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Current Condition: need to change Toward Green Economy Closing Remarks

CURRENTCONDITION
NeedtoChange

WorldEconomySignificantlyGrow

Yet,..
Sumber :AustrianDevelopmentAgency(2010) dalam Adiningsih (2010)

WithTreatstoEnvironment.

Sumber:UnitedNationsEnvironmentProgramme(2010&2011)).

UNEP: Business As Usual Scenario by 2030:


Global energy demand up by 45% Oil price up to US$180 per barrel GHG emissions up 45% Global average temperature up 6C Sustained losses equivalent to 5-10% of global GDP Poor countries will suffer costs in excess of 10% of their GDP

Source:UnitedNationsEnvironmentProgramme(2010).

Leadto

UncertainEconomicGrowth...

Sumber :UnitedNationsEnvironmentProgramme(2011) dalam Adiningsih (2010).

INDONESIA
Theongoingunbalancedecologicalfootprint(unsustainable patternofconsumptionandproduction)vsbiocapacity ECOLOGICALDEFICIT; Recenteconomiccrisisandenvironmentaldisasterleadstono optionthanshifttosoundeconomicdevelopment.
2000

1500 PeatFire 1000 LUCF Waste 500 Agiculture Industry 0 Energy 2000 2005 2010 2015 2020 BAU BAU BAU

26% 41%

Environmental condition is alarming, furthermore GHG emission tends to increase;


Indonesias2020carbon challenges

2020 target

Absence of market and economic value on the natural resources and environment; Lack of priority, and limited options of policy instruments, incl. Legal basis to develop various incentives;
Biodiversitylost:caseofBorneo

Source:WorldBank(2002)andLIPI(2010)

MapofIndonesianGreenGDP

Legend

NAD

GreenGDP%GDPreg 57 73 74 80 81 85 86 89 90 92
SUMUT KALTIM RIAU KALBAR SUMBAR JAMBI BABEL KALTENG KALSEL SULSEL SULTRA SULTENG MALUKU PAPUA SULUT GORONTALO MALUT

SUMSEL BENGKULU LAMPUNG BANTEN JABAR

0 170 340

680Kilometers

JATENG DIY JATIM

BALI

NTB

NTT

sumber: KLH, ESP2 DANIDA, 2009 10

Environmental Quality Index of Islands


(av. 2006 2008)

Main Islands EQI _________________________________ 1. Papua 75,29 2. Sulawesi 73,66 3. Bali dan Nusa Tenggara 68,96 4. Sumatera 64,63 5. Kalimantan 62,01 6. Jawa 53,50 _______________________________________ Indonesia 60,07
Basedon3indicators:surfacewaterquality,airqualityandlandcoverage Sumber:MoE,ESP2DANIDA,2009

Unsustainableconsumptionandproduction(huge EcologicalFootprint) Withoutenvironmentalcarryingcapacity(BioCapacity) consideration,leadto: ECOLOGICALDEFICIT.. BusinessAsUsualIs NotTheAnswer, ChangeLifestylegloballyis AMUST

Sumber :Adiningsih (2010).

TOWARDS
GreenEconomy

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GreenEconomy isnotanewconcept,yethasbeen40
yearsindevelopment
Limitstogrowth:scenarios(Meadows)1960s Questioningconsumption:(Ehrlich)1970s Sustainabledevelopment:(Brundtland 1989) Greeneconomicpolicy:(Pearce1989) Returnstoenvironment investments:(Pearce2005) Economicsofclimatechange:(Stern2006) Economicsofecosystemsandbiodiversity:(TEEB2009) ProsperitywithoutGrowth:(Jackson2009) BeyondGDP:(SarkozyCommission2009)
Source:AustrianDevelopmentAgency(2010).

UNEPsGE
Increase in green investment Increase in quantity & quality of jobs in green sectors Increase in share of green sectors in GDP Decrease in resource use per unit of production Decrease in Environmental cost of production or consumption Decrease in wasteful consumption

Source:UnitedNationsEnvironmentProgramme(2010).

GECoaliton (GreenEconomyCoalition):
Afairandresilienteconomy,whichprovidesabetter qualityoflifeforallachievedwithintheecologicallimits ofoneplanet
Differentpeopleemphasisedifferentlevels: Microeconomicactivity: localgreenactivities&(social)enterprise Macroeconomicpolicy: setofeconomicandinstitutionalpolicies(prices, accounting) Values: newparadigmandnewinnovation(protectnature,socialjustice/equity, resilienteconomy)
Source:AustrianDevelopmentAgency(2010) inAdiningsih (2010).

GlobalInitiativesonGreenGrowthandGreenEconomy:a comparison...

Source:InstituteforGlobalEnvironmentStrategies(2010).

ECONOMY Profit

Efficiency Growth Stability

3 Bottom line of Sustainable Development

Poverty Social Gaps Culture

Natural resources . Pollution/degradation . Biodiversity .

SOCIAL
People

ENVIRONMENT
Planet

Profit

Eksploitatif

Ekstraktif

People

Conflict

Planet

Sumber :Eryatno (2011)

Satisfaction of Human Needs by the Efficient Use of Resources

Respect for Ecological Integrity and Biodiversity

Ecological Services

POLICY DESIGN

Social Equity

Equity Between Generations

Traditional Knowledge

Delegation of Authority Good Decision Making

Stakeholder Participation

Source:Eryatno (2011)

Ecological Carrying Capacity Green Investment

Ecology

Business

Ecological Services Industries

People Participate Traditional Knowledge Standard (effluent/ambient


Source:Eryatno (2011)

Whyaresomanypeoplethinkingwe shouldfirstbecomerichanddealwith climateproblemslater?Itistheconvenient paradigmoftheKuznetscurveofpollution

ConventionalWisdom: MoreWealth,more carbonintensity

Richanddirty

Poorandclean

Richandclean

Sumber :vonWeizsacker (2009)

Escapingfromthismindsetmeansweneeda KuznetsCurveofdecarbonization!

Richandcarbonfree

GREENECONOMY
IndonesiaisoftheviewthatGreenEconomyisadevelopment paradigmthatbasedonresourceefficiencyapproachwithstrong emphasizesoninternalizingcostofnaturalresourcedepletionon environmentaldegradation,effortsonalleviatethepoverty, creatingdecentjobs,andensuringsustainableeconomicgrowth
(IndonesianDelegation/DELRI,UNEP11th GSS,February,2010)

Definisi: Kondisimembaiknyakehidupan(wellbeing)dankeadilansosial (socialequity)dengansecarasignifikanmengurangiresiko lingkungandankelangkaanekologi. Greeneconomy:menghubungkanpertumbuhanekonomi, keberlanjutanlingkungan


(Bappenas,2012)
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UNSUSTAINABLE CONSUMPTION AND PRODUCTION

Both..PUBLICPOLICIESandMARKETSfailthe environment
(subsidizedgrowth,distorsed energyprice,nointernalizationtheexternalities)
Aremaincausesofthecurrentenvironmentalchallenges

INTERVENTION TO CORRECT MARKETANDBEHAVIOUR

SUSTAINABLE PRODUCTION ANC CONSUMPTION


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SCPframework

asitleadstosustainabledevelopment,itrequiresincentives
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Economictofollowwavesofinnovation:

Source:UnitedNationsIndustrialDevelopmentOrganization(2009) inAdiningsih (2010).

Effectiveness&Impacts
BuildingEnvironmentalAwareness EIshavebeenableto
raiseenvironmentalawarenessofstakeholders.

IncentivizingSustainableUseofResources provide
incentivefotstakeholderstomovetowardssustainableuseofresources behaviour

PromotingEnvironmentalInvestment shiftedendof
pipetoindustrialefficiency

ComplementingEnvironmentalLawCompliance
EIs,suchasenvironmentallabelling,environmentalperformancerating systemaswellasenvironmentalcompensation,contributetoenhance environmentalcomplianceofthestakeholders,andtostrengthen environmentallawenforcement.
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Hindrances
Lackofcommonunderstandingabouteconomicinstrument forenvironmentalmanagementamongstakeholdersin Indonesia Lackofsectoralsupporttoimplementeconomicinstrument; Lackoflegalframework,especiallywithregardtofiscal instruments; Therearemanyconflictingregulatoryinstrumentswithregard tofiscalinitiativesfornaturalresourceextractionand environmentalregulation; Lackofcleartargetsforimplementationofeconomic instrumentbothatlocalscaleandnationalscales.
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ScopeofEIsforEnvironmentalProtectionand ManagementinIndonesia
PLANNING
GreenGDP/GDRP Environmental Compensations(Payment forEnvironmental Servicesbetween regions) Environmental PerformanceBond EnvironmentalTaxation (retribution,tax,subsidy,fee,etc) EnvironmentalLabelling(Ecolabel) Environmental EmergencyFundfor Mitigationand Rehabilitation GreenProcurement
GreenBankingandsoundCapital Market

FINANCE/FUND

INCENTIVE/DISINCENTIVE

NaturalResourcesand Environmental Accounting(NREA) Internalizationof EnvironmentalCost

EnvironmentalTrust Fund

PaymentforEnvironmentalServices (PES)

Tradeablepermit EnvironmentalPerformanceAward

Green Government Budget


Source: Act 32/2009

EnvironmentalInsurance31

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Overviewofdevelopmentofincentiveinstruments fortheenvironmentinIndonesia(emphasizedbyAct32/2009)
Objectives of Environmental Finance Incentives towards sustainable resource use Incentives set by the State
Emission charges Product charges Environmental taxes Tradable permits Access and Benefit Sharing

Creation of markets
Payments for Environmental Services certification

Funds linked to resource use (selfgenerated)

Environmental Fiscal Reform


Waste and water fees

Concessions or performance bonds Reform and removal of adverse subsidies

Revenue mobilisation
Carbon Offsets Environmental funds

Refund systems

Mechanisms for administrating funds

Debt-for-nature swaps

Funds from government and donors budegts Private donations

Funds from outside resource management

Diagram modified from Emerton, L. et al. (2006) Sustainable Financing of Protected Areas, IUCN and Fischer, A. / Petersen, L. / Hubbert, W. (2004): Natural Resources and Governance: Incentives for Sustainable Resource Use, GTZ).

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FiscalPolicyincentivesfor Grant mechanism for transport system REDD/forestry/othersector Climate Change StreamliningDAKfor Subsidy/ fiscal incentives for renewable energy Environment Fiscalmechanism/taxexemptionformanufacturing toencouragelowemission

Carbon Tax Develop charge mechanism for waste Develop protocol for Payment for Environmental Services (PES) Capacity Building For EIs Develop protocol for environmental damage assessment Develop protocol for economic valuation in Legal framework relation to spatial planning

Time

2010

2011

2012

2013

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FromLessonsLearned ToFurther Development


Focus on getting the market price of environment right
1. Shifting away levies from items that are valued highly by society (manual work, intellectual creativity) to
undesirable items (pollution);

2. Tax-subsidies to correct distortions (taxing private for


subsidizing public transportation, taxing fossil fuel to subsidize wind energy);

3. Environmental service user pays the provider


(down-stream river user pays upstream river people to prevent sedimentation)
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Integrating decentralized policy making


Provinces and Districts are autonomous to impose levies on natural resources with Central Governments approval.

Effective implementation in nature


Possible and reasonable cost to implement, falls as clearly and directly as possible on the ultimate payer, embody no favoritism or special exception, correspond to the payers ability to pay, and NOT bring about undesirable economic distortions.

PublicandPrivateInvolvement

Actively involvement of stakeholders are crucial


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SUGGESTIONSFORFURTHER DEVELOPMENT
Tosetapolicydirectionforfurtherdevelop economicinstrumentsforenvironmental protectionandmanagementinIndonesia, aiming,mainly,tochangeunsustainable consumptionandproductionpatterninto moreresourceuseefficientbehaviour

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GREEN ECONOMY AS ONE OF KEY TO SUSTAINABLE DEVELOPMENT


Extended Producer Responsibiliry CSR GreenGDP Inclusive Economic Policy

PROPEOPLE(poor people)

PROGROWTH

GREEN ECONOMY
ENRIntensity Env.Quality Index GreenBudget Rasio

PRO ENVIRONMENT

PROJOBS
Rasio on decentjobs Labour wealth

FROMMAINSTREAMINGTOCOMPLEMENTARITY TIERING/LEVELINGOFINDICATOR:global&local INTEGRATEDDASHBOARDOFSUSTAINABLEDEVELOPMENT

CLOSINGREMARKS
Shiftingtoinclusiveandsoundenvironmentallyeconomicgrowthis amust throughchangingunsustainableconsumptionand productionpattern; Implementingeconomicinstrumentforenvironmental managementinIndonesiaisbothtimelyandurgentasanintegral partofIndonesiassustainabledevelopment; Givenmanyvarietiesofeconomicinstrumentstobeimplemented withtheircomplexitiesandconstraints,aprioritymustbechosen; Therearemanyinitiativesthathavebeendevelopedand implementedwithregardtothoseinstrumentsinIndonesia.Yet, therearesomeconstraintswiththeseinitiativeswhichcouldbe remediedandimproved.

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Thank You
Contactus: AssistantDeputyforEnvironmentalEconomic DeputyMinisterforEnvironmentalGovernance ABuilding,4th floor Jl D.IPanjaitan Kav 24 Kebun Nanas JakartaTimur Ph/fx. +62218517161