/develop new and alternative renewable resources, resources, renewable new and alternative nd/develop bonds. of rainforest the issuance by nanced World Bank’s Strategic Climate Fund, will provide grants and grants provide will Fund, Climate Strategic Bank’s World of REDD demonstration development for credits low-interest management in sustainable forest as investments projects well as Government The carbon reservoirs. and conservation of forest fi development of Norway is providing verifi for such as Brazil in exchange Project Rainforest Wales of Prince UK’s The of deforestation. rate perhaps on performance, similar payments provide seeks to fi 9.2.3 Energy and Climate Change Options and Climate 9.2.3 Energy High-level an eff for the policy of and coordination is integration use, fuel fossil to a formed has Government The the Government. across response a policy help coordinate Change to on Climate National Council its capacity. this institution is still developing but response, and basis of its recommendations the technical improve To eff coordination Study Development and Environmental a National Economic costs abatement (NEEDS) and an assessment of emissions a range of sectors. across aware are etc) forestry, industry, Key sectoral ministries (energy, of the importance as a national development change of climate In c plans. sector specifi formulating challenge and are Ministry the fuel emissions, of fossil in the area particular, and the Assessment and the Agency for of Environment Technology (BPPT) a produced have Technology Application of Change Mitigation. on Climate Needs Assessment reducing policy for Many under consideration options are a National GOI has developed The emissions. Indonesia’s Change and a National Development Climate Action Plan for Ministry The of Finance Change. Climate Planning Response to options study carbon development a low has commissioned help in formulating change to paper on climate and a green both mitigation and adaptation. BAPPENAS address options to the medium term change issues into climate is integrating map’ ‘road a and developing planning framework development Both institutions are change issues. climate addressing for national change priorities into climate working incorporate to plans. budgets and longer term Specifi specifi internationally remain emissions and to energy-related [including] effi competitive adopt eco-friendly fuel substitution to fossil source; energy cost and application technology, energy the use of renewable fuel, to tax and other incentives a carbon of emissions standards, To management.” and sustainable forest support reforestation Bappenas resources, energy the limitation of fossil overcome a number of possible eff enumerates production, limit exports, increase new resources, “identify to and fi waste), biomass (organic geothermal, power, including water and wind energy.” energy, ocean solar energy, t nancial SECTION 4: The Way Forward Way The SECTION 4: cation are are cation nancial benefi ts benefi nancial opportunities. REDD nancing and distribution nancing fi sale able emissions reductions for smoke and haze reduce to control re rms, to improve competitiveness and competitiveness improve to rms, carbon forest

that cause high health costs that cause high health use decisions Equity and transparency in forest/land fi any (also fundamental for mechanism) and Independent of legal compliance monitors participation standards. Realigned incentives for timber harvesting for and incentives Realigned fi processing returns economic sector Restructuring of forest and revitalization capture with supply, demand balance industries to and improve markets, and keep international competitiveness. and land fi Forest nancing. The Forest Investment Program, within the Program, Investment Forest The nancing. • • • • • ably costs time and money: sites have to be selected time and money: to ably costs have sites erent types of forests. These payments for REDD can benefi for payments These types of forests. erent sets the costs of making needed changes. Many donors of making Many sets the costs changes. needed In addition to REDD, Indonesia can tap other sources of forest of forest Indonesia can tap other sources In REDD, addition to carbon fi needed to assure carbon buyers that the emissions have indeed that the emissions have carbon buyers assure needed to and minimal leakage with some permanence in been reduced, and deals be found to also have buyers Willing other areas. sharing of both fi with appropriate negotiated the drivers means addressing Reducing deforestation and risks. This rent-seeking. enforcement, governance, of deforestation: data monitoring forest though recent a challenge, remains years. in recent that Indonesiaindicate has had some success on an international is an investment process with risks. For this For with risks. process is an investment on an international of the Ministry is necessary the involvement of Finance reason, and important. (and emissions) Reducing deforestation verifi to change eld be taken in the fi to actionsand surveyed, have and verifi monitoring behaviors, or replace incentives In verifi fact, solid, producing Indonesia by creating an incentive and a revenue stream that stream and a revenue incentive an Indonesia creating by off the REDD develop engaged in assisting the GOI to now are of pilot demonstrations and development through program sector private agents and NGOs many Also, policy frameworks. voluntary pursuing REDD schemes through markets (Worldare Bank, 2009). is a major opportunity Indonesia, which is a for and incentive An international negotiations. in international advocate strong carbon market is expected be established in the post- to forest of the Estimates 2012 framework, under negotiation now. scheme range Indonesia a REDD gains to through potential covered depending on the area $0.5 - 2 billion per year, from of carbon in the as the stock as well performance, and overall diff Under any climate scenario, these policy and governance these policy and governance scenario, climate Under any fi management and actions improve sense to make International returns from an important national asset. Thus, these could be could these Thus, an important from returns national asset. options. regrets” “no seen as combat combat l incentive l incentive erent erent levels eforestation) eforestation) ts to prevent prevent ts to ion or more in ion or more e Bali Roadmap airs and Fisheries. airs and Fisheries. the Bank supported cally, GHG emissions in the reduce to ective approaches to stimulate and accelerate the needed investments. accelerate and stimulate to erent ways. Before 1994, the Bank was involved in 1994, the Bank was involved Before ways. erent Environment and NRM Sectors Environment and in diff directly (and unsuccessfully) lending operations and worked 1994, the Bank After policy achieve with the GoI to reforms. through involved remain lending but tried to from withdrew analytical/advisory dialogue, higher-level services build to agencies (Bappedalda) and the capacityenvironmental of local established Ministryrecently of Marine Aff also occurred “mainstreaming” In addition, environmental participationthrough supervision and in the design of lending and UPP II and ILGRIP, I and II, KGRIP, activitiesas COREMAP such in Bank safeguards III, and the application of environmental all sectors. loans to major of the Government’s launch in 2001, following Then, the Ministry program, Environment decentralization for of State expertise help devise a to (KLH) called upon the Bank’s and quality of environmental the level improve to strategy Specifi management at the local level. phase of and implementation of the second the development which rst PROPER program, Unlike the fi the PROPER program. PROPER II is based on pollution only, industrial water targeted eight aspects, and participation is mandatory in the program In addition, the Good Environmental decree. ministerial by complement was also launched to Program Governance of environmental assess the state PROPER. GEG is meant to incentives capacity building and provide promote governance, 9.3 A Role for the World Bank World the for 9.3 A Role history a long and evolving Bank has of engagement World The resource and natural with Indonesiaon the environment in sectors engagement will continue such This management. conservation biodiversity marine and and coastal as forestry, in the areas will be strengthened Partnership resources. and governance in this CEA – environmental emphasized change. climate in the Bank Engagement World 9.3.1 Bank has been engaged World the Over decades, the past two and natural with Indonesia of environment in the area in the forestry (mainly sector) at diff resources nancing SECTION 4: The Way Forward Way The SECTION 4: orts to reduce deforestation and degradation. Forest carbon emissions reductions are carbon emissions reductions are Forest and degradation. orts deforestation reduce to ciency and able eff rm level. Also, Also, rm level. ciency, develop develop ciency, the emissions rm; ciency standards for c areas. c - Indonesia has development several additional energy-related energy-related additional several - The approach to pricing energy pricing energy to approach The - energy - International fi incentives

- Even in the current energy energy in the current ciency - Even

effi energy orts improve to ts for investments in mitigation actions investments ts for effi setting payments or lower cost funds to funds to cost or lower payments setting

nancial sense now at the fi nancial sense now hinders eff Renewable Energy pricing Energy conserve on increasingly resources, energy alternative gas greenhouse and reduce fuels, fossil expensive but new issue, cult political is a diffi This emissions. help may nancing Indonesia make fi climate of forms in some specifi progress mechanisms, in particularmechanisms, the carbon market and can help provide Funds, Investment the Climate some off help Indonesia meet its mitigation objectives. Again, help Indonesia Again, meet its mitigation objectives. help would climate in the investment improvements energy management approaches with short management approaches energy payback manufacturing power, especially in the periods, and transportation of these actions Many sectors. make fi management and effi energy certain for types be appropriate of equipment may energy The in the Indonesianconsideration context. t the fi benefi would savings and cost t all Indonesians. benefi would savings Financing abundant renewable energy resources but their resources energy abundant renewable and a of investment lack lags due to development IfIndonesia continues enabling environment. weak tackleto the policy that challenges and perceptions will there generally, climate the investment improve be benefi sources. energy of alternative and development a more require issues may climate investment These in-depth look at banking and tax sector policies, and trade policies that help incentives, depreciation or hinder the application of new technologies. Energy some opportunities are there for pricing regime, effi energy emissions reductions through • • • • IPCC (2007) and Stern (2006) have noted that reducing deforestation is one of the most cost-eff deforestation that reducing noted (2006) have (2007) and Stern IPCC to Indonesia committed has already loss. forest and management activities that reduce governance sound forest through produced Box 9.3. Indonesia and Reduced Emissions from Deforestation and Degradation (REDD) and Degradation Deforestation from Emissions 9.3. Indonesia and Reduced Box short run. The UNFCCC is discussing how to create markets for forest carbon by instituting a REDD scheme (as recommended by th by instituting a REDD scheme (as recommended carbon by forest markets for create to is discussing how UNFCCC The short run. a powerfu provide land would forest carbon emissions reductions from for payments encourage 13). A mechanism to at COP adopted management. If an ambitious mechanism is established after gain USD 1 bill 2012, Indonesia potentially forest could improve to and verifi assuming successful annual payments, d carbon (avoided forest for 2008). REDD payments (MOFr, a REDD initiative and is developing and illegal logging deforestation could provide resources and incentives for sound forest management, as well as compensation for those who must forego benefi those who must forego for as compensation management, as well sound forest for and incentives resources provide could deforestation.

From the analysis in Chapter 8, ongoing discussions and the discussions and 8, ongoing in Chapter analysis the From literature, change climate be pursued: options can Investing In a More Sustainable Indonesia 84 85 Country Environmental Analysis . In orts promoting promoting orts sheries communities . Most Bank and other key resources marine and in participating districts. The World Bank has consistently Bank has consistently World The in participating districts. supported management eff enhance the GoI to Learning sustainability and marines resources. use of coastal there involvement, Bank’s what has been going on since from is a unique opportunity supporting continue to Indonesia, especially in enhancing and widening impacts and outcomes donor assistance has contributed to strengthening institutional strengthening to has contributed donor assistance and regional institutions (both national, capacity of responsible based are capacityThese building programs sub-regional). been that have on management models and approaches as pilots in Indonesia parts or other tested successfully of the program of a 15 year Bank has led the development The world. Reef Rehabilitation and Management Program called the Coral of its kind anywhere Program which is the largest (COREMAP), will Revitalization Project Fisheries proposed The in the world. and fi of rural coastal income increase 9.3.2 Areas of Continued Engagement Continued of 9.3.2 Areas the where is a brief overview of the themes/areas following The a meaningful engagement in Indonesia has Bank already World conservation, biodiversity and coastal/marine and, (forest at least engaged remain it is likely to and where resources), Considering Country the current Strategy. Partnership through Bank will World the broadly, challenges more environmental its support environmental and sanitation, continue water for services and sustainable agriculture. and infrastructure, conservation and biodiversity management Forest 2004- from strategy assistance the Bank’s sector, the forest to management and governance 2007 aimed at improving support in sustainable forest and communities governments management, conservation, and dialogue. development conservationBiodiversity has been supported a through and marine initiatives terrestrial number of medium-sized the Bank’s the present, 2008 to From supported the GEF. by primary the market for has been on developing forestry focus REDD in Indonesia deforestation as part reduce to of a strategy Bank proposes World The carbon emissions. and forest-based forestry in Indonesia’s assistance up and mainstream scale to —both programs comprehensive more sector develop to in conservation management at the and collaborative and protection build environmental to community level—, activitiesforestry issues into with actors outside the forestry trade, customs, authorities, enforcement —including box scale larger and into communities—, local governments, losses, macro-policy on public revenue interventions focusing and povertycorruption, alleviation. Dialogue will also be scaled management, land rights up on community-based resource In and equity. growth to and their contribution and access, support continued this will be done primarily through forestry, the Facility, Partnership Carbon the Forest REDD through for and partnerships with government, Program Investment Forest the biodiversity, For donors and REDD demonstration projects. such as approaches emphasis will be on scaling up promising concept. concession restoration the ecological Coastal SECTION 4: The Way Forward Way The SECTION 4: and the EAP c Region cally, work is to be undertaken is to work on cally, ortand develop scale up the program to ed as strategic priorities but these are not priorities but these are ed as strategic environmental sustainability build the capacity to of the environmental environmental country change and address climate adapt to to change mitigation and adaptation, climate challenges through conservation, management, biodiversity and natural resource mitigation also management. Disaster local environmental the importance encompasses adaptation to of mainstreaming support change through climate Indonesian to institutions as inclusion of this The portfolio. own as within the Bank’s well was partlyengagement area inputs based on intermediate Analysis. the Country develop Environmental used to supported by substantive programs. Faced with this gap, two two with this gap, Faced supported programs. substantive by for Strategy the Environment important documents, regional and Pacifi in the East Asia Bank World the In the new Country (2009-2012) contrast, Strategy Partnership engagement sustainability as a core environmental embraces engagement aims This mitigation. along with disaster area ability manage environmental to Indonesia’s strengthen to ensure risks to disaster-related challenges and reduce Specifi sustainability. for better environmental performance in urban centers across across performance centers in urban environmental better for Indonesia. the Bank was instrumental in the case of PROPER, As eff in supporting KLH’s CAS (2004 – 2007) outlined a reform-oriented previous The for the Climate objectives (Improving three around program High Making Quality Investment, Service Delivery Responsive with aligned that are Governance) the Need of the Poor; to Plan (RJPM) Development Term Medium the Government’s the the CAS did not encompass 2004 – 2007. However, for Environmental management. or natural resource environment the for environment a healthy sustainability providing and identifi poor are expanding for critical guidance provided Strategy, Forestry strategies These engagement in Indonesia. the Bank’s the importance the qualityemphasized of life, of improving and the regional protecting enhancing the quality of growth, with local partners, engaging commons, global environmental management, and supporting resource sustainable natural process. assisting the reform A new phase of engagement began in 2004 on: (i) natural began in 2004 on: (i) natural A new phase of engagement management, with a particular emphasis on forestry resource policy-based on and a more management, and coastal focus loans, including governance, mining; (ii) local environmental support to assistance and technical decentralized grants global management; (iii) addressing environmental gas emissions, including greenhouse issues, environmental depleting and ozone waters, international biodiversity, through the environment and (iv) safeguarding substances; support better-coordinated operations lending to continued, in all sectors. meaningful indicators to measure progress and impact and this of progress measure to meaningful indicators program. ciency With energy- With erent development scenarios scenarios development erent ts) of adaptation. nance investments in adaptation, investments nance ndings on environmental governance governance on environmental ndings nancing. Given the context described Given nancing. ectiveness in helping Indonesia tackle to nancing of demonstration projects for REDD, REDD, nancing of demonstration projects for . As forest and peatland degradation and peatland degradation forest . As degradation nancing from the Clean Technology Fund, lending lending Fund, Technology the Clean nancing from agships for this pillar would be a) increasing the the be a) increasing this pillar would agships for based emissions likely to overtake those from land overtakebased emissions likely to those from Bank World is an opportunity there use, increase to include initiatives would This support energy. clean for energy in renewable investment more a) promote to: b) supportand especially geothermal power; policies effi energy greater promote to and programs transportationin industries, and buildings; and c) and coal carbon emissions from reduce to assistance instruments include Potential products. petroleum fi CDM the expansion, growing geothermal power for in clean fuels and technologies promoting portfolio, the transport sector;, and supporting sector policies policy development lending. through and reforms are the overwhelming sources of Indonesia’s of Indonesia’s the overwhelming sources are strengthen to it is sensible gas emissions, greenhouse objective should The in this area. approach the Bank’s help Indonesia and implement its be to develop deforestation emissions from reducing for strategy assistance technical both through and degradation, and fi and conservation management of sustainable forest carbon reservoirs. forest 3: Building supportPillar for clean energy. Pillar 1: Increasing the focus on the costs and benefi ts of and benefi the focus on the costs Increasing 1: Pillar and Bank should use its convening The adaptation. help stakeholders in Indonesia to analytical powers the by and options faced understand the issues two The country global warming. in adapting to fl investment Bank’s World of the resilience climate portfolio and exploring possible stand-alone operations that fi strategy and b) suport the low-carbon growth for identify diff to in order the while lowering growth that enable economic and incorporating emissions intensity of development (and benefi the costs deforestation on avoided 2: Enhancing the focus Pillar and • • • about CDM opportunities;about CDM CDM and c) actively developing fi carbon projectsfor a unique opportunity is now our there increase to above, engagement and eff pillars strategic Each of the following change issues. climate advantages with the comparative builds on one of these ability understand and to objective of supporting Indonesia’s change. climate by presented the key challenges to respond 9.3.4 Adjusting to the New Challenges to the New 9.3.4 Adjusting In light of the CEA fi Bank can adjust the Country World the change, and climate on sustainability ways. in two focus Strategy’s Partnership partnerships. new and strengthened for is a need there First, direct more will require governance Enhancing environmental parliamentarians, civil society, with local governments, work ve ndings sheries- SECTION 4: The Way Forward Way The SECTION 4: plan development, cation, t from marine-based as t from producers product for . The World Bank is one of several actors that Bank is one of several World The change.

Partnerships ed in this report as areas that would be critical ed in this report that would as areas

for strengthening the GoI’s eff orts sustainable towards eff the GoI’s strengthening for the next in the new Country years over Partnership development Bank has only had a World Indonesia, in date the To Strategy. step to and plans areas, engagement with these two limited the to respond to the next years three over up its presence relevant support, for the Government’s request enhance GoI’s advantages. comparative and use the Bank’s strategy learned and fi . Lessons governance Environmental and USRDP, ULGR the implementation of the ILGR, from is that there indicate GEG programs PROPER and COREMAP, that addresses an operation developing for and scope room and institutional capacity technical demands for the expansive management capacity the environmental strengthen needed to small- which ongoing pilots and relatively of local governments, institutional the evolving With cannot provide. scale initiatives and regulatory framework, scaling up and mainstreaming help could governance local environmental for assistance sector existing gaps and needs in the at address systematically existing platforms, through can best be done This the local level. Urban “Green and the emerging program KDP” “Green the e.g. community both within the government’s Program”, Poverty be option would A second (PNPM). framework empowerment for a) grants operation that provides: an investment develop to infrastructure and services for environmental locally-prioritized high performance scores that receive those local governments and b) technical (Bangun Praja), the national rating system from that have local governments the poor-scoring for assistance By assistance. grant and qualify for improve the political will to management environmental needs for on local level focusing local on-grant the Ministry funds to could capacity, of Finance as a qualify would improvement as environmental government generating activity. non-revenue Climate the past fi issues over change been active in climate have has included: a) implementing activitiesThis with the years. b) raising awareness change mitigation program; GEF climate Environmental governance and climate change have been change have and climate governance Environmental identifi 9.3.3 Implications of the CEA for New Bank Bank New of the CEA for 9.3.3 Implications of Bank’s and other donors involvements along the following following along the other donors involvements and of Bank’s learning capacity and marine of coastal lines: i) Improve issue identifi stakeholders: resources evaluation, of the plan, monitoring, implementation managing on enhancing impact and outcome 2) Focusing controlling; especially on management, resource and marine of coastal socio-economicadvancing small-scale fi issues in based industries and livelihood, post-harvest industry livelihood, based industries and and conservation-basedproducts, trading of marine marine community welfare; coastal industries promoting tourism in maximizing cooperation inter-regional and 3) Facilitation benefi fair share coastal Many community welfare. coastal improving for tools implement options to been encouraged have communities and marine coastal from materials processed of producing manners. in sustainable resources Investing In a More Sustainable Indonesia 86 87 Country Environmental Analysis nanciers airs Potential Partners Potential as the GEF Adaptation nancing such Min. of Forestry ASEAN Min. of Forestry, sector private Min. of Forestry, & district governments Provincial Kalimantan,Central AusAID Burung Indonesia, Min. of Forestry NAD government DNPI Min. of Finance, partners & private government Various Min. & Mineral of Energy Resources Pertamina Min. of Environment, local governments Min. of Environment, Works Min. of Public authorities local Min. of Environment, Min. of Home Aff NGOs, mass media NGOs, NGO as facilitator Agency Mgmt. (BNPB) Disaster Nat’l (DNPI) BNPB, Council Bappenas, donors & NGOs Bi- and multilateral Bank & co-fi World to new sources of climate fi of climate new sources to Carbon and the Forest Funds Investment the Climate Fund, opportunities new are there for Second, Facility. Partnership sustainable Indonesia.more Some in a invest Bank to World the with a base 9.3, beginning Table in summarized of these are is presented ambitious scenarios more case; a fuller table with in the annex. SECTION 4: The Way Forward Way The SECTION 4: alization framework for environmen- for alization framework nancing mechanisms, Environmental Governance Environmental Energy and Climate Change and Climate Energy Land Use and Climate Change and Climate Land Use Adaptation to Climate Change to Climate Adaptation Engagement Areas and Activities (Base Case) Engagement Areas tions grant) grant) tal management organizations gious Strategic environmental assessment on climate change for Greater Jakarta Greater change for assessment on climate environmental Strategic AAA • issues and op- carbon options study with emphasis on energy-related Low (with ADB and IFC) program investment • Fund Technology Clean Develop GRANT FUNDING • (existing GEF grant) in geothermal power investing barriers to Removing INVESTMENT LENDING • Fund Technology generation loan with Clean Geothermal power AAA • Mapping change vulnerability climate of at the national scale GRANT FUNDING • risk reduction (GFDRR agendas link adaptation and disaster Activities to DIALOGUE/CONVENING on adaptation capacity & investment • building TA, for Donor coordination INVESTMENT LENDING • portfolio as part investment resilience of climate of overall Mainstreaming AAA • level implementation of REDD Readiness Plan at national for TA • work & governance enforcement law support forest Regional continued for • (with ADB and IFC) program investment Program Investment Identify Forest • carbon emissions (WACLIMAD) to issues related of wetlands/peat Analysis GRANT FUNDING resources with AusAID • Fund Trust Carbon Management of Indonesia Forest • with new GEF grant concessions restoration Expansion of ecological • (MDF Project and Environment Forest Extension and expansion of Aceh • TA for setting up Green Urban Poverty Program (UPP) • Program Urban Poverty setting up Green for TA • Study on harmonization of the decentr GRANT FUNDING • scale-up Program Continued Kecamatan Development of Green • issues(s) on key environmental campaign(s) awareness Public DIALOGUE/CONVENING • & reli- legislature with mass media, & involvement Increased consultation AAA • Table 9.2. Engagement Areas and Activities Areas 9.2. Engagement Table religious organizations, and general public awareness. Tackling Tackling general public awareness. and organizations, religious new actorsIndonesia in (the should involve change climate the Indonesia Climate Change Council, National Climate and other local fi Fund Trust Change linkages the for Management Agencyand the Disaster system risk reduction). Beyond adaptation and disaster between access Indonesia’s help facilitate Bank can World Indonesia, the scal scal High Engagement (Medium Engagement +) REDD nancing for credits from 2-3 REDD demonstration from credits Fund projects with FCPF Carbon money plans with the most vulnerable localities inputs Fund with GEF Adaptation demonstration projects, sustainable demonstration projects, management and/or forest carbon conservation of forest Investment reservoirs with Forest (with IFC) Program enforcement of NRM and of enforcement regulations environmental measures reform performance and for environmental capacity building KDP and UPP in next lending PNPM reform measures in DPL series measures reform education sector curriculum through programs AAA • oil issues and options paper Palm GRANT FUNDING/CARBON FINANCE • carbon emissions reduction Purchase INVESTMENT LENDING fi • Soft AAA • action of adaptation Development INVESTMENT LENDING • soft change adaptation Climate loan AAA • local strengthening for TA • fi of environmental Development INVESTMENT LENDING • on based block grants LG • Green mainstreaming for Financing • fi Inclusionof environmental • Expansion of environmental erent erent (Base Case +) (Base Case Medium Engagement UPP in select Green nancing for Environmental Governance Environmental nancing of adaptation activities with nancing of ICCTF to activities related Land Use and Climate Change and Climate Land Use Adaptation to Climate Change Climate to Adaptation approaches to reduce forest carbon forest reduce to approaches emissions the Indonesia Climate Change Trust Fund Trust the Indonesia Change Climate forestry and land use vulnerability areas in highest-risk adaptation needs assessment & program investment in select provinces programs behalf of Ministry of Forestry Sumatra spatial planning initiative Sumatra spatial planning and other environmental AMDAL functions rights at the local level tenure mass media and legislators, for events organizations religious MIH) in KLH (PROPER, Adipura, programs urban areas with Ministry of Public Works with Ministryurban areas of Public DIALOGUE/CONVENING • diff of Donor coordination • a national develop Bappenas to Assist GRANT FUNDING • Co-fi AAA • implementation of readiness for TA GRANT FUNDING • on of FCPF Readiness grant Execution • Co-fi AAA • change Detailed mapping of climate • strengthen to local governments to TA • and access Engagement on land resource • awareness environmental Targeted GRANT FUNDING • ranking Expansion of reputational fi • Pilot AAA • Support Ministry to for of Environment Base Case

TA for implementation of REDD Readiness for TA Plan at national level work & governance enforcement carbon emissions (WACLIMAD) to resources with AusAID Fund Trust with GEF grant concessions (MDF grant) Project and Environment Mapping change vulnerability of climate at the national scale on adaptation building & investment grant) risk reduction agendas (GFDRR portfolio part investment of overall climate change for Greater Jakarta Greater change for climate (UPP) with MinistryProgram of PW NRM for framework decentralization Program Development issues(s) environmental & religious with mass media, legislature organizations Strategic environmental assessment on environmental Strategic

AAA • • program Identify FIP investment • law support Regional forest for • issues related of wetlands/peat Analysis GRANT FUNDING • Carbon Management of Indonesia Forest • restoration Expansion of ecological • Forest Extension and expansion of Aceh DIALOGUE/CONVENING capacity• TA, for Donor coordination GRANT FUNDING • link adaptation and disaster Activities to INVESTMENT LENDING • as resilience of climate Mainstreaming • Urban Poverty setting up Green for TA • Study on harmonization of the GRANT FUNDING • scale-up Continued Kecamatan of Green • on key campaign(s) awareness Public DIALOGUE/CONVENING • & involvement Increased consultation AAA • AAA • ANNEX: Business Plan Scenarios for Increased World Bank Involvement Bank World Increased for Plan Scenarios ANNEX: Business Investing In a More Sustainable Indonesia 88 89 Country Environmental Analysis program (with IFC and ADB) program INVESTMENT LENDING INVESTMENT • investment Clean technology ciency in the in ciency ciency/fuel substitution ciency/fuel Energy and Climate Change and Climate Energy nancing of ICCTF to activities related private sectorprivate (IFC) clean energy in other renewable energy sources energy in other renewable effi energy INVESTMENT LENDING • effi energy for Loan(s) GRANT FUNDING/CARBON FINANCE • and renewables New CDM projects for • Co-fi AAA • Biofuels issues and options note • investment to barriers Study on removing Low carbon options study with emphasis carbon Low issues and options on energy-related (with ADB and IFC)program investment grant) (GEF geothermal power Fund Clean Technology GRANT FUNDING • in investing to barriers Removing INVESTMENT LENDING • loan with generation Geothermal power • Develop Clean Technology Fund • Fund Technology Clean Develop AAA • c airs and Fisheries, airs and State Ministerairs and State of Bojö, Jan and Fernanda Ruiz Nunez (2008), Indoor Ruiz Air Quality in Jan and Fernanda Bojö, the Indonesia CEA. for Indonesia. prepared note Informal Knight Dietriech Bengen, Maurice (2005), Timothy, Brown, in Indonesia: of Marine Fisheries Scenario Analysis “Future Future Trends, Regional Trends, Industry Role, Economic II Management Project Resources USAID Coastal Potential”. 2005). (August “Dicari, Media Massa (Desember 4, 2007), Ichwan Butsi, Febry Majalah Kajian Media, DIKTUM. Lingkungan”, Pro (2007), .A D.W M., Brown A., Boccucci A.C, Setyarso, Casson, and Illegal Logging Curb Multistakeholder Action Plan to WWF for in Indonesia. Prepared Enforcement Law Improve Bank, and DFID (In Press). World Indonesia, the Oil Palm Hesitant Boom: Indonesia’s The Anne (2000), Casson, Change. Sub-Sector Crisis and Political in an Era of Economic Indonesia. CIFOR. Bogor. (1997), S. Bettencourt, Dixon and J. H, C.G. Lundin, Cesar, of a Precious analysis Economic — an Indonesian reefs coral 345-350. 6, pp. 26, no. Vol. Ambio Resource Threatened but and Outside of a 10 m Within Density CIESIN, 2007. Population : Columbia Indonesia. s.l. Western in Zone Elevation Coastal Low 2007. University, Fire. Change and Forest CIFOR (2006), Climate Impact and Agriculture: Warming 2007. Global W., Cline, and Global Development for Center Country. by Estimates Washington, International Economics. Institute for Peterson D.C. and Mrs. Indonesia: “Mr. CLSA Indonesia (2007), Morgan) (Roy Middle Class Revealed”. Asia’s 17 in Chapter Air Pollution, et al (2004), Urban Aaron Cohen, Geneva. WHO. Risk Assessment. Comparative Fengler W. Bulman, T. del Granado, J. Agustina, R.D. Dian Cut ImpactThe “Black Hole or Black Gold? and M. Ikhsan (2008), Policy Finances.” Public on Indonesia’s of Oil and Gas Prices and Pacifi Bank East Asia World The Paper. Working Research Region. PREM. World Bank: JakartaWorld PREM. Region. Departemen Letter Joint Circular Dalam Negeri (2008), MinisterBetween of Home Aff Government of Local Reorganization concerning Environment Number 061/163/SJ/2008 and SE- Institutions. Governmental 01/MENLH/2008. Conservation for and (2009), Director Agus Dermawan, MinistryMarine National Parks, of Marine Aff Indonesia. April 2009

Bibliography (2006), Indonesia: Country Bank (ADB) Development Asian ReportSynthesis on Urban Air Quality Management. ADB and Cities. Asian for the Clean Air Initiative Southeast Change in of Climate Economics The ADB (2009), ADB. Review. A Regional Asia: Southeast Change in of Climate Economics The ADB (2009), Review A Regional Asia: (2005), Alisjahbana, Armida Salsiah dengan Politik Partai Hubungan Pengelolaan ”Pola Anonymous, http://forum-politisi.org/downloads. Konstituen”. “NGO (2005), Peter Tuijl, Ibrahim, Rustam and van Hans, Antlov, in Indonesia: in a Challenges and Accountability Governance Newly Democratizing Country”. Fires. Change and Forest 2006), Climate (May et al. Applegate, “Development Azis, and Salim, Emil (2005), Iwan Jaya of Sustainable Scenarios in the Context and Future Performance and Economics Politics The in Utilization of Natural Resources.” editor. P., B. Resosudarmo, Natural Resources. of Indonesia’s . Institute of Southeast Studies. Asian Jangka “Rencana Pembangunan DKI JakartaBAPPEDA dan sertaMenengah Daerah (RJPMD) Anggaran Pendapatan www.bappedajakarta.go.id. Belanja Daerah (APBD)” BAPPENAS (2007) Indonesia Country Natural Resource Jakarta. Analysis. Environmental Jangka Menengah Pembangunan “Rencana BAPPENAS (2004), www.bappenas.go.id. 2004-2009”. Alam dan Lingkungan Hidup BAPPENAS (2004), Sumberdaya Indonesia: Antara Krisis dan Peluang. (February Udara?” Polusi Penyebab “Motor, BAPPENAS (2007), 2007), www.udarakota.bappenas.go.id. BAPPENAS (2007), Indonesia Country Natural Resource Summary Analysis. 2007. in English. December Environmental Planning: IndonesiaBAPPENAS (2008), National Development Jakarta. Change. Climate Responses to Extent, ImpactBAPPENAS-ADB (1999), Causes, of and Cost and Prevention Fire Planning for Drought. and 1997-1998 Fires Jakarta. 2999-INO. TA ADB Management Project. Drought perubahan iklim Rizaldi (2007), Deteksi et al. dan dampak Boer, Kerjasama BMG dan IPB, sosio-ekonominya. Laporan Proyek Bogor. Investing In a More Sustainable Indonesia 90 91 Country Environmental Analysis rms hit new snags,” p. 14, May 15, 14, May p. rms hit new snags,” Hansen M, P Potapov, K Pittman, Wardoyo, B. Arunawarti, B. Wardoyo, K Pittman, Hansen M, P Potapov, in Change A Basyiruddin, S. Rahman, R. Sari (2006), Forest by convened of a workshop Indonesia proceedings 2000-2006, Indonesian of Excellence, of SouthUniversity Dakota GIS Center by sponsored Survey, WRI, US Geological Ministry of Forestry, Bank, Jakarta.World PEAT-CO2: S (2006), H, Page Wösten Hooijer A, Silvius M, SE drained peatlands in emissions from of CO2 Assessment International. Wetlands DelftAsia, Hydraulics, Change Nicola (1999), Climate MikeHulme, and Sheard, in Indonesia. Unit. United Climatic Research Projections WWF International, Kingdom of East Anglia and : University 1999. (2003). Center) Research IDRC (International Development risk change: study maps those at greatest 2007. Climate IIED, 27, 2007. http:// March [Online] cyclones and rising seas. from www.iied.org/mediaroom/releases/070328coastal.html. The Security IIEE (2007), Energy and Sustainable Development, 2-2007, Periodical Volume Review Indonesia Economics Energy IIEE, Jakarta.published by Review on legal and “Preliminary IIEE (January 2008), Draft Study.” Options Carbon Low the Institutional Settings For Note. Tak “Suara yang Institut (ISAI) (2007), Studi Arus Informasi “Kolaborasi Abaikan Lingkungan”, Berpihak pada Lingkungan”, Mengenai Presiden Kampanye Isi Berita Media Cetak “Analisis yang Berpihak pada “Rekomendasi Janji Politik Lingkungan”, http://www.isai.or.id. Lingkungan”. Outlook Energy World Agency (2004) International Energy Paris. Agency of the OECD, 2004, International Energy Review of Policy “Energy Agency (2008), International Energy IEA: Paris. Indonesia.” (IFES) (2003), Election for Systems International Foundation Opinion Survey”. Public “Papua Report. Assesment Fourth The s.l. (2007), IPCC Needed legal Ground “Firm Jakarta 25, 2009), Globe (February miners.” Australian Investment: Boost Foreign to through environment “Sampah: Saving Jakarta (2008), Post July 17, 2008. faith”, fi “Forest Jakarta (2009), Post 2009. ce or Pandora’s Box? Box? or Pandora’s ce and Social c Environment nished Edifi c Studies. The Australian National University. Institute of National University. Australian The c Studies. Government of Indonesia. MinistryGovernment and Mineral of Energy 2005. Statistics, Economic Handbook of Energy Resources, Government of Indonesia (2008), National Development Government BAPPENAS. Change, Planning: Indonesia Climate Responses to Government of Indonesia (2007b), National Action Plan Government Ministry Change, Climate of Environment. Addressing Government of Indonesia (2007a), Climate Variability Variability of Indonesia (2007a), Climate Government Implication.Their Ministry of and Changes, and Climate Environment. Government of Indonesia (2007), “Matrix of Priorities, Focuses Focuses “Matrixof Priorities, of Indonesia (2007), Government 2007” Year Plan Work Activities of Government and Priority (unpublished document). Government of Indonesia (2007), National Action Plan for of Indonesia (2007), National Action Plan for Government Change. Climate Mitigation to and Adaptation Government of Indonesia (2006), RJPPK.Government Framework Contract AMS/451 Lot N°6, Request for Services N°6, Request for Contract AMS/451 Lot Framework of the Government MWH SA for by N°2005/102581. Prepared July 2005. Commission. Indonesia and the European Decentralisation and Resource Management in Indonesia.” in Management in Indonesia.” and Resource Decentralisation Resources. Natural of Indonesia’s and Economics Politics The Fox, James J., Adhuri, Dedi Supriadi, and Resosudarmo, Ida Dedi Supriadi, and Resosudarmo, Adhuri, James J., Fox, “Unfi (2005), Aju Pradnja FAO (1996), FAO. [Online] 1996, [Cited: February 27, 2007.] February 1996, [Cited: [Online] (1996), FAO. FAO www.fao.org. FAO (2006), Global Forest Resources Assessment 2005 (www. Assessment Resources (2006), Global Forest FAO fao.org/forestry/fra2005) ICG (2001), Indonesia: Natural Resources and Law Enforcement. Enforcement. and Law (2001), Indonesia: Resources Natural ICG Jakarta / Brussels. Southeast Asian Studies, Singapore Southeast Studies, Asian Dutton, Ian (2005), “The and Marine challenges of Coastal Ian (2005), Dutton, “The (2005). Resosudarmo in Budi P. Management,” Resources Natural Resources.” of Indonesia’s Economics and Politics School and of Asian Research Indonesia Series, Update Pacifi Development Department. Washington, DC: World Bank. World DC: Washington, Department.Development Dore, Giovanna, J. Leitmann, A. Mackay (2006), AMDAL Reform A. Mackay Reform Leitmann, (2006), AMDAL J. Giovanna, Dore, Opportunitiesand Decentralization: Innovation in Indonesia. for and Pacifi East Asia Discussion papers, Desai, Manish, S. Mehta and K. Smith (2004), Indoor Smoke from at of disease burden the environmental Assessing Solid Fuels: WHO. Geneva: national and local levels. ects of the 2008. airs, l Gerakan Nasional Kehutanan shing on Indonesian coral reefs for the live the live for shing on Indonesian reefs coral Manurung, Togu and Joseph Buongiorno (1997), “Eff (1997), Buongiorno and Joseph Togu Manurung, and Pet Y. H., Sadovy M., Cesar L., Erdmann Pet-Soede Mous P., fi Cyanide (2000), J. Fish Reef SPC, Live What is the problem? sh market – fi food Bulletin #7. Information T. and G. Indarto, I. Pulungan H. Subagiyo, Murharjanti, Prayekti, Indonesian Disasters, Yielding (2008), Closing Access, Baskoro Jakarta. Law, Environmental for Center “Profi Nahdlatul Ulama (2007), dan Lingkungan Hidup”. (2001), (USAID) Management Project Natural Resources (KAP) Survey and Practices Attitudes Report“Knowledge, - North and East Kalimantan”. Sulawesi the risks of climate (2007), Assessing Rosamond et al. Naylor, Indonesian agriculture, variability rice change for and climate R. McLean, Hay, J. Codignotto, Burkett, J. V. Wong, R., P. Nicholls, and Coastal systems e, 2007.: Woodroff S. Ragoonaden, and C. Ban On Tropical Log Exports On the Forestry Sector in Indonesia.” Exports Sector Log in Indonesia.” Forestry On the Tropical Ban On Management 8: 21-49. resource Forest world Journal of of Donor ActivitiesMarifa, Review and Assessment Isna (2007), report and NRM Sectors in Indonesia. Final in the Environment Bank, processed. World the to Not Medina, Martin L. Scavenger. and Rodriguez, Abelardo Yale. and Latin America. in Asia Cooperatives Dated. “Stable but Unpopular: 2008), April-June Marcus Mietzner, their political with a love-hate relationship Indonesian have 2008. http:// Inside Indonesia 92: April-June parties”, insideindonesia.org of the Environment State The Ministry (2008), of Environment Report in Indonesia 2007. Jakarta, June 2008. Ministry Statistics of Indonesia. (2006), Forestry of Forestry Jakarta.Badan Planologi. Ministry (2008), Reducing Emissions From of Forestry In Indonesia: Degradation IFCA And Forest Deforestation and Development Research Report.Consolidation Forest Jakarta.Agency, Ministry (2007), Reducing Emissions From of Forestry/IFCA In Indonesia. Degradation Summary And Forest Deforestation Ministry Makers. Policy Indonesia and for Forest of Forestry Jakarta. Alliance. Climate Assessment Report:Final airs (2008), Ministry of Home Aff Institutional of Environmental Capacity Strengthening a Regional General for Director Level. Management at the Local MinistryDevelopment, of Home Aff orts”,. le: Indonesia.

Jakarta,ce 2008. February

Kompas (13 November 2007), “Jurnalisme Lingkungan Belum “Jurnalisme 2007), Kompas (13 November Kebijakan”. Pengaruhi mandatoryKrismantari, Ika. 2-2.5 percent proposes Committee JakartaThe 4, 2008 February Post. use of biofuel. Agricultural Changing The (2000), Shifting Lindert, Ground: Peter MIT Press. MA: Soils of China and Indonesia. Cambridge, – Good Governance (LGSP) Support Program Governance Local DPRD dalam Meningkatkan“Peran Otonomi 2008), Brief (March yang Baik: Kerangka Pemerintahan kerja, Tata Daerah and Baru”. dan Pedekatan Tantangan Balance, Anggaran (2006), DG Budget and Fiscal Warta Majalah IndonesianThe in Brief 2006. Budget Ministry of Finance. Kanungo, Parameeta and Torres, Magüi (2006), Moreno Torres, and Parameeta Kanungo, study PROPER. Case Studies: Indonesia’s Case Empowerment And Evaluation, Control, Pollution For Program of Indonesia’s Bank (Washington DC). World Rating (PROPER). Negara Lingkungan HidupKementerian (2006), Persepsi Lingkungan Hidup : Masyarakat Pengelolaan Upaya terhadap Menatap Indonesia 2009. Negara Lingkungan HidupKementerian (2007), Menuju Kearah Hijau – KaukusParlemen Lingkungan Hidup Anggota DPRD: Sebuah Gagasan Mengarusutamakan Lingkungan Hidup. Negara Lingkungan HidupKementerian (2007), Status Lingkungan Hidup Indonesia 2006. Negara Lingkungan HidupKementerian (June 2007), Hasil Adipura. Program Evaluasi (2005), Country Gareth Environmental Ward, and Eivind O. Kofod, Profi Jakarta Post (2008), “Green media groups air environmental air environmental groups media “Green Jakarta (2008), Post 6, 2008. May programs”, park wildlife,” endanger “Human invaders Jakarta (2009), Post June 15, 2009. turning to volunteers “More Jakarta 6, 2008), (December Post eff green and Non-Fiscal “Study on Fiscal 2009), JICA and GOI (February By Development Geothermal Energy Accelerate to Incentives Presentation. Sector Private in Indonesia.” Reef (2003), Coral Terangi John Hopkins and University 2003. Database] [CD Education Database. Welfare, Justice, for “Land 2008), (February Winoto Joyo Bank World at Presentation Sustainability Social and Harmony.” Offi Investing In a More Sustainable Indonesia 92 93 Country Environmental Analysis c ict In Indonesia. Development Economic cient Instrument for Resosudarmo, Budi and Arief Anshory Yusuf (2005a), “Is the Log Log “Is the (2005a), Yusuf Arief Anshory Budi and Resosudarmo, Export Ban An Effi Asian of Indonesia.” Case The protection? and Environmental 5:2 Job No.1070 (ASEP) Papers Economic the “On (2005b), Yusuf Budi and Arief AnshoryResosudarmo, Countries: Tax in Developing ectsCarbon of a Distributional Eff National Australian Paper Working of Indonesia.” Case The Canberra University. “Decomposing (2008), Frank and Jotzo, Budi. P. Resousudarmo, To in Indonesia Combustions Fuel C02 Emissions From Draft working paper Mitigation.” Options For The Understand Study of GHG Enissions and Scenarios Baseline Technical the for Bank: Jakarta.World Project. The Threat. E. Studies Deem Biofuels a Greenhouse Rosenthal, 8, 2008. February Times. York New Society and Royal Biofuels: Prospects (2008), Sustainable Document 01/08, London. RS Policy Challenges, Tilman, Joseph, Jason Hill, David Science (2008), Fargione, 2008, Land Clearning Hawthorne, and Peter Polasky Stephen 5867, pp 319, No. Vol Debt, Science, and the Biofuel Carbon 1235-1238. Coral (BBNP) Setiasih, Naneng (2006), Bali Barat National Park WWF Project of the Reefs Monitoring Report. : Friends s.l. Indonesia. Democratic Institutions, for Sherlock, Center Stephen, (2003), http://ww.cdi.anu.edu.au National University, Australian in an Era of IndonesianThe Parliament Change: “Struggling to – A Report on the Structure and Operation of the Reformasi” Dewan Perwakilan Rakyat (DPR), (2005), L., Muhammadiyah University, Caitlin Stanley, and Environment toward Tribe of Bajo and Awareness “Attitude National Wakatobi Village, Conservation Study : Sampela - Case Park”. ‘Blossoming’ New Decentralisation. The Steenbrink, Karel (2008), Confl Ethnic And Religious Liberalization Trade Will Anderson (2000), Strutt, Anna and Kym of Indonesia 2020. Case to The Harm the Environment? 203-232. 17, pp. vol. Economics, and Resource Environmental Publishers. Kluwer Academic 2009). LP3ES (April Suryadi, Director, Suhardi, “Masyarakat Sipil dan Konsolidasi Demokrasi Susan, Novri. http://journal.lib.unair.ac.id/index.php/d/article/ Daerah” viewFile/436/396. in Jakarta: Change Susandi, Armi et al (2007), Climate Its of Annual Scientifi Proceedings Projection, Historical Study for sika. ects Change: A Summary of Climate of Resosudarmo, Budi (2005), “Does Indonesia have the Balance the Balance Indonesia“Does have Budi (2005), Resosudarmo, and Politics The in Sharing?” Revenue Right in Natural Resource B. Resosudarmo, Natural Resources. of Indonesia’s Economics Singapore. Institute of Southeast Studies. Asian editor. P., Ratag, Mezak (2 March 2007), Perubahan Iklim Mezak 2007), Perubahan : Perubahan (2 March Ratag, dan Iklim Hujan, Cuaca Curah Ekstrim. JakartaVariasi : Badan dan Geofi Metereologi and Global Agriculture Change, John (1996), Climate Reilly, and Sons. Wiley and John : FAO s.l. Vulnerability. Regional PT. Insan Hitawasana Sejahtera (2004), INFORM “Indonesia Insan Hitawasana Sejahtera (2004), INFORM PT. Monitoring and Evaluation”.. and Media Campaign Forest Pricewaterhouse Coopers (2006), “ Review of Trends in the Trends “ Review of (2006), Coopers Pricewaterhouse Coopers: Indonesian MiningPricewaterhouse Industry. Jakarta. Pew Research Center. Pew Global Attitudes Survey Global Attitudes (2007), Pew Center. Research Pew Powers”. World Unease with Major “Global Pet-Soede C., H.S.J. Cesar and J.S. Pet (1999), An Economic (1999), An Economic Pet and J.S. Cesar C., H.S.J. Pet-Soede Reefs, On Indonesian Of Coral Analysis Blast Fishing Issue 2 – June 1999. 26, Volume Conservation Environmental PEACE (2007), Indonesia and Climate Change: Current Status (2007), Indonesia Change: Current and Climate PEACE Bank, Jakarta,World DfID Indonesia. and and Policies, Parry, M.L and Nih, A.R. Magalhaes and N.H. (1992), The Potential Potential The M.L and Nih, A.R. Magalhaes and N.H. (1992), Parry, Socio Eff Economic Nations : United Kenya Nairobi: Assesment. Regional Three Programme. Environment Pandey, K., B. Hintermann, D. Wheeler, and K. and Hamilton Wheeler, K., Hintermann, D. B. Pandey, Air Pollution. of Urban Costs (forthcoming) Economic National Mimeo. Page, S.E., Siegert, F., Rieley, J.O., Boehm, H.V., Jaya, A. and Limin, Jaya, Boehm, H.V., J.O., Rieley, S.E., Siegert, F., Page, peat and forest from amount of carbon released The S (2002), 420: 61-65. res in Indonesia during 1997. Nature, fi Oxfam (2007), Adapting to Climate Change: What’s needed in needed What’s Change: Climate to Oxfam (2007), Adapting No. Paper ng Oxfam Briefi and who should pay, poor countries, 104. OFDA/CRED (2007), The International Disaster Database, Database, International Disaster The (2007), OFDA/CRED Belgium. of Louvain, University Catholic PNAS Early Edition, May 1, 2007. PNAS Early Edition, May low-lying areas. Climate Change 2007: Impacts, Adaptation and 2007: Impacts, Change Climate Adaptation areas. low-lying the Fourth II to Group Working of Contribution vulnerability. on Climate Panel ReportAssessment the Intergovernmental of and van der Linden P. Palutikof, J. Canziani, O. M. Parry, Change, UK, Cambridge, Press, University Cambridge C. Hanson, Eds. 315-356. ts: Strategic . Unpublished usion: Exploring airs. nance. World Bank Staff World nance. ts: Strategic Options for Forest Assistance Assistance Forest Options for ts: Strategic Draft. 19, 2008 March The and WorldPublicOpinion.org Opinion (2007), Public World on Global Aff Chicago Council Version CAIT Tools. Indicators Analysis WRI/CAIT (2007), Climate DC. Washington, Institute. Resources World 04. Opinion and Media“Elite Diff Jun (1999). Yin, HarvardThe International Journal of Atittudes”. Environmental 4.3, 62-86. Politics Press Change Herminia (2009), Climate Arief and Francisco, Yusuf, and Southeast Economic Asia, Mapping for Vulnerability Southeast Asia for Program Environment Bank, World WDI (World Indicators), 2009. Development D.C. Washington, World Bank (2007), Program Document for a proposed Fourth Fourth a proposed Document for Bank (2007), Program World of US$600 (IDPL 4) in the amount Loan Policy Development Republic of Indonesia. the million to Bank for International DC. Washington Reconstruction and Development, Products Market Fuel cient an Effi Towards Bank (2007). World an Equitable and Sustainable Policy. in Indonesia: Achieving Jakarta, World Bank. Impacts Economic Bank (2007a), of Sanitation in World Southeast A four-country Asia. study conducted in Cambodia, of the Economics under Vietnam Indonesia, and the Philippines Report. Research Processed. WSP-EAP Sanitation Initiative. Making Development: the Spending for Bank (2007b), World Bank, World Opportunities, Development Most of Indonesia’s DC. Washington of Case The Change: Climate to Bank (2008), Adapting World Rice in Indonesia, Report 44434-ID No. D.C. Washington, Data Book. Bank (2009), Little Green World Growth, Economic 2006), Sustaining Bank (December World Benefi and Environmental Rural Livelihoods, Bank. World The in Indonesia. Assistance Forest Options For of Spatial Assessment Strategic “A 2008), Bank (December World Province. Papua Planning Options for Agroforestry World IFC, EC, ADB, Bank, CIFOR, DFID, World Rural Livelihoods, Growth, (2006), Sustaining Economic Center Benefi and Economic in Indonesia. Jakarta. REDD in Indonesia. a Market for Bank (2009), Developing World LokakaryaWorkshop: Report on Implementation of a Learning REDD di Indonesia.Mengembangkan Jakarta. Pasar impactThe of oil & Bank. Indonesia at $100 per Barrel: World on public fi gas prices Options for ts – Strategic airs, United Nations (2007), Millenium United Development airs,

Meeting HAGI, Semarang, Indonesia (13-15 November 2006). IndonesiaSemarang, (13-15 November Meeting HAGI, “Segar Jakartaku and 2004), (unpublished) (2003 Swisscontact Awareness of Level Public ectiveness and Eff Campaign Survey”. Civil Society dan Peran “Peta Juni (30 October 2001), Thamrin, Wahid”; di Indonesia Pemerintahan Organization Paska Center. Asia at the Japan Foundation Presented Indonesia Why change: other half of climate The UNDP (2007), UNDP Indonesia people, its poorest protect must adapt to Seas Igr-2 East Asian The 2006), ReportUNEP (August Of Enhanced Opportunities‘Partnership For Workshop Preparatory Gpa Implementation. Coordinating Seas East Asian Regional Unit, UNEP. Nations Statistics Division, DepartmentUnited and of Economic Social Aff http://unstats.un.org/unsd/mdg/SeriesDetail. Goals Indicators. aspx?srid=616 “Laporan Studi Krisis (unpublished) (2007), WALHI, Jabodetabek”. Monitor 2003. Bank (2003), IndonesiaEnvironment World Bank, Jakarta.World Appraisal I and II. Project Bank (2004), COREMAP World D.C. Washington, Document. What Should Refrom. Fiscal “Environmental Bank (2005), World D.C. Washington Bank: World it.” achieve To Be done and How Rural Growth, Bank (2006a), Sustaining Economic World Benefi and Environmental Livelihoods, Bank: JakartaWorld Assistance. Forest Strategy Forests. Bank (2006b), Sustaining Indonesia’s World Bank, World The Bank 2006-2009. Bank Dunia, World the for Jakarta. World of Nations? Wealth is the Where Bank (2006c), World Bank,D.C. Washington, Making Development: the “Spending for Bank (2007), World New Opportunities. Indonesia Public Most of Indonesia’s Bank: JakartaWorld . Review 2007.” Expenditure First a proposed Document for Bank (2007), Program World (IDPL 1) in the amount Loan Infrastructire Policy Development Reconstruction and of US$200 million. International Bank for DC. Washington Development, Report Development 2010: World Bank (2009), World Washington, Bank; World Change, and Climate Development DC, June 2009. Investing In a More Sustainable Indonesia 94

For further information, please contact: World Bank Offi ce Jakarta Building, Tower 2, 12th fl oor Jl. Jenderal Sudirman Kav. 52-53, Jakarta 12190 - Indonesia Ph. 62-21 5299 3068 fax. 62-21 5299 3111 To download the full report “Investing in a More Sustainable Indonesia”, visit our website: www.worldbank.org/id

Printed on cyclus off set (recycled paper)