World Bank Counts Cost of Indonesian Haze Crisis

The record number of slash-and-burn fires that swept through large parts of Sumatra and Kalimantan for five months earlier this year cost Indonesia an estimated Rp221 trillion (US$15.73 billion), wiping a full 1.9 percent off gross domestic product, according to a new report released Tuesday by the World Bank.

Between June and October, according to the Bank’s Indonesia Economic Quarterly, “more than 100,000 man-made fires burned 2.6 million hectares of land, an area four and a half times the size of Bali.” The nearly $16 billion price tag on the damage was more than twice the cost of reconstruction from the devastating Boxing Day tsunami that struck Aceh province in 2004.

Kalimantan, where much of the country’s fragile peat lands are located and which was already hit by falling prices of commodities including coal and palm oil, was the hardest hit, with seasonally adjusted quarterly GDP declining by 1.2 percent, with losses as high as 5.1 percent of GDP in East Kalimantan before rains in late October finally quelled the blazes.

Along with the Brazilian Amazon rain forest and Central Africa, Indonesia is one of the earth’s crucial “green lungs,” soaking up carbon from the rest of the world’s energy extraction. With weak central governments and corrupt local officials, all three are under threat.

Perfect firestorm

The haze, driven by ultra-dry conditions resulting from the el Nino-inspired drought, made Indonesia a regional pariah, affecting countries as far away as southern Thailand, Cambodia and the Philippines. Brunei and Singapore saw haze levels so high that schools had to be closed and outdoor activity curtailed. Nearly 4 million students missed days of school in Malaysia and Singapore. In Singapore, particulate matter hit 471 ppm on the worst days, nearly twice the World Health Organization’s maximum standard of 250 ppm.

The 2015 FINA Swimming World Cup in Singapore and the Kuala Lumpur Marathon were among events that were disrupted or postponed. For a short period, Singaporean officials were concerned that the Singapore Formula 1 race would have to be postponed due to poor visibility.

On Sept. 25, Singaporean officials had become so outraged by the haze that they named five Singapore-based plantation companies with operations in Indonesia – Asia Pulp and Paper, Rimba Hutani Mas, Sebangun Bumi Andalas Wood Industries, Bumi Sriwijaya Sentosa and Wachyuni Mandira, as responsible for the haze and ordered them to put out fires on their land and not start new ones, and submit action plans on how they will prevent future fires or face fines up to uS$100,000 a day.

The fires also made Indonesia a major contributor to production of greenhouse gases, which cause global warming and made Indonesian President Joko Widodo, accompanied by a scrum of 450 government officials, institutions, NGOs, private companies and journalists, a feature attraction at the UN-sponsored COP21 climate talks in Paris. The president returned from Paris on Dec. 9, having committed his government to combating the fires and seeking to reduce greenhouse gas emissions.

This time we really mean it

Indonesia formally submitted a plan on Sept. 29 to cut emissions by 29 percent from business-as-usual levels by 2030. But meeting that goal is ambitious to say the least. It means Indonesia would draw 23 percent of its energy from renewables by 2025 and crackdown on the fires, which contributed to Indonesian carbon emissions being the highest in the world at times, surpassing the entire United States on 47 of 74 days during the recent haze crisis.

The president has ordered a moratorium on all new development on peat land, intends to repeal plantation licenses on peat where development has yet to begin and intends to block hundreds of thousands of kilometers of canals used to drain the marshes for planting. Many of the measures now being discussed were also discussed under former President Susilo Bambang Yudhoyono, whose government aggressively sought world headlines for tackling climate change but ultimately failed to halt the fires, which clear land for lucrative plantations that benefit the Indonesian elite.

On Dec. 1, Jokowi said he would establish a Peatland Restoration Agency to restore peatlands that have been damaged by the fires. He said a regulation would seek to engage indigenous people to take care of the forests. They are also one of the major sources of the fires although the light of publicity more often shines on the palm oil and pulp and paper giants.

In forest and land governance, Jokowi said he would implement a one-map policy – also a Yudhoyono-era idea that has yet to be implemented – which would impose a moratorium while permits are being reviewed to maintain peatlands and sustainable forest. Indonesian government agencies typically use their own maps that do not follow standard boundaries, a practice that creates confusion and facilitates corrupt land practices.

Despite a promise that the reforms would be signed immediately, they remain in abeyance. In recent appearances, some government officials have said the haze problem is finished now that the fires have been extinguished for this year.