Indonesia Part II - Balancing Economic Development with Environmental Sustainability

Just like every party, every good trip deserves a theme.  For Indonesia, the theme we set out to explore was balancing economic development with environmental sustainability.  This is an especially appropriate question to consider when visiting Indonesia.  Again, let me do a little to set the stage on Indonesia.

While being the fourth most populous country in the world, Indonesia only has the world’s 17^th largest economy.  In my opinion, that’s not that bad.  Certainly no Japan but still safely within the G20.  GDP per capita is about $3,500 which is on par with what you would find in much of Central America or countries like Ukraine.  So… good but not great.  However, Indonesia has been blessed with being situated almost literally on a gold mine.  First, it straddles the equator and is drenched with copious amounts of sun and tons of rain and moisture.  Basically a natural greenhouse.  This is especially good for growing things like palm trees for palm oil (more on that later).  This rich biological gift existed in prior years as well and as a result Indonesia sits on top of large amounts of both oil and coal.  Until recently it was the only member of OPEC but has since become a net oil importer (hey, 240m people need oil).  Further, Indonesia has tremendous biological diversity as one might expect.  It has everything from komodo dragons to orangutans to just about anything else you might expect to find in SE Asia.  This biodiversity extends to the ocean as well.  Indonesia has approximately eight times the biodiversity of coral as the entire Caribbean.  Apologies as that stat might be slightly off the mark but I don't think it's off by much.

However, it’s already fully in the throes of cashing in on these resources.  Indonesia is the world’s fourth largest emitter of greenhouse gasses in the world.  Yeah, I know, finally punching its weight!  But in this case that’s really not great.  Especially since emissions will grow as Indonesia continues to develop.  Mostly this is due to the clearing of land for palm oil.  Small or large actors will clear virgin forest (that stores literally tons of carbon) and peat bogs with bulldozers and fire to make the way clear for the incredibly lucrative palm oil plantations that cover large swaths of Indonesia.  This releases massive amounts of carbon into the atmosphere while also wreaking havoc on Indonesia’s forests and biodiversity.  To boil it down to a Greenpeace campaign, glaciers and monkeys vs. palm oil and cash money.  Worse than this is the coal mining that goes on in the northern reaches of Indonesia.  Unlike coal reserves in the US, that lie far below the ground, Indonesia’s lie just under the surface and lend themselves to strip mines that literally uproot every tree in sight.  Not surprisingly, this is devastating to the local ecosystem.  These operations lead to massive runoffs, contamination of the water supply, and devastation of the region’s topsoil.  There is also significant oil production but it almost pales in comparison to the effects of palm oil and coal operations

Knowing all of this, you have to ask, what should Indonesia do?  It’s easy for us in the developed world to say that this type of reckless development is indefensible but it would ring pretty hollow considering the wanton use of the environment that we’ve shown in the past.  Plus, how do you really tell a poor Indonesian not to cut down some trees to provide for his family?  I know what decision I would make if it were between my children and the trees (or peat bogs) in my backyard.  Next, I’ll discuss this question from the perspective of government and corporate leaders in Jakarta.