Asosiasi Fakultas Ekonomi & Bisnis Indonesia

Green Economy and Sustainable Development

in Indonesia

Prof. Dr. Armida S. Alisjahbana

Fakultas Ekonomi dan Bisnis

–

Universitas Padjadjaran

Outline*

1. From MDGs to Sustainable Development Goals

2. Sustainable Development in Indonesia: An Unfinished Agenda

3. Framework for Priority Policies and Strategies

4. Green Economy and Sustainable Development

5. Implementation and Priority Issues

SDGs in the Post 2015 Development Agenda

Outcome Document of The United Nations Summit for The Adoption

of The Post-2015 Development Agenda

•

Sustainable Development Goals Agenda:

•

Renewing and strengthening commitment to MDGs

(MDGs+)

•

Based on Agenda 21

•

Focus on 3 dimensions of Sustainable Development

(Pillars: Economic, Socio and Environment)

•

A coherent and integral part of Post-2015 Development

Alongside continuing development priorities such as poverty

eradication, health, education and food security and nutrition,

it sets out a wide range of economic, social and environmental

objectives. It also promises more peaceful and inclusive

societies. It also, crucially, defines means of implementation.

Main Components:

•

Human resources development and welfare improvement

•

Inequality and poverty alleviation

•

Access to basic infrastructure and public services

•

Inclusive and sustainable economic development

•

Environment, natural resources, ecosystem, bio-resources

management and development

•

Promote peaceful and inclusive societies

•

Targets (some) and Means of Implementation (including finance,

No.

Proposed Goals

Targets

MoI

1

End poverty in all its forms everywhere

2

End hunger, achieve food security and improved nutrition,

and promote sustainable agriculture

3

Ensure healthy lives and promote well-being for all at all ages

4

Ensure inclusive and equitable quality education and

promote life-long learning opportunities for all

5

Achieve gender equality and empower all women and girls

6

Ensure availability and sustainable management of water and

sanitation for all

7

Ensure access to affordable, reliable, sustainable, and

modern energy for all

No.

Proposed Goals

Targets

MoI

8

Promote sustained, inclusive and sustainable economic growth,

full and productive employment and decent work for all

9

Build resilient infrastructure, promote inclusive and sustainable

industrialization and foster innovation

10

Reduce inequality within and among countries

11

Make cities and human settlements inclusive, safe, resilient and

sustainable

12

Ensure sustainable consumption and production patterns

13

Take urgent action to combat climate change and its impacts*

14

Conserve and sustainably use the oceans, seas and marine

No.

Proposed Goals

Targets

MoI

15

Protect, restore and promote sustainable use of terrestrial ecosystems,

sustainably manage forests, combat desertification, and halt and

reverse land degradation and halt biodiversity loss

16

Promote peaceful and inclusive societies for sustainable development,

provide access to justice for all and build effective, accountable and

inclusive institutions at all levels

17

Strengthen the means of implementation and revitalize the global

partnership for sustainable development (Finance, Technology,

capacity building, Trade, Policy and institutional coherence,

Multi-stakeholder partnerships, Data, monitoring and accountability)

Highlights of Selected Goals

Goals

Selected Targets

Goals 1. End Poverty in all its forms everywhere

 Eradicate extreme poverty for all people everywhere by 2030  Reduce at least by half the proportion of all ages living in

poverty by 2030

 Implement nationally appropriate social protection systems by 2030

Goal 2. End hunger, achieve food security and improved nutrition and promote sustainable agriculture

 End hunger and ensure access by all people, in particular the poor and people in vulnerable situations by 2030

 End all forms of malnutrition by 2030

Goals

Selected Targets

Goal 4. Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all

 Ensure that all girls and boys complete free, equitable and quality primary and secondary education by 2030

 Ensure that all girls and boys have access to quality early childhood development by 2030

 Ensure equal access for all to affordable and quality technical, vocational and tertiary education, including university by 2030  Substantially increase the number of youth and adults who

have relevant skills by 2030 Goal 6. Ensure availability and sustainable

management of water and sanitation for all

 Achieve universal and equitable access to safe and affordable drinking water for all by 2030

 Achieve access to adequate and equitable sanitation and hygiene for all by 2030

Goals

Selected Targets

Goal 7. Ensure access to affordable,

reliable, sustainable and modern energy for all

 Ensure universal access to affordable, reliable and modern energy services by 2030

 Increase substantially the share of renewable energy in the global energy mix by 2030

 Double the global rate of improvement in energy efficiency by 2030

Goal 8. Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all

 Achieve higher levels of economic productivity

 Improve global resource efficiency in consumption and

production and endeavour to decouple economic growth from environmental degradation

Goals

Selected Targets

Goal 9. Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation

 Develop quality, reliable, sustainable and resilient

infrastructure, to support economic development and human well-being

 Promote inclusive and sustainable industrialization  Increase the access of small-scale industrial and other

enterprises, to financial services, and their integration into value chains and markets

Goal 10. Reduce inequality within and among countries

 Progressively achieve and sustain income growth of the bottom 40 per cent of the population at a rate higher than the national average

 Adopt policies, especially fiscal, wage and social protection policies, and progressively achieve greater equality

 Improve the regulation and monitoring of global financial

Goals

Selected Targets

Goal 12. Ensure sustainable consumption and production patterns

 Rationalize inefficient fossil-fuel subsidies Goal 14. Conserve and sustainably use the

oceans, seas and marine resources for sustainable development

 Sustainably manage and protect marine and coastal ecosystems to avoid significant adverse impacts

 Effectively regulate harvesting and end overfishing, illegal, unreported and unregulated fishing and destructive fishing practices

 Conserve at least 10 per cent of coastal and marine areas, consistent with national and international law

 Enhance the conservation and sustainable use of oceans and their resources

2. Sustainable and Inclusive Development in Indonesia:

An Unfinished Agenda

•

Economic growth in Indonesia for the past decade has transformed

the economy, increase welfare

•

Total number and percentage of extreme poverty has rapidly

declined (people lived under USD1.25 a day)

•

Depth of poverty has declined

•

However, vulnerability to poverty (the near poor) remains significant

(people lived under USD2 a day)

•

Decreased job growth, increased economic insecurity

and vulnerabilities

–

High incidence of informal sector jobs

•

Youth unemployment

–

Youth unemployment is forecast to edge upwards in 2015

•

Social security system in transition

Indonesia’s

Gini Coefficient, 1996

–

2014

Increasing Income Inequality

Income inequality (Gini ratio) in Indonesia increased from 0.36 in 1996 to

0.41 in the latest available year.

0.36

0.31

0.33

0.36 0.36

0.35

0.37 0.38

0.41 0.41 0.41 0.41

0.20 0.25 0.30 0.35 0.40 0.45

Unfinished Development Agenda: Selected Indicators

Maternal death per 100,000

live birth

346 (SP 2010)

Infant mortality rate per 1,000

live birth 32 (2012/2013)

Prevalence of malnutrition (underweight) for

children age less than 5 years

(percent) 19,6 (2013)

Prevalence of

stunting (height short and very short) for children

(age less than 2 years) (percent)

32,9 (2013)

Access to clean water 70% (2014)

Access to sanitation 60.9%

Unsustainable Use of Resources

• Asia-Pacific economy, including Indonesia is requiring more resources to produce one dollar of GDP as the economy grows

• Future growth of resource use in several countries, including Indonesia holds

significant implications for overall resource demand

• Vulnerability to natural disasters (Indonesia prone to natural disasters):

– 42% of the global economic losses due to natural disasters

– Disaster losses since 1980 have

increased by 16 times in Asia while GDP

CO2 emissions from fuel combustion (IEA) [Metric tons of CO2 equivalent per capita] 0 1 2 3 4 5 6 7 8 9 10

1992-2002 1992-2012 1993-2003 2002-2012 China

East Asia and Pacific

3. Framework for Priority Policies and Strategies

On the onset of Global Economic Situation*:

• Subdued euro zone economy, decelerating China growth and Policy uncertainty in US

Impact on Asia-Pacific (including Indonesia)

• Decreased economic activity through the trade and finance channel

• Estimated regional GDP loss of 3% since the onset of the global crisis five years ago -$870 billion

• Loose monetary policies, quantitative easing (QE), of the developed world including in US and the end of QE starting in 2014

Impact on Asia-Pacific (including Indonesia)

• Short-term capital flows volatility

• Rapid short-term currency appreciation turned into depreciation

• Food and fuel price volatility (increase during the commodity boom period of 2000s until 2011 and now food and fuel price decrease, currency appreciation/depreciation and volatility and end of oil subsidy for certain countries)

Impact on Asia-Pacific (including Indonesia)

Inclusive and Sustainable Development Resource mobilization Higher Productivity and Sustained Growth

Public debt and inflation

Healthier and more educated labor force, Better environment, Resilient

people, Inclusive society

Strengthening social and environmental pillars by providing universal access to basic public services through well designed national public

investment policies, that focus on:

Education Health Income Security Energy security Human security Environmental protection Required public investment

ECONOMIC SOCIAL ENVIRONMENTAL

4. Green Economy and Sustainable Development

(Source: Murniningtyas, 2015)

•

Green Economy and Sustainable Development Concept

•

Principles of Green Economy

•

Economic Restructuring; Sustainable Consumption and Production

•

Internalizing Environmental Aspect into Economic

Social Aspect 1. Equity 2. Health 3. Education 4. Security 5. Housing 6. Population Economic Aspect 1. Economic structure 2. Consumption and production pattern Environment Aspect 1. Atmosphere 2. Land

3. Coastal and sea 4. Clean water 5. Biodiversity Governance Aspect 1. Institutional framework (institution, inter-relationship and rules) 2. Capacity: institution and human resources Human Development/MDG Governance Green Economy Environment and _Biodiversity

SUSTAINABLE DEVELOPMENT

Disadvantage 1:

environmental aspect is not as developed as economic and

Disadvantage 2:

GREEN ECONOMY

1. Resource efficiency 2. Minimum/clean waste 3. Renewable resources

DEFINITION  AN ECONOMY WHICH:

1. Utilization of resources is efficient (in particularnon renewable resources): a. Resour es a e utilized lo ger

b. Efficient – o aste

Key: continuous increase in productivity –technology is key 2. Utilization of resources along its value chain such that:

a. Zero waste

b. Minimal waste –can be absorbed by the ecosystem

Key: Technology for development ofby-product; and Clean Technology for separation and recycling of waste, safe for the ecosystem

3. The use of renewable resources:

a. No non-biodegradable waste

Sustainable use of resources and management of the environment

for our future generation

Where to start?

1. Economic restructuring (at macro level):

a. Value added creation

–

value added chain in economic activity

–

industry/manufacturing (technology is key)

b. Services

–

sector which relies on human resources, skills.

2. Sustainable consumption and production:

a. Efficient consumption and zero waste (versus affluent

consumption with high waste)

b. Production: efficient use of resources and environmental

friendly.

SUSTAINABLE DEVELOPMENT IMPLEMENTATION

Greenhouse Gas Emission Reduction (Low Carbon

Development)

SCP Green Economy ... Sustainable Development

Reducing water and land

pollution

• Resource efficient

• Sustainable production

• Sustainable consumption Green procurement Green standard • SCP • Economic structure Green financing Green banking Green jobs

Components and Strategic Approach of

SCP INDONESIA

Sustainable Concumption and Production

PRODUCTION:

1. Agriculture

2. Fisheries and Maritime

3. Energy and Mining

4. Industry

5. Services: finance; tourism,

environment, expertise

Consumption:

1. Households

2. Corporation

3. Living: City, Style/living

Law-regulations: Procurement, Standard Human resources: capacity for implementation

TO INTERNALIZE ENVIRONMENTAL ASPECT INTO ECONOMIC AND SOCIAL

PILLARS:

1. Address disadvantages 1 and 2 by:

Completing data and

value/environmental valuation

: (i) people have to understand

environmental attributes/characteristics (disadvantage 1); (ii)

understand disadvantage 2 as a result of economic and social

impact on environment due to economic activities which have gone

ignored

2. Enforcement of green economy through: (i) command and control

(regulation); and/or (ii) polluters pay principles (doing bad has its

price).

5. Implementation and Priority Issues

Our National and International Commitment

•

“DGs Age da is i I do esia’s atio al i terest. Need stro g o

it e t

and political will.

•

15 years horizon: 3 RPJMNs, across RPJP (beyond 2025)

•

Built on 2014 baseline (Sustainable Development Indicators

–

baseline

RPJMN III). Ma y of the “DGs Targets are ithi rea h, ho e er…..

•

Challenging year 2015: Economic Slowdown, increased poverty, increased

unemployment, stagnated or potentially decreasing socio-economic

•

The Goals have to be translated into concrete annual targets,

budgets, roles of stakeholders (RPJMN

–

5 year targets and indicative

budget, supported by Regulatory Framework, Budgetary Framework,

Institutional Framework, and Evaluation Framework or

Kerangka

Regulasi, Kerangka Pendanaan, Kerangka Kelembagaan, Kerangka

Evaluasi

)

•

The importance of Outcome, Output and Process

•

The importance of synergy with Provinces, Kabupaten and Kota



Experiences with RAN MDGs and RAD MDGs, dan Inpres 3/2010

(Pembangunan yang Berkeadilan)

•

The importance of synergy with all stakeholders (CSOs, academics,

communities, etc)



Roles of Regional and Local Governments, and Communities

•

Role of monitoring and evaluation, feed back mechanism to annual

planning

Economic Consideration:

•

Macroeconomic stability is a must

•

Conducive economic and business environment is a must



Both can not be taken for granted

•

The need for inclusive economic development (employment creation

and poverty alleviation)

•

What are the leading economic sectors? (manufacturing, services

including tourism and creative economy?)

Human Resources and Institution Development

•

Human resources: roles of education (with the education expansion

–

a child now entering school age will have an expected years of

schooling of 13.2 years), but inequality in access and quality is still a

problem.

•

Governance and institution development (Political, Law and

Bureaucracy Institutions) at the Central, Local and Private sector.

Implement and Internalize Green Economy Concept into the Social,

Economic and Environment Pillars (see PPT on Green Economy and

TO INTERNALIZE ENVIRONMENTAL ASPECT INTO ECONOMIC AND SOCIAL PILLARS:

1. Address disadvantages 1 and 2 by: Completing data and

value/environmental valuation: (i) people have to understand environmental attributes/characteristics (disadvantage 1); (ii) understand disadvantage 2 as a result of economic and social

impact on environment due to economic activities which have gone ignored

2. Enforcement of green economy through: (i) command and control (regulation); and/or (ii) polluters pay principles (doing bad has its price).

5. Implementation and Priority Issues

Our National and International Commitment

• “DGs Age da is i I do esia’s atio al i terest. Need stro g o it e t and political will.

• 15 years horizon: 3 RPJMNs, across RPJP (beyond 2025)

• Built on 2014 baseline (Sustainable Development Indicators – baseline RPJMN III). Ma y of the “DGs Targets are ithi rea h, ho e er…..

• Challenging year 2015: Economic Slowdown, increased poverty, increased unemployment, stagnated or potentially decreasing socio-economic

• The Goals have to be translated into concrete annual targets,

budgets, roles of stakeholders (RPJMN – 5 year targets and indicative budget, supported by Regulatory Framework, Budgetary Framework, Institutional Framework, and Evaluation Framework or Kerangka

Regulasi, Kerangka Pendanaan, Kerangka Kelembagaan, Kerangka Evaluasi)

• The importance of Outcome, Output and Process

• The importance of synergy with Provinces, Kabupaten and Kota Experiences with RAN MDGs and RAD MDGs, dan Inpres 3/2010

(Pembangunan yang Berkeadilan)

• The importance of synergy with all stakeholders (CSOs, academics, communities, etc)

 Roles of Regional and Local Governments, and Communities

• Role of monitoring and evaluation, feed back mechanism to annual planning

Economic Consideration:

• Macroeconomic stability is a must

• Conducive economic and business environment is a must Both can not be taken for granted

• The need for inclusive economic development (employment creation and poverty alleviation)

• What are the leading economic sectors? (manufacturing, services including tourism and creative economy?)

• Market mechanism and incentives/disincentives vs Command and Control

Human Resources and Institution Development

• Human resources: roles of education (with the education expansion – a child now entering school age will have an expected years of

schooling of 13.2 years), but inequality in access and quality is still a problem.

• Governance and institution development (Political, Law and

Bureaucracy Institutions) at the Central, Local and Private sector. Implement and Internalize Green Economy Concept into the Social, Economic and Environment Pillars (see PPT on Green Economy and Sustainable Development)