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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.

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File URL: http://lp3e.fe.unpad.ac.id/wopeds/201204.pdf
File Function: First version, 2012
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Paper provided by Department of Economics, Padjadjaran University in its series Working Papers in Economics and Development Studies (WoPEDS) with number 201204.

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Length: 18 pages
Date of creation: Dec 2012
Date of revision: Dec 2012
Handle: RePEc:unp:wpaper:201204
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  1. 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.
  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. repec:cup:cbooks:9780521779883 is not listed on IDEAS
  4. repec:cup:cbooks:9780521770026 is not listed on IDEAS
  5. 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.
  6. Dean, Judith M, 1995. "Export Bans, Environment, and Developing Country Welfare," Review of International Economics, Wiley Blackwell, vol. 3(3), pages 319-29, October.
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