Assessing the Potential Economic Impact of GHG Mitigation Policyin Land Use Change and Forestry (LUCF) in Indonesia
Marissa Malahayati 1, 2, Toshihiko Masui 21) Tokyo Institute of Technology, 2) National Institute for Environmental Studies

E-mail: marissa.Malahayati@gmail.com

INTRODUCTIONIndonesia GHG emission mostly comes from the Land-Use Change andForestry (LUCF) sectors. The challenge is that the concept of GHG mitigation
in LUCF is a bit different than the mitigation in the other sectors. In the othersectors, the mitigation can be done by carbon restriction and increase thecarbon tax. However, in the LUCF, the mitigation can be done by control theland use change, but due to different land cover and condition, the amountof emission that can be reduced can’t easily predicted. In this study, we tried
to first assess the potential of mitigation in LUCF sectors to the GHG emission
and the economics. The mitigation we use here is increasing the yield andprepare some land endowment for reforestation.

The yield improvement and rate of reforestation/ afforestation is following the ratethat DDPP scenario that stated by the (Boer et al. 2016). However, we haven’t added
mitigation action from another sectors. So, for the carbon restriction, we still assume
3% carbon restriction in other sector.

RESULTa. GDP
A higher GDP can be achieved by Indonesia, if they increase the yield of the crops.
Another finding is, under the carbon restriction condition, reforest/afforestation
may help to reduce the GDP loss.
Table 2. GDP Comparison (Trillion IDR)

METHODSThis study is using Computer General Equilibrium (CGE) that constructed based onIndonesia Input-Output Table (IOT) 2010, with the structure as below:b. Land Area

Figure 1. Model Structure of the Study

However, to asses the LUCF, the information of land use change is needed. For
this study we use the land conversion matrix gained from Santosa et al. (2014).
The matrix was divided into 22 land types, but as the sector should be adjustedwith the aggregation/disaggregation of IOT so the matrix then aggregated into 10
sectors (Table 1).
Table 1. Land Transition Matrix (ha)Figure 2. Land Area Comparison

Increasing yield for profitable crops,
especially cash crops like palm and otherplantation crops, may giving positive impact
on economics, but not to the forest area. We
predict that if there is no reforestation/afforestation effort, the deforestation andland use conversion will still high, because
people tend to convert the land to more
profitable crops.

c. Total GHG emission
Table 3. Total GHG emission (Mton Co2eq)

Moreover, this land is treated as input for some sectors. The future land usechange will be following the profit optimization scheme designed in the model.
The land demand will also depend on another macroeconomics assumption (e.g.
GDP growth) stated in the model.
We also add some scenario to test the model. The scenarios are follows:
Scenarios:
1: Business as Usual (BaU)
2: Yield Improvement
3: Yield + Carbon Limit
4: Yield + Reforestation
5: Yield + Carbon Limit+ Reforestation

While in the GHG emission, we predict that only improving yield will not giving asignificant reduction of GHG gases. This is a reason why reforest/afforestation isimportant to introduced along with the yield improvement.

NEXT STEP• Complete the scenario development and assumption for the LUCF
• Combine with mitigation technologies from other sectors• Matching up with Indonesia emission reduction target
REFERENCES:[1]. Boer, Rizaldi et al. 2016. Pathways to Deep Decarbonizing Agriculture, Forest and Other Land Uses Sector inIndonesia, SDSN-IDDRI.
[2].Santosa, I. et al. 2014. Pedoman Teknis Penghitungan Baseline Emisi Dan Serapan Gas Rumah Kaca SektorBerbasis Lahan. Jakarta.