Poverty reduction and forest protection in Indonesia are two sides of the same coin

Mar 12, 2015

To prosper and to reduce poverty and inequality Indonesia must continue to curb deforestation and protect its threatened forests.

Since President Joko Widodo came to power last October, he has adopted important policies designed to further bring down poverty and reduce inequality.

His decision to slash the decades-old fuel subsidy was a bold and necessary move. Not only does it reduce incentives to consume fossil fuel, but the US$ 23 billion freed up can be better used to boost public investments in much needed infrastructure and social programmes to improve economic livelihoods and expand access to social services for the poor.

The administration has also outlined programmes to reduce interregional disparities by focusing development on peripheral regions and improving connectivity.

These and other measures should help improve the lives of the poor and reduce the rising levels of inequality in the country. Indonesia’s Gini Coefficient, climbed by 30% from 0.3 in 2000 to 0.41 in 2013.

To be effective however these efforts will need to be complemented by strong action to keep Indonesia’s forests standing.

Forest ecosystems in Indonesia support nearly 50 million Indonesians, many of whom live on less than US$2 per day. Yet primary forest equaling the size of Sri Lanka was lost through deforestation between 2000-2012. This threatens the livelihoods of the poor who rely on the forests as a major source for their household income.

A recent UNDP study on the GDP of the Poor conducted in Central Kalimantan under the leadership of UNEP Goodwill Ambassador Pavan Sukhdev found that 76% of the income of the province’s rural poor is generated from ecosystem services provided by the forests.

Beyond their importance for poverty reduction, Indonesia’s forests also function as a massive ‘carbon sink’ absorbing high amounts of carbon dioxide (CO2) from the atmosphere. CO2 is a major contributor to global warming. As the country with the third largest tropical forest coverage in the world, the protection of Indonesia’s forests will therefore be vital in both the global and national fight against climate change.

Rising sea levels triggered by climate change and global warming could have severe impacts on archipelagic nations like Indonesia. With the second longest coastline in the world, millions of Indonesians living in coastal areas could face the threat of losing their homes and livelihoods because of sea level rise. UNDP’s ‘One Planet To Share’ 2012 Human Development Report for Asia and the Pacific also showed that a two-degree rise in average global temperature will interrupt global food supplies with the world’s poor struggling most to cope with skyrocketing food prices.

Halting climate change and reducing poverty are hence two sides of the same coin. Reducing greenhouse gas (GHG) emissions by protecting its forests makes both climate and pro-poor sense for Indonesia.

Deforestation and peatland degradation constitute the highest contributors to Indonesia’s GHG emissions. In the new Medium Term Development Plan (RPJMN), Indonesia has maintained the target to reduce GHG emissions by 26% by 2020. Estimates suggest that 87% of this reduction will need to come from stopping deforestation and preserving peatlands. Extending the moratorium on the issuance of logging and plantation concessions in primary forest, which is expiring in May 2015, will be critical. The extension would allow more time to address the underlying causes of deforestation while strengthening governance and enforcement mechanisms. The current RPJMN is silent on a specific target to reduce deforestation. Introducing such a target into the plan would serve to underline the government’s commitment.

As it pursues its domestic policy agenda of fighting poverty, inequality and climate change, Indonesia’s efforts will also have an important signal effect for the negotiations at the upcoming United Nations Climate Change Conference in Paris later this year. The conference is expected to produce an ambitious global agreement on climate change targets to replace the Kyoto protocol. As an emerging powerhouse and the 9th biggest economy in the world, countries will look to Indonesia to play an active role.

Long term prosperity and equity come from achieving a balance between growth and environmental protection. Far from being mutually exclusive these two goals should be seen as complementary since the long term effects and costs of environmental destruction and climate change have the potential to wipe out short term economic gains as well as development progress.

To support decision makers in Indonesia to create strategies for sustainable development and livelihood generation UNDP has collaborated with the government to design the Indonesia Green Economy Model which was piloted in the province of Central Kalimantan. This system dynamic model uses indicators such as Green GDP (environmentally adjusted GDP), GDP of the Poor (proportion of the poor’s income derived from ecosystem services) and Green Jobs (an International Labor Organisation indicator of jobs created in green sectors), and enables policy makers to assess the combined social, economic, and environmental impact of policy and investment decisions.

As the ancient saying goes – “Only when the last tree has died and the last river been poisoned and the last fish been caught, will we realize we cannot eat money.”

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