Estimates of the “Green” or “Eco” Regional Domestic Product of Indonesian Provinces for the year 2005

Arief Yusuf

Economics and Finance in Indonesia, 2010, vol. 58, 131-148

Abstract: A trial estimate of the Green or Eco-Regional Domestic Product (ERDP) for 30 provinces in Indonesia for the year 2005 was attempted. ERDP was calculated by subtracting from “brown” Gross Regional Domestic Product (GRDP), the value of liquidation of all kind of assets, man-made and natural. The types of assets covered are man-made capital, oil and natural gas, as well as other nonoil-gas minerals. The environmental assets liquidation included are environmental degradation of local and global pollution. This estimate is the first covering all provinces in Indonesia which enable informative cross-provincial comparison. It is found that the sustainability of the economic development of such provinces as Papua, East Kalimantan, West Nusa Tenggara, Riau and South Sumatra are in question as they rank low in term of the ratio of ERDP to GRDP. It implies that their future generations are among the most vulnerable. The rapid economic development in these provinces is primarily caused by the liquidation of natural resource assets, especially from oil, gas and other minerals. The findings call for the need to diversify economic activity to avoid being too dependent on the extractive and polluting sectors. Sustainability could also be enhanced by way of increasing productivity so that for each unit of the liquidation of natural assets, we can generate welfare as much as possible.

Keywords: Green Regional Domestic Product; Green Accounting; Indonesia (search for similar items in EconPapers)
JEL-codes: Q56 (search for similar items in EconPapers)
Date: 2010
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