Green growth opportunities in the Indonesian Special Economic Zone of Maloy are worth billions according to a GGGI report assessing the costs and benefits of capital projects in Indonesia. The findings are a part of GGGI’s ongoing support for the Indonesia to mainstream green growth within economic and development planning processes.
GGGI and Indonesia are working together closely to develop a framework and suite of tools that will help promote and measure green growth in Indonesia through 5 core outcomes; Greenhouse gas emission reduction; Sustained economic growth; Healthy and productive ecosystems providing services; Inclusive and equitable green growth; and Social, economic and environmental resilience.
One important measurement tool being developed is the Extended Cost Benefit Analysis (eCBA), which will allow Indonesian decision-makers to identify the monetary values of public goods, environment externalities and social returns associated with many projects. The results of such assessments will, in turn, provide decision-makers with the evidence to determine the size of public and private investment flows needed to maximize these values over time.
The eCBA of the Special Economic Zone of Maloy represents the first in a series of planned assessments for selected capital projects across Indonesia. Assessments are not intended to provide a full business or investment proposal, but rather a technical analysis demonstrating the usefulness of eCBA as a planning tool to estimate the monetary benefits associated with green growth outcomes.
The Maloy eCBA, and the policy recommendations drawn from it, aim to provide decision-makers with a tangible example of how to quantify and monetize a broad range of impacts at the project-level, as well as motivate the embedding of green growth theory into Indonesia’s practical planning framework.
Maloy, located in the province of East Kalimantan, is driving development through the build-up of its palm-oil and coal-based industries, which require considerable capital investments in new and upgraded infrastructure systems such as rail, road and shipping.
The report indicates that infrastructure investments in Maloy can be made “greener” without compromising social and economic benefits. The eCBA demonstrates that the 9 green growth interventions studied in the report could have upwards of USD 3.8 Billion, or over 10% of East Kalimantan’s 2012 GDP, in Net Present Value.
The value of these results is spread out over the 5 outcomes of Indonesian green growth, and come in the form of reduced GHG emissions from energy and deforestations savings, reduced healthcare costs as a result of improved air quality, and increased revenues from ecosystem services, such as fishing and tourism, due to enhanced ecosystem protection.
The report also discusses the broad implications for how these interventions may, or may not, become “investible”. By identifying potential barriers, the report is able to put forth a range of policies remedies that will help facilitate green investments in development. These policy options include; green taxes and charges, green subsidies, electricity Feed-in Tariffs, financial guarantees and preferential financing, and payments for Ecosystem Services