Dr. Joe Leitmann Lead Environment Specialist, EASER SDN FORUM: CEA and Climate Change, January 27, 2010

Transcription

1 Dr. Joe Leitmann Lead Environment Specialist, EASER SDN FORUM: CEA and Climate Change, January 27, 2010

2 Introduction Climate Change in the CEA Lessons from the Indonesia experience Process Substance Impact and Follow-up

3 Objectives of Indonesia Country Environmental Analysis (CEA): Highlight underlying challenges and opportunities for Indonesia s environment and management of its natural resources Guide World Bank support to Indonesian institutions for more sustainable development

4 Economics of Environmental Degradation Natural capital = 1/4 of Indonesia s total wealth BUT being rapidly depleted with relatively little investment in human and productive capital Economic costs to Indonesia of climate change potentially percent of GDP by 2100 Inadequate water and sanitation 2 percent GDP Outdoor/indoor pollution 1.3 percent of GDP Savings rate declines by more than 90 percent once depreciation, depletion of natural resources and damage from air pollutants is accounted for

5 1. Environmental governance: Decentralized framework for environmental management Enabling policies for greater environment and resource sustainability Building environmental constituencies 2. Sectoral challenges facing climate change: Adaptation/Vulnerability Land use Energy

6 Specific areas of Indonesia are highly vulnerable to multiple climate change hazards (drought, floods, landslides, sea-level rise) People and ecosystems are especially vulnerable to climate risks on Java, Bali, parts of Sumatra, and a large area of Papua. More intense rainfall and sea-level rise will negatively affect food security, water resources, coastal areas, farming and coastal livelihoods, forests, marine biodiversity, and health.

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8 Climate change will have the most impact on the poorest Indonesians who are more likely to be: living in marginal areas that are susceptible to drought, flooding and/or landslides; dependent on climate-sensitive agriculture or fisheries; and have fewer assets to cope with the impacts of a changing climate

9 The annual benefit of avoided damage from climate change is likely to exceed the annual cost by 2050 By 2100, the benefit could reach 1.6 percent of GDP, compared to the cost at 0.12 percent of GDP Adaptation options exist to help reduce Indonesia s vulnerability to climate change need to be phased and prioritized according to the magnitude of costs, benefits and risks

10 Deforestation, illegal logging, forest fires, and peatland degradation are the largest sources of Indonesia s GHG emissions. 10 provinces account for 78 percent of dry forest loss and 96 percent of swamp forest loss Riau, Central Kalimantan and South Sumatra accounting for over half of all losses and emissions. Forest climate finance such as REDD can provide an important incentive for change.

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12 In future, fossil fuel emissions will be a greater concern than forest and land use emissions Emissions from energy consumption will triple by 2030 from 2005 levels Main sectors: industry (largest emissions), transport (largest fuel use) Energy subsidies more difficult to promote efficiency, cleaner technology or innovation Leads to inefficient and excessive use of fuel and electricity

13 Indonesia has the world s largest potential for developing geothermal power, biofuels and other renewables (hydropower, wind, solar, and biomass) Mitigating energy emissions will require more realistic energy pricing, a more enabling environment to develop renewable energy resources, and greater efficiency in the industrial, power, manufacturing, and transport sectors

14 Undertake reactive and proactive adaptation measures in the key areas of water resources, agriculture, forestry, coastal/marine, and health, including and in addition to what is currently contemplated Prioritize adaptation options by emphasizing no regrets actions that provide benefits even without climate change, buying safety margins for new investments, and favoring reversible and flexible options Implement a phased strategy to mainstream adaptation, including complementary efforts to raise public awareness, undertake research, coordinate, strengthen local capacity, and increase the resilience of vulnerable groups

15 Implement no regrets options for forest law enforcement, management and governance, realigned incentives for timber harvesting, revitalization of forest sector industries on a more sustainable basis, control of forest fi res, and greater accountability, equity and transparency in forest/land use decisions Pursue new sources of forest carbon financing in order to support and accelerate the no regrets options

16 Be guided by high-level planning and coordination for a lower carbon development scenario to reduce the emissions intensity of growth Go beyond existing plans to introduce more efficient energy pricing, encourage investment to develop renewable energy resources, accelerate energy efficiency in key emitting sectors, and take advantage of international fi nancing mechanisms to off set the costs of some of these options

17 Allow adequate time for preparation, production and dissemination of CEA Use local knowledge but pair Bank staff with consultants to ensure effective analysis and implementation Prepare documentation and dissemination activities in local language to increase access, participation and awareness Hire professionals to prepare an attractive product

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19 Make the economic case for environmental issues, including climate change (regional mini-stern review) Link to Government and other in-country climate initiatives and policies Use the CEA to remind partners about linkages to development agenda (poverty, growth, sub-national development) Link environmental governance to climate change

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21 Identify strategic uses for the climate-related results (CPS, development planning, briefing for new administration, climate change DPL) Involve regional MDB and key donors early in the process to ensure coordination, avoid duplication and leverage impacts Outline a course for WB support (base, medium and high cases)

22 Adaptation National-scale mapping of vulnerability Link adaptation and DRR agendas through GFDRR grant Mainstream climate resilience in investment portfolio Land Use Grant for REDD readiness (FCPF) Engagement with Forest Investment Program Create Indonesia Forest Carbon TF Studies: low carbon, oil palm Energy Develop CTF investment plan Investment: geothermal loan, IFC EE/RE guarantees All areas: Climate Change DPL