The Lapindo mudflow disaster: environmental, infrastructure and economic impact

Heath McMichael

Bulletin of Indonesian Economic Studies, 2009, vol. 45, issue 1, 73-83

Abstract: This note examines the environmental, infrastructure and economic impact of the Lapindo mudflow disaster in East Java province. It outlines unsuccessful attempts to staunch the mud volcano, concerns for human health and plans for long-term management of the mudflow. It considers the impact on transport and logistics networks and the additional costs to the East Java economy. The heaviest economic impact has occurred in the region surrounding the mud volcano in Sidoarjo district, but areas to the east and west are also affected. Individual firms in East Java have found means of accommodating their business operations to the mudflow with some provincial government assistance. PT Lapindo Brantas, the company considered responsible for the drilling that led to the mud volcano, has been slow in compensating victims as required by presidential decrees. Delays in finalising compensation appear to be holding back implementation by the national government of critical infrastructure reconstruction work.

Date: 2009
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DOI: 10.1080/00074910902836189

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Bulletin of Indonesian Economic Studies is currently edited by Firman Witoelar Kartaadipoetra, Arianto Patunru, Robert Sparrow, Sarah Xue Dong and Sean Muir

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