Macroeconomic impacts of climate change on four priority
sectors of adaptation in Indonesia*
Ambiyah Abdullah1**, Toshihiko Masui1
1National Institute for Environmental Studies (NIES)*It is under finalization for journal submission**Email: ambiyah.abdullah@nies.go.jp; ambiyah@gmail.com
25th AIM International Workshop, Tsukuba, Japan, November 18-19, 2019

Background•Table 1: Scenario setting in this study

Climate change is predicted to increase the climatechange related disasters in Indonesia by 80% which
requires the integrated approach between mitigation andadaptation (UNFCCC, 2016);

NoScenarioPaddy

Soybeanandsugarcane

CornMarineandfishery

HealthSettlement due
to coastal
flooding

1.

Rise of temperature andrainfall-21.9%-1.73%

31.3%

0-32.3%02.

Sea level rise

-0.4%

0.02%

-0.2%

-0.6%

0-0.8%

3.

Total climate change impacts-22.3%-1.75%

31.2%

-0.6%

-32.3%-0.8%

4.

No-regret adaptation
measures*

9%**

-5%

6%

9%

5.

Low-regret adaptation
measures***

-6%

7%

100%****

16%

Note: * represents the average change of total budget of four ministers (agriculture, marine and fishery, health and public work ofIndonesia) from 2015 to 2019; ** represents the average change of all budget under ministry of agriculture, *** represents theaverage change of the total budget spent for the planned adaptation measures under the four ministries (agriculture, marine andfishery, health and public work of Indonesia) from 2015 to 2019; **** it is assumed that maximum percentage share is 100%.
Source: Author’s calculation based on 2010 Indonesian IO table, BAPPENAS (2014; 2015; 2019), USAID (2016) with someadjustments to have the same base year of 2010, Ministry of Finance of Indonesia (2015; 2017; 2018; 2019)

Results

Source: CCVIA Country Report (2016) as mentioned at the following link:
http://ditjenppi.menlhk.go.id/reddplus/images/resources/ws_transperancy_framework/r2_04_adaptasi.pdf•The Indonesian national planning (BAPPENAS) selectedfour key sectors of adaptation in Indonesia (agriculture,water, marine and fishery, and health) (RAN API Review,2018);
Source: Authors’ calculation•The Indonesian government aims to secure the resilienceof priority development sectors by aiming to reduce theGDP loss due to climate change impacts to 0.11% by2024 (RPJMN, 2020-2024);•As the negative impacts of climate change will also affectthe overall economic sectors, it is necessary to examine
the macroeconomic impacts of climate change on fourpriority sectors of adaptation in Indonesia to estimate
total adaptation cost.

Source: Authors’ calculation

Method and scenario setting•••

The method applied in this study is comparative static
AIM/CGE [Indonesia] model developed by the NIES;
Source: Authors’ calculation

The AIM/CGE [Indonesia] model is based on 2010Indonesia IO table published by Bureau of Central
Statistics with modification to have 46 sectors (Abdullahand Masui, 2019).
The scenarios setting in this study consists of two parts:(i) climate change impacts scenarios by 2050 (scenario1,2&3); and (ii) adaptation scenarios (scenario 4&5) (seetable 1).

Discussion and conclusion•The modelling results show that without any adaptation measures, theclimate change affects not only four priority sectors of adaptation but
also the indirectly affected sectors (energy and industry sectors) during
2010 to 2050;•The modelling results show that the current scale of government
budget spent for adaptation measures is not adequate to cover theeconomic impacts of climate change to 2050. This provide insights forpolicy makers in Indonesia to seize the opportunity for the international
adaptation financial sources.