Reducing Indonesia’s Deforestation‐Based Greenhouse Gas Emissions

25 Pages Posted: 5 Jul 2011

See all articles by Peter G. Warr

Peter G. Warr

Australian National University (ANU) - Crawford School of Public Policy

Arief Anshory Yusuf

Padjadjaran University

Date Written: July 2011

Abstract

Indonesia has set the target that by the year 2020 its emissions of greenhouse gases will be reduced by 26 per cent relative to business‐as‐usual conditions. This article analyses the effectiveness of a subsidy to the use of land in forestry as a means of achieving this goal. The analysis uses a general equilibrium model of the Indonesian economy characterised by explicit treatment of land use, disaggregated by industry and by region. The results of the analysis indicate that the subsidy cost of permanently reducing carbon emissions by 26 per cent is a little over US$1 per metric tonne of carbon emissions abated. This cost needs to be compared with that of alternative instruments and with the price of carbon that might be agreed under the proposed Reducing Emissions through Deforestation and Land Degradation (REDD) scheme, to be administered through the World Bank and the United Nations.

Keywords: deforestation, general equilibrium modeling, greenhouse gas emissions, Indonesia, land allocation, REDD scheme

Suggested Citation

Warr, Peter G. and Yusuf, Arief Anshory, Reducing Indonesia’s Deforestation‐Based Greenhouse Gas Emissions (July 2011). Australian Journal of Agricultural and Resource Economics, Vol. 55, Issue 3, pp. 297-321, 2011, Available at SSRN: https://ssrn.com/abstract=1878954 or http://dx.doi.org/10.1111/j.1467-8489.2011.00540.x

Peter G. Warr

Australian National University (ANU) - Crawford School of Public Policy ( email )

ANU College of Asia and the Pacific
J.G. Crawford Building, #132, Lennox Crossing
Canberra, Australian Capital Territory 0200
Australia

Arief Anshory Yusuf

Padjadjaran University

Jl. Dipatiukur 35
Bandung, West Java 40132
Indonesia

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