Indonesia: Indonesia Environment Profile

As the world’s largest archipelago of 17,000 islands, Indonesia spans two bio-geographic regions - the Indomalayan and Australasian - and supports tremendous biodiversity of animal and plant life in its pristine rain forests and its rich coastal and marine areas. Up to 3,305 known species of amphibians, birds, mammals, and reptiles and at least 29,375 species of vascular plants are endemic to the islands, estimated at 40 per cent of APEC’s biodiversity. Indonesia’s stunning natural environment and rich resources however, are facing sustained challenges both from natural phenomena – it is located in the highly seismic Pacific Ring of Fire which experiences 90 percent of the world’s earthquakes and human activity.

The growing pressure of population demands together with inadequate environmental management is a challenge for Indonesia that hurts the poor and the economy. For example, total economic losses attributable to limited access to safe water and sanitation are conservatively estimated at 2 percent of GDP annually while the annual costs of air pollution to the Indonesia economy have been calculated at around $400 million per year. These costs are typically disproportionately borne by the poor because they are more likely to be exposed to pollution and less likely to be able to afford mitigation measures.

Natural resource challenges have persisted and become more complicated after decentralization. For example, the forest sector has long played a pivotal role in supporting economic development, the livelihoods of rural people and in providing environmental services. However, these resources have not been managed in a sustainable or equitable manner. Turning this situation around will require a new vision, led by the Government, of what a viable and environmentally sound forestry sector might look like.

The country’s administrative and regulatory framework cannot yet meet the demands of sustainable development in spite of a long history of support for policy and capacity development both from within the government and with international donor support. Indonesia’s ministries concerned with environment and natural resources management have benefited from good national level leadership, and also from an active network of civil society organizations throughout the country that are focused on environmental issues, with significant advocacy experience. Yet, improving Indonesia’s approach to environment and natural resources management is difficult.

Two reasons account for much of the poor performance: First, despite the substantial investment in environment and natural resources policy and staff development, actual implementation of rules and procedures has been poor and slow due to weak commitment by sector agencies, low awareness in local departments and capacity challenges at all levels. Also, awareness about the expected negative environmental impacts of sustained economic growth and the mechanisms for stakeholders to hold government agencies accountable for their performance are weak. Second, there is little integration of environmental considerations at the planning and programmatic levels, especially in the public investment planning process and in regional plans for land and resource use.

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The issues that most seriously threaten progress towards sustainable development in Indonesia are:

Perverse incentives that hinder the sustainable use of natural resources

Natural resources are an important contributor to Indonesia’s GDP and Government budget. Agriculture, forestry, and mining contribute about 25% of Indonesia’s GDP and about 30% of overall Government budget revenue (in 2005, income tax on oil & gas represented 7% of revenue, and “non tax receipts” on natural resource revenues represented 22% of state revenues). Yet, Indonesia’s macroeconomic policies (tax and non-tax revenue policies and fiscal balancing formulas) appear to favor resource depletion over sustainable use as they reward district governments on resource revenue and not performance or stewardship, under-tax forestry and fisheries (relative to other natural resources), and do not allow charitable contributions by individuals or corporation.

Gaps between policy and practice following decentralization could slow significant improvement in environmental quality

Under decentralization, the extent to which sub-national governments feel bound by national guidelines is being put to the test; the civil service is no longer part of a unified chain of command, regulatory bodies in many provinces and districts now fall directly under the command of the governor or district head, who is often also the proponent of the projects or activities that must be regulated. Despite the substantial investment in environmental policy and staff development, actual implementation of rules and procedures has been poor. These problems are unlikely to get better under decentralization unless a more effective approach to regulation can be developed.

Many provinces and districts are making new interpretations of existing rules, or else inventing entirely new regulatory procedures. While some of these innovations strengthen environmental controls, many relax them or bypass national standards entirely.

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Public perception of environmental issues and the Government’s development priorities

Public awareness is an essential part of the effort to address Indonesia’s environmental problems, from disaster risks to biodiversity conservation. Informed and aware citizens can take action to address environmental issues, and can form constituencies for improved efforts at the political and local government level. At a broader level, however, environmental values are not deeply embedded in society, leading to undervaluation of natural resources and environmental services. Participation and voice in decision making is an essential element of good governance. Recent environmental disasters (floods, mud, fires, erosion) have stimulated greater environmental concern, but further analysis of knowledge, attitudes and practices would be needed to determine how far or deep this understanding goes outside of urban centers, and what tools can best be used to build on this basic awareness.

Social, environmental and economic benefits , risks and costs of alternative development paths

Energy policy, forest sector practices and climate change issues are intricately linked in Indonesia. Fossil fuels dominate energy consumption in Indonesia both in rural and urban areas and Indonesia is gradually increasing the proportion of energy produced from coal (approximately 40% in 2002). Indonesia is also a large greenhouse gas emitter, generating 80 %of greenhouse gases from changed land use following logging and forest/swamp fires.

National energy policies propose to increase reliance on renewable energy sources, including biomass, geothermal, and hydropower. At the same time, the Government plans a large scale up in the use of coal to reduce Indonesia’s dependence on oil imports. Increased coal use would lead to significant negative environmental impacts associated with high sulfur content and potential impacts on forests from land clearing. Alternative energy solutions are necessary for more remote areas that are appropriately priced and supported by the public sector.

Climate Change

Climate change is receiving more attention in Indonesia than ever before. Political leaders are adjusting to the realization that the country is the world’s third largest emitter of greenhouse gases. Local and national stakeholders are energized by the possibility of avoiding deforestation with support from international payments. Society is contemplating the risks and options for how a vulnerable country can adapt to the effects of climate change. And Indonesia is increasingly in the international spotlight as recent willingness to reduce greenhouse gas emissions by 26 percent show.

Forest and Watershed Management

Indonesia has the world’s third largest area of tropical forest and globally significant biodiversity. Forest governance is a tangible entry point for engagement on decentralization and democracy, conflict and injustice, poverty and vulnerability. Forest and watershed issues touch every segment of civil society, including communities, adat (customary) groups, women, religious groups, NGOs and watchdog groups, large and small business, unions, educational institutions, the media, local governments and parliaments, law enforcement agencies and the central government. Forest and watershed policy is an entry point for engagement on every key development theme: rural development, economic growth, poverty, anti-corruption, democracy, conflict, and decentralization.

They are a national asset, a global public good, and central to the livelihoods of many of the 36 million Indonesians living in poverty. Forest governance touches fundamental issues of asset management and democratic choice in nearly every district in Indonesia. Forest policy reform processes address real issues that are central to the rural economy and the poor, build voice and accountability, and engage governments and people in building good governance practices together. Read More

Policy, Institutions, and Governance

Indonesia faces many constraints in its efforts to improve environmental regulations and policy and their application. These include a fragmented institutional structure, limited coordination among ministries and agencies at national and local levels, and limited financial and technical resources. Furthermore, the recent decentralization process has created additional challenges for environment and natural resource managers. In response to the latter challenge, the Bank is supporting the Kecamatan Development Program, which has funded over 17,000 village-level development and environmental infrastructure projects throughout the country. It is also assisting with various analytical and advisory inputs such as the Indonesian Environmental Monitor and the improvement of environmental assessment techniques (AMDAL).

Coastal Resources and Reef Ecosystem

Indonesia is the world’s largest archipelago, containing 50 000 km2 of coral reefs. This is roughly 18 percent of the world’s coral reefs. The Indonesian coastal and marine sector, and in particular the small-scale fisheries supported by coral reef ecosystems, is a significant productive asset for the country and millions of poor fishers depend on them. Healthy coral reef ecosystems can annually produce marine products worth on average US$ 15,000 per square kilometer, and are an important source of food and livelihoods for roughly 9,969 coastal villages across the country. Yet almost two-thirds (65%) of Indonesia’s coral reefs are now considered threatened from over-fishing, and almost half are considered threatened specifically from destructive fishing practices.
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Natural Hazards: Occasional floods; severe droughts; tsunamis; earthquakes; volcanoes; forest fires

Volcanism: Indonesia contains the most volcanoes of any country in the world - some 76 are historically active; significant volcanic activity occurs on Java, western Sumatra, the Sunda Islands, Halmahera Island, Sulawesi Island, Sangihe Island, and in the Banda Sea; Merapi (elev. 2,968 m, 9,737 ft), Indonesia's most active volcano and in eruption since 2010, has been deemed a "Decade Volcano" by the International Association of Volcanology and Chemistry of the Earth's Interior, worthy of study due to its explosive history and close proximity to human populations; other notable historically active volcanoes include Agung, Awu, Karangetang, Krakatau (Krakatoa), Makian, Raung, and Tambora

Sunda Shelf mangroves
Sumatran tropical pine forests
Sumatran montane rain forests
Sumatran lowland rain forests
Sumatran peat swamp forests
Sumatran freshwater swamp forests
Peninsular Malaysian rain forests
Sundaland heath forests
Mentawai Islands rain forests
Western Java rain forests
Western Java montane rain forests
Eastern Java-Bali rain forests
Eastern Java-Bali montane rain forests
Lesser Sundas deciduous forests
Sumba deciduous forests
Timor and Wetar deciduous forests
Southwest Borneo freshwater swamp forests
Borneo peat swamp forests
Borneo montane rain forests
Borneo lowland rain forests
Sulawesi lowland rain forests
Sulawesi montane rain forests
Buru rain forests
Halmahera rain forests
Seram rain forests
Banda Sea Islands moist deciduous forests
Vogelkop-Aru lowland rain forests
Vogelkop montane rain forests
New Guinea mangroves
Biak-Numfoor rain forests
Yapen rain forests
Northern New Guinea lowland rain and freshwater swamp forests
Northern New Guinea montane rain forests
Central Range montane rain forests
Central Range sub-alpine grasslands
Southern New Guinea freshwater swamp forests
Trans Fly savanna and grasslands