Potential of Land-Based GHG Mitigation Policy to the Indonesian Economy

Abstract

Indonesia GHG emission mostly originated from the Land-Use Change and Forestry (LUCF) sectors. The complexity of land conversion pattern and different carbon stocks for each land type makes have made the mitigation and emission calculations for the LUCF more challenging. However, the Indonesian government has already introduced some policy package to reduce the deforestation and increase the reforestation. Here we, simulate the policy to reduce deforestation by increasing the yield of the crops, and increase reforestation. The simulation was done by using the Computer General Equilibrium (CGE) combined with Land Conversion Matrix. The focus of this study was to observe how mitigation, especially from the land-use sector, would affect the economy under the low and high economic growths. The results indicated that the mitigation policy would hit the Indonesian economy harder under the low economic growth, since under the low growth, Indonesia might experienced around 2.7% of GDP loss in 2030 compared to the BAU level. However, if Indonesia is able to achieve high economic growth, the introduction of mitigation, especially through the improvement of crop productivity, might produce better implications to the economy. However, this result also might be overestimated, especially for the GDP due to the consideration of high economic growth and several study limitations in this paper.