GREEN-GDP/GRDP AS INDICATOR OF

GREEN GROWTH INDONESIA; A

SUGGESTION

Prof. Dr. Matius Suparmoko,

Budi Luhur University, Jakarta
BAPPENAS, UNEP, UNDP AND UNORCID

JW Mariott Hotel, Jakarta, Indonesia,

21 June 2013

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Map of indonesia
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Background
Indonesia is rich of natural resources
endowment.
Economic dvelopment is the vehicle to reach
the sustainable welfare.
The main source of the Government budget is
Natural resources extraction.

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Measurement /Indicator
Performance of National Development is still
measured by Brown/Conventional GDP
Performance of Local Development is still
measured by Brown/Conventional GRDP
So greening the development plan require
greening the GDP/GRDP as indicator or
measurement of deveopment or growth

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History
GREEN GDP HAS BEEN INTRODUCED SINCE 1990-S
(BOB REPETO, KLH & CBS)
BAPPENAS (2007), KLH (2007, 2010)
MOE & MOF PRODUCED MORE THAN 12 REPORTS ON
GREEN-GRDP (Before 2008)
MOF HAS SOCIALIZED THE FORESTRY GREEN-GRDP IN
MORE THAN 20 DISTRICTS IN 7 PROVINCES (Before 2008)
MOE PROVIDED TECHNICAL GUIDANCE TO CONSTRUCT
GREEN-GRDP IN 40 DISTRICTS in 8 PROVINCES (2011-2012)
and 20 more in 2013
LAW NO. 32 ON PROTECTION & MANAGEMENT OF THE
ENVIRONMENT ENDORSED the development of GREEN
GDP/GRDP
( Ch. 43, verse 2)
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WHY NO INTEREST FROM

GOVERNMENT
POLITICALLY UNFRAVORABLE: LOWER VALUE OF
GREEN-GDP/GRDP COMPARED TO
CONVENTIONAL GRDP DISCOURAGED LOCAL
GOVT TO DEVELOP GREEN-GDP/GRDP
GREEN-GDP/GRDP IS NOT IN HIGH PRIORITY; IT IS
ADDITIONAL ASSIGNMENT TO THE
CENTRAL/LOCAL GOVT (Lack of awareness)
GREEN-GDP/GRDP NEEDS ADDITONAL BUDGET
FROM THE CENTRAL/LOCAL GOVERNMENT
NO MANDATORY FROM MOIA TO LOCAL GOVTS
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CONCEPT OF GREEN-GDP/GRDP

GDP = MTOTOAL ADDED VALUE IN THE ECONOMY

GnGDP = CGDP DNR- DR ED

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EXTERNALITY
This paper concerns with the exploitation of
natural resources and the externalities.
Negative externality is one of the enemy of
the green growth, and commonly were not
accounted in the computation of the
conventional GDP or GRDP due to the nonmarket characteristics of the external
outputs.
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Economic rent
The external outputs are the depletion of
natural resources and the environmental
degradation .
The value of natural resource depletion is the
value of the natural resources while they are
still on or in the ground.
Those natural resources have attached values
although they are not exploited yet.These
values are known as economic rent
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Taxation
Since most of natural resources are claimed to
be owned and controlled by the government,
therefore the depletion and degradation
values must be captured back by the
government through taxation and other
measures in order to be ploughed back into
the environment

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CONVENTIONAL GDP/GRDP
Conventional GDP and GRDP are not
appropriate indicator and poor indicator for
green economy
It is misleading towards over exploitation of
natural resources and environmental
damages.
Prevention costs are conssidered as earnings
in Brown GDP/GRDP
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CORRECT INTERPRETATION
Contribution of forest sector to the GDP of
Indonesia is less than 1%. ????
This is wrong because the true contribution
OF FOREST SECTOR should be the total added
value + depletion value of the forest + loss of
environmental degradation

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Chapter 43 of Law 32 Year 2009 on The Protection and

Management of the Living Environment,

Central and Local goverment must produce

report on:
Natural Reource and Envrionmental
Accounting and
Green GDP / GRDP that include the depletion
values of natural resources and degradation
values of the environment
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Role of Knowledge and

understanding
Without understanding about the natural
resources and the environment of the country
for the national government and the the
natural resources and the environment of the
local region for local governments, the
protection and the management for the
natural resources and the environment will be
very frustrating
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FUNCTIONS OF NATURAL RESOURCES AND

THE ENVIRONMENT
Damages to natural resources and the
degradation of the environment will become :
the sources of the failure for the achievement
of the green economy objectives i.e:
improvement in economic and social welfare
for all people, while significantly reducing the
environmental risk and ecological damages
will fail.
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Role of Fiscal Policy

Fiscal policies must be pro the environment
meaning that it should be giving more
incentives for those who perform the
environmentally friendly activities
Gives dis- incentive for those who destroy or
damages the environment.
This fiscal attitudes is to be applied for the
government budgetting system.
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 The central governmnet must allocate the

General Allocation Fund (DAU) and the
Specific Allocation Fund (DAK) to districts
(kabupaten) and provinces which act as a
conservation districts or conservation
provinces and not otherwise

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ECONOMIC VALUATION
Economic valuation skill and methods must be
developed properly through research and
training for capacity building.
The approach use must be total economic
value as a basis for all economic activities.
Total economic value consists of use value and
non-use value.
Use value includes mainly the values of
extracted goods or is called direct use value
and values of non extracted goods or
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TOTAL ECONOMIC VALUE

Total economic value consists of use value and
non-use value.
Use value includes mainly the values of
extracted goods or is called direct use value
Non-use value is value of non extracted goods
or environmental services
Its is important for decision makers to
understand this value concept
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Thank You

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