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Preliminary Analysis of REDD on Indonesian's Economy


  • Budy Resosudarmo

    () (Division of Economics, RSPAS, The AUstralian National University)

  • Arief Anshory Yusuf

    () (Department of Economics, Padjadjaran University)

  • Ditya A. Nurdianto

    () (Division of Economics, RSPAS, The AUstralian National University)


Approximately 10 per cent of the world’s tropical forests or around 144 million ha are located in Indonesia, scattered from the westernmost tip of Sumatra to the eastern border of Papua, occupying approximately 70 per cent of the country’s land area (Barbier, 1998). Thus, Indonesia ranks third — after Brazil and Zaire — in its endowment of tropical forests (Forest Watch Indonesia, 2002). Indonesia’s forests have been one of its most important natural assets. Forestry related activities have provided an important source of formal as well as informal employment for many people and have generated large amounts of both government revenue and foreign exchange (Indonesia-UK Tropical Forest Management Program, 2001). Meanwhile, deforestation and forest degradation has been the main source of Indonesia’s Green House Gas (GHG) emission; i.e. 70-80% of Indonesia’s GHG emission. Incentive to reduce the rate of deforestation, through the Reducing Emissions from Deforestation and Forest Degradation (REDD) program, has recently widely discussed. In general, the program allows international communities to transfer a certain amount of funding to Indonesia to compensate its successful efforts to reduce its rate of deforestation. The question is what will the likely impact on the Indonesian economy, if Indonesia commits to be involved in this REDD program. This report illustrates the impacts of reduced deforestation have on the Indonesian economy and demonstrates the complexity in distributing Reducing Emissions from Deforestation and Forest Degradation (REDD) fund to compensate the negative economic impacts of reduced deforestation.

Suggested Citation

  • Budy Resosudarmo & Arief Anshory Yusuf & Ditya A. Nurdianto, 2012. "Preliminary Analysis of REDD on Indonesian's Economy," Working Papers in Economics and Development Studies (WoPEDS) 201204, Department of Economics, Padjadjaran University, revised Dec 2012.
  • Handle: RePEc:unp:wpaper:201204

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    References listed on IDEAS

    1. Pearson,Charles S., 2000. "Economics and the Global Environment," Cambridge Books, Cambridge University Press, number 9780521779883.
    2. Marco Boscolo & Jeffrey R. Vincent, 2000. "Promoting Better Logging Practices in Tropical Forests: A Simulation Analysis of Alternative Regulations," Land Economics, University of Wisconsin Press, vol. 76(1), pages 1-14.
    3. Goodland, Robert & Daly, Herman, 1996. "If tropical log export bans are so perverse, why are there so many?," Ecological Economics, Elsevier, vol. 18(3), pages 189-196, September.
    4. Deacon Robert T., 1995. "Assessing the Relationship between Government Policy and Deforestation," Journal of Environmental Economics and Management, Elsevier, vol. 28(1), pages 1-18, January.
    5. Pearson,Charles S., 2000. "Economics and the Global Environment," Cambridge Books, Cambridge University Press, number 9780521770026.
    6. Dean, Judith M, 1995. "Export Bans, Environment, and Developing Country Welfare," Review of International Economics, Wiley Blackwell, vol. 3(3), pages 319-329, October.
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    Cited by:

    1. Budy P. Resosudarmo & Ani A Nawir & Ida Aju P. Resosudarmo & Nina L Subiman, 2012. "Forest Land Use Dynamics in Indonesia," Departmental Working Papers 2012-01, The Australian National University, Arndt-Corden Department of Economics.

    More about this item


    REDD; Indonesia;

    JEL classification:

    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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