Tue, 09 Jun 2009
Magda Safrina , Massachusetts

Indonesia, the "Emerald of the Equator". That's the latest Indonesian tourism campaign, launched early in 2009. The tale of the land of Gods and Goddesses; the tale of islands with singing coconut trees; or the tale of sailors in the Phinisi - these are common tales told by parents to their children across Indonesia.

However, the debate that has long gone on between the economic development pros and the environmental protection pros has not come to a compromise thus far.

And these tales will be told over and over again, leaving millions of children questioning whether the Emerald of the Equator ever really existed.

The rest of the world has been pointing fingers at Indonesia for its massive deforestation in past decades. The world has demanded Indonesia reduce and prevent further deforestation to protect the earth from increasing global temperatures.

However, the world has not done anything to solve this problem on the ground, other than adding problems by putting more pressure on Indonesia every day. On the other hand, the rest of the world continues to fuel deforestation by increasing demand for forest products as well as palm oil.

This article has been written not to add to the pros and the cons debate over Indonesia's deforestation, but to put into perspective how policymakers should pay a serious attention to accounting for the costs of environmental damage caused by massive exploitation of natural resources in calculations of the Indonesia's "growth", by adopting a "Green GDP".

From a global perspective, we may argue why Indonesia should be responsible for protecting rainforests for the rest of the world when the whole globe contributes to climate change.

We may also defend our development policy for the need of economic growth to provide employment for the country's population which is ranked as the forth-largest in the world. Despite all these arguments from global perspectives, adopting the Green GDP is necessary for our own national interests.

Unlike the common method used to calculate GDP (also referred to as "growth") as a factor of consumption, investment, government spending and net exports and imports, Green GDP (sometimes also referred to Adjusted Net Saving) is an accounting system which deducts natural resource depletion costs, so as to asses the quality of economic development in a more real sense.

To justify adopting a Green GDP with our national interests in mind, it is wise to view the Green GDP as the mechanism to explicitly balance the growth-environment trade-off, as a contrast to the conventional GDP calculation which recognizes growth without calculating the cost incurred to generate the growth itself.

This is especially relevant given the nature of environmental damage incurred which is generally local and permanent, but most importantly, because some of the costs of this environmental damage already occur in the present, and will continue to occur in future.

Indonesia's economy grew 6.3 percent last year and is expected to decline to 4.5 percent this year. Over the same period, Indonesia's rainforests shrank in size by 3.8 percent annually, as land was cleared for plantations.

Average temperatures also increased, as well as sea levels, which rose up to 8 mm, according to the State Ministry of the Environment.

Rising sea levels cause salt water to seep into groundwater resources leading to a reduction in the availability of fresh water. The increasing temperature also increased evaporation in rivers, dams and water reservoirs, leading to a reduction in fresh water available for human consumption, irrigation and hydropower generation.

Massive deforestation, meanwhile, has decreased river flows and water levels in reservoirs during dry seasons, and has increased river flows during rainy seasons causing floods, erosion and landslides.

The increases in temperature and land salinity, and reduction in the availability of fresh water for irrigation has reduced agricultural yields. Increases in emissions and air pollution have reduced the average health of populations in highly polluted areas, causing increased health costs and reducing the productivity of the population.

We can continue discussing all the effects of the environmental damage caused by the massive use of natural resources. However, to calculate all the costs we will have to pay for the depletion and degradation of our natural resources would leave us much better off than to only record the growth of the economy.

It is important we open discussions on this sensitive issue, to assure that all policies put in place will not only generate growth but will also sustain growth in the long run.

Most importantly, this discussion is urgently needed since policymakers tend to be short-sighted and driven by political pressure to succeed today while ignoring the cost that will have to be paid tomorrow.

In the overwhelming presidential race today, as growth rates have been promised by presidential nominees, we, the public, should be even more critical questioning the underlying policies being laid out to support the promised growth, particularly because we should not enjoy economic growth by mortgaging the lives of our future generations, leaving only memories of the "Emerald of the Equator" for the children of tomorrow.

The writer is graduate student at the International Business School, Brandeis University, US, and is a founder of the Aceh Initiative



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