Sustainability Prediction Model for Capital City Relocation in Indonesia Based on Inclusive Wealth and System Dynamics

Takuya Shimamura and Takeshi Mizunoya
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Takuya Shimamura: Department of Urban and Environmental Engineering, Graduate School of Engineering, Kyushu University, 744 Motooka, Nishi-ku, Fukuoka 819-0395, Japan
Takeshi Mizunoya: Faculty of Life and Environmental Sciences, University of Tsukuba, Tennodai, Tsukuba, Ibaraki 305-8572, Japan

Sustainability, 2020, vol. 12, issue 10, 1-25

Abstract: Based on inclusive wealth (IW), this paper evaluates the impact and sustainability of the Indonesian government’s decision to relocate the capital city from Jakarta to East Kalimantan in terms of economic, human, and environmental aspects. This paper develops an integrated prediction simulation model based on IW and system dynamics and sets three scenarios, depending on the expected population recovery in Jakarta and the increased immigration into the new capital city (NCC) from the nearby areas after the public sector relocates. The most reliable scenario projects benefit of USD 169 billion in IW in 2050, equivalent to 2.41% of the expected cumulative real gross domestic product (GDP) growth in Indonesia from 2021 to 2050. Regarding the sustainability of the relocation, the current investment plans are not sustainable, largely because of the negative impact on human capital, comprising the education and health capital caused by the income gap between Jakarta and the NCC, and due to depreciation of produced capital. This study makes a significant contribution to the integrated evaluation of capital city relocations for Indonesia and beyond, because no previous study of such relocations combines produced, human, and natural capital. This is the first policy evaluation to include the impact of migration on IW, which plays an important role in IW literature, because population is a key model factor.

Keywords: inclusive wealth; system dynamics; sustainability prediction model; capital city relocation; Indonesia (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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