Indonesia can meet low carbon goals without sacrificing economic growth, says UK report

April 14, 2011

Indonesia can meet its low carbon development goals without sacrificing economic growth, reports an assessment commissioned by the British government.

The research, authored by Dominic Elson, finds that while costs of reducing emissions from deforestation and degradation (REDD) could amount to two percent of annual GDP by 2030, the benefits of shifting to a greener growth model would more than outweigh the outlays. Gains would come from reduced severity and impact of natural disasters, avoided air pollution and degradation of ecosystem services, and improved productivity—especially on degraded, non-forest land.

“Indonesia still has a substantial forest estate and extensive peatlands,” writes Elson. “Sensible management of these landscapes in the context of global carbon markets has great potential to release some of the ‘utility’ value that reflects the true economic, social and environmental value of the forest, not just the short term extraction value. This will improve the welfare of millions of rural Indonesians, whilst also setting the economy on a path of higher productivity and more resilient prosperity.”


Value of land use sector to Indonesian economy - trend 2004-2009
Value of land use sector to Indonesian economy – trend 2004-2009.

Elson notes that REDD offers to potential to reverse the declining contribution of the Indonesian forestry sector to the national economy. Despite increased expansion and associated deforestation, the forestry sector now accounts for more than a quarter less economic output than it did in 2004. Declining natural resources is a factor in the decline. Pulp and paper and plantations have also declined in relative significance since 2004.

Dominic Elson (2011). Cost-Benefit Analysis of a Shift to a Low Carbon Economy in the Land Use Sector in Indonesia. UK Climate Change Unit of the British Embassy, Jakarta.


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