Direct and indirect impacts of flood and climate change adaptation in Indonesia: AIM/CGEAmbiyah Abdullah a*, Toshihiko Masui aa
National Institute for Environmental Studies (NIES)*
Corresponding author email address: ambiyah.abdullah@nies.go.jp; ambiyah@gmail.com
Abstract(i)
Research purposes
Geographically, Indonesia is a prone country to disaster and climate change. According to thestatistical data of the Indonesian National Board for Disaster Management, about 23 thousand
times of disasters occurred in Indonesia from 1815 to 2018. Flood is the most frequently occurred
disaster in Indonesia (about 9 thousand times). Flood in Indonesia is a complex issue that requires
the comprehensive and continuous efforts from both state and non-state actors in Indonesia. In
other hands, climate change (without any efforts) will increase the disaster risk and affect the longterm economic development goals in Indonesia. In recent years, the Indonesian government isstrengthening the climate change adaptation through numerous efforts such as the 2016 NDCs andthe update of 2014 RAN-API (National Adaptation Plan). Disaster risk reduction and climatechange adaptation are interlinked particularly on reducing vulnerability and increasing theresilience of the key development sectors in Indonesia.
Against this background, this study tries to link two main recent issues in Indonesia (disaster riskreduction and climate change adaptation) into one single analysis. This study analyzes theeconomic impacts of three selected floods and the current climate change adaptation measuresapplied for flood risk reduction in Indonesia using AIM/CGE model. As the best knowledge of theauthors, this study is considered as “pioneer” for the Indonesian case both in terms of methodology
and policy analysis. The findings of the study can provide the overall picture (characteristics) offlood and its economic impacts within an economic system of Indonesia. It can also provide
insights for policy makers and other related stakeholders in Indonesia on the effectiveness of thecurrent climate change adaptation measures for flood risk reduction in Indonesia.
(ii) Methods
This study employs the computable general equilibrium (AIM/CGE) model to analyze the direct
and indirect impacts of flood in Indonesia. Although this study uses the static CGE model, it cancapture the total economic impacts of floods and climate change adaptation measures within theeconomic system of Indonesia. The AIM/CGE model used in this study is the country model ofIndonesia. The analysis is conducted using two simulation scenarios: (i) SIM 1: considering flood
damages without adaptation; and (ii) SIM 2: considering flood damages with adaptation.
(iii) Description of data
This study uses three main following data: (i) 2010 Indonesian IO table published by the Bureauof Statistics of Indonesia (called BPS in Bahasa); (ii) damages and losses data of the 2007 Jakartaflood, the 2010 West Papua flood, and the 2014 North Sulawesi flood based on the reports
published by the Indonesian national board for disaster management (BNPB) and the nationaldevelopment planning (BAPPENAS); (iii) the annual budget of the Indonesian government spent
for adaptation measures for flood risk reduction.

1

The 2010 Indonesian IO table is originally available at 185 sectors to represent the economic flowsof Indonesia. The original 2010 Indonesian IO table is disaggregated to cover more specificallyfor electricity and energy sectors in Indonesia. It then is grouped to meet the analytical needs ofthe study. As a result, the 2010 Indonesian IO table at 46 sectors classification is used as the main
input data of the AIM/CGE model. This study used a static CGE model without considering thefuture changes of the socio-economic situation (such as population, economic growth) that might
affect the future economic impacts of flood in Indonesia.
The damages and losses data of three selected flood cases are based on the reports published by
two main agencies responsible for disaster management (the Indonesian national board for disastermanagement or called as BNPB in Bahasa) and development planning (called as BAPPENAS inBahasa). The damages and losses data are in monetary values, which are consistent with both theIO and CGE models. The damages and losses data then are translated as shocks of existing capitaland labor.
The annual budget of the Indonesian government spent on the hard measure of flood risk reduction
is used in the simulation scenario parts. This study focuses only on the budget spent on the hard
adaptation measures for flood risk reduction under the Ministry of Public Works of Indonesia.
(ii)
FindingsThe expected findings of this study are three folds. First is the economic losses (GDP, employment,and welfare) caused by floods in Indonesia at national and at sectoral levels. Second is patterns ofeconomic losses (both direct and spillover) of each selected flood in Indonesia. Third is theeffectiveness (impacts) of the current climate change adaptation measures applied for flood risk
reduction in Indonesia.
Keywords: flood, climate change adaptation, Indonesia, AIM/CGE2