Natural Capital: Accounting for the Value of Nature in Indonesia

Webinar

Background: Indonesia's natural resources make up over 20 percent of Indonesia’s total capital stock,
which includes built, human, and financial capital1. Renewable resources account for 67 percent of
Indonesia’s natural capital (renewable and non-renewable)2. Income-related to natural capital makes up
more than 27 percent of Indonesia’s GDP, coming from natural resources such as forests, rubber, oil and
natural gas, minerals, palm products, and rich biodiversity that attracts nature-based tourism3. As a result,
integrating natural capital into national wealth accounting can provide valuable insights into Indonesia’s
total wealth, development progress, and the relationship between growth and natural resource
management.

The Government of Indonesia is aware of the overall importance of natural capital and has adopted
legislation on Natural Capital Accounting (NCA) and economic instruments. The government regulation
on Environmental Economic Instruments No. 46/2017 was initiated by the Ministry of Environment and
Forestry (MoEF) and sets out a framework for environmental economic instruments. This mandates the
Central Statistics Agency (BPS) to use an Integrated System of Environmental and Economic Accounts
(Sistem Terintegrasi Neraca Lingkungan dan Ekonomi, SISNERLING) and GDP that accounts for natural
capital. The Government of Indonesia is now developing a bill that incorporates the provision for natural
resources valuation, in accordance with Article 33 of the Indonesian Constitution 1945.

While natural capital accounting offers significant potential benefits for Indonesia, there is a need to
continue strengthening its implementation. From 2012-2019, the Government of Indonesia, with the
support of the World Bank through the Wealth Accounting and the Valuation of Ecosystem Services
(WAVES) activity, made important progress in terms of account development, stakeholder engagement
and initial policy impacts. The final report highlighted further implementation needs which include but
are not limited to securing high-level support for developing and using the natural capital account,
connecting data suppliers and potential data users to build synergy, and developing a communication
strategy4 (World Bank, 2019). Among these and other areas there remain important opportunities to
further mainstream natural capital in development planning and decision-making.

To fully realize the benefit of natural capital accounting, it is important to build capacity, raise
awareness, and develop the necessary frameworks and tools. A crucial factor is showcasing the
comprehensive potential of the accounts in analyzing trade-offs that arise while making development

1 World Bank. 2021. The Changing Wealth of Nations: Managing Assets for the Future. Washington, DC: World
Bank. https://openknowledge.worldbank.org/server/api/core/bitstreams/c0debd7c-e47a-5213-9959-
64659494f791/content
2 World Bank. 2019. Indonesia: Changes in Wealth and Natural Capital. Washington, DC: World Bank.

https://documents1.worldbank.org/curated/pt/490341564118255320/pdf/Indonesia-Changes-in-Wealth-and-
Natural-Capital.pdf
3 World Bank. 2019. Synthesis report: Natural capital accounts and policy in Indonesia. Washington, DC: World

Bank. https://documents1.worldbank.org/curated/pt/935331564034831263/pdf/Synthesis-Report-Natural-
Capital-Accounts-and-Policy-in-Indonesia.pdf
4 World Bank. 2019. From Accounts to Policy: WAVES Closeout Report. Washington, DC: World Bank.

https://documents1.worldbank.org/curated/en/779351636579119839/pdf/From-Accounts-to-Policy-WAVES-
Closeout-Report-Wealth-Accounting-and-Valuation-of-Ecosystem-Services-Global-Partnership-2012-2019.pdf
decisions. This includes balancing the benefits of converting natural capital into productive assets against
the drawbacks of diminished ecosystem services provided by natural capital (WAVES, 2019)5. By
addressing these challenges, Indonesia can better measure, manage, and protect its natural capital for
sustainable development. Going forward, natural capital accounting can provide a valuable tool for
measuring the economic value of natural resources and ecosystems and integrating this information into
policy and decision-making.

Webinar Objective: This webinar aims to facilitate discussion on new developments in natural capital
accounting used internationally; understand the status, needs, and opportunities for natural capital
accounting in Indonesia; and gather input to shape follow-up workshops and trainings.

Proposed Date: Wednesday, May 31st 2023 (Jakarta Time, GMT+7) 08.00 - 10.30 WIB

Proposed Location: Zoom

8.00 - 8.10 WIB Welcoming and Opening
Remarks: The Importance of
Natural Capital
8.10 – 8.30 WIB The Changing Wealth of
Nations
8.30 - 8.50 Mainstreaming Natural Capital
Accounting within the National
System: The Case of Canada
8.50 - 09.05 Q&A
09.05 – 10.05 WIB Moderated discussion:
Opportunities for Indonesia
Moderator: Hari Sutarmin
10:05 – 10.25 WIB Q&A
10:25 - 10.30 WIB Close
Welcome by Host: World Bank
Opening Remarks: Rionald Silaban,
Director General of State Asset Management
Stefanie Onder, Senior Economist and Lead Author of
the Changing Wealth of Nations Report, World Bank
Rob Smith, Senior Associate, International Institute for
Sustainable Development and Principal, Midsummer
Analytics.
Moderated by World Bank
• Arik Hariyono, Director of Valuation, Ministry of
Finance (MOF)
• Puji Agus Kurniawan, Director of Production
Account, National Statistics Agency (BPS)
• Alin Halimatussadiah, Head of the Environmental
Economic Research Group at the Institute of
Economic and Social Research (LPEM), University
of Indonesia (UI)
Moderated by MOF/World Bank
David Kaczan, Senior Economist, World Bank

5Wealth Accounting and the Valuation of Ecosystem Services (WAVES) Global Partnership. 2019. "WAVES Program
Brief." https://www.wavespartnership.org/sites/waves/files/kc/04_Waves%20Program%20Brief_eng_2019.pdf.
Invitees:

• Ministry of Finance
o Irwan Dharmawan, Head of Forestry and Land Change Sub-sector, Center for Climate Change and
Multilateral Financing Policies, Fiscal Policy Agency (BKF)
o DJA
o DJPPR
o Pusdiklat BPPK
o Arik Hariyono, Director of Valuation, Directorate General of State Asset Management
o Dedi Syarif Usman, Secretary, Directorate General of State Asset Management
o Encep Sudarman, Director of Policy Development for State Asset, Directorate General of State
Asset Management
o Rahayu Puspasari, Director of Non-Tax Revenue, Directorate General of Budget
• Ministry of Environment and Forestry
o Erik Teguh Primiantoro , Director of Environmental Impact Prevention for Regional and Sector
Policy (PDLKWS)
o Nandang Prihadi, Director of Environmental Services Utilization of Conservation Area (PJLHK)
o Indra Exploitasia, Director of Biodiversity Conservation
o Djati Witjaksono Hadi, Head of Research and Development Center for Social, Economy, Policy
and Climate Change at the Agency for Research and Development and Innovation
o Jo Kumala Dewi, Director of Environmental Partnership
• Ministry of Marine Affairs and Fishery
o Firdaus Agung, Director of Marine Conservation
• National Statistics Agency
o Puji Agus Kurniawan, Director of Production Account, National Statistics Agency
• National Development Planning Agency
o Sri Yanti, Director of Marine and Fishery
o Eka Chandra Buana, Director of Macro Planning and Statistical Analysis
o Medrilzam, Director of Environment
o Nur Hygiawati Rahayu, Director of Forestry and Water Resource Conservation
• Geospatial Information Agency (BIG)
o Director of the Center for Determination of Spatial Planning and Atlas
• The World Bank

Speakers’ Profile

Stefanie Onder

Stefanie Onder is a Senior Environmental Economist at the World Bank, where she is currently leading the update of
the flagship report The Changing Wealth of Nations. She has also worked in World Bank teams in South Asia and the
East Asia and Pacific region. Her work covered both lending operations as well as technical assistance, focusing on
key development issues in natural resource management with an emphasis on natural capital accounting, livelihoods
of the natural resource-dependent poor as well as climate mitigation and adaptation. She also worked as an Assistant
Professor at the School of International Service of American University, where she has developed a broad research
agenda in development and environmental economics and, more recently, the economics of forced displacement.
She holds a PhD in Economics from the London School of Economics.

Rob Smith
Rob Smith is an environmental statistician and economist known for his conceptual and empirical work linking the
environment and the economy, particularly related to the concept of natural capital and its use in measuring
sustainable development. Rob worked for more than 20 years at Statistics Canada, Canada’s national statistical
agency, helping build its leading environmental accounts and statistics program. In 2013, Rob left Statistics Canada
to form Midsummer Analytics, an Ottawa-based consultancy focused on environment-economy analysis.

Potential Questions for Panel Session

Current Status

• BPS: What are some of the success stories of natural capital accounting implementation in Indonesia, and
what can we learn from them?
• MOF: What are the challenges that still need to be addressed for integrating NCA into state asset
management valuation in Indonesia?
• UI: How is the integration of inclusive wealth into natural capital accounting and national wealth
accounting progressing?

Needs

• BPS: In your opinion, how can data suppliers and potential data users be connected to build synergy?
• MOF: How can the Government of Indonesia fully realize the benefit of natural capital accounting, and
how can we foster inter-institutional collaboration in the process?
• UI: What are some of the key data gaps and research needs for natural capital accounting in Indonesia?

Opportunities

• BPS: What can be learned/adopted from the international examples in natural capital accounting?
• MOF: In relation to the draft of the valuator bill (RUU Penilai), what are its potential impacts on natural
capital accounting on policy and decision-making in Indonesia? What are the most promising
opportunities in Indonesia and how can development partners support them?
• UI: How can different stakeholders collaborate to ensure that principle of natural capital accounting and
the profession of valuators is properly integrated into Indonesia’s Long-Term Plan (RPJP)?