Climate Change is a New National Priority
Specific areas of Indonesia are highly vulnerable to multiple climate change hazards. While Indonesia is likely to experience modest temperature increases, climate change will result in more intense rainfall and sea-level rise. People and ecosystems are especially vulnerable to climate risks on Java, Bali, parts of Sumatra and a large area of Papua. The warming ocean will also affect marine biodiversity and be especially harmful to coral reefs, which already suffer from bleaching. Potential development impacts include: - Increased threats to food security
- Declining agricultural productivity
- Inundation of productive coastal zones and communities
- Loss of farming and coastal livelihoods
- Intensification of water and vector borne diseases.
Economic impacts of climate change will be high in Indonesia. Without considering non-market impacts and catastrophic risks, mean GDP loss is projected to reach 2.5 percent by 2100.
Root causes
Indonesia’s high level of greenhouse gas emissions is being driven by deforestation, forest fires and degradation of land, especially peat swamps. Underlying these emissions are good forestry policies and legislation, but weak implementation and enforcement. Also, initiatives such as expansion of bio fuel production and revitalization of forest industries may exacerbate emissions if they are not carefully planned. Emissions from the energy sector are relatively small but rapidly growing – in fact growing faster than the economy. Root causes of problems in this area include the GOI’s pursuit of a coal-fired power expansion program and barriers to the development of renewable energy sources. Finally, there has been relatively little planning or investment in mitigation, and adaptation to climate change.
Benefits of adaptation and mitigation
The annual benefit for Indonesia of avoided damage from climate change is likely to exceed the annual cost by 2050, and, by 2100, the benefit could reach 1.6 percent of GDP.
The 2010 World Development Report provides guidance in adapting to climate change in an environment of uncertainty. Priority should be given to “no regrets” policies and investments that provide benefits even without climate change. Safety margins should be included in new investments. Reversible and flexible options should be favored and plans based on scenario analysis.
Bank and other key donor assistance
The international community is seeking ways to respond to this growing commitment to address the causes and consequences of climate change. Financing for CDM projects has been actively promoted since Indonesia ratified the Kyoto Protocol., but with limited results. Now the Bank is moving ahead with a more programmatic approach to CDM enabling the replication of similar activities. Also, the possibility of reducing greenhouse gas emissions through Reduction of Emissions from Deforestation and Degradation (REDD) has captured the imagination of the Ministries of Environment and Forestry. As forest and peat land degradation are the overwhelming sources of Indonesia’s greenhouse gas emissions, we are helping Indonesia develop and implement its strategy for reducing emissions both through technical assistance and financing of pilot projectsThe World Bank and donor partners have launched the Forest Carbon Partnership Facility which provides support for REDD readiness activities and a further carbon finance mechanism, to be operationalized based on progress in readiness. In addition to REDD, other sources of carbon financing can be tapped as well. Some examples include the Forest Investment Program, a multi donor fund within the World Bank’s Strategic Climate Fund, and bilateral government support.
Proposed Initiatives
The World Bank is, through the Country Partnership Strategy, actively supporting the Government’s efforts to seize the unique opportunity to increase its ability to respond to the key challenges presented by climate change. The Bank is working closely with donors and government to help stakeholders in Indonesia identify and understand the issues and options faced by the country in mitigating and adapting to climate change. Recent flagship reports include :
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