Detailed Solutions
Case of Java Island -- Part III
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Our solutions include:
-- Government Policies and Sustainable Agriculture
-- Alternative Livelihoods and Ecotourism
-- Taxation and Regulation Interventions
-- Population Relocation and Infrastructure Development
Solution 1: Government Policies & Sustainable Agriculture
Concerning fields: E S G
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Background: Moratorium on Palm Oil Plantation Licenses (2018)
In 2018, the Indonesian government implemented a moratorium on new palm oil plantation licenses in an effort to curb deforestation. This policy was intended to prevent the opening up of new forests for palm oil production, and it was part of broader efforts to meet Indonesia’s commitments under international climate agreements.
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Taxation & Diversifying Agricultural Products
To prevent deforestation for oil production, we first recommend the government tax palm farm producers directly to reduce economic incentives to plant palms. We want to set a revenue tax rate at 50%, radically eliminating any economic incentives. However, to provide a temporary alternative livelihood for farmers, we recommend the following plants:​​
Durian Coffee Java Plum Teak
​​Why do we choose those plants?
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Durian：acidic soil specialist, $4/kg
-- Ecosystem support: flowers attract bats and insects, supporting food chains
-- High economic value: generates double the revenue per hectare compared to palm oil
-- Mixed forest potential: Pairing with fast-growing species (e.g., Java Plum) balances short-term income and long-term carbon storage.
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Coffee: planted at high altitudes (1300m), $15/kg
-- Shade effect: Canopy reduces soil evaporation, maintaining soil moisture (humidity increases by 15–20%)
-- High-altitude conservation: Encourages planting above 1300m, reducing pressure on lowland forests.
-- Agroforestry: Intercropping with shade trees (e.g., bananas) enhances carbon sinks and biodiversity.
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Java Plum: planted at low or middle altitudes, provide cultural values (not for export)
-- Carbon sequestration: Sequesters 2.5 tons of COâ‚‚ per hectare annually, significantly higher than palm oil (1.2 tons/ha).
-- Soil improvement: Root systems secrete organic acids, reducing soil acidity (pH increases by 0.5–1.0), ideal for rehabilitating degraded volcanic soils.
-- Biodiversity: Fruits attract birds and insects, restoring pollination networks.
-- Medical values: Java plum is high in vitamins, minerals, and dietary fiber, which could be used for further medical research.
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Teak: Fire-resistant timber, $3,000/m³
-- Fire resistance: Silica-rich leaves reduce flammability, ideal for fire-prone areas
-- Soil conservation: Deep roots reduce erosion (erosion rates drop by 40%)
-- Long-term carbon storage: Durable wood locks carbon for over 50 years.
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Those plants could not only generate enormous benefits but also control deforestation by providing alternative plants and reducing financial incentives.
Solution 2: Alternative Livelihoods & Ecotourism
Concerning fields: E S G
This solution aids the first solution, trying to find other job opportunities for indigenous people. We suggest providing alternative income opportunities for local farmers who make their living based on palm oil plantations, pulpwood development, and nickel mining. Instead of working in palm farms or mining sites, they could enter the ecotourism industry and elevate the cultural service of forests to create job opportunities for local farmers. In this way, not only the deforestation rate could decrease but also the unemployment rate would remain low.
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Why do we choose ecotourism?
We recommend ecotourism, not only because it offers a sustainable income stream and incentivizes local communities to protect their forests, but also because it is an area with unrealized potential in Indonesia’s GDP – currently, tourism is not an important part of Indonesia’s economy, only taking up only 4.5% of its GDP. Additionally, it could attract tourists to Indonesia's forest diversity, promoting ecotourism in public and raising social awareness.
However, as Indonesia is not a big tourism country, local people would require special education and training (training in serving, hospitality, and management) to give tourists a wonderful experience, which might create additional costs for this solution.
Solution 3: Policy Interventions – Taxation & Regulation
Concerning fields: E S G
We recommend:
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Taxing Palm Oil Farms (mentioned in solution 1)
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Levying taxes per hectare to discourage excessive expansion.
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Revenue generated can be redirected toward reforestation and conservation efforts.
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2. Regulating Factory Production
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Enforcing sustainable sourcing and production practices.
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Incentivizing industries to reduce deforestation-related supply chain impacts.
Both tax rates are planned to be set at 50%, aiming to completely reduce the economic incentive of palm farming and factory production.
Solution 4: Population Relocation & Infrastructure Development
Concerning fields: E S G
Background
Joko Widodo issued an order to move civil servants to Nusantara, the new capital in East Kalimantan, no later than January 2025. President Prabowo Subianto signed Law No. 151/2024, officially revoking the capital status of Jakarta. Prabowo Subianto set the limit of the capital relocation, which will happen on 17 August 2028. This policy is set to battle the problem of overpopulation and urban sprawl of Java Island (effects on forest please see the previous part), but the effect is not obvious. Thus, we design the policy to further aid the population migration.
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We recommend that the government subsidize workers’ transportation fee and rental fee, thereby encouraging more people to reside in Nusantara but work in Java. Encouraging Java residents to reside in Nusantara while maintaining employment in Java could significantly alleviate the city’s overpopulation crisis. By subsidizing, the government can make it financially viable for workers to live in Nusantara, which is a rather nice alternative to improve their living standards. This strategy not only provides more affordable housing options but also promotes a more balanced distribution of the population across the region. This can potentially reduce the number of residents enduring substandard living conditions in Java.
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Nevertheless, there are potential drawbacks to consider. The financial burden on the government could be substantial. However, according to our economic budget analysis, the cost could be covered by revenue generated by other solutions.
Time: 2025.4.2
Editor: Tian. Qiu