CONCEPT OF SUSTAINABLE DEVELOPMENT IN NATIONAL AND
REGIONAL DEVELOPMENT PLANNING
Introduction
The concept of sustainable development in principle states that the development of
the current generation should not require compromise from future generations through their
sacrifice in the form of social welfare that is lower than the welfare of the current generation.
What is meant by social welfare here is economic welfare, social welfare which includes
health and education, and environmental welfare.
To develop development planning based on the concept of sustainable development, it
is necessary to understand what elements are needed for sustainable development, as well as
what factors and tools are needed for sustainable development. For this reason, Law No.
32/2009 on Environmental Protection and Management has shown what components are
needed for the implementation of sustainable development, both at the national development
level, as well as at the regional development level (Province, Regency and City).
Sustainable Development
The concept of sustainable development became popular after it was announced by
the Bruntland Commission under the leadership of Norwegian Prime Minister Gro Harlem
Brundtland who worked from October 1984 to March 1987 and gave birth to the book "Our
Common Future" published by the World Commission on Environment and Development
(WECD) in 1987 (Ismid Hadad, 2010).
During the 20th century there were 2 (two) revolutions related to the role of the
environment in economic and social development. The first revolution (1) between the 1960's
-1970's when the paradigm emerged that there was a conflict between the concepts of growth
and conservation of natural resources and the environment where every development that was
intended to improve the welfare of society was always accompanied by the exploitation of
natural resources and environmental damage (Meadows, Donella and Meadows, Nancy,
1972). Meadows and Meadows who are members of the Rome Group wrote a book on
"Limits to Growth". The book argued that if there was no reduction in the level of
consumption in society at that time, then within 100 years the world would collapse, because
natural resources would be exhausted and the environment would experience high pollution
and severe damage.
The concept of sustainable development, which is interpreted as development for the
present and which does not require compromising future generations, emerged at a meeting
of nations in Norway chaired by Norwegian Prime Minister Gro Harlem Brundtland in 1987.
At that time it was as if there was a second revolution in the field of national development
which stated that economic development did not solely damage the environment, but instead
economic development and environmental development could synergize with each other,
economic development will create an increase in national income that gives a country the
ability to maintain its environment so that it does not deteriorate. Economic development will
create an increase in national income that gives a country the ability to maintain its
environment so that it is not damaged; conversely, good environmental conditions will not
absorb development funds but instead support or sustain the lives of humans and other living
things (Pearce and Warford, 1993).
The pillars of sustainable development are economic sustainability, social
sustainability and environmental sustainability, all three of which must develop in a balanced
manner; otherwise development will be trapped in a conventional development model that
emphasizes economic growth alone and leaves social and environmental development. The
results of conventional development include the distribution of development results being
very unequal with 20 percent of the world's population in developed countries controlling 80
percent of world income and 80 percent of the world's population (developing countries) only
controlling 20 percent of world income. As a result, conventional development is hampered
or constrained by social conditions (health, education, and poverty) and shrinking natural
resource reserves (non-renewable fossil fuel energy and coal) as well as deteriorating
environmental quality due to air, water, river and lake pollution, as well as water shortages in
the dry season and floods in the rainy season in many places in United States and in other
developing countries and also in developed countries. (Emil Sallim, in Iwan Jaya Aziz, et al,
2010)
Environmental Economic Instruments
For the implementation of sustainable development, there is already a legal basis that
serves as the basis and guidelines for implementing sustainable development, which is stated
in Paragraph 8, articles 42 and 43 of Law Number 32, Year 2009 concerning Environmental
Protection and Management which is quoted as below.
Natural Resource Balance
A natural resource balance sheet is a record of the various natural resources found in a
region (Regency, City, or Province) or in a country (National) within a certain time (usually
one year) showing both physical reserves and monetary values ranging from initial reserves,
reserve increases, reserve reductions, and final reserves. For countries rich in natural
resources and a beautiful environment like United States, the balance sheet of natural
resources is very important as a basis for the preparation of development plans. United States
economic development has been based on the exploitation of natural resources. Therefore,
development planning needs to understand the condition of natural resource reserves owned
by a region (district, city, province). Natural resources can be divided into two major groups,
namely non-renewable natural resources (such as petroleum, coal, mineral resources) and
renewable natural resources (such as water, forests or plants, fish, animals and environmental
services). Examples of environmental services are the ability of forests to conserve soil and
water, prevent flooding, carbon sinks, recreational areas and so on).
Both central and local governments need to have records of their natural resource
reserves and changes. Then for planning, it is necessary to analyze the development of
natural resource reserves and their role in economic, social and environmental development.
With the balance sheet of natural resources and the environment, it can be seen where a
region is now located, whether it still has enough natural resource reserves or is already
depleted, or can still be utilized for how long. Thus, development plans will be neatly
organized, including all the consequences.
The step of preparing a natural resource balance can be started by identifying what
ecosystems are found in an area; then from each ecosystem it is identified what kind of
natural resources can be utilized from each ecosystem. Furthermore, each type of natural
resource and environmental function is quantified to determine the amount or volume of each
natural resource concerned, both the initial reserves and those lost due to exploitation or
natural disasters. After that, they are then valued in rupiah.
A natural resource balance sheet can be done for a given year for an area or on an
island where the state and amount of natural resources are not yet known. However, a natural
resource balance sheet can also record the existence of natural resources as a result of a
development activity. By knowing the impact of an activity, the costs and benefits of the
activity can be known, so it is very useful as a natural resource balance sheet feasibility
study. Actually, the feasibility study of an activity or a project in a region or in a country can
be facilitated once there is a balance sheet of natural resources and the environment in the
region or in the country concerned.
Sustainable Development Capital
In the theory of economic growth, the factors that can encourage economic growth in
a region or a country include population and labor, capital, natural resources and the
environment, technology and social factors. Our focus in this paper is the role of natural
resources and the environment in economic growth or development. If observed carefully,
natural resources and the environment are not the main factors that determine the progress of
a country. The progress of a country is usually measured by looking at the high and low per
capita income of the population in the country concerned; and it is proven that many
countries that do not have sufficient natural resources, but are actually developed countries
with high per capita income, such as Singapore, Japan, Taiwan, Korea; while many countries
with abundant natural resources are still underdeveloped countries with relatively low per
capita income such as United States, India, the Philippines, Vietnam, and Latin American
countries. There have even been articles written about the natural resource curse or also
known as "the paradox of plenty" found in developing countries that are rich in natural
resources. The paradoxical situation refers to countries that are rich in natural resources,
especially non-renewable ones, experiencing stagnant economic growth and even
regression.(Jeffrey A. Frankel, 2010)
There are two definitions of sustainable development; namely sustainable
development in the sense of strong (strong definition) and sustainable in the sense of soft
(weak definition), Sustainable in the sense of strong or hard requires that the value of all
development capital; namely the value of human capital (human capital) plus the value of the
ecosystem as natural capital (natural capital) plus human-made capital (human made
capital) remains or does not decline. Meanwhile, in a soft sense, sustainable development
allows for substitution between the three types of development capital; mainly, if the value of
natural capital decreases, it can be offset by an increase in the value of human capital and
man-made capital. For example, if there is a decrease in the amount of natural capital such as
oil and coal that is always exploited or taken from our earth, it is desired that the value of
human capital and/or the value of man-made capital increases, which is financed by utilizing
natural capital taken from nature in the area concerned. Economists are more amenable to a
soft or weak definition of sustainable development.
In addition to the success of sustainable development, it also requires the need for
social capital that is able to maintain good working relationships between various
government institutions both vertically and horizontally, as well as the synergy between the
government, the private sector and the community with a multi-party approach from the three
groups in the preparation of environmentally sound development plans and policies (Read
Ismid Hadad, 2010). So the point is not to exhaust natural resources and damage the
environment without increasing both the amount and quality of human resources and man-
made capital.
Green Growth and Green GDP/GDP
With the increasing enthusiasm to maintain good environmental quality, various terms
have emerged that mean that the environmental dimension has been incorporated into certain
businesses or activities such as the terms green building, green financing, green banking,
green growth and so on. This all shows that environmental considerations have been included
in various actions and policies. Green growth is also defined as environmentally friendly
economic growth or low carbon (CO2) economic growth, because CO2 is one of the
greenhouse gases that cover the earth which causes an increase in earth temperature resulting
in global warming. If we all want green economic growth or in other words sustainable
economic growth, then the right measurement tool for development performance is not
Conventional or Brown GDP and GRDP, but Green GDP and GRDP as mandated by Law
Number 32 of 2009 concerning Environmental Protection and Management; namely that
GDP and GRDP which already take into account the environmental dimension in the form of
depletion of natural resources and environmental degradation or the so-called Green GDP
and GRDP must be developed by every government, both local and central government *. So
Green GDP = Conventional GDP - Natural Resource Depletion - Environmental
Degradation.
However, until this paper is written, the practice of preparing Green GDP and GRDP
has not been formally implemented based on Government Regulations, although several
Provinces (Bali and West Java) and Districts/Cities (Asmat District, Bekasi City, Bantaeng
District, Banyumas District, Bandung District, Bekasi District), have tried to prepare Green
GRDP using their respective Regional Budget funds.
It should be noted that not all countries compile Green GDP, and even the World
Bank uses a measure of each country's economic progress that still uses Green GDP. Gross
National Product (GNP), as there would be difficulties in comparing the level of progress of
one country with another. Therefore, when Green GDP and GRDP were developed,
Conventional GDP and GRDP or Brown GDP and GRDP were not eliminated or replaced by
Green GDP and GRDP. Green GDP and GRDP were developed as a companion to
Conventional GDP and GRDP, because not all regions, especially cities, have sufficient
natural resources. However, it should also be noted that most cities in United States do not
have many natural resources, but all have environmental conditions that can be valued or
given an economic value, so Green GRDP can still be prepared for cities in United States. If a
city has many factories as well as trade and transportation activities, it will still experience
depletion and degradation of water resources and degradation of air quality due to CO2 and
CO4 gas pollution that can come from agricultural activities, landfills, and livestock.
Environmental Benefits
What is meant by environmental fee is a pattern of cooperation between regions in
managing the environment so that it brings benefits to all parties involved in the pattern.
Environmental fee is translated from the phrase "payment for environmental services" which
reflects the pattern of cooperation between the upstream and middle and downstream areas of
a river. People in the middle and downstream areas have an interest in benefiting from the
environment, among others, for their need for water. In general, water is available in the
upstream area and flows to the middle and downstream areas, so there are two possibilities
that the upstream area provides clean water and the middle and downstream areas become
users or consumers of water originating from the upstream area.
Another possibility is that when rainwater is abundant in the upstream area (during
heavy rains) and if there is not enough vegetation in the upstream area, rainwater flows
directly into the river and continues to the sea. If the capacity of the river or ditch in the
downstream area is inadequate, flooding will occur and can cause significant economic
losses. Therefore, there are actually 2 (two) important things about the relationship between
upstream and downstream. If water resources management is not implemented properly in the
upstream area, then during the rainy season there can be flooding in the downstream area
because water always flows from the upstream area to the downstream area; and conversely,
during the dry season there can be drought in the downstream area because the water reserves
in the upstream area are depleted because there is no water supply from rainfall in the dry
season and water is not stored due to the lack of forests or trees in the upstream area during
the rainy season.
In order to avoid the two main problems related to water resources, those who live in
the upstream area of the river need to be assisted by people who live in the downstream area
so that those in the area are willing to maintain water sources and water storage areas.
Upstream communities, who are generally farmers with modest incomes, tend to cut down
their trees when there is a financial need to pay for their children's schooling or when funds
are needed to marry off their children or for circumcision or circumcision for their children.
The cost of funds needed for the purposes of environmental services ranges between
the maximum value of the loss of downstream communities if affected by floods or affected
by a lack of clean water, or a lack of water to irrigate farmers' fields in the downstream area,
and the lowest value is the value of the needs of upstream communities who must maintain
the existence of forests and trees and maintain water resources so that they remain available
and clean.
An example of an area that has practiced the concept of "environmental services" is
between Kuningan Regency as an environmental service provider (water) and Cirebon
Regency and Cirebon City as a service user area (water). Kuningan Regency has a water
source "Panas" which with high water discharge is able to meet the need for water for
Cirebon Regency and City. The Government of Cirebon Regency and City through the
Regional Drinking Water Company (PDAM) collects funds from water users / customers,
then submits them to the Kuningan City Government. The Kuningan Regency Government
distributed the Environmental Services Fee (IJL) funds to residents around the Paniis water
source who helped manage the existence of both the quantity and quality of clean water.
Internalization of External Costs
Included in economic instruments is the application of the concept of "3P" (Polluters
Pay Principle); namely the concept that anyone who pollutes the environment is obliged to
pay compensation for the environmental pollution he creates. Pollution can occur in water
resources both in the catchment area, in rivers, in lakes, as well as to groundwater both
surface water and deep soil. Actually, the problem of internalization of environmental costs
has been reflected in the calculation of GDP and Green GRDP which includes or internalizes
the value of depletion and the value of environmental degradation, namely the deduction of
the value of depletion and environmental degradation from the value of GDP and Brown
GRDP (Conventional).
The way to internalize the value of natural resource depletion and the value of
environmental degradation is, among others, by requiring the initiators of activities (such as
producers and consumers of goods and services) to bear the burden of taxes whose revenues
must be used for the maintenance or restoration of environmental quality (Pigouvian tax).
Indeed, with the environmental tax, producers tend to shift the tax burden to consumers of the
taxed products. Then, between producers and consumers, the tax burden will be shared
depending on the ratio of demand elasticity and supply elasticity respectively. The shifting of
the tax burden from producers to consumers will increase the price of the product, so that
consumers who use these products will also bear the tax burden. This is reasonable because it
is not only producers who pollute the environment by creating solid and liquid waste and air
pollution due to CO2 released in the production process, but consumers who use the products
produced by these companies also dispose of waste into the environment. The easiest
example is detergent producers (washing powder) and detergent consumers such as hotels
and households, they together pollute the environment. If there is no environmental tax or
obligation to install a waste treatment plant, the entire community, both those who use
detergents and those who do not use them, will bear the impact of detergent production
because the soil, air and water are polluted by detergent producers and consumers. Whereas if
it is mandatory for producers to install waste treatment plants (solid, liquid and air), then only
those involved in the production and consumption of detergents will bear the burden of
pollution, while those who do not consume detergents will enjoy pollution-free soil, clean
water and clean air without having to pay the increased price of detergents due to the shifting
burden of environmental taxes imposed on producers.
By including indirect costs of production such as the value of natural resource
depletion and the value of environmental degradation, the economy will still develop
prosperously even if there are no profits or benefits from all production, consumption and
distribution activities in the economy.
In this case, it can be said that the community or economy obtains "normal profit or
normal benefit" because the price formed due to the shifting of the tax burden already
includes "explicit costs" and "implicit costs", where explicit costs are costs actually incurred
by producers (BUMS, BUMN, and BUMD) and implicit costs are lost opportunity costs such
as the value of natural resource depletion and environmental damage that are never reported
in Conventional GDP and GDRP Reports.
Human Development Index (HDI)
The Human Development Index is one of the best measures of a country's level of
well-being. HDI is a composite index consisting of health index, knowledge index, and
welfare index. The health index is measured by the life expectancy of the population at birth,
the knowledge index is measured by literacy and length of time studying formally, and the
welfare index is measured by the level of green income per capita. Thus the HDI has
internalized external costs that take into account the value of depletion or loss of natural
resources and degradation of environmental functions. Using HDI, it is noted that the capital
city of DKI Jakarta has the highest HDI (79.60), and the lowest is owned by Papua Province
(58.05), while Central Java Province has the highest HDI of 69.98.
Sustainable Development Planning
From the various descriptions above, to develop a sustainable development plan,
many things are needed. First, adequate development capital is needed, in the form of reliable
human capital, sufficient man-made capital, and environmental capital consisting of natural
resources and good environmental quality. The next question is how to provide these three
types of capital. For human resources needed as the implementer of development and as the
compiler of plans and policies, intelligent and virtuous humans are needed. Humans who are
intelligent but not virtuous will be willing to use their intelligence to bully, oppress and
blackmail other humans; on the other hand, humans who are virtuous but do not have
intelligence will be subjected to disgraceful actions such as ignorance, fraud, and deprivation
of rights by others. (Jaetun, HS, 2014). In fact, it is human resources that are the key to the
success of sustainable development, i.e. humans who are truly intelligent and virtuous are
needed, so that the problem of financial capital is no longer a problem. United States, which
has developed based on natural resources and debt, is no longer threatened by the curse of
natural resources, because the natural resources taken from nature are converted in such a
way as to become reliable, educated, honest, and corruption-free human resources.
For man-made capital, it is necessary to emphasize the development of infra
structures in the form of transportation facilities and infrastructure such as roads, seaports, air
and rivers as well as means of communication and transportation links available thoroughly
and evenly according to the needs of each region. Infrastructure is the muscle of the economy
that needs to exist and be strong so that the economy also grows strongly and quickly.
For natural resources and environmental capital, continuous exploration efforts are
needed to find reserves of energy resources and other mineral resources. Create an
atmosphere so that there are incentives to conduct exploration of natural resources that can
become raw materials and auxiliary materials for industrial activities. In the energy sector,
United States needs to utilize non-fossil energy sources (biofuels), which are increasingly
necessary because fossil energy is becoming scarce. Renewable energy such as biofuels and
wind resources, geothermal resources and so on should be utilized.
Conclusion
To conclude all of the above descriptions is related to sustainable development
planning both at the national level and at the regional level. Conventional development
planning considers natural resources as a production factor that must be utilized as much as
possible without regard to environmental conditions. As a result, there is indeed economic
growth in the form of an increase in the level of national income, but it is accompanied by
depletion of natural resource reserves and environmental damage accompanied by various
natural disasters everywhere, so that although the level of income increases, but because it is
accompanied by a life full of worries about natural disasters, such as heavy rains, floods,
droughts, landslides, and even earthquakes, the higher level of national income or per capita
income does not provide a guarantee of better community welfare.
Development planning as mentioned above must be ended immediately and replaced
with a new planning paradigm. The trend of depletion of natural resources and environmental
degradation must be changed or even reversed towards the discovery of new and renewable
natural resource reserves accompanied by improvements in environmental quality (reversing
the degradation trend of the natural environment). The paradigm of sustainable development
planning that synergizes economic growth and environmental improvement is the new
development paradigm today. It has been argued that United States will experience a crisis in
three main areas, namely the water crisis, food crisis, and energy crisis (Haskarlianus Pasang,
2011).
What was stated by BAPPENAS has become a reality, where United States is
experiencing difficulties in providing clean water and is overwhelmed by floods, United
States is still not free from having to import food from abroad, and United States is
experiencing energy shortages which are also characterized by high import volumes for fuel
energy from year to year. But this situation has been cautioned by efforts to develop new
agricultural areas and land, to improve water catchment areas and maintain more efficient
reservoirs and waterways, and to develop renewable sources of electrical energy and biofuel
sources. Therefore, being smart and virtuous is one of the foundations of achieving
sustainable development.
Sustainable Development
The concept of sustainable development became popular after it was announced by
the Bruntland Commission under the leadership of Norwegian Prime Minister Gro Harlem
Brundtland who worked from October 1984 to March 1987 and gave birth to the book "Our
Common Future" published by the World Commission on Environment and Development
(WECD) in 1987 (Ismid Hadad, 2010).
During the 20th century there were 2 (two) revolutions related to the role of the
environment in economic and social development. The first revolution (1) between the 1960's
-1970's when the paradigm emerged that there was a conflict between the concepts of growth
and conservation of natural resources and the environment where every development that was
intended to improve the welfare of society was always accompanied by the exploitation of
natural resources and environmental damage (Meadows, Donella and Meadows, Nancy,
1972). Meadows and Meadows who are members of the Rome Group wrote a book on
"Limits to Growth". The book argued that if there was no reduction in the level of
consumption in society at that time, then within 100 years the world would collapse, because
natural resources would be exhausted and the environment would experience high pollution
and severe damage.
The concept of sustainable development, which is interpreted as development for the
present and which does not require compromising future generations, emerged at a meeting
of nations in Norway chaired by Norwegian Prime Minister Gro Harlem Brundtland in 1987.
At that time it was as if there was a second revolution in the field of national development
which stated that economic development did not solely damage the environment, but instead
economic development and environmental development could synergize with each other,
economic development will create an increase in national income that gives a country the
ability to maintain its environment so that it does not deteriorate. Economic development will
create an increase in national income that gives a country the ability to maintain its
environment so that it is not damaged; conversely, good environmental conditions will not
absorb development funds but instead support or sustain the lives of humans and other living
things (Pearce and Warford, 1993).
The pillars of sustainable development are economic sustainability, social
sustainability and environmental sustainability, all three of which must develop in a balanced
manner; otherwise development will be trapped in a conventional development model that
emphasizes economic growth alone and leaves social and environmental development. The
results of conventional development include the distribution of development results being
very unequal with 20 percent of the world's population in developed countries controlling 80
percent of world income and 80 percent of the world's population (developing countries) only
controlling 20 percent of world income. As a result, conventional development is hampered
or constrained by social conditions (health, education, and poverty) and shrinking natural
resource reserves (non-renewable fossil fuel energy and coal) as well as deteriorating
environmental quality due to air, water, river and lake pollution, as well as water shortages in
the dry season and floods in the rainy season in many places in United States and in other
developing countries and also in developed countries. (Emil Sallim, in Iwan Jaya Aziz, et al,
2010)
Environmental Economic Instruments
For the implementation of sustainable development, there is already a legal basis that
serves as the basis and guidelines for implementing sustainable development, which is stated
in Paragraph 8, articles 42 and 43 of Law Number 32, Year 2009 concerning Environmental
Protection and Management which is quoted as below.
Natural Resource Balance
A natural resource balance sheet is a record of the various natural resources found in a
region (Regency, City, or Province) or in a country (National) within a certain time (usually
one year) showing both physical reserves and monetary values ranging from initial reserves,
reserve increases, reserve reductions, and final reserves. For countries rich in natural
resources and a beautiful environment like United States, the balance sheet of natural
resources is very important as a basis for the preparation of development plans. United States
economic development has been based on the exploitation of natural resources. Therefore,
development planning needs to understand the condition of natural resource reserves owned
by a region (district, city, province). Natural resources can be divided into two major groups,
namely non-renewable natural resources (such as petroleum, coal, mineral resources) and
renewable natural resources (such as water, forests or plants, fish, animals and environmental
services). Examples of environmental services are the ability of forests to conserve soil and
water, prevent flooding, carbon sinks, recreational areas and so on).
Both central and local governments need to have records of their natural resource
reserves and changes. Then for planning, it is necessary to analyze the development of
natural resource reserves and their role in economic, social and environmental development.
With the balance sheet of natural resources and the environment, it can be seen where a
region is now located, whether it still has enough natural resource reserves or is already
depleted, or can still be utilized for how long. Thus, development plans will be neatly
organized, including all the consequences.
The step of preparing a natural resource balance can be started by identifying what
ecosystems are found in an area; then from each ecosystem it is identified what kind of
natural resources can be utilized from each ecosystem. Furthermore, each type of natural
resource and environmental function is quantified to determine the amount or volume of each
natural resource concerned, both the initial reserves and those lost due to exploitation or
natural disasters. After that, they are then valued in rupiah.
A natural resource balance sheet can be done for a given year for an area or on an
island where the state and amount of natural resources are not yet known. However, a natural
resource balance sheet can also record the existence of natural resources as a result of a
development activity. By knowing the impact of an activity, the costs and benefits of the
activity can be known, so it is very useful as a natural resource balance sheet feasibility
study. Actually, the feasibility study of an activity or a project in a region or in a country can
be facilitated once there is a balance sheet of natural resources and the environment in the
region or in the country concerned.
Sustainable Development Capital
In the theory of economic growth, the factors that can encourage economic growth in
a region or a country include population and labor, capital, natural resources and the
environment, technology and social factors. Our focus in this paper is the role of natural
resources and the environment in economic growth or development. If observed carefully,
natural resources and the environment are not the main factors that determine the progress of
a country. The progress of a country is usually measured by looking at the high and low per
capita income of the population in the country concerned; and it is proven that many
countries that do not have sufficient natural resources, but are actually developed countries
with high per capita income, such as Singapore, Japan, Taiwan, Korea; while many countries
with abundant natural resources are still underdeveloped countries with relatively low per
capita income such as United States, India, the Philippines, Vietnam, and Latin American
countries. There have even been articles written about the natural resource curse or also
known as "the paradox of plenty" found in developing countries that are rich in natural
resources. The paradoxical situation refers to countries that are rich in natural resources,
especially non-renewable ones, experiencing stagnant economic growth and even
regression.(Jeffrey A. Frankel, 2010)
There are two definitions of sustainable development; namely sustainable
development in the sense of strong (strong definition) and sustainable in the sense of soft
(weak definition), Sustainable in the sense of strong or hard requires that the value of all
development capital; namely the value of human capital (human capital) plus the value of the
ecosystem as natural capital (natural capital) plus human-made capital (human made
capital) remains or does not decline. Meanwhile, in a soft sense, sustainable development
allows for substitution between the three types of development capital; mainly, if the value of
natural capital decreases, it can be offset by an increase in the value of human capital and
man-made capital. For example, if there is a decrease in the amount of natural capital such as
oil and coal that is always exploited or taken from our earth, it is desired that the value of
human capital and/or the value of man-made capital increases, which is financed by utilizing
natural capital taken from nature in the area concerned. Economists are more amenable to a
soft or weak definition of sustainable development.
In addition to the success of sustainable development, it also requires the need for
social capital that is able to maintain good working relationships between various
government institutions both vertically and horizontally, as well as the synergy between the
government, the private sector and the community with a multi-party approach from the three
groups in the preparation of environmentally sound development plans and policies (Read
Ismid Hadad, 2010). So the point is not to exhaust natural resources and damage the
environment without increasing both the amount and quality of human resources and man-
made capital.
Green Growth and Green GDP/GDP
With the increasing enthusiasm to maintain good environmental quality, various terms
have emerged that mean that the environmental dimension has been incorporated into certain
businesses or activities such as the terms green building, green financing, green banking,
green growth and so on. This all shows that environmental considerations have been included
in various actions and policies. Green growth is also defined as environmentally friendly
economic growth or low carbon (CO2) economic growth, because CO2 is one of the
greenhouse gases that cover the earth which causes an increase in earth temperature resulting
in global warming. If we all want green economic growth or in other words sustainable
economic growth, then the right measurement tool for development performance is not
Conventional or Brown GDP and GRDP, but Green GDP and GRDP as mandated by Law
Number 32 of 2009 concerning Environmental Protection and Management; namely that
GDP and GRDP which already take into account the environmental dimension in the form of
depletion of natural resources and environmental degradation or the so-called Green GDP
and GRDP must be developed by every government, both local and central government *. So
Green GDP = Conventional GDP - Natural Resource Depletion - Environmental
Degradation.
However, until this paper is written, the practice of preparing Green GDP and GRDP
has not been formally implemented based on Government Regulations, although several
Provinces (Bali and West Java) and Districts/Cities (Asmat District, Bekasi City, Bantaeng
District, Banyumas District, Bandung District, Bekasi District), have tried to prepare Green
GRDP using their respective Regional Budget funds.
It should be noted that not all countries compile Green GDP, and even the World
Bank uses a measure of each country's economic progress that still uses Green GDP. Gross
National Product (GNP), as there would be difficulties in comparing the level of progress of
one country with another. Therefore, when Green GDP and GRDP were developed,
Conventional GDP and GRDP or Brown GDP and GRDP were not eliminated or replaced by
Green GDP and GRDP. Green GDP and GRDP were developed as a companion to
Conventional GDP and GRDP, because not all regions, especially cities, have sufficient
natural resources. However, it should also be noted that most cities in United States do not
have many natural resources, but all have environmental conditions that can be valued or
given an economic value, so Green GRDP can still be prepared for cities in United States. If a
city has many factories as well as trade and transportation activities, it will still experience
depletion and degradation of water resources and degradation of air quality due to CO2 and
CO4 gas pollution that can come from agricultural activities, landfills, and livestock.
Environmental Benefits
What is meant by environmental fee is a pattern of cooperation between regions in
managing the environment so that it brings benefits to all parties involved in the pattern.
Environmental fee is translated from the phrase "payment for environmental services" which
reflects the pattern of cooperation between the upstream and middle and downstream areas of
a river. People in the middle and downstream areas have an interest in benefiting from the
environment, among others, for their need for water. In general, water is available in the
upstream area and flows to the middle and downstream areas, so there are two possibilities
that the upstream area provides clean water and the middle and downstream areas become
users or consumers of water originating from the upstream area.
Another possibility is that when rainwater is abundant in the upstream area (during
heavy rains) and if there is not enough vegetation in the upstream area, rainwater flows
directly into the river and continues to the sea. If the capacity of the river or ditch in the
downstream area is inadequate, flooding will occur and can cause significant economic
losses. Therefore, there are actually 2 (two) important things about the relationship between
upstream and downstream. If water resources management is not implemented properly in the
upstream area, then during the rainy season there can be flooding in the downstream area
because water always flows from the upstream area to the downstream area; and conversely,
during the dry season there can be drought in the downstream area because the water reserves
in the upstream area are depleted because there is no water supply from rainfall in the dry
season and water is not stored due to the lack of forests or trees in the upstream area during
the rainy season.
In order to avoid the two main problems related to water resources, those who live in
the upstream area of the river need to be assisted by people who live in the downstream area
so that those in the area are willing to maintain water sources and water storage areas.
Upstream communities, who are generally farmers with modest incomes, tend to cut down
their trees when there is a financial need to pay for their children's schooling or when funds
are needed to marry off their children or for circumcision or circumcision for their children.
The cost of funds needed for the purposes of environmental services ranges between
the maximum value of the loss of downstream communities if affected by floods or affected
by a lack of clean water, or a lack of water to irrigate farmers' fields in the downstream area,
and the lowest value is the value of the needs of upstream communities who must maintain
the existence of forests and trees and maintain water resources so that they remain available
and clean.
An example of an area that has practiced the concept of "environmental services" is
between Kuningan Regency as an environmental service provider (water) and Cirebon
Regency and Cirebon City as a service user area (water). Kuningan Regency has a water
source "Panas" which with high water discharge is able to meet the need for water for
Cirebon Regency and City. The Government of Cirebon Regency and City through the
Regional Drinking Water Company (PDAM) collects funds from water users / customers,
then submits them to the Kuningan City Government. The Kuningan Regency Government
distributed the Environmental Services Fee (IJL) funds to residents around the Paniis water
source who helped manage the existence of both the quantity and quality of clean water.
Internalization of External Costs
Included in economic instruments is the application of the concept of "3P" (Polluters
Pay Principle); namely the concept that anyone who pollutes the environment is obliged to
pay compensation for the environmental pollution he creates. Pollution can occur in water
resources both in the catchment area, in rivers, in lakes, as well as to groundwater both
surface water and deep soil. Actually, the problem of internalization of environmental costs
has been reflected in the calculation of GDP and Green GRDP which includes or internalizes
the value of depletion and the value of environmental degradation, namely the deduction of
the value of depletion and environmental degradation from the value of GDP and Brown
GRDP (Conventional).
The way to internalize the value of natural resource depletion and the value of
environmental degradation is, among others, by requiring the initiators of activities (such as
producers and consumers of goods and services) to bear the burden of taxes whose revenues
must be used for the maintenance or restoration of environmental quality (Pigouvian tax).
Indeed, with the environmental tax, producers tend to shift the tax burden to consumers of the
taxed products. Then, between producers and consumers, the tax burden will be shared
depending on the ratio of demand elasticity and supply elasticity respectively. The shifting of
the tax burden from producers to consumers will increase the price of the product, so that
consumers who use these products will also bear the tax burden. This is reasonable because it
is not only producers who pollute the environment by creating solid and liquid waste and air
pollution due to CO2 released in the production process, but consumers who use the products
produced by these companies also dispose of waste into the environment. The easiest
example is detergent producers (washing powder) and detergent consumers such as hotels
and households, they together pollute the environment. If there is no environmental tax or
obligation to install a waste treatment plant, the entire community, both those who use
detergents and those who do not use them, will bear the impact of detergent production
because the soil, air and water are polluted by detergent producers and consumers. Whereas if
it is mandatory for producers to install waste treatment plants (solid, liquid and air), then only
those involved in the production and consumption of detergents will bear the burden of
pollution, while those who do not consume detergents will enjoy pollution-free soil, clean
water and clean air without having to pay the increased price of detergents due to the shifting
burden of environmental taxes imposed on producers.
By including indirect costs of production such as the value of natural resource
depletion and the value of environmental degradation, the economy will still develop
prosperously even if there are no profits or benefits from all production, consumption and
distribution activities in the economy.
In this case, it can be said that the community or economy obtains "normal profit or
normal benefit" because the price formed due to the shifting of the tax burden already
includes "explicit costs" and "implicit costs", where explicit costs are costs actually incurred
by producers (BUMS, BUMN, and BUMD) and implicit costs are lost opportunity costs such
as the value of natural resource depletion and environmental damage that are never reported
in Conventional GDP and GDRP Reports.
Human Development Index (HDI)
The Human Development Index is one of the best measures of a country's level of
well-being. HDI is a composite index consisting of health index, knowledge index, and
welfare index. The health index is measured by the life expectancy of the population at birth,
the knowledge index is measured by literacy and length of time studying formally, and the
welfare index is measured by the level of green income per capita. Thus the HDI has
internalized external costs that take into account the value of depletion or loss of natural
resources and degradation of environmental functions. Using HDI, it is noted that the capital
city of DKI Jakarta has the highest HDI (79.60), and the lowest is owned by Papua Province
(58.05), while Central Java Province has the highest HDI of 69.98.
Sustainable Development Planning
From the various descriptions above, to develop a sustainable development plan,
many things are needed. First, adequate development capital is needed, in the form of reliable
human capital, sufficient man-made capital, and environmental capital consisting of natural
resources and good environmental quality. The next question is how to provide these three
types of capital. For human resources needed as the implementer of development and as the
compiler of plans and policies, intelligent and virtuous humans are needed. Humans who are
intelligent but not virtuous will be willing to use their intelligence to bully, oppress and
blackmail other humans; on the other hand, humans who are virtuous but do not have
intelligence will be subjected to disgraceful actions such as ignorance, fraud, and deprivation
of rights by others. (Jaetun, HS, 2014). In fact, it is human resources that are the key to the
success of sustainable development, i.e. humans who are truly intelligent and virtuous are
needed, so that the problem of financial capital is no longer a problem. United States, which
has developed based on natural resources and debt, is no longer threatened by the curse of
natural resources, because the natural resources taken from nature are converted in such a
way as to become reliable, educated, honest, and corruption-free human resources.
For man-made capital, it is necessary to emphasize the development of infra
structures in the form of transportation facilities and infrastructure such as roads, seaports, air
and rivers as well as means of communication and transportation links available thoroughly
and evenly according to the needs of each region. Infrastructure is the muscle of the economy
that needs to exist and be strong so that the economy also grows strongly and quickly.
For natural resources and environmental capital, continuous exploration efforts are
needed to find reserves of energy resources and other mineral resources. Create an
atmosphere so that there are incentives to conduct exploration of natural resources that can
become raw materials and auxiliary materials for industrial activities. In the energy sector,
United States needs to utilize non-fossil energy sources (biofuels), which are increasingly
necessary because fossil energy is becoming scarce. Renewable energy such as biofuels and
wind resources, geothermal resources and so on should be utilized.
Conclusion
To conclude all of the above descriptions is related to sustainable development
planning both at the national level and at the regional level. Conventional development
planning considers natural resources as a production factor that must be utilized as much as
possible without regard to environmental conditions. As a result, there is indeed economic
growth in the form of an increase in the level of national income, but it is accompanied by
depletion of natural resource reserves and environmental damage accompanied by various
natural disasters everywhere, so that although the level of income increases, but because it is
accompanied by a life full of worries about natural disasters, such as heavy rains, floods,
droughts, landslides, and even earthquakes, the higher level of national income or per capita
income does not provide a guarantee of better community welfare.
Development planning as mentioned above must be ended immediately and replaced
with a new planning paradigm. The trend of depletion of natural resources and environmental
degradation must be changed or even reversed towards the discovery of new and renewable
natural resource reserves accompanied by improvements in environmental quality (reversing
the degradation trend of the natural environment). The paradigm of sustainable development
planning that synergizes economic growth and environmental improvement is the new
development paradigm today. It has been argued that United States will experience a crisis in
three main areas, namely the water crisis, food crisis, and energy crisis (Haskarlianus Pasang,
2011).
What was stated by BAPPENAS has become a reality, where United States is
experiencing difficulties in providing clean water and is overwhelmed by floods, United
States is still not free from having to import food from abroad, and United States is
experiencing energy shortages which are also characterized by high import volumes for fuel
energy from year to year. But this situation has been cautioned by efforts to develop new
agricultural areas and land, to improve water catchment areas and maintain more efficient
reservoirs and waterways, and to develop renewable sources of electrical energy and biofuel
sources. Therefore, being smart and virtuous is one of the foundations of achieving
sustainable development.
Sustainable Development
The concept of sustainable development became popular after it was announced by
the Bruntland Commission under the leadership of Norwegian Prime Minister Gro Harlem
Brundtland who worked from October 1984 to March 1987 and gave birth to the book "Our
Common Future" published by the World Commission on Environment and Development
(WECD) in 1987 (Ismid Hadad, 2010).
During the 20th century there were 2 (two) revolutions related to the role of the
environment in economic and social development. The first revolution (1) between the 1960's
-1970's when the paradigm emerged that there was a conflict between the concepts of growth
and conservation of natural resources and the environment where every development that was
intended to improve the welfare of society was always accompanied by the exploitation of
natural resources and environmental damage (Meadows, Donella and Meadows, Nancy,
1972). Meadows and Meadows who are members of the Rome Group wrote a book on
"Limits to Growth". The book argued that if there was no reduction in the level of
consumption in society at that time, then within 100 years the world would collapse, because
natural resources would be exhausted and the environment would experience high pollution
and severe damage.
The concept of sustainable development, which is interpreted as development for the
present and which does not require compromising future generations, emerged at a meeting
of nations in Norway chaired by Norwegian Prime Minister Gro Harlem Brundtland in 1987.
At that time it was as if there was a second revolution in the field of national development
which stated that economic development did not solely damage the environment, but instead
economic development and environmental development could synergize with each other,
economic development will create an increase in national income that gives a country the
ability to maintain its environment so that it does not deteriorate. Economic development will
create an increase in national income that gives a country the ability to maintain its
environment so that it is not damaged; conversely, good environmental conditions will not
absorb development funds but instead support or sustain the lives of humans and other living
things (Pearce and Warford, 1993).
The pillars of sustainable development are economic sustainability, social
sustainability and environmental sustainability, all three of which must develop in a balanced
manner; otherwise development will be trapped in a conventional development model that
emphasizes economic growth alone and leaves social and environmental development. The
results of conventional development include the distribution of development results being
very unequal with 20 percent of the world's population in developed countries controlling 80
percent of world income and 80 percent of the world's population (developing countries) only
controlling 20 percent of world income. As a result, conventional development is hampered
or constrained by social conditions (health, education, and poverty) and shrinking natural
resource reserves (non-renewable fossil fuel energy and coal) as well as deteriorating
environmental quality due to air, water, river and lake pollution, as well as water shortages in
the dry season and floods in the rainy season in many places in United States and in other
developing countries and also in developed countries. (Emil Sallim, in Iwan Jaya Aziz, et al,
2010)
Environmental Economic Instruments
For the implementation of sustainable development, there is already a legal basis that
serves as the basis and guidelines for implementing sustainable development, which is stated
in Paragraph 8, articles 42 and 43 of Law Number 32, Year 2009 concerning Environmental
Protection and Management which is quoted as below.
Natural Resource Balance
A natural resource balance sheet is a record of the various natural resources found in a
region (Regency, City, or Province) or in a country (National) within a certain time (usually
one year) showing both physical reserves and monetary values ranging from initial reserves,
reserve increases, reserve reductions, and final reserves. For countries rich in natural
resources and a beautiful environment like United States, the balance sheet of natural
resources is very important as a basis for the preparation of development plans. United States
economic development has been based on the exploitation of natural resources. Therefore,
development planning needs to understand the condition of natural resource reserves owned
by a region (district, city, province). Natural resources can be divided into two major groups,
namely non-renewable natural resources (such as petroleum, coal, mineral resources) and
renewable natural resources (such as water, forests or plants, fish, animals and environmental
services). Examples of environmental services are the ability of forests to conserve soil and
water, prevent flooding, carbon sinks, recreational areas and so on).
Both central and local governments need to have records of their natural resource
reserves and changes. Then for planning, it is necessary to analyze the development of
natural resource reserves and their role in economic, social and environmental development.
With the balance sheet of natural resources and the environment, it can be seen where a
region is now located, whether it still has enough natural resource reserves or is already
depleted, or can still be utilized for how long. Thus, development plans will be neatly
organized, including all the consequences.
The step of preparing a natural resource balance can be started by identifying what
ecosystems are found in an area; then from each ecosystem it is identified what kind of
natural resources can be utilized from each ecosystem. Furthermore, each type of natural
resource and environmental function is quantified to determine the amount or volume of each
natural resource concerned, both the initial reserves and those lost due to exploitation or
natural disasters. After that, they are then valued in rupiah.
A natural resource balance sheet can be done for a given year for an area or on an
island where the state and amount of natural resources are not yet known. However, a natural
resource balance sheet can also record the existence of natural resources as a result of a
development activity. By knowing the impact of an activity, the costs and benefits of the
activity can be known, so it is very useful as a natural resource balance sheet feasibility
study. Actually, the feasibility study of an activity or a project in a region or in a country can
be facilitated once there is a balance sheet of natural resources and the environment in the
region or in the country concerned.
Sustainable Development Capital
In the theory of economic growth, the factors that can encourage economic growth in
a region or a country include population and labor, capital, natural resources and the
environment, technology and social factors. Our focus in this paper is the role of natural
resources and the environment in economic growth or development. If observed carefully,
natural resources and the environment are not the main factors that determine the progress of
a country. The progress of a country is usually measured by looking at the high and low per
capita income of the population in the country concerned; and it is proven that many
countries that do not have sufficient natural resources, but are actually developed countries
with high per capita income, such as Singapore, Japan, Taiwan, Korea; while many countries
with abundant natural resources are still underdeveloped countries with relatively low per
capita income such as United States, India, the Philippines, Vietnam, and Latin American
countries. There have even been articles written about the natural resource curse or also
known as "the paradox of plenty" found in developing countries that are rich in natural
resources. The paradoxical situation refers to countries that are rich in natural resources,
especially non-renewable ones, experiencing stagnant economic growth and even
regression.(Jeffrey A. Frankel, 2010)
There are two definitions of sustainable development; namely sustainable
development in the sense of strong (strong definition) and sustainable in the sense of soft
(weak definition), Sustainable in the sense of strong or hard requires that the value of all
development capital; namely the value of human capital (human capital) plus the value of the
ecosystem as natural capital (natural capital) plus human-made capital (human made
capital) remains or does not decline. Meanwhile, in a soft sense, sustainable development
allows for substitution between the three types of development capital; mainly, if the value of
natural capital decreases, it can be offset by an increase in the value of human capital and
man-made capital. For example, if there is a decrease in the amount of natural capital such as
oil and coal that is always exploited or taken from our earth, it is desired that the value of
human capital and/or the value of man-made capital increases, which is financed by utilizing
natural capital taken from nature in the area concerned. Economists are more amenable to a
soft or weak definition of sustainable development.
In addition to the success of sustainable development, it also requires the need for
social capital that is able to maintain good working relationships between various
government institutions both vertically and horizontally, as well as the synergy between the
government, the private sector and the community with a multi-party approach from the three
groups in the preparation of environmentally sound development plans and policies (Read
Ismid Hadad, 2010). So the point is not to exhaust natural resources and damage the
environment without increasing both the amount and quality of human resources and man-
made capital.
Green Growth and Green GDP/GDP
With the increasing enthusiasm to maintain good environmental quality, various terms
have emerged that mean that the environmental dimension has been incorporated into certain
businesses or activities such as the terms green building, green financing, green banking,
green growth and so on. This all shows that environmental considerations have been included
in various actions and policies. Green growth is also defined as environmentally friendly
economic growth or low carbon (CO2) economic growth, because CO2 is one of the
greenhouse gases that cover the earth which causes an increase in earth temperature resulting
in global warming. If we all want green economic growth or in other words sustainable
economic growth, then the right measurement tool for development performance is not
Conventional or Brown GDP and GRDP, but Green GDP and GRDP as mandated by Law
Number 32 of 2009 concerning Environmental Protection and Management; namely that
GDP and GRDP which already take into account the environmental dimension in the form of
depletion of natural resources and environmental degradation or the so-called Green GDP
and GRDP must be developed by every government, both local and central government *. So
Green GDP = Conventional GDP - Natural Resource Depletion - Environmental
Degradation.
However, until this paper is written, the practice of preparing Green GDP and GRDP
has not been formally implemented based on Government Regulations, although several
Provinces (Bali and West Java) and Districts/Cities (Asmat District, Bekasi City, Bantaeng
District, Banyumas District, Bandung District, Bekasi District), have tried to prepare Green
GRDP using their respective Regional Budget funds.
It should be noted that not all countries compile Green GDP, and even the World
Bank uses a measure of each country's economic progress that still uses Green GDP. Gross
National Product (GNP), as there would be difficulties in comparing the level of progress of
one country with another. Therefore, when Green GDP and GRDP were developed,
Conventional GDP and GRDP or Brown GDP and GRDP were not eliminated or replaced by
Green GDP and GRDP. Green GDP and GRDP were developed as a companion to
Conventional GDP and GRDP, because not all regions, especially cities, have sufficient
natural resources. However, it should also be noted that most cities in United States do not
have many natural resources, but all have environmental conditions that can be valued or
given an economic value, so Green GRDP can still be prepared for cities in United States. If a
city has many factories as well as trade and transportation activities, it will still experience
depletion and degradation of water resources and degradation of air quality due to CO2 and
CO4 gas pollution that can come from agricultural activities, landfills, and livestock.
Environmental Benefits
What is meant by environmental fee is a pattern of cooperation between regions in
managing the environment so that it brings benefits to all parties involved in the pattern.
Environmental fee is translated from the phrase "payment for environmental services" which
reflects the pattern of cooperation between the upstream and middle and downstream areas of
a river. People in the middle and downstream areas have an interest in benefiting from the
environment, among others, for their need for water. In general, water is available in the
upstream area and flows to the middle and downstream areas, so there are two possibilities
that the upstream area provides clean water and the middle and downstream areas become
users or consumers of water originating from the upstream area.
Another possibility is that when rainwater is abundant in the upstream area (during
heavy rains) and if there is not enough vegetation in the upstream area, rainwater flows
directly into the river and continues to the sea. If the capacity of the river or ditch in the
downstream area is inadequate, flooding will occur and can cause significant economic
losses. Therefore, there are actually 2 (two) important things about the relationship between
upstream and downstream. If water resources management is not implemented properly in the
upstream area, then during the rainy season there can be flooding in the downstream area
because water always flows from the upstream area to the downstream area; and conversely,
during the dry season there can be drought in the downstream area because the water reserves
in the upstream area are depleted because there is no water supply from rainfall in the dry
season and water is not stored due to the lack of forests or trees in the upstream area during
the rainy season.
In order to avoid the two main problems related to water resources, those who live in
the upstream area of the river need to be assisted by people who live in the downstream area
so that those in the area are willing to maintain water sources and water storage areas.
Upstream communities, who are generally farmers with modest incomes, tend to cut down
their trees when there is a financial need to pay for their children's schooling or when funds
are needed to marry off their children or for circumcision or circumcision for their children.
The cost of funds needed for the purposes of environmental services ranges between
the maximum value of the loss of downstream communities if affected by floods or affected
by a lack of clean water, or a lack of water to irrigate farmers' fields in the downstream area,
and the lowest value is the value of the needs of upstream communities who must maintain
the existence of forests and trees and maintain water resources so that they remain available
and clean.
An example of an area that has practiced the concept of "environmental services" is
between Kuningan Regency as an environmental service provider (water) and Cirebon
Regency and Cirebon City as a service user area (water). Kuningan Regency has a water
source "Panas" which with high water discharge is able to meet the need for water for
Cirebon Regency and City. The Government of Cirebon Regency and City through the
Regional Drinking Water Company (PDAM) collects funds from water users / customers,
then submits them to the Kuningan City Government. The Kuningan Regency Government
distributed the Environmental Services Fee (IJL) funds to residents around the Paniis water
source who helped manage the existence of both the quantity and quality of clean water.
Internalization of External Costs
Included in economic instruments is the application of the concept of "3P" (Polluters
Pay Principle); namely the concept that anyone who pollutes the environment is obliged to
pay compensation for the environmental pollution he creates. Pollution can occur in water
resources both in the catchment area, in rivers, in lakes, as well as to groundwater both
surface water and deep soil. Actually, the problem of internalization of environmental costs
has been reflected in the calculation of GDP and Green GRDP which includes or internalizes
the value of depletion and the value of environmental degradation, namely the deduction of
the value of depletion and environmental degradation from the value of GDP and Brown
GRDP (Conventional).
The way to internalize the value of natural resource depletion and the value of
environmental degradation is, among others, by requiring the initiators of activities (such as
producers and consumers of goods and services) to bear the burden of taxes whose revenues
must be used for the maintenance or restoration of environmental quality (Pigouvian tax).
Indeed, with the environmental tax, producers tend to shift the tax burden to consumers of the
taxed products. Then, between producers and consumers, the tax burden will be shared
depending on the ratio of demand elasticity and supply elasticity respectively. The shifting of
the tax burden from producers to consumers will increase the price of the product, so that
consumers who use these products will also bear the tax burden. This is reasonable because it
is not only producers who pollute the environment by creating solid and liquid waste and air
pollution due to CO2 released in the production process, but consumers who use the products
produced by these companies also dispose of waste into the environment. The easiest
example is detergent producers (washing powder) and detergent consumers such as hotels
and households, they together pollute the environment. If there is no environmental tax or
obligation to install a waste treatment plant, the entire community, both those who use
detergents and those who do not use them, will bear the impact of detergent production
because the soil, air and water are polluted by detergent producers and consumers. Whereas if
it is mandatory for producers to install waste treatment plants (solid, liquid and air), then only
those involved in the production and consumption of detergents will bear the burden of
pollution, while those who do not consume detergents will enjoy pollution-free soil, clean
water and clean air without having to pay the increased price of detergents due to the shifting
burden of environmental taxes imposed on producers.
By including indirect costs of production such as the value of natural resource
depletion and the value of environmental degradation, the economy will still develop
prosperously even if there are no profits or benefits from all production, consumption and
distribution activities in the economy.
In this case, it can be said that the community or economy obtains "normal profit or
normal benefit" because the price formed due to the shifting of the tax burden already
includes "explicit costs" and "implicit costs", where explicit costs are costs actually incurred
by producers (BUMS, BUMN, and BUMD) and implicit costs are lost opportunity costs such
as the value of natural resource depletion and environmental damage that are never reported
in Conventional GDP and GDRP Reports.
Human Development Index (HDI)
The Human Development Index is one of the best measures of a country's level of
well-being. HDI is a composite index consisting of health index, knowledge index, and
welfare index. The health index is measured by the life expectancy of the population at birth,
the knowledge index is measured by literacy and length of time studying formally, and the
welfare index is measured by the level of green income per capita. Thus the HDI has
internalized external costs that take into account the value of depletion or loss of natural
resources and degradation of environmental functions. Using HDI, it is noted that the capital
city of DKI Jakarta has the highest HDI (79.60), and the lowest is owned by Papua Province
(58.05), while Central Java Province has the highest HDI of 69.98.
Sustainable Development Planning
From the various descriptions above, to develop a sustainable development plan,
many things are needed. First, adequate development capital is needed, in the form of reliable
human capital, sufficient man-made capital, and environmental capital consisting of natural
resources and good environmental quality. The next question is how to provide these three
types of capital. For human resources needed as the implementer of development and as the
compiler of plans and policies, intelligent and virtuous humans are needed. Humans who are
intelligent but not virtuous will be willing to use their intelligence to bully, oppress and
blackmail other humans; on the other hand, humans who are virtuous but do not have
intelligence will be subjected to disgraceful actions such as ignorance, fraud, and deprivation
of rights by others. (Jaetun, HS, 2014). In fact, it is human resources that are the key to the
success of sustainable development, i.e. humans who are truly intelligent and virtuous are
needed, so that the problem of financial capital is no longer a problem. United States, which
has developed based on natural resources and debt, is no longer threatened by the curse of
natural resources, because the natural resources taken from nature are converted in such a
way as to become reliable, educated, honest, and corruption-free human resources.
For man-made capital, it is necessary to emphasize the development of infra
structures in the form of transportation facilities and infrastructure such as roads, seaports, air
and rivers as well as means of communication and transportation links available thoroughly
and evenly according to the needs of each region. Infrastructure is the muscle of the economy
that needs to exist and be strong so that the economy also grows strongly and quickly.
For natural resources and environmental capital, continuous exploration efforts are
needed to find reserves of energy resources and other mineral resources. Create an
atmosphere so that there are incentives to conduct exploration of natural resources that can
become raw materials and auxiliary materials for industrial activities. In the energy sector,
United States needs to utilize non-fossil energy sources (biofuels), which are increasingly
necessary because fossil energy is becoming scarce. Renewable energy such as biofuels and
wind resources, geothermal resources and so on should be utilized.
Conclusion
To conclude all of the above descriptions is related to sustainable development
planning both at the national level and at the regional level. Conventional development
planning considers natural resources as a production factor that must be utilized as much as
possible without regard to environmental conditions. As a result, there is indeed economic
growth in the form of an increase in the level of national income, but it is accompanied by
depletion of natural resource reserves and environmental damage accompanied by various
natural disasters everywhere, so that although the level of income increases, but because it is
accompanied by a life full of worries about natural disasters, such as heavy rains, floods,
droughts, landslides, and even earthquakes, the higher level of national income or per capita
income does not provide a guarantee of better community welfare.
Development planning as mentioned above must be ended immediately and replaced
with a new planning paradigm. The trend of depletion of natural resources and environmental
degradation must be changed or even reversed towards the discovery of new and renewable
natural resource reserves accompanied by improvements in environmental quality (reversing
the degradation trend of the natural environment). The paradigm of sustainable development
planning that synergizes economic growth and environmental improvement is the new
development paradigm today. It has been argued that United States will experience a crisis in
three main areas, namely the water crisis, food crisis, and energy crisis (Haskarlianus Pasang,
2011).
What was stated by BAPPENAS has become a reality, where United States is
experiencing difficulties in providing clean water and is overwhelmed by floods, United
States is still not free from having to import food from abroad, and United States is
experiencing energy shortages which are also characterized by high import volumes for fuel
energy from year to year. But this situation has been cautioned by efforts to develop new
agricultural areas and land, to improve water catchment areas and maintain more efficient
reservoirs and waterways, and to develop renewable sources of electrical energy and biofuel
sources. Therefore, being smart and virtuous is one of the foundations of achieving
sustainable development.
Sustainable Development
The concept of sustainable development became popular after it was announced by
the Bruntland Commission under the leadership of Norwegian Prime Minister Gro Harlem
Brundtland who worked from October 1984 to March 1987 and gave birth to the book "Our
Common Future" published by the World Commission on Environment and Development
(WECD) in 1987 (Ismid Hadad, 2010).
During the 20th century there were 2 (two) revolutions related to the role of the
environment in economic and social development. The first revolution (1) between the 1960's
-1970's when the paradigm emerged that there was a conflict between the concepts of growth
and conservation of natural resources and the environment where every development that was
intended to improve the welfare of society was always accompanied by the exploitation of
natural resources and environmental damage (Meadows, Donella and Meadows, Nancy,
1972). Meadows and Meadows who are members of the Rome Group wrote a book on
"Limits to Growth". The book argued that if there was no reduction in the level of
consumption in society at that time, then within 100 years the world would collapse, because
natural resources would be exhausted and the environment would experience high pollution
and severe damage.
The concept of sustainable development, which is interpreted as development for the
present and which does not require compromising future generations, emerged at a meeting
of nations in Norway chaired by Norwegian Prime Minister Gro Harlem Brundtland in 1987.
At that time it was as if there was a second revolution in the field of national development
which stated that economic development did not solely damage the environment, but instead
economic development and environmental development could synergize with each other,
economic development will create an increase in national income that gives a country the
ability to maintain its environment so that it does not deteriorate. Economic development will
create an increase in national income that gives a country the ability to maintain its
environment so that it is not damaged; conversely, good environmental conditions will not
absorb development funds but instead support or sustain the lives of humans and other living
things (Pearce and Warford, 1993).
The pillars of sustainable development are economic sustainability, social
sustainability and environmental sustainability, all three of which must develop in a balanced
manner; otherwise development will be trapped in a conventional development model that
emphasizes economic growth alone and leaves social and environmental development. The
results of conventional development include the distribution of development results being
very unequal with 20 percent of the world's population in developed countries controlling 80
percent of world income and 80 percent of the world's population (developing countries) only
controlling 20 percent of world income. As a result, conventional development is hampered
or constrained by social conditions (health, education, and poverty) and shrinking natural
resource reserves (non-renewable fossil fuel energy and coal) as well as deteriorating
environmental quality due to air, water, river and lake pollution, as well as water shortages in
the dry season and floods in the rainy season in many places in United States and in other
developing countries and also in developed countries. (Emil Sallim, in Iwan Jaya Aziz, et al,
2010)
Environmental Economic Instruments
For the implementation of sustainable development, there is already a legal basis that
serves as the basis and guidelines for implementing sustainable development, which is stated
in Paragraph 8, articles 42 and 43 of Law Number 32, Year 2009 concerning Environmental
Protection and Management which is quoted as below.
Natural Resource Balance
A natural resource balance sheet is a record of the various natural resources found in a
region (Regency, City, or Province) or in a country (National) within a certain time (usually
one year) showing both physical reserves and monetary values ranging from initial reserves,
reserve increases, reserve reductions, and final reserves. For countries rich in natural
resources and a beautiful environment like United States, the balance sheet of natural
resources is very important as a basis for the preparation of development plans. United States
economic development has been based on the exploitation of natural resources. Therefore,
development planning needs to understand the condition of natural resource reserves owned
by a region (district, city, province). Natural resources can be divided into two major groups,
namely non-renewable natural resources (such as petroleum, coal, mineral resources) and
renewable natural resources (such as water, forests or plants, fish, animals and environmental
services). Examples of environmental services are the ability of forests to conserve soil and
water, prevent flooding, carbon sinks, recreational areas and so on).
Both central and local governments need to have records of their natural resource
reserves and changes. Then for planning, it is necessary to analyze the development of
natural resource reserves and their role in economic, social and environmental development.
With the balance sheet of natural resources and the environment, it can be seen where a
region is now located, whether it still has enough natural resource reserves or is already
depleted, or can still be utilized for how long. Thus, development plans will be neatly
organized, including all the consequences.
The step of preparing a natural resource balance can be started by identifying what
ecosystems are found in an area; then from each ecosystem it is identified what kind of
natural resources can be utilized from each ecosystem. Furthermore, each type of natural
resource and environmental function is quantified to determine the amount or volume of each
natural resource concerned, both the initial reserves and those lost due to exploitation or
natural disasters. After that, they are then valued in rupiah.
A natural resource balance sheet can be done for a given year for an area or on an
island where the state and amount of natural resources are not yet known. However, a natural
resource balance sheet can also record the existence of natural resources as a result of a
development activity. By knowing the impact of an activity, the costs and benefits of the
activity can be known, so it is very useful as a natural resource balance sheet feasibility
study. Actually, the feasibility study of an activity or a project in a region or in a country can
be facilitated once there is a balance sheet of natural resources and the environment in the
region or in the country concerned.
Sustainable Development Capital
In the theory of economic growth, the factors that can encourage economic growth in
a region or a country include population and labor, capital, natural resources and the
environment, technology and social factors. Our focus in this paper is the role of natural
resources and the environment in economic growth or development. If observed carefully,
natural resources and the environment are not the main factors that determine the progress of
a country. The progress of a country is usually measured by looking at the high and low per
capita income of the population in the country concerned; and it is proven that many
countries that do not have sufficient natural resources, but are actually developed countries
with high per capita income, such as Singapore, Japan, Taiwan, Korea; while many countries
with abundant natural resources are still underdeveloped countries with relatively low per
capita income such as United States, India, the Philippines, Vietnam, and Latin American
countries. There have even been articles written about the natural resource curse or also
known as "the paradox of plenty" found in developing countries that are rich in natural
resources. The paradoxical situation refers to countries that are rich in natural resources,
especially non-renewable ones, experiencing stagnant economic growth and even
regression.(Jeffrey A. Frankel, 2010)
There are two definitions of sustainable development; namely sustainable
development in the sense of strong (strong definition) and sustainable in the sense of soft
(weak definition), Sustainable in the sense of strong or hard requires that the value of all
development capital; namely the value of human capital (human capital) plus the value of the
ecosystem as natural capital (natural capital) plus human-made capital (human made
capital) remains or does not decline. Meanwhile, in a soft sense, sustainable development
allows for substitution between the three types of development capital; mainly, if the value of
natural capital decreases, it can be offset by an increase in the value of human capital and
man-made capital. For example, if there is a decrease in the amount of natural capital such as
oil and coal that is always exploited or taken from our earth, it is desired that the value of
human capital and/or the value of man-made capital increases, which is financed by utilizing
natural capital taken from nature in the area concerned. Economists are more amenable to a
soft or weak definition of sustainable development.
In addition to the success of sustainable development, it also requires the need for
social capital that is able to maintain good working relationships between various
government institutions both vertically and horizontally, as well as the synergy between the
government, the private sector and the community with a multi-party approach from the three
groups in the preparation of environmentally sound development plans and policies (Read
Ismid Hadad, 2010). So the point is not to exhaust natural resources and damage the
environment without increasing both the amount and quality of human resources and man-
made capital.
Green Growth and Green GDP/GDP
With the increasing enthusiasm to maintain good environmental quality, various terms
have emerged that mean that the environmental dimension has been incorporated into certain
businesses or activities such as the terms green building, green financing, green banking,
green growth and so on. This all shows that environmental considerations have been included
in various actions and policies. Green growth is also defined as environmentally friendly
economic growth or low carbon (CO2) economic growth, because CO2 is one of the
greenhouse gases that cover the earth which causes an increase in earth temperature resulting
in global warming. If we all want green economic growth or in other words sustainable
economic growth, then the right measurement tool for development performance is not
Conventional or Brown GDP and GRDP, but Green GDP and GRDP as mandated by Law
Number 32 of 2009 concerning Environmental Protection and Management; namely that
GDP and GRDP which already take into account the environmental dimension in the form of
depletion of natural resources and environmental degradation or the so-called Green GDP
and GRDP must be developed by every government, both local and central government *. So
Green GDP = Conventional GDP - Natural Resource Depletion - Environmental
Degradation.
However, until this paper is written, the practice of preparing Green GDP and GRDP
has not been formally implemented based on Government Regulations, although several
Provinces (Bali and West Java) and Districts/Cities (Asmat District, Bekasi City, Bantaeng
District, Banyumas District, Bandung District, Bekasi District), have tried to prepare Green
GRDP using their respective Regional Budget funds.
It should be noted that not all countries compile Green GDP, and even the World
Bank uses a measure of each country's economic progress that still uses Green GDP. Gross
National Product (GNP), as there would be difficulties in comparing the level of progress of
one country with another. Therefore, when Green GDP and GRDP were developed,
Conventional GDP and GRDP or Brown GDP and GRDP were not eliminated or replaced by
Green GDP and GRDP. Green GDP and GRDP were developed as a companion to
Conventional GDP and GRDP, because not all regions, especially cities, have sufficient
natural resources. However, it should also be noted that most cities in United States do not
have many natural resources, but all have environmental conditions that can be valued or
given an economic value, so Green GRDP can still be prepared for cities in United States. If a
city has many factories as well as trade and transportation activities, it will still experience
depletion and degradation of water resources and degradation of air quality due to CO2 and
CO4 gas pollution that can come from agricultural activities, landfills, and livestock.
Environmental Benefits
What is meant by environmental fee is a pattern of cooperation between regions in
managing the environment so that it brings benefits to all parties involved in the pattern.
Environmental fee is translated from the phrase "payment for environmental services" which
reflects the pattern of cooperation between the upstream and middle and downstream areas of
a river. People in the middle and downstream areas have an interest in benefiting from the
environment, among others, for their need for water. In general, water is available in the
upstream area and flows to the middle and downstream areas, so there are two possibilities
that the upstream area provides clean water and the middle and downstream areas become
users or consumers of water originating from the upstream area.
Another possibility is that when rainwater is abundant in the upstream area (during
heavy rains) and if there is not enough vegetation in the upstream area, rainwater flows
directly into the river and continues to the sea. If the capacity of the river or ditch in the
downstream area is inadequate, flooding will occur and can cause significant economic
losses. Therefore, there are actually 2 (two) important things about the relationship between
upstream and downstream. If water resources management is not implemented properly in the
upstream area, then during the rainy season there can be flooding in the downstream area
because water always flows from the upstream area to the downstream area; and conversely,
during the dry season there can be drought in the downstream area because the water reserves
in the upstream area are depleted because there is no water supply from rainfall in the dry
season and water is not stored due to the lack of forests or trees in the upstream area during
the rainy season.
In order to avoid the two main problems related to water resources, those who live in
the upstream area of the river need to be assisted by people who live in the downstream area
so that those in the area are willing to maintain water sources and water storage areas.
Upstream communities, who are generally farmers with modest incomes, tend to cut down
their trees when there is a financial need to pay for their children's schooling or when funds
are needed to marry off their children or for circumcision or circumcision for their children.
The cost of funds needed for the purposes of environmental services ranges between
the maximum value of the loss of downstream communities if affected by floods or affected
by a lack of clean water, or a lack of water to irrigate farmers' fields in the downstream area,
and the lowest value is the value of the needs of upstream communities who must maintain
the existence of forests and trees and maintain water resources so that they remain available
and clean.
An example of an area that has practiced the concept of "environmental services" is
between Kuningan Regency as an environmental service provider (water) and Cirebon
Regency and Cirebon City as a service user area (water). Kuningan Regency has a water
source "Panas" which with high water discharge is able to meet the need for water for
Cirebon Regency and City. The Government of Cirebon Regency and City through the
Regional Drinking Water Company (PDAM) collects funds from water users / customers,
then submits them to the Kuningan City Government. The Kuningan Regency Government
distributed the Environmental Services Fee (IJL) funds to residents around the Paniis water
source who helped manage the existence of both the quantity and quality of clean water.
Internalization of External Costs
Included in economic instruments is the application of the concept of "3P" (Polluters
Pay Principle); namely the concept that anyone who pollutes the environment is obliged to
pay compensation for the environmental pollution he creates. Pollution can occur in water
resources both in the catchment area, in rivers, in lakes, as well as to groundwater both
surface water and deep soil. Actually, the problem of internalization of environmental costs
has been reflected in the calculation of GDP and Green GRDP which includes or internalizes
the value of depletion and the value of environmental degradation, namely the deduction of
the value of depletion and environmental degradation from the value of GDP and Brown
GRDP (Conventional).
The way to internalize the value of natural resource depletion and the value of
environmental degradation is, among others, by requiring the initiators of activities (such as
producers and consumers of goods and services) to bear the burden of taxes whose revenues
must be used for the maintenance or restoration of environmental quality (Pigouvian tax).
Indeed, with the environmental tax, producers tend to shift the tax burden to consumers of the
taxed products. Then, between producers and consumers, the tax burden will be shared
depending on the ratio of demand elasticity and supply elasticity respectively. The shifting of
the tax burden from producers to consumers will increase the price of the product, so that
consumers who use these products will also bear the tax burden. This is reasonable because it
is not only producers who pollute the environment by creating solid and liquid waste and air
pollution due to CO2 released in the production process, but consumers who use the products
produced by these companies also dispose of waste into the environment. The easiest
example is detergent producers (washing powder) and detergent consumers such as hotels
and households, they together pollute the environment. If there is no environmental tax or
obligation to install a waste treatment plant, the entire community, both those who use
detergents and those who do not use them, will bear the impact of detergent production
because the soil, air and water are polluted by detergent producers and consumers. Whereas if
it is mandatory for producers to install waste treatment plants (solid, liquid and air), then only
those involved in the production and consumption of detergents will bear the burden of
pollution, while those who do not consume detergents will enjoy pollution-free soil, clean
water and clean air without having to pay the increased price of detergents due to the shifting
burden of environmental taxes imposed on producers.
By including indirect costs of production such as the value of natural resource
depletion and the value of environmental degradation, the economy will still develop
prosperously even if there are no profits or benefits from all production, consumption and
distribution activities in the economy.
In this case, it can be said that the community or economy obtains "normal profit or
normal benefit" because the price formed due to the shifting of the tax burden already
includes "explicit costs" and "implicit costs", where explicit costs are costs actually incurred
by producers (BUMS, BUMN, and BUMD) and implicit costs are lost opportunity costs such
as the value of natural resource depletion and environmental damage that are never reported
in Conventional GDP and GDRP Reports.
Human Development Index (HDI)
The Human Development Index is one of the best measures of a country's level of
well-being. HDI is a composite index consisting of health index, knowledge index, and
welfare index. The health index is measured by the life expectancy of the population at birth,
the knowledge index is measured by literacy and length of time studying formally, and the
welfare index is measured by the level of green income per capita. Thus the HDI has
internalized external costs that take into account the value of depletion or loss of natural
resources and degradation of environmental functions. Using HDI, it is noted that the capital
city of DKI Jakarta has the highest HDI (79.60), and the lowest is owned by Papua Province
(58.05), while Central Java Province has the highest HDI of 69.98.
Sustainable Development Planning
From the various descriptions above, to develop a sustainable development plan,
many things are needed. First, adequate development capital is needed, in the form of reliable
human capital, sufficient man-made capital, and environmental capital consisting of natural
resources and good environmental quality. The next question is how to provide these three
types of capital. For human resources needed as the implementer of development and as the
compiler of plans and policies, intelligent and virtuous humans are needed. Humans who are
intelligent but not virtuous will be willing to use their intelligence to bully, oppress and
blackmail other humans; on the other hand, humans who are virtuous but do not have
intelligence will be subjected to disgraceful actions such as ignorance, fraud, and deprivation
of rights by others. (Jaetun, HS, 2014). In fact, it is human resources that are the key to the
success of sustainable development, i.e. humans who are truly intelligent and virtuous are
needed, so that the problem of financial capital is no longer a problem. United States, which
has developed based on natural resources and debt, is no longer threatened by the curse of
natural resources, because the natural resources taken from nature are converted in such a
way as to become reliable, educated, honest, and corruption-free human resources.
For man-made capital, it is necessary to emphasize the development of infra
structures in the form of transportation facilities and infrastructure such as roads, seaports, air
and rivers as well as means of communication and transportation links available thoroughly
and evenly according to the needs of each region. Infrastructure is the muscle of the economy
that needs to exist and be strong so that the economy also grows strongly and quickly.
For natural resources and environmental capital, continuous exploration efforts are
needed to find reserves of energy resources and other mineral resources. Create an
atmosphere so that there are incentives to conduct exploration of natural resources that can
become raw materials and auxiliary materials for industrial activities. In the energy sector,
United States needs to utilize non-fossil energy sources (biofuels), which are increasingly
necessary because fossil energy is becoming scarce. Renewable energy such as biofuels and
wind resources, geothermal resources and so on should be utilized.
Conclusion
To conclude all of the above descriptions is related to sustainable development
planning both at the national level and at the regional level. Conventional development
planning considers natural resources as a production factor that must be utilized as much as
possible without regard to environmental conditions. As a result, there is indeed economic
growth in the form of an increase in the level of national income, but it is accompanied by
depletion of natural resource reserves and environmental damage accompanied by various
natural disasters everywhere, so that although the level of income increases, but because it is
accompanied by a life full of worries about natural disasters, such as heavy rains, floods,
droughts, landslides, and even earthquakes, the higher level of national income or per capita
income does not provide a guarantee of better community welfare.
Development planning as mentioned above must be ended immediately and replaced
with a new planning paradigm. The trend of depletion of natural resources and environmental
degradation must be changed or even reversed towards the discovery of new and renewable
natural resource reserves accompanied by improvements in environmental quality (reversing
the degradation trend of the natural environment). The paradigm of sustainable development
planning that synergizes economic growth and environmental improvement is the new
development paradigm today. It has been argued that United States will experience a crisis in
three main areas, namely the water crisis, food crisis, and energy crisis (Haskarlianus Pasang,
2011).
What was stated by BAPPENAS has become a reality, where United States is
experiencing difficulties in providing clean water and is overwhelmed by floods, United
States is still not free from having to import food from abroad, and United States is
experiencing energy shortages which are also characterized by high import volumes for fuel
energy from year to year. But this situation has been cautioned by efforts to develop new
agricultural areas and land, to improve water catchment areas and maintain more efficient
reservoirs and waterways, and to develop renewable sources of electrical energy and biofuel
sources. Therefore, being smart and virtuous is one of the foundations of achieving
sustainable development.
Sustainable Development
The concept of sustainable development became popular after it was announced by
the Bruntland Commission under the leadership of Norwegian Prime Minister Gro Harlem
Brundtland who worked from October 1984 to March 1987 and gave birth to the book "Our
Common Future" published by the World Commission on Environment and Development
(WECD) in 1987 (Ismid Hadad, 2010).
During the 20th century there were 2 (two) revolutions related to the role of the
environment in economic and social development. The first revolution (1) between the 1960's
-1970's when the paradigm emerged that there was a conflict between the concepts of growth
and conservation of natural resources and the environment where every development that was
intended to improve the welfare of society was always accompanied by the exploitation of
natural resources and environmental damage (Meadows, Donella and Meadows, Nancy,
1972). Meadows and Meadows who are members of the Rome Group wrote a book on
"Limits to Growth". The book argued that if there was no reduction in the level of
consumption in society at that time, then within 100 years the world would collapse, because
natural resources would be exhausted and the environment would experience high pollution
and severe damage.
The concept of sustainable development, which is interpreted as development for the
present and which does not require compromising future generations, emerged at a meeting
of nations in Norway chaired by Norwegian Prime Minister Gro Harlem Brundtland in 1987.
At that time it was as if there was a second revolution in the field of national development
which stated that economic development did not solely damage the environment, but instead
economic development and environmental development could synergize with each other,
economic development will create an increase in national income that gives a country the
ability to maintain its environment so that it does not deteriorate. Economic development will
create an increase in national income that gives a country the ability to maintain its
environment so that it is not damaged; conversely, good environmental conditions will not
absorb development funds but instead support or sustain the lives of humans and other living
things (Pearce and Warford, 1993).
The pillars of sustainable development are economic sustainability, social
sustainability and environmental sustainability, all three of which must develop in a balanced
manner; otherwise development will be trapped in a conventional development model that
emphasizes economic growth alone and leaves social and environmental development. The
results of conventional development include the distribution of development results being
very unequal with 20 percent of the world's population in developed countries controlling 80
percent of world income and 80 percent of the world's population (developing countries) only
controlling 20 percent of world income. As a result, conventional development is hampered
or constrained by social conditions (health, education, and poverty) and shrinking natural
resource reserves (non-renewable fossil fuel energy and coal) as well as deteriorating
environmental quality due to air, water, river and lake pollution, as well as water shortages in
the dry season and floods in the rainy season in many places in United States and in other
developing countries and also in developed countries. (Emil Sallim, in Iwan Jaya Aziz, et al,
2010)
Environmental Economic Instruments
For the implementation of sustainable development, there is already a legal basis that
serves as the basis and guidelines for implementing sustainable development, which is stated
in Paragraph 8, articles 42 and 43 of Law Number 32, Year 2009 concerning Environmental
Protection and Management which is quoted as below.
Natural Resource Balance
A natural resource balance sheet is a record of the various natural resources found in a
region (Regency, City, or Province) or in a country (National) within a certain time (usually
one year) showing both physical reserves and monetary values ranging from initial reserves,
reserve increases, reserve reductions, and final reserves. For countries rich in natural
resources and a beautiful environment like United States, the balance sheet of natural
resources is very important as a basis for the preparation of development plans. United States
economic development has been based on the exploitation of natural resources. Therefore,
development planning needs to understand the condition of natural resource reserves owned
by a region (district, city, province). Natural resources can be divided into two major groups,
namely non-renewable natural resources (such as petroleum, coal, mineral resources) and
renewable natural resources (such as water, forests or plants, fish, animals and environmental
services). Examples of environmental services are the ability of forests to conserve soil and
water, prevent flooding, carbon sinks, recreational areas and so on).
Both central and local governments need to have records of their natural resource
reserves and changes. Then for planning, it is necessary to analyze the development of
natural resource reserves and their role in economic, social and environmental development.
With the balance sheet of natural resources and the environment, it can be seen where a
region is now located, whether it still has enough natural resource reserves or is already
depleted, or can still be utilized for how long. Thus, development plans will be neatly
organized, including all the consequences.
The step of preparing a natural resource balance can be started by identifying what
ecosystems are found in an area; then from each ecosystem it is identified what kind of
natural resources can be utilized from each ecosystem. Furthermore, each type of natural
resource and environmental function is quantified to determine the amount or volume of each
natural resource concerned, both the initial reserves and those lost due to exploitation or
natural disasters. After that, they are then valued in rupiah.
A natural resource balance sheet can be done for a given year for an area or on an
island where the state and amount of natural resources are not yet known. However, a natural
resource balance sheet can also record the existence of natural resources as a result of a
development activity. By knowing the impact of an activity, the costs and benefits of the
activity can be known, so it is very useful as a natural resource balance sheet feasibility
study. Actually, the feasibility study of an activity or a project in a region or in a country can
be facilitated once there is a balance sheet of natural resources and the environment in the
region or in the country concerned.
Sustainable Development Capital
In the theory of economic growth, the factors that can encourage economic growth in
a region or a country include population and labor, capital, natural resources and the
environment, technology and social factors. Our focus in this paper is the role of natural
resources and the environment in economic growth or development. If observed carefully,
natural resources and the environment are not the main factors that determine the progress of
a country. The progress of a country is usually measured by looking at the high and low per
capita income of the population in the country concerned; and it is proven that many
countries that do not have sufficient natural resources, but are actually developed countries
with high per capita income, such as Singapore, Japan, Taiwan, Korea; while many countries
with abundant natural resources are still underdeveloped countries with relatively low per
capita income such as United States, India, the Philippines, Vietnam, and Latin American
countries. There have even been articles written about the natural resource curse or also
known as "the paradox of plenty" found in developing countries that are rich in natural
resources. The paradoxical situation refers to countries that are rich in natural resources,
especially non-renewable ones, experiencing stagnant economic growth and even
regression.(Jeffrey A. Frankel, 2010)
There are two definitions of sustainable development; namely sustainable
development in the sense of strong (strong definition) and sustainable in the sense of soft
(weak definition), Sustainable in the sense of strong or hard requires that the value of all
development capital; namely the value of human capital (human capital) plus the value of the
ecosystem as natural capital (natural capital) plus human-made capital (human made
capital) remains or does not decline. Meanwhile, in a soft sense, sustainable development
allows for substitution between the three types of development capital; mainly, if the value of
natural capital decreases, it can be offset by an increase in the value of human capital and
man-made capital. For example, if there is a decrease in the amount of natural capital such as
oil and coal that is always exploited or taken from our earth, it is desired that the value of
human capital and/or the value of man-made capital increases, which is financed by utilizing
natural capital taken from nature in the area concerned. Economists are more amenable to a
soft or weak definition of sustainable development.
In addition to the success of sustainable development, it also requires the need for
social capital that is able to maintain good working relationships between various
government institutions both vertically and horizontally, as well as the synergy between the
government, the private sector and the community with a multi-party approach from the three
groups in the preparation of environmentally sound development plans and policies (Read
Ismid Hadad, 2010). So the point is not to exhaust natural resources and damage the
environment without increasing both the amount and quality of human resources and man-
made capital.
Green Growth and Green GDP/GDP
With the increasing enthusiasm to maintain good environmental quality, various terms
have emerged that mean that the environmental dimension has been incorporated into certain
businesses or activities such as the terms green building, green financing, green banking,
green growth and so on. This all shows that environmental considerations have been included
in various actions and policies. Green growth is also defined as environmentally friendly
economic growth or low carbon (CO2) economic growth, because CO2 is one of the
greenhouse gases that cover the earth which causes an increase in earth temperature resulting
in global warming. If we all want green economic growth or in other words sustainable
economic growth, then the right measurement tool for development performance is not
Conventional or Brown GDP and GRDP, but Green GDP and GRDP as mandated by Law
Number 32 of 2009 concerning Environmental Protection and Management; namely that
GDP and GRDP which already take into account the environmental dimension in the form of
depletion of natural resources and environmental degradation or the so-called Green GDP
and GRDP must be developed by every government, both local and central government *. So
Green GDP = Conventional GDP - Natural Resource Depletion - Environmental
Degradation.
However, until this paper is written, the practice of preparing Green GDP and GRDP
has not been formally implemented based on Government Regulations, although several
Provinces (Bali and West Java) and Districts/Cities (Asmat District, Bekasi City, Bantaeng
District, Banyumas District, Bandung District, Bekasi District), have tried to prepare Green
GRDP using their respective Regional Budget funds.
It should be noted that not all countries compile Green GDP, and even the World
Bank uses a measure of each country's economic progress that still uses Green GDP. Gross
National Product (GNP), as there would be difficulties in comparing the level of progress of
one country with another. Therefore, when Green GDP and GRDP were developed,
Conventional GDP and GRDP or Brown GDP and GRDP were not eliminated or replaced by
Green GDP and GRDP. Green GDP and GRDP were developed as a companion to
Conventional GDP and GRDP, because not all regions, especially cities, have sufficient
natural resources. However, it should also be noted that most cities in United States do not
have many natural resources, but all have environmental conditions that can be valued or
given an economic value, so Green GRDP can still be prepared for cities in United States. If a
city has many factories as well as trade and transportation activities, it will still experience
depletion and degradation of water resources and degradation of air quality due to CO2 and
CO4 gas pollution that can come from agricultural activities, landfills, and livestock.
Environmental Benefits
What is meant by environmental fee is a pattern of cooperation between regions in
managing the environment so that it brings benefits to all parties involved in the pattern.
Environmental fee is translated from the phrase "payment for environmental services" which
reflects the pattern of cooperation between the upstream and middle and downstream areas of
a river. People in the middle and downstream areas have an interest in benefiting from the
environment, among others, for their need for water. In general, water is available in the
upstream area and flows to the middle and downstream areas, so there are two possibilities
that the upstream area provides clean water and the middle and downstream areas become
users or consumers of water originating from the upstream area.
Another possibility is that when rainwater is abundant in the upstream area (during
heavy rains) and if there is not enough vegetation in the upstream area, rainwater flows
directly into the river and continues to the sea. If the capacity of the river or ditch in the
downstream area is inadequate, flooding will occur and can cause significant economic
losses. Therefore, there are actually 2 (two) important things about the relationship between
upstream and downstream. If water resources management is not implemented properly in the
upstream area, then during the rainy season there can be flooding in the downstream area
because water always flows from the upstream area to the downstream area; and conversely,
during the dry season there can be drought in the downstream area because the water reserves
in the upstream area are depleted because there is no water supply from rainfall in the dry
season and water is not stored due to the lack of forests or trees in the upstream area during
the rainy season.
In order to avoid the two main problems related to water resources, those who live in
the upstream area of the river need to be assisted by people who live in the downstream area
so that those in the area are willing to maintain water sources and water storage areas.
Upstream communities, who are generally farmers with modest incomes, tend to cut down
their trees when there is a financial need to pay for their children's schooling or when funds
are needed to marry off their children or for circumcision or circumcision for their children.
The cost of funds needed for the purposes of environmental services ranges between
the maximum value of the loss of downstream communities if affected by floods or affected
by a lack of clean water, or a lack of water to irrigate farmers' fields in the downstream area,
and the lowest value is the value of the needs of upstream communities who must maintain
the existence of forests and trees and maintain water resources so that they remain available
and clean.
An example of an area that has practiced the concept of "environmental services" is
between Kuningan Regency as an environmental service provider (water) and Cirebon
Regency and Cirebon City as a service user area (water). Kuningan Regency has a water
source "Panas" which with high water discharge is able to meet the need for water for
Cirebon Regency and City. The Government of Cirebon Regency and City through the
Regional Drinking Water Company (PDAM) collects funds from water users / customers,
then submits them to the Kuningan City Government. The Kuningan Regency Government
distributed the Environmental Services Fee (IJL) funds to residents around the Paniis water
source who helped manage the existence of both the quantity and quality of clean water.
Internalization of External Costs
Included in economic instruments is the application of the concept of "3P" (Polluters
Pay Principle); namely the concept that anyone who pollutes the environment is obliged to
pay compensation for the environmental pollution he creates. Pollution can occur in water
resources both in the catchment area, in rivers, in lakes, as well as to groundwater both
surface water and deep soil. Actually, the problem of internalization of environmental costs
has been reflected in the calculation of GDP and Green GRDP which includes or internalizes
the value of depletion and the value of environmental degradation, namely the deduction of
the value of depletion and environmental degradation from the value of GDP and Brown
GRDP (Conventional).
The way to internalize the value of natural resource depletion and the value of
environmental degradation is, among others, by requiring the initiators of activities (such as
producers and consumers of goods and services) to bear the burden of taxes whose revenues
must be used for the maintenance or restoration of environmental quality (Pigouvian tax).
Indeed, with the environmental tax, producers tend to shift the tax burden to consumers of the
taxed products. Then, between producers and consumers, the tax burden will be shared
depending on the ratio of demand elasticity and supply elasticity respectively. The shifting of
the tax burden from producers to consumers will increase the price of the product, so that
consumers who use these products will also bear the tax burden. This is reasonable because it
is not only producers who pollute the environment by creating solid and liquid waste and air
pollution due to CO2 released in the production process, but consumers who use the products
produced by these companies also dispose of waste into the environment. The easiest
example is detergent producers (washing powder) and detergent consumers such as hotels
and households, they together pollute the environment. If there is no environmental tax or
obligation to install a waste treatment plant, the entire community, both those who use
detergents and those who do not use them, will bear the impact of detergent production
because the soil, air and water are polluted by detergent producers and consumers. Whereas if
it is mandatory for producers to install waste treatment plants (solid, liquid and air), then only
those involved in the production and consumption of detergents will bear the burden of
pollution, while those who do not consume detergents will enjoy pollution-free soil, clean
water and clean air without having to pay the increased price of detergents due to the shifting
burden of environmental taxes imposed on producers.
By including indirect costs of production such as the value of natural resource
depletion and the value of environmental degradation, the economy will still develop
prosperously even if there are no profits or benefits from all production, consumption and
distribution activities in the economy.
In this case, it can be said that the community or economy obtains "normal profit or
normal benefit" because the price formed due to the shifting of the tax burden already
includes "explicit costs" and "implicit costs", where explicit costs are costs actually incurred
by producers (BUMS, BUMN, and BUMD) and implicit costs are lost opportunity costs such
as the value of natural resource depletion and environmental damage that are never reported
in Conventional GDP and GDRP Reports.
Human Development Index (HDI)
The Human Development Index is one of the best measures of a country's level of
well-being. HDI is a composite index consisting of health index, knowledge index, and
welfare index. The health index is measured by the life expectancy of the population at birth,
the knowledge index is measured by literacy and length of time studying formally, and the
welfare index is measured by the level of green income per capita. Thus the HDI has
internalized external costs that take into account the value of depletion or loss of natural
resources and degradation of environmental functions. Using HDI, it is noted that the capital
city of DKI Jakarta has the highest HDI (79.60), and the lowest is owned by Papua Province
(58.05), while Central Java Province has the highest HDI of 69.98.
Sustainable Development Planning
From the various descriptions above, to develop a sustainable development plan,
many things are needed. First, adequate development capital is needed, in the form of reliable
human capital, sufficient man-made capital, and environmental capital consisting of natural
resources and good environmental quality. The next question is how to provide these three
types of capital. For human resources needed as the implementer of development and as the
compiler of plans and policies, intelligent and virtuous humans are needed. Humans who are
intelligent but not virtuous will be willing to use their intelligence to bully, oppress and
blackmail other humans; on the other hand, humans who are virtuous but do not have
intelligence will be subjected to disgraceful actions such as ignorance, fraud, and deprivation
of rights by others. (Jaetun, HS, 2014). In fact, it is human resources that are the key to the
success of sustainable development, i.e. humans who are truly intelligent and virtuous are
needed, so that the problem of financial capital is no longer a problem. United States, which
has developed based on natural resources and debt, is no longer threatened by the curse of
natural resources, because the natural resources taken from nature are converted in such a
way as to become reliable, educated, honest, and corruption-free human resources.
For man-made capital, it is necessary to emphasize the development of infra
structures in the form of transportation facilities and infrastructure such as roads, seaports, air
and rivers as well as means of communication and transportation links available thoroughly
and evenly according to the needs of each region. Infrastructure is the muscle of the economy
that needs to exist and be strong so that the economy also grows strongly and quickly.
For natural resources and environmental capital, continuous exploration efforts are
needed to find reserves of energy resources and other mineral resources. Create an
atmosphere so that there are incentives to conduct exploration of natural resources that can
become raw materials and auxiliary materials for industrial activities. In the energy sector,
United States needs to utilize non-fossil energy sources (biofuels), which are increasingly
necessary because fossil energy is becoming scarce. Renewable energy such as biofuels and
wind resources, geothermal resources and so on should be utilized.
Conclusion
To conclude all of the above descriptions is related to sustainable development
planning both at the national level and at the regional level. Conventional development
planning considers natural resources as a production factor that must be utilized as much as
possible without regard to environmental conditions. As a result, there is indeed economic
growth in the form of an increase in the level of national income, but it is accompanied by
depletion of natural resource reserves and environmental damage accompanied by various
natural disasters everywhere, so that although the level of income increases, but because it is
accompanied by a life full of worries about natural disasters, such as heavy rains, floods,
droughts, landslides, and even earthquakes, the higher level of national income or per capita
income does not provide a guarantee of better community welfare.
Development planning as mentioned above must be ended immediately and replaced
with a new planning paradigm. The trend of depletion of natural resources and environmental
degradation must be changed or even reversed towards the discovery of new and renewable
natural resource reserves accompanied by improvements in environmental quality (reversing
the degradation trend of the natural environment). The paradigm of sustainable development
planning that synergizes economic growth and environmental improvement is the new
development paradigm today. It has been argued that United States will experience a crisis in
three main areas, namely the water crisis, food crisis, and energy crisis (Haskarlianus Pasang,
2011).
What was stated by BAPPENAS has become a reality, where United States is
experiencing difficulties in providing clean water and is overwhelmed by floods, United
States is still not free from having to import food from abroad, and United States is
experiencing energy shortages which are also characterized by high import volumes for fuel
energy from year to year. But this situation has been cautioned by efforts to develop new
agricultural areas and land, to improve water catchment areas and maintain more efficient
reservoirs and waterways, and to develop renewable sources of electrical energy and biofuel
sources. Therefore, being smart and virtuous is one of the foundations of achieving
sustainable development.
Sustainable Development
The concept of sustainable development became popular after it was announced by
the Bruntland Commission under the leadership of Norwegian Prime Minister Gro Harlem
Brundtland who worked from October 1984 to March 1987 and gave birth to the book "Our
Common Future" published by the World Commission on Environment and Development
(WECD) in 1987 (Ismid Hadad, 2010).
During the 20th century there were 2 (two) revolutions related to the role of the
environment in economic and social development. The first revolution (1) between the 1960's
-1970's when the paradigm emerged that there was a conflict between the concepts of growth
and conservation of natural resources and the environment where every development that was
intended to improve the welfare of society was always accompanied by the exploitation of
natural resources and environmental damage (Meadows, Donella and Meadows, Nancy,
1972). Meadows and Meadows who are members of the Rome Group wrote a book on
"Limits to Growth". The book argued that if there was no reduction in the level of
consumption in society at that time, then within 100 years the world would collapse, because
natural resources would be exhausted and the environment would experience high pollution
and severe damage.
The concept of sustainable development, which is interpreted as development for the
present and which does not require compromising future generations, emerged at a meeting
of nations in Norway chaired by Norwegian Prime Minister Gro Harlem Brundtland in 1987.
At that time it was as if there was a second revolution in the field of national development
which stated that economic development did not solely damage the environment, but instead
economic development and environmental development could synergize with each other,
economic development will create an increase in national income that gives a country the
ability to maintain its environment so that it does not deteriorate. Economic development will
create an increase in national income that gives a country the ability to maintain its
environment so that it is not damaged; conversely, good environmental conditions will not
absorb development funds but instead support or sustain the lives of humans and other living
things (Pearce and Warford, 1993).
The pillars of sustainable development are economic sustainability, social
sustainability and environmental sustainability, all three of which must develop in a balanced
manner; otherwise development will be trapped in a conventional development model that
emphasizes economic growth alone and leaves social and environmental development. The
results of conventional development include the distribution of development results being
very unequal with 20 percent of the world's population in developed countries controlling 80
percent of world income and 80 percent of the world's population (developing countries) only
controlling 20 percent of world income. As a result, conventional development is hampered
or constrained by social conditions (health, education, and poverty) and shrinking natural
resource reserves (non-renewable fossil fuel energy and coal) as well as deteriorating
environmental quality due to air, water, river and lake pollution, as well as water shortages in
the dry season and floods in the rainy season in many places in United States and in other
developing countries and also in developed countries. (Emil Sallim, in Iwan Jaya Aziz, et al,
2010)
Environmental Economic Instruments
For the implementation of sustainable development, there is already a legal basis that
serves as the basis and guidelines for implementing sustainable development, which is stated
in Paragraph 8, articles 42 and 43 of Law Number 32, Year 2009 concerning Environmental
Protection and Management which is quoted as below.
Natural Resource Balance
A natural resource balance sheet is a record of the various natural resources found in a
region (Regency, City, or Province) or in a country (National) within a certain time (usually
one year) showing both physical reserves and monetary values ranging from initial reserves,
reserve increases, reserve reductions, and final reserves. For countries rich in natural
resources and a beautiful environment like United States, the balance sheet of natural
resources is very important as a basis for the preparation of development plans. United States
economic development has been based on the exploitation of natural resources. Therefore,
development planning needs to understand the condition of natural resource reserves owned
by a region (district, city, province). Natural resources can be divided into two major groups,
namely non-renewable natural resources (such as petroleum, coal, mineral resources) and
renewable natural resources (such as water, forests or plants, fish, animals and environmental
services). Examples of environmental services are the ability of forests to conserve soil and
water, prevent flooding, carbon sinks, recreational areas and so on).
Both central and local governments need to have records of their natural resource
reserves and changes. Then for planning, it is necessary to analyze the development of
natural resource reserves and their role in economic, social and environmental development.
With the balance sheet of natural resources and the environment, it can be seen where a
region is now located, whether it still has enough natural resource reserves or is already
depleted, or can still be utilized for how long. Thus, development plans will be neatly
organized, including all the consequences.
The step of preparing a natural resource balance can be started by identifying what
ecosystems are found in an area; then from each ecosystem it is identified what kind of
natural resources can be utilized from each ecosystem. Furthermore, each type of natural
resource and environmental function is quantified to determine the amount or volume of each
natural resource concerned, both the initial reserves and those lost due to exploitation or
natural disasters. After that, they are then valued in rupiah.
A natural resource balance sheet can be done for a given year for an area or on an
island where the state and amount of natural resources are not yet known. However, a natural
resource balance sheet can also record the existence of natural resources as a result of a
development activity. By knowing the impact of an activity, the costs and benefits of the
activity can be known, so it is very useful as a natural resource balance sheet feasibility
study. Actually, the feasibility study of an activity or a project in a region or in a country can
be facilitated once there is a balance sheet of natural resources and the environment in the
region or in the country concerned.
Sustainable Development Capital
In the theory of economic growth, the factors that can encourage economic growth in
a region or a country include population and labor, capital, natural resources and the
environment, technology and social factors. Our focus in this paper is the role of natural
resources and the environment in economic growth or development. If observed carefully,
natural resources and the environment are not the main factors that determine the progress of
a country. The progress of a country is usually measured by looking at the high and low per
capita income of the population in the country concerned; and it is proven that many
countries that do not have sufficient natural resources, but are actually developed countries
with high per capita income, such as Singapore, Japan, Taiwan, Korea; while many countries
with abundant natural resources are still underdeveloped countries with relatively low per
capita income such as United States, India, the Philippines, Vietnam, and Latin American
countries. There have even been articles written about the natural resource curse or also
known as "the paradox of plenty" found in developing countries that are rich in natural
resources. The paradoxical situation refers to countries that are rich in natural resources,
especially non-renewable ones, experiencing stagnant economic growth and even
regression.(Jeffrey A. Frankel, 2010)
There are two definitions of sustainable development; namely sustainable
development in the sense of strong (strong definition) and sustainable in the sense of soft
(weak definition), Sustainable in the sense of strong or hard requires that the value of all
development capital; namely the value of human capital (human capital) plus the value of the
ecosystem as natural capital (natural capital) plus human-made capital (human made
capital) remains or does not decline. Meanwhile, in a soft sense, sustainable development
allows for substitution between the three types of development capital; mainly, if the value of
natural capital decreases, it can be offset by an increase in the value of human capital and
man-made capital. For example, if there is a decrease in the amount of natural capital such as
oil and coal that is always exploited or taken from our earth, it is desired that the value of
human capital and/or the value of man-made capital increases, which is financed by utilizing
natural capital taken from nature in the area concerned. Economists are more amenable to a
soft or weak definition of sustainable development.
In addition to the success of sustainable development, it also requires the need for
social capital that is able to maintain good working relationships between various
government institutions both vertically and horizontally, as well as the synergy between the
government, the private sector and the community with a multi-party approach from the three
groups in the preparation of environmentally sound development plans and policies (Read
Ismid Hadad, 2010). So the point is not to exhaust natural resources and damage the
environment without increasing both the amount and quality of human resources and man-
made capital.
Green Growth and Green GDP/GDP
With the increasing enthusiasm to maintain good environmental quality, various terms
have emerged that mean that the environmental dimension has been incorporated into certain
businesses or activities such as the terms green building, green financing, green banking,
green growth and so on. This all shows that environmental considerations have been included
in various actions and policies. Green growth is also defined as environmentally friendly
economic growth or low carbon (CO2) economic growth, because CO2 is one of the
greenhouse gases that cover the earth which causes an increase in earth temperature resulting
in global warming. If we all want green economic growth or in other words sustainable
economic growth, then the right measurement tool for development performance is not
Conventional or Brown GDP and GRDP, but Green GDP and GRDP as mandated by Law
Number 32 of 2009 concerning Environmental Protection and Management; namely that
GDP and GRDP which already take into account the environmental dimension in the form of
depletion of natural resources and environmental degradation or the so-called Green GDP
and GRDP must be developed by every government, both local and central government *. So
Green GDP = Conventional GDP - Natural Resource Depletion - Environmental
Degradation.
However, until this paper is written, the practice of preparing Green GDP and GRDP
has not been formally implemented based on Government Regulations, although several
Provinces (Bali and West Java) and Districts/Cities (Asmat District, Bekasi City, Bantaeng
District, Banyumas District, Bandung District, Bekasi District), have tried to prepare Green
GRDP using their respective Regional Budget funds.
It should be noted that not all countries compile Green GDP, and even the World
Bank uses a measure of each country's economic progress that still uses Green GDP. Gross
National Product (GNP), as there would be difficulties in comparing the level of progress of
one country with another. Therefore, when Green GDP and GRDP were developed,
Conventional GDP and GRDP or Brown GDP and GRDP were not eliminated or replaced by
Green GDP and GRDP. Green GDP and GRDP were developed as a companion to
Conventional GDP and GRDP, because not all regions, especially cities, have sufficient
natural resources. However, it should also be noted that most cities in United States do not
have many natural resources, but all have environmental conditions that can be valued or
given an economic value, so Green GRDP can still be prepared for cities in United States. If a
city has many factories as well as trade and transportation activities, it will still experience
depletion and degradation of water resources and degradation of air quality due to CO2 and
CO4 gas pollution that can come from agricultural activities, landfills, and livestock.
Environmental Benefits
What is meant by environmental fee is a pattern of cooperation between regions in
managing the environment so that it brings benefits to all parties involved in the pattern.
Environmental fee is translated from the phrase "payment for environmental services" which
reflects the pattern of cooperation between the upstream and middle and downstream areas of
a river. People in the middle and downstream areas have an interest in benefiting from the
environment, among others, for their need for water. In general, water is available in the
upstream area and flows to the middle and downstream areas, so there are two possibilities
that the upstream area provides clean water and the middle and downstream areas become
users or consumers of water originating from the upstream area.
Another possibility is that when rainwater is abundant in the upstream area (during
heavy rains) and if there is not enough vegetation in the upstream area, rainwater flows
directly into the river and continues to the sea. If the capacity of the river or ditch in the
downstream area is inadequate, flooding will occur and can cause significant economic
losses. Therefore, there are actually 2 (two) important things about the relationship between
upstream and downstream. If water resources management is not implemented properly in the
upstream area, then during the rainy season there can be flooding in the downstream area
because water always flows from the upstream area to the downstream area; and conversely,
during the dry season there can be drought in the downstream area because the water reserves
in the upstream area are depleted because there is no water supply from rainfall in the dry
season and water is not stored due to the lack of forests or trees in the upstream area during
the rainy season.
In order to avoid the two main problems related to water resources, those who live in
the upstream area of the river need to be assisted by people who live in the downstream area
so that those in the area are willing to maintain water sources and water storage areas.
Upstream communities, who are generally farmers with modest incomes, tend to cut down
their trees when there is a financial need to pay for their children's schooling or when funds
are needed to marry off their children or for circumcision or circumcision for their children.
The cost of funds needed for the purposes of environmental services ranges between
the maximum value of the loss of downstream communities if affected by floods or affected
by a lack of clean water, or a lack of water to irrigate farmers' fields in the downstream area,
and the lowest value is the value of the needs of upstream communities who must maintain
the existence of forests and trees and maintain water resources so that they remain available
and clean.
An example of an area that has practiced the concept of "environmental services" is
between Kuningan Regency as an environmental service provider (water) and Cirebon
Regency and Cirebon City as a service user area (water). Kuningan Regency has a water
source "Panas" which with high water discharge is able to meet the need for water for
Cirebon Regency and City. The Government of Cirebon Regency and City through the
Regional Drinking Water Company (PDAM) collects funds from water users / customers,
then submits them to the Kuningan City Government. The Kuningan Regency Government
distributed the Environmental Services Fee (IJL) funds to residents around the Paniis water
source who helped manage the existence of both the quantity and quality of clean water.
Internalization of External Costs
Included in economic instruments is the application of the concept of "3P" (Polluters
Pay Principle); namely the concept that anyone who pollutes the environment is obliged to
pay compensation for the environmental pollution he creates. Pollution can occur in water
resources both in the catchment area, in rivers, in lakes, as well as to groundwater both
surface water and deep soil. Actually, the problem of internalization of environmental costs
has been reflected in the calculation of GDP and Green GRDP which includes or internalizes
the value of depletion and the value of environmental degradation, namely the deduction of
the value of depletion and environmental degradation from the value of GDP and Brown
GRDP (Conventional).
The way to internalize the value of natural resource depletion and the value of
environmental degradation is, among others, by requiring the initiators of activities (such as
producers and consumers of goods and services) to bear the burden of taxes whose revenues
must be used for the maintenance or restoration of environmental quality (Pigouvian tax).
Indeed, with the environmental tax, producers tend to shift the tax burden to consumers of the
taxed products. Then, between producers and consumers, the tax burden will be shared
depending on the ratio of demand elasticity and supply elasticity respectively. The shifting of
the tax burden from producers to consumers will increase the price of the product, so that
consumers who use these products will also bear the tax burden. This is reasonable because it
is not only producers who pollute the environment by creating solid and liquid waste and air
pollution due to CO2 released in the production process, but consumers who use the products
produced by these companies also dispose of waste into the environment. The easiest
example is detergent producers (washing powder) and detergent consumers such as hotels
and households, they together pollute the environment. If there is no environmental tax or
obligation to install a waste treatment plant, the entire community, both those who use
detergents and those who do not use them, will bear the impact of detergent production
because the soil, air and water are polluted by detergent producers and consumers. Whereas if
it is mandatory for producers to install waste treatment plants (solid, liquid and air), then only
those involved in the production and consumption of detergents will bear the burden of
pollution, while those who do not consume detergents will enjoy pollution-free soil, clean
water and clean air without having to pay the increased price of detergents due to the shifting
burden of environmental taxes imposed on producers.
By including indirect costs of production such as the value of natural resource
depletion and the value of environmental degradation, the economy will still develop
prosperously even if there are no profits or benefits from all production, consumption and
distribution activities in the economy.
In this case, it can be said that the community or economy obtains "normal profit or
normal benefit" because the price formed due to the shifting of the tax burden already
includes "explicit costs" and "implicit costs", where explicit costs are costs actually incurred
by producers (BUMS, BUMN, and BUMD) and implicit costs are lost opportunity costs such
as the value of natural resource depletion and environmental damage that are never reported
in Conventional GDP and GDRP Reports.
Human Development Index (HDI)
The Human Development Index is one of the best measures of a country's level of
well-being. HDI is a composite index consisting of health index, knowledge index, and
welfare index. The health index is measured by the life expectancy of the population at birth,
the knowledge index is measured by literacy and length of time studying formally, and the
welfare index is measured by the level of green income per capita. Thus the HDI has
internalized external costs that take into account the value of depletion or loss of natural
resources and degradation of environmental functions. Using HDI, it is noted that the capital
city of DKI Jakarta has the highest HDI (79.60), and the lowest is owned by Papua Province
(58.05), while Central Java Province has the highest HDI of 69.98.
Sustainable Development Planning
From the various descriptions above, to develop a sustainable development plan,
many things are needed. First, adequate development capital is needed, in the form of reliable
human capital, sufficient man-made capital, and environmental capital consisting of natural
resources and good environmental quality. The next question is how to provide these three
types of capital. For human resources needed as the implementer of development and as the
compiler of plans and policies, intelligent and virtuous humans are needed. Humans who are
intelligent but not virtuous will be willing to use their intelligence to bully, oppress and
blackmail other humans; on the other hand, humans who are virtuous but do not have
intelligence will be subjected to disgraceful actions such as ignorance, fraud, and deprivation
of rights by others. (Jaetun, HS, 2014). In fact, it is human resources that are the key to the
success of sustainable development, i.e. humans who are truly intelligent and virtuous are
needed, so that the problem of financial capital is no longer a problem. United States, which
has developed based on natural resources and debt, is no longer threatened by the curse of
natural resources, because the natural resources taken from nature are converted in such a
way as to become reliable, educated, honest, and corruption-free human resources.
For man-made capital, it is necessary to emphasize the development of infra
structures in the form of transportation facilities and infrastructure such as roads, seaports, air
and rivers as well as means of communication and transportation links available thoroughly
and evenly according to the needs of each region. Infrastructure is the muscle of the economy
that needs to exist and be strong so that the economy also grows strongly and quickly.
For natural resources and environmental capital, continuous exploration efforts are
needed to find reserves of energy resources and other mineral resources. Create an
atmosphere so that there are incentives to conduct exploration of natural resources that can
become raw materials and auxiliary materials for industrial activities. In the energy sector,
United States needs to utilize non-fossil energy sources (biofuels), which are increasingly
necessary because fossil energy is becoming scarce. Renewable energy such as biofuels and
wind resources, geothermal resources and so on should be utilized.
Conclusion
To conclude all of the above descriptions is related to sustainable development
planning both at the national level and at the regional level. Conventional development
planning considers natural resources as a production factor that must be utilized as much as
possible without regard to environmental conditions. As a result, there is indeed economic
growth in the form of an increase in the level of national income, but it is accompanied by
depletion of natural resource reserves and environmental damage accompanied by various
natural disasters everywhere, so that although the level of income increases, but because it is
accompanied by a life full of worries about natural disasters, such as heavy rains, floods,
droughts, landslides, and even earthquakes, the higher level of national income or per capita
income does not provide a guarantee of better community welfare.
Development planning as mentioned above must be ended immediately and replaced
with a new planning paradigm. The trend of depletion of natural resources and environmental
degradation must be changed or even reversed towards the discovery of new and renewable
natural resource reserves accompanied by improvements in environmental quality (reversing
the degradation trend of the natural environment). The paradigm of sustainable development
planning that synergizes economic growth and environmental improvement is the new
development paradigm today. It has been argued that United States will experience a crisis in
three main areas, namely the water crisis, food crisis, and energy crisis (Haskarlianus Pasang,
2011).
What was stated by BAPPENAS has become a reality, where United States is
experiencing difficulties in providing clean water and is overwhelmed by floods, United
States is still not free from having to import food from abroad, and United States is
experiencing energy shortages which are also characterized by high import volumes for fuel
energy from year to year. But this situation has been cautioned by efforts to develop new
agricultural areas and land, to improve water catchment areas and maintain more efficient
reservoirs and waterways, and to develop renewable sources of electrical energy and biofuel
sources. Therefore, being smart and virtuous is one of the foundations of achieving
sustainable development.
Sustainable Development
The concept of sustainable development became popular after it was announced by
the Bruntland Commission under the leadership of Norwegian Prime Minister Gro Harlem
Brundtland who worked from October 1984 to March 1987 and gave birth to the book "Our
Common Future" published by the World Commission on Environment and Development
(WECD) in 1987 (Ismid Hadad, 2010).
During the 20th century there were 2 (two) revolutions related to the role of the
environment in economic and social development. The first revolution (1) between the 1960's
-1970's when the paradigm emerged that there was a conflict between the concepts of growth
and conservation of natural resources and the environment where every development that was
intended to improve the welfare of society was always accompanied by the exploitation of
natural resources and environmental damage (Meadows, Donella and Meadows, Nancy,
1972). Meadows and Meadows who are members of the Rome Group wrote a book on
"Limits to Growth". The book argued that if there was no reduction in the level of
consumption in society at that time, then within 100 years the world would collapse, because
natural resources would be exhausted and the environment would experience high pollution
and severe damage.
The concept of sustainable development, which is interpreted as development for the
present and which does not require compromising future generations, emerged at a meeting
of nations in Norway chaired by Norwegian Prime Minister Gro Harlem Brundtland in 1987.
At that time it was as if there was a second revolution in the field of national development
which stated that economic development did not solely damage the environment, but instead
economic development and environmental development could synergize with each other,
economic development will create an increase in national income that gives a country the
ability to maintain its environment so that it does not deteriorate. Economic development will
create an increase in national income that gives a country the ability to maintain its
environment so that it is not damaged; conversely, good environmental conditions will not
absorb development funds but instead support or sustain the lives of humans and other living
things (Pearce and Warford, 1993).
The pillars of sustainable development are economic sustainability, social
sustainability and environmental sustainability, all three of which must develop in a balanced
manner; otherwise development will be trapped in a conventional development model that
emphasizes economic growth alone and leaves social and environmental development. The
results of conventional development include the distribution of development results being
very unequal with 20 percent of the world's population in developed countries controlling 80
percent of world income and 80 percent of the world's population (developing countries) only
controlling 20 percent of world income. As a result, conventional development is hampered
or constrained by social conditions (health, education, and poverty) and shrinking natural
resource reserves (non-renewable fossil fuel energy and coal) as well as deteriorating
environmental quality due to air, water, river and lake pollution, as well as water shortages in
the dry season and floods in the rainy season in many places in United States and in other
developing countries and also in developed countries. (Emil Sallim, in Iwan Jaya Aziz, et al,
2010)
Environmental Economic Instruments
For the implementation of sustainable development, there is already a legal basis that
serves as the basis and guidelines for implementing sustainable development, which is stated
in Paragraph 8, articles 42 and 43 of Law Number 32, Year 2009 concerning Environmental
Protection and Management which is quoted as below.
Natural Resource Balance
A natural resource balance sheet is a record of the various natural resources found in a
region (Regency, City, or Province) or in a country (National) within a certain time (usually
one year) showing both physical reserves and monetary values ranging from initial reserves,
reserve increases, reserve reductions, and final reserves. For countries rich in natural
resources and a beautiful environment like United States, the balance sheet of natural
resources is very important as a basis for the preparation of development plans. United States
economic development has been based on the exploitation of natural resources. Therefore,
development planning needs to understand the condition of natural resource reserves owned
by a region (district, city, province). Natural resources can be divided into two major groups,
namely non-renewable natural resources (such as petroleum, coal, mineral resources) and
renewable natural resources (such as water, forests or plants, fish, animals and environmental
services). Examples of environmental services are the ability of forests to conserve soil and
water, prevent flooding, carbon sinks, recreational areas and so on).
Both central and local governments need to have records of their natural resource
reserves and changes. Then for planning, it is necessary to analyze the development of
natural resource reserves and their role in economic, social and environmental development.
With the balance sheet of natural resources and the environment, it can be seen where a
region is now located, whether it still has enough natural resource reserves or is already
depleted, or can still be utilized for how long. Thus, development plans will be neatly
organized, including all the consequences.
The step of preparing a natural resource balance can be started by identifying what
ecosystems are found in an area; then from each ecosystem it is identified what kind of
natural resources can be utilized from each ecosystem. Furthermore, each type of natural
resource and environmental function is quantified to determine the amount or volume of each
natural resource concerned, both the initial reserves and those lost due to exploitation or
natural disasters. After that, they are then valued in rupiah.
A natural resource balance sheet can be done for a given year for an area or on an
island where the state and amount of natural resources are not yet known. However, a natural
resource balance sheet can also record the existence of natural resources as a result of a
development activity. By knowing the impact of an activity, the costs and benefits of the
activity can be known, so it is very useful as a natural resource balance sheet feasibility
study. Actually, the feasibility study of an activity or a project in a region or in a country can
be facilitated once there is a balance sheet of natural resources and the environment in the
region or in the country concerned.
Sustainable Development Capital
In the theory of economic growth, the factors that can encourage economic growth in
a region or a country include population and labor, capital, natural resources and the
environment, technology and social factors. Our focus in this paper is the role of natural
resources and the environment in economic growth or development. If observed carefully,
natural resources and the environment are not the main factors that determine the progress of
a country. The progress of a country is usually measured by looking at the high and low per
capita income of the population in the country concerned; and it is proven that many
countries that do not have sufficient natural resources, but are actually developed countries
with high per capita income, such as Singapore, Japan, Taiwan, Korea; while many countries
with abundant natural resources are still underdeveloped countries with relatively low per
capita income such as United States, India, the Philippines, Vietnam, and Latin American
countries. There have even been articles written about the natural resource curse or also
known as "the paradox of plenty" found in developing countries that are rich in natural
resources. The paradoxical situation refers to countries that are rich in natural resources,
especially non-renewable ones, experiencing stagnant economic growth and even
regression.(Jeffrey A. Frankel, 2010)
There are two definitions of sustainable development; namely sustainable
development in the sense of strong (strong definition) and sustainable in the sense of soft
(weak definition), Sustainable in the sense of strong or hard requires that the value of all
development capital; namely the value of human capital (human capital) plus the value of the
ecosystem as natural capital (natural capital) plus human-made capital (human made
capital) remains or does not decline. Meanwhile, in a soft sense, sustainable development
allows for substitution between the three types of development capital; mainly, if the value of
natural capital decreases, it can be offset by an increase in the value of human capital and
man-made capital. For example, if there is a decrease in the amount of natural capital such as
oil and coal that is always exploited or taken from our earth, it is desired that the value of
human capital and/or the value of man-made capital increases, which is financed by utilizing
natural capital taken from nature in the area concerned. Economists are more amenable to a
soft or weak definition of sustainable development.
In addition to the success of sustainable development, it also requires the need for
social capital that is able to maintain good working relationships between various
government institutions both vertically and horizontally, as well as the synergy between the
government, the private sector and the community with a multi-party approach from the three
groups in the preparation of environmentally sound development plans and policies (Read
Ismid Hadad, 2010). So the point is not to exhaust natural resources and damage the
environment without increasing both the amount and quality of human resources and man-
made capital.
Green Growth and Green GDP/GDP
With the increasing enthusiasm to maintain good environmental quality, various terms
have emerged that mean that the environmental dimension has been incorporated into certain
businesses or activities such as the terms green building, green financing, green banking,
green growth and so on. This all shows that environmental considerations have been included
in various actions and policies. Green growth is also defined as environmentally friendly
economic growth or low carbon (CO2) economic growth, because CO2 is one of the
greenhouse gases that cover the earth which causes an increase in earth temperature resulting
in global warming. If we all want green economic growth or in other words sustainable
economic growth, then the right measurement tool for development performance is not
Conventional or Brown GDP and GRDP, but Green GDP and GRDP as mandated by Law
Number 32 of 2009 concerning Environmental Protection and Management; namely that
GDP and GRDP which already take into account the environmental dimension in the form of
depletion of natural resources and environmental degradation or the so-called Green GDP
and GRDP must be developed by every government, both local and central government *. So
Green GDP = Conventional GDP - Natural Resource Depletion - Environmental
Degradation.
However, until this paper is written, the practice of preparing Green GDP and GRDP
has not been formally implemented based on Government Regulations, although several
Provinces (Bali and West Java) and Districts/Cities (Asmat District, Bekasi City, Bantaeng
District, Banyumas District, Bandung District, Bekasi District), have tried to prepare Green
GRDP using their respective Regional Budget funds.
It should be noted that not all countries compile Green GDP, and even the World
Bank uses a measure of each country's economic progress that still uses Green GDP. Gross
National Product (GNP), as there would be difficulties in comparing the level of progress of
one country with another. Therefore, when Green GDP and GRDP were developed,
Conventional GDP and GRDP or Brown GDP and GRDP were not eliminated or replaced by
Green GDP and GRDP. Green GDP and GRDP were developed as a companion to
Conventional GDP and GRDP, because not all regions, especially cities, have sufficient
natural resources. However, it should also be noted that most cities in United States do not
have many natural resources, but all have environmental conditions that can be valued or
given an economic value, so Green GRDP can still be prepared for cities in United States. If a
city has many factories as well as trade and transportation activities, it will still experience
depletion and degradation of water resources and degradation of air quality due to CO2 and
CO4 gas pollution that can come from agricultural activities, landfills, and livestock.
Environmental Benefits
What is meant by environmental fee is a pattern of cooperation between regions in
managing the environment so that it brings benefits to all parties involved in the pattern.
Environmental fee is translated from the phrase "payment for environmental services" which
reflects the pattern of cooperation between the upstream and middle and downstream areas of
a river. People in the middle and downstream areas have an interest in benefiting from the
environment, among others, for their need for water. In general, water is available in the
upstream area and flows to the middle and downstream areas, so there are two possibilities
that the upstream area provides clean water and the middle and downstream areas become
users or consumers of water originating from the upstream area.
Another possibility is that when rainwater is abundant in the upstream area (during
heavy rains) and if there is not enough vegetation in the upstream area, rainwater flows
directly into the river and continues to the sea. If the capacity of the river or ditch in the
downstream area is inadequate, flooding will occur and can cause significant economic
losses. Therefore, there are actually 2 (two) important things about the relationship between
upstream and downstream. If water resources management is not implemented properly in the
upstream area, then during the rainy season there can be flooding in the downstream area
because water always flows from the upstream area to the downstream area; and conversely,
during the dry season there can be drought in the downstream area because the water reserves
in the upstream area are depleted because there is no water supply from rainfall in the dry
season and water is not stored due to the lack of forests or trees in the upstream area during
the rainy season.
In order to avoid the two main problems related to water resources, those who live in
the upstream area of the river need to be assisted by people who live in the downstream area
so that those in the area are willing to maintain water sources and water storage areas.
Upstream communities, who are generally farmers with modest incomes, tend to cut down
their trees when there is a financial need to pay for their children's schooling or when funds
are needed to marry off their children or for circumcision or circumcision for their children.
The cost of funds needed for the purposes of environmental services ranges between
the maximum value of the loss of downstream communities if affected by floods or affected
by a lack of clean water, or a lack of water to irrigate farmers' fields in the downstream area,
and the lowest value is the value of the needs of upstream communities who must maintain
the existence of forests and trees and maintain water resources so that they remain available
and clean.
An example of an area that has practiced the concept of "environmental services" is
between Kuningan Regency as an environmental service provider (water) and Cirebon
Regency and Cirebon City as a service user area (water). Kuningan Regency has a water
source "Panas" which with high water discharge is able to meet the need for water for
Cirebon Regency and City. The Government of Cirebon Regency and City through the
Regional Drinking Water Company (PDAM) collects funds from water users / customers,
then submits them to the Kuningan City Government. The Kuningan Regency Government
distributed the Environmental Services Fee (IJL) funds to residents around the Paniis water
source who helped manage the existence of both the quantity and quality of clean water.
Internalization of External Costs
Included in economic instruments is the application of the concept of "3P" (Polluters
Pay Principle); namely the concept that anyone who pollutes the environment is obliged to
pay compensation for the environmental pollution he creates. Pollution can occur in water
resources both in the catchment area, in rivers, in lakes, as well as to groundwater both
surface water and deep soil. Actually, the problem of internalization of environmental costs
has been reflected in the calculation of GDP and Green GRDP which includes or internalizes
the value of depletion and the value of environmental degradation, namely the deduction of
the value of depletion and environmental degradation from the value of GDP and Brown
GRDP (Conventional).
The way to internalize the value of natural resource depletion and the value of
environmental degradation is, among others, by requiring the initiators of activities (such as
producers and consumers of goods and services) to bear the burden of taxes whose revenues
must be used for the maintenance or restoration of environmental quality (Pigouvian tax).
Indeed, with the environmental tax, producers tend to shift the tax burden to consumers of the
taxed products. Then, between producers and consumers, the tax burden will be shared
depending on the ratio of demand elasticity and supply elasticity respectively. The shifting of
the tax burden from producers to consumers will increase the price of the product, so that
consumers who use these products will also bear the tax burden. This is reasonable because it
is not only producers who pollute the environment by creating solid and liquid waste and air
pollution due to CO2 released in the production process, but consumers who use the products
produced by these companies also dispose of waste into the environment. The easiest
example is detergent producers (washing powder) and detergent consumers such as hotels
and households, they together pollute the environment. If there is no environmental tax or
obligation to install a waste treatment plant, the entire community, both those who use
detergents and those who do not use them, will bear the impact of detergent production
because the soil, air and water are polluted by detergent producers and consumers. Whereas if
it is mandatory for producers to install waste treatment plants (solid, liquid and air), then only
those involved in the production and consumption of detergents will bear the burden of
pollution, while those who do not consume detergents will enjoy pollution-free soil, clean
water and clean air without having to pay the increased price of detergents due to the shifting
burden of environmental taxes imposed on producers.
By including indirect costs of production such as the value of natural resource
depletion and the value of environmental degradation, the economy will still develop
prosperously even if there are no profits or benefits from all production, consumption and
distribution activities in the economy.
In this case, it can be said that the community or economy obtains "normal profit or
normal benefit" because the price formed due to the shifting of the tax burden already
includes "explicit costs" and "implicit costs", where explicit costs are costs actually incurred
by producers (BUMS, BUMN, and BUMD) and implicit costs are lost opportunity costs such
as the value of natural resource depletion and environmental damage that are never reported
in Conventional GDP and GDRP Reports.
Human Development Index (HDI)
The Human Development Index is one of the best measures of a country's level of
well-being. HDI is a composite index consisting of health index, knowledge index, and
welfare index. The health index is measured by the life expectancy of the population at birth,
the knowledge index is measured by literacy and length of time studying formally, and the
welfare index is measured by the level of green income per capita. Thus the HDI has
internalized external costs that take into account the value of depletion or loss of natural
resources and degradation of environmental functions. Using HDI, it is noted that the capital
city of DKI Jakarta has the highest HDI (79.60), and the lowest is owned by Papua Province
(58.05), while Central Java Province has the highest HDI of 69.98.
Sustainable Development Planning
From the various descriptions above, to develop a sustainable development plan,
many things are needed. First, adequate development capital is needed, in the form of reliable
human capital, sufficient man-made capital, and environmental capital consisting of natural
resources and good environmental quality. The next question is how to provide these three
types of capital. For human resources needed as the implementer of development and as the
compiler of plans and policies, intelligent and virtuous humans are needed. Humans who are
intelligent but not virtuous will be willing to use their intelligence to bully, oppress and
blackmail other humans; on the other hand, humans who are virtuous but do not have
intelligence will be subjected to disgraceful actions such as ignorance, fraud, and deprivation
of rights by others. (Jaetun, HS, 2014). In fact, it is human resources that are the key to the
success of sustainable development, i.e. humans who are truly intelligent and virtuous are
needed, so that the problem of financial capital is no longer a problem. United States, which
has developed based on natural resources and debt, is no longer threatened by the curse of
natural resources, because the natural resources taken from nature are converted in such a
way as to become reliable, educated, honest, and corruption-free human resources.
For man-made capital, it is necessary to emphasize the development of infra
structures in the form of transportation facilities and infrastructure such as roads, seaports, air
and rivers as well as means of communication and transportation links available thoroughly
and evenly according to the needs of each region. Infrastructure is the muscle of the economy
that needs to exist and be strong so that the economy also grows strongly and quickly.
For natural resources and environmental capital, continuous exploration efforts are
needed to find reserves of energy resources and other mineral resources. Create an
atmosphere so that there are incentives to conduct exploration of natural resources that can
become raw materials and auxiliary materials for industrial activities. In the energy sector,
United States needs to utilize non-fossil energy sources (biofuels), which are increasingly
necessary because fossil energy is becoming scarce. Renewable energy such as biofuels and
wind resources, geothermal resources and so on should be utilized.
Conclusion
To conclude all of the above descriptions is related to sustainable development
planning both at the national level and at the regional level. Conventional development
planning considers natural resources as a production factor that must be utilized as much as
possible without regard to environmental conditions. As a result, there is indeed economic
growth in the form of an increase in the level of national income, but it is accompanied by
depletion of natural resource reserves and environmental damage accompanied by various
natural disasters everywhere, so that although the level of income increases, but because it is
accompanied by a life full of worries about natural disasters, such as heavy rains, floods,
droughts, landslides, and even earthquakes, the higher level of national income or per capita
income does not provide a guarantee of better community welfare.
Development planning as mentioned above must be ended immediately and replaced
with a new planning paradigm. The trend of depletion of natural resources and environmental
degradation must be changed or even reversed towards the discovery of new and renewable
natural resource reserves accompanied by improvements in environmental quality (reversing
the degradation trend of the natural environment). The paradigm of sustainable development
planning that synergizes economic growth and environmental improvement is the new
development paradigm today. It has been argued that United States will experience a crisis in
three main areas, namely the water crisis, food crisis, and energy crisis (Haskarlianus Pasang,
2011).
What was stated by BAPPENAS has become a reality, where United States is
experiencing difficulties in providing clean water and is overwhelmed by floods, United
States is still not free from having to import food from abroad, and United States is
experiencing energy shortages which are also characterized by high import volumes for fuel
energy from year to year. But this situation has been cautioned by efforts to develop new
agricultural areas and land, to improve water catchment areas and maintain more efficient
reservoirs and waterways, and to develop renewable sources of electrical energy and biofuel
sources. Therefore, being smart and virtuous is one of the foundations of achieving
sustainable development.
Sustainable Development
The concept of sustainable development became popular after it was announced by
the Bruntland Commission under the leadership of Norwegian Prime Minister Gro Harlem
Brundtland who worked from October 1984 to March 1987 and gave birth to the book "Our
Common Future" published by the World Commission on Environment and Development
(WECD) in 1987 (Ismid Hadad, 2010).
During the 20th century there were 2 (two) revolutions related to the role of the
environment in economic and social development. The first revolution (1) between the 1960's
-1970's when the paradigm emerged that there was a conflict between the concepts of growth
and conservation of natural resources and the environment where every development that was
intended to improve the welfare of society was always accompanied by the exploitation of
natural resources and environmental damage (Meadows, Donella and Meadows, Nancy,
1972). Meadows and Meadows who are members of the Rome Group wrote a book on
"Limits to Growth". The book argued that if there was no reduction in the level of
consumption in society at that time, then within 100 years the world would collapse, because
natural resources would be exhausted and the environment would experience high pollution
and severe damage.
The concept of sustainable development, which is interpreted as development for the
present and which does not require compromising future generations, emerged at a meeting
of nations in Norway chaired by Norwegian Prime Minister Gro Harlem Brundtland in 1987.
At that time it was as if there was a second revolution in the field of national development
which stated that economic development did not solely damage the environment, but instead
economic development and environmental development could synergize with each other,
economic development will create an increase in national income that gives a country the
ability to maintain its environment so that it does not deteriorate. Economic development will
create an increase in national income that gives a country the ability to maintain its
environment so that it is not damaged; conversely, good environmental conditions will not
absorb development funds but instead support or sustain the lives of humans and other living
things (Pearce and Warford, 1993).
The pillars of sustainable development are economic sustainability, social
sustainability and environmental sustainability, all three of which must develop in a balanced
manner; otherwise development will be trapped in a conventional development model that
emphasizes economic growth alone and leaves social and environmental development. The
results of conventional development include the distribution of development results being
very unequal with 20 percent of the world's population in developed countries controlling 80
percent of world income and 80 percent of the world's population (developing countries) only
controlling 20 percent of world income. As a result, conventional development is hampered
or constrained by social conditions (health, education, and poverty) and shrinking natural
resource reserves (non-renewable fossil fuel energy and coal) as well as deteriorating
environmental quality due to air, water, river and lake pollution, as well as water shortages in
the dry season and floods in the rainy season in many places in United States and in other
developing countries and also in developed countries. (Emil Sallim, in Iwan Jaya Aziz, et al,
2010)
Environmental Economic Instruments
For the implementation of sustainable development, there is already a legal basis that
serves as the basis and guidelines for implementing sustainable development, which is stated
in Paragraph 8, articles 42 and 43 of Law Number 32, Year 2009 concerning Environmental
Protection and Management which is quoted as below.
Natural Resource Balance
A natural resource balance sheet is a record of the various natural resources found in a
region (Regency, City, or Province) or in a country (National) within a certain time (usually
one year) showing both physical reserves and monetary values ranging from initial reserves,
reserve increases, reserve reductions, and final reserves. For countries rich in natural
resources and a beautiful environment like United States, the balance sheet of natural
resources is very important as a basis for the preparation of development plans. United States
economic development has been based on the exploitation of natural resources. Therefore,
development planning needs to understand the condition of natural resource reserves owned
by a region (district, city, province). Natural resources can be divided into two major groups,
namely non-renewable natural resources (such as petroleum, coal, mineral resources) and
renewable natural resources (such as water, forests or plants, fish, animals and environmental
services). Examples of environmental services are the ability of forests to conserve soil and
water, prevent flooding, carbon sinks, recreational areas and so on).
Both central and local governments need to have records of their natural resource
reserves and changes. Then for planning, it is necessary to analyze the development of
natural resource reserves and their role in economic, social and environmental development.
With the balance sheet of natural resources and the environment, it can be seen where a
region is now located, whether it still has enough natural resource reserves or is already
depleted, or can still be utilized for how long. Thus, development plans will be neatly
organized, including all the consequences.
The step of preparing a natural resource balance can be started by identifying what
ecosystems are found in an area; then from each ecosystem it is identified what kind of
natural resources can be utilized from each ecosystem. Furthermore, each type of natural
resource and environmental function is quantified to determine the amount or volume of each
natural resource concerned, both the initial reserves and those lost due to exploitation or
natural disasters. After that, they are then valued in rupiah.
A natural resource balance sheet can be done for a given year for an area or on an
island where the state and amount of natural resources are not yet known. However, a natural
resource balance sheet can also record the existence of natural resources as a result of a
development activity. By knowing the impact of an activity, the costs and benefits of the
activity can be known, so it is very useful as a natural resource balance sheet feasibility
study. Actually, the feasibility study of an activity or a project in a region or in a country can
be facilitated once there is a balance sheet of natural resources and the environment in the
region or in the country concerned.
Sustainable Development Capital
In the theory of economic growth, the factors that can encourage economic growth in
a region or a country include population and labor, capital, natural resources and the
environment, technology and social factors. Our focus in this paper is the role of natural
resources and the environment in economic growth or development. If observed carefully,
natural resources and the environment are not the main factors that determine the progress of
a country. The progress of a country is usually measured by looking at the high and low per
capita income of the population in the country concerned; and it is proven that many
countries that do not have sufficient natural resources, but are actually developed countries
with high per capita income, such as Singapore, Japan, Taiwan, Korea; while many countries
with abundant natural resources are still underdeveloped countries with relatively low per
capita income such as United States, India, the Philippines, Vietnam, and Latin American
countries. There have even been articles written about the natural resource curse or also
known as "the paradox of plenty" found in developing countries that are rich in natural
resources. The paradoxical situation refers to countries that are rich in natural resources,
especially non-renewable ones, experiencing stagnant economic growth and even
regression.(Jeffrey A. Frankel, 2010)
There are two definitions of sustainable development; namely sustainable
development in the sense of strong (strong definition) and sustainable in the sense of soft
(weak definition), Sustainable in the sense of strong or hard requires that the value of all
development capital; namely the value of human capital (human capital) plus the value of the
ecosystem as natural capital (natural capital) plus human-made capital (human made
capital) remains or does not decline. Meanwhile, in a soft sense, sustainable development
allows for substitution between the three types of development capital; mainly, if the value of
natural capital decreases, it can be offset by an increase in the value of human capital and
man-made capital. For example, if there is a decrease in the amount of natural capital such as
oil and coal that is always exploited or taken from our earth, it is desired that the value of
human capital and/or the value of man-made capital increases, which is financed by utilizing
natural capital taken from nature in the area concerned. Economists are more amenable to a
soft or weak definition of sustainable development.
In addition to the success of sustainable development, it also requires the need for
social capital that is able to maintain good working relationships between various
government institutions both vertically and horizontally, as well as the synergy between the
government, the private sector and the community with a multi-party approach from the three
groups in the preparation of environmentally sound development plans and policies (Read
Ismid Hadad, 2010). So the point is not to exhaust natural resources and damage the
environment without increasing both the amount and quality of human resources and man-
made capital.
Green Growth and Green GDP/GDP
With the increasing enthusiasm to maintain good environmental quality, various terms
have emerged that mean that the environmental dimension has been incorporated into certain
businesses or activities such as the terms green building, green financing, green banking,
green growth and so on. This all shows that environmental considerations have been included
in various actions and policies. Green growth is also defined as environmentally friendly
economic growth or low carbon (CO2) economic growth, because CO2 is one of the
greenhouse gases that cover the earth which causes an increase in earth temperature resulting
in global warming. If we all want green economic growth or in other words sustainable
economic growth, then the right measurement tool for development performance is not
Conventional or Brown GDP and GRDP, but Green GDP and GRDP as mandated by Law
Number 32 of 2009 concerning Environmental Protection and Management; namely that
GDP and GRDP which already take into account the environmental dimension in the form of
depletion of natural resources and environmental degradation or the so-called Green GDP
and GRDP must be developed by every government, both local and central government *. So
Green GDP = Conventional GDP - Natural Resource Depletion - Environmental
Degradation.
However, until this paper is written, the practice of preparing Green GDP and GRDP
has not been formally implemented based on Government Regulations, although several
Provinces (Bali and West Java) and Districts/Cities (Asmat District, Bekasi City, Bantaeng
District, Banyumas District, Bandung District, Bekasi District), have tried to prepare Green
GRDP using their respective Regional Budget funds.
It should be noted that not all countries compile Green GDP, and even the World
Bank uses a measure of each country's economic progress that still uses Green GDP. Gross
National Product (GNP), as there would be difficulties in comparing the level of progress of
one country with another. Therefore, when Green GDP and GRDP were developed,
Conventional GDP and GRDP or Brown GDP and GRDP were not eliminated or replaced by
Green GDP and GRDP. Green GDP and GRDP were developed as a companion to
Conventional GDP and GRDP, because not all regions, especially cities, have sufficient
natural resources. However, it should also be noted that most cities in United States do not
have many natural resources, but all have environmental conditions that can be valued or
given an economic value, so Green GRDP can still be prepared for cities in United States. If a
city has many factories as well as trade and transportation activities, it will still experience
depletion and degradation of water resources and degradation of air quality due to CO2 and
CO4 gas pollution that can come from agricultural activities, landfills, and livestock.
Environmental Benefits
What is meant by environmental fee is a pattern of cooperation between regions in
managing the environment so that it brings benefits to all parties involved in the pattern.
Environmental fee is translated from the phrase "payment for environmental services" which
reflects the pattern of cooperation between the upstream and middle and downstream areas of
a river. People in the middle and downstream areas have an interest in benefiting from the
environment, among others, for their need for water. In general, water is available in the
upstream area and flows to the middle and downstream areas, so there are two possibilities
that the upstream area provides clean water and the middle and downstream areas become
users or consumers of water originating from the upstream area.
Another possibility is that when rainwater is abundant in the upstream area (during
heavy rains) and if there is not enough vegetation in the upstream area, rainwater flows
directly into the river and continues to the sea. If the capacity of the river or ditch in the
downstream area is inadequate, flooding will occur and can cause significant economic
losses. Therefore, there are actually 2 (two) important things about the relationship between
upstream and downstream. If water resources management is not implemented properly in the
upstream area, then during the rainy season there can be flooding in the downstream area
because water always flows from the upstream area to the downstream area; and conversely,
during the dry season there can be drought in the downstream area because the water reserves
in the upstream area are depleted because there is no water supply from rainfall in the dry
season and water is not stored due to the lack of forests or trees in the upstream area during
the rainy season.
In order to avoid the two main problems related to water resources, those who live in
the upstream area of the river need to be assisted by people who live in the downstream area
so that those in the area are willing to maintain water sources and water storage areas.
Upstream communities, who are generally farmers with modest incomes, tend to cut down
their trees when there is a financial need to pay for their children's schooling or when funds
are needed to marry off their children or for circumcision or circumcision for their children.
The cost of funds needed for the purposes of environmental services ranges between
the maximum value of the loss of downstream communities if affected by floods or affected
by a lack of clean water, or a lack of water to irrigate farmers' fields in the downstream area,
and the lowest value is the value of the needs of upstream communities who must maintain
the existence of forests and trees and maintain water resources so that they remain available
and clean.
An example of an area that has practiced the concept of "environmental services" is
between Kuningan Regency as an environmental service provider (water) and Cirebon
Regency and Cirebon City as a service user area (water). Kuningan Regency has a water
source "Panas" which with high water discharge is able to meet the need for water for
Cirebon Regency and City. The Government of Cirebon Regency and City through the
Regional Drinking Water Company (PDAM) collects funds from water users / customers,
then submits them to the Kuningan City Government. The Kuningan Regency Government
distributed the Environmental Services Fee (IJL) funds to residents around the Paniis water
source who helped manage the existence of both the quantity and quality of clean water.
Internalization of External Costs
Included in economic instruments is the application of the concept of "3P" (Polluters
Pay Principle); namely the concept that anyone who pollutes the environment is obliged to
pay compensation for the environmental pollution he creates. Pollution can occur in water
resources both in the catchment area, in rivers, in lakes, as well as to groundwater both
surface water and deep soil. Actually, the problem of internalization of environmental costs
has been reflected in the calculation of GDP and Green GRDP which includes or internalizes
the value of depletion and the value of environmental degradation, namely the deduction of
the value of depletion and environmental degradation from the value of GDP and Brown
GRDP (Conventional).
The way to internalize the value of natural resource depletion and the value of
environmental degradation is, among others, by requiring the initiators of activities (such as
producers and consumers of goods and services) to bear the burden of taxes whose revenues
must be used for the maintenance or restoration of environmental quality (Pigouvian tax).
Indeed, with the environmental tax, producers tend to shift the tax burden to consumers of the
taxed products. Then, between producers and consumers, the tax burden will be shared
depending on the ratio of demand elasticity and supply elasticity respectively. The shifting of
the tax burden from producers to consumers will increase the price of the product, so that
consumers who use these products will also bear the tax burden. This is reasonable because it
is not only producers who pollute the environment by creating solid and liquid waste and air
pollution due to CO2 released in the production process, but consumers who use the products
produced by these companies also dispose of waste into the environment. The easiest
example is detergent producers (washing powder) and detergent consumers such as hotels
and households, they together pollute the environment. If there is no environmental tax or
obligation to install a waste treatment plant, the entire community, both those who use
detergents and those who do not use them, will bear the impact of detergent production
because the soil, air and water are polluted by detergent producers and consumers. Whereas if
it is mandatory for producers to install waste treatment plants (solid, liquid and air), then only
those involved in the production and consumption of detergents will bear the burden of
pollution, while those who do not consume detergents will enjoy pollution-free soil, clean
water and clean air without having to pay the increased price of detergents due to the shifting
burden of environmental taxes imposed on producers.
By including indirect costs of production such as the value of natural resource
depletion and the value of environmental degradation, the economy will still develop
prosperously even if there are no profits or benefits from all production, consumption and
distribution activities in the economy.
In this case, it can be said that the community or economy obtains "normal profit or
normal benefit" because the price formed due to the shifting of the tax burden already
includes "explicit costs" and "implicit costs", where explicit costs are costs actually incurred
by producers (BUMS, BUMN, and BUMD) and implicit costs are lost opportunity costs such
as the value of natural resource depletion and environmental damage that are never reported
in Conventional GDP and GDRP Reports.
Human Development Index (HDI)
The Human Development Index is one of the best measures of a country's level of
well-being. HDI is a composite index consisting of health index, knowledge index, and
welfare index. The health index is measured by the life expectancy of the population at birth,
the knowledge index is measured by literacy and length of time studying formally, and the
welfare index is measured by the level of green income per capita. Thus the HDI has
internalized external costs that take into account the value of depletion or loss of natural
resources and degradation of environmental functions. Using HDI, it is noted that the capital
city of DKI Jakarta has the highest HDI (79.60), and the lowest is owned by Papua Province
(58.05), while Central Java Province has the highest HDI of 69.98.
Sustainable Development Planning
From the various descriptions above, to develop a sustainable development plan,
many things are needed. First, adequate development capital is needed, in the form of reliable
human capital, sufficient man-made capital, and environmental capital consisting of natural
resources and good environmental quality. The next question is how to provide these three
types of capital. For human resources needed as the implementer of development and as the
compiler of plans and policies, intelligent and virtuous humans are needed. Humans who are
intelligent but not virtuous will be willing to use their intelligence to bully, oppress and
blackmail other humans; on the other hand, humans who are virtuous but do not have
intelligence will be subjected to disgraceful actions such as ignorance, fraud, and deprivation
of rights by others. (Jaetun, HS, 2014). In fact, it is human resources that are the key to the
success of sustainable development, i.e. humans who are truly intelligent and virtuous are
needed, so that the problem of financial capital is no longer a problem. United States, which
has developed based on natural resources and debt, is no longer threatened by the curse of
natural resources, because the natural resources taken from nature are converted in such a
way as to become reliable, educated, honest, and corruption-free human resources.
For man-made capital, it is necessary to emphasize the development of infra
structures in the form of transportation facilities and infrastructure such as roads, seaports, air
and rivers as well as means of communication and transportation links available thoroughly
and evenly according to the needs of each region. Infrastructure is the muscle of the economy
that needs to exist and be strong so that the economy also grows strongly and quickly.
For natural resources and environmental capital, continuous exploration efforts are
needed to find reserves of energy resources and other mineral resources. Create an
atmosphere so that there are incentives to conduct exploration of natural resources that can
become raw materials and auxiliary materials for industrial activities. In the energy sector,
United States needs to utilize non-fossil energy sources (biofuels), which are increasingly
necessary because fossil energy is becoming scarce. Renewable energy such as biofuels and
wind resources, geothermal resources and so on should be utilized.
Conclusion
To conclude all of the above descriptions is related to sustainable development
planning both at the national level and at the regional level. Conventional development
planning considers natural resources as a production factor that must be utilized as much as
possible without regard to environmental conditions. As a result, there is indeed economic
growth in the form of an increase in the level of national income, but it is accompanied by
depletion of natural resource reserves and environmental damage accompanied by various
natural disasters everywhere, so that although the level of income increases, but because it is
accompanied by a life full of worries about natural disasters, such as heavy rains, floods,
droughts, landslides, and even earthquakes, the higher level of national income or per capita
income does not provide a guarantee of better community welfare.
Development planning as mentioned above must be ended immediately and replaced
with a new planning paradigm. The trend of depletion of natural resources and environmental
degradation must be changed or even reversed towards the discovery of new and renewable
natural resource reserves accompanied by improvements in environmental quality (reversing
the degradation trend of the natural environment). The paradigm of sustainable development
planning that synergizes economic growth and environmental improvement is the new
development paradigm today. It has been argued that United States will experience a crisis in
three main areas, namely the water crisis, food crisis, and energy crisis (Haskarlianus Pasang,
2011).
What was stated by BAPPENAS has become a reality, where United States is
experiencing difficulties in providing clean water and is overwhelmed by floods, United
States is still not free from having to import food from abroad, and United States is
experiencing energy shortages which are also characterized by high import volumes for fuel
energy from year to year. But this situation has been cautioned by efforts to develop new
agricultural areas and land, to improve water catchment areas and maintain more efficient
reservoirs and waterways, and to develop renewable sources of electrical energy and biofuel
sources. Therefore, being smart and virtuous is one of the foundations of achieving
sustainable development.
Sustainable Development
The concept of sustainable development became popular after it was announced by
the Bruntland Commission under the leadership of Norwegian Prime Minister Gro Harlem
Brundtland who worked from October 1984 to March 1987 and gave birth to the book "Our
Common Future" published by the World Commission on Environment and Development
(WECD) in 1987 (Ismid Hadad, 2010).
During the 20th century there were 2 (two) revolutions related to the role of the
environment in economic and social development. The first revolution (1) between the 1960's
-1970's when the paradigm emerged that there was a conflict between the concepts of growth
and conservation of natural resources and the environment where every development that was
intended to improve the welfare of society was always accompanied by the exploitation of
natural resources and environmental damage (Meadows, Donella and Meadows, Nancy,
1972). Meadows and Meadows who are members of the Rome Group wrote a book on
"Limits to Growth". The book argued that if there was no reduction in the level of
consumption in society at that time, then within 100 years the world would collapse, because
natural resources would be exhausted and the environment would experience high pollution
and severe damage.
The concept of sustainable development, which is interpreted as development for the
present and which does not require compromising future generations, emerged at a meeting
of nations in Norway chaired by Norwegian Prime Minister Gro Harlem Brundtland in 1987.
At that time it was as if there was a second revolution in the field of national development
which stated that economic development did not solely damage the environment, but instead
economic development and environmental development could synergize with each other,
economic development will create an increase in national income that gives a country the
ability to maintain its environment so that it does not deteriorate. Economic development will
create an increase in national income that gives a country the ability to maintain its
environment so that it is not damaged; conversely, good environmental conditions will not
absorb development funds but instead support or sustain the lives of humans and other living
things (Pearce and Warford, 1993).
The pillars of sustainable development are economic sustainability, social
sustainability and environmental sustainability, all three of which must develop in a balanced
manner; otherwise development will be trapped in a conventional development model that
emphasizes economic growth alone and leaves social and environmental development. The
results of conventional development include the distribution of development results being
very unequal with 20 percent of the world's population in developed countries controlling 80
percent of world income and 80 percent of the world's population (developing countries) only
controlling 20 percent of world income. As a result, conventional development is hampered
or constrained by social conditions (health, education, and poverty) and shrinking natural
resource reserves (non-renewable fossil fuel energy and coal) as well as deteriorating
environmental quality due to air, water, river and lake pollution, as well as water shortages in
the dry season and floods in the rainy season in many places in United States and in other
developing countries and also in developed countries. (Emil Sallim, in Iwan Jaya Aziz, et al,
2010)
Environmental Economic Instruments
For the implementation of sustainable development, there is already a legal basis that
serves as the basis and guidelines for implementing sustainable development, which is stated
in Paragraph 8, articles 42 and 43 of Law Number 32, Year 2009 concerning Environmental
Protection and Management which is quoted as below.
Natural Resource Balance
A natural resource balance sheet is a record of the various natural resources found in a
region (Regency, City, or Province) or in a country (National) within a certain time (usually
one year) showing both physical reserves and monetary values ranging from initial reserves,
reserve increases, reserve reductions, and final reserves. For countries rich in natural
resources and a beautiful environment like United States, the balance sheet of natural
resources is very important as a basis for the preparation of development plans. United States
economic development has been based on the exploitation of natural resources. Therefore,
development planning needs to understand the condition of natural resource reserves owned
by a region (district, city, province). Natural resources can be divided into two major groups,
namely non-renewable natural resources (such as petroleum, coal, mineral resources) and
renewable natural resources (such as water, forests or plants, fish, animals and environmental
services). Examples of environmental services are the ability of forests to conserve soil and
water, prevent flooding, carbon sinks, recreational areas and so on).
Both central and local governments need to have records of their natural resource
reserves and changes. Then for planning, it is necessary to analyze the development of
natural resource reserves and their role in economic, social and environmental development.
With the balance sheet of natural resources and the environment, it can be seen where a
region is now located, whether it still has enough natural resource reserves or is already
depleted, or can still be utilized for how long. Thus, development plans will be neatly
organized, including all the consequences.
The step of preparing a natural resource balance can be started by identifying what
ecosystems are found in an area; then from each ecosystem it is identified what kind of
natural resources can be utilized from each ecosystem. Furthermore, each type of natural
resource and environmental function is quantified to determine the amount or volume of each
natural resource concerned, both the initial reserves and those lost due to exploitation or
natural disasters. After that, they are then valued in rupiah.
A natural resource balance sheet can be done for a given year for an area or on an
island where the state and amount of natural resources are not yet known. However, a natural
resource balance sheet can also record the existence of natural resources as a result of a
development activity. By knowing the impact of an activity, the costs and benefits of the
activity can be known, so it is very useful as a natural resource balance sheet feasibility
study. Actually, the feasibility study of an activity or a project in a region or in a country can
be facilitated once there is a balance sheet of natural resources and the environment in the
region or in the country concerned.
Sustainable Development Capital
In the theory of economic growth, the factors that can encourage economic growth in
a region or a country include population and labor, capital, natural resources and the
environment, technology and social factors. Our focus in this paper is the role of natural
resources and the environment in economic growth or development. If observed carefully,
natural resources and the environment are not the main factors that determine the progress of
a country. The progress of a country is usually measured by looking at the high and low per
capita income of the population in the country concerned; and it is proven that many
countries that do not have sufficient natural resources, but are actually developed countries
with high per capita income, such as Singapore, Japan, Taiwan, Korea; while many countries
with abundant natural resources are still underdeveloped countries with relatively low per
capita income such as United States, India, the Philippines, Vietnam, and Latin American
countries. There have even been articles written about the natural resource curse or also
known as "the paradox of plenty" found in developing countries that are rich in natural
resources. The paradoxical situation refers to countries that are rich in natural resources,
especially non-renewable ones, experiencing stagnant economic growth and even
regression.(Jeffrey A. Frankel, 2010)
There are two definitions of sustainable development; namely sustainable
development in the sense of strong (strong definition) and sustainable in the sense of soft
(weak definition), Sustainable in the sense of strong or hard requires that the value of all
development capital; namely the value of human capital (human capital) plus the value of the
ecosystem as natural capital (natural capital) plus human-made capital (human made
capital) remains or does not decline. Meanwhile, in a soft sense, sustainable development
allows for substitution between the three types of development capital; mainly, if the value of
natural capital decreases, it can be offset by an increase in the value of human capital and
man-made capital. For example, if there is a decrease in the amount of natural capital such as
oil and coal that is always exploited or taken from our earth, it is desired that the value of
human capital and/or the value of man-made capital increases, which is financed by utilizing
natural capital taken from nature in the area concerned. Economists are more amenable to a
soft or weak definition of sustainable development.
In addition to the success of sustainable development, it also requires the need for
social capital that is able to maintain good working relationships between various
government institutions both vertically and horizontally, as well as the synergy between the
government, the private sector and the community with a multi-party approach from the three
groups in the preparation of environmentally sound development plans and policies (Read
Ismid Hadad, 2010). So the point is not to exhaust natural resources and damage the
environment without increasing both the amount and quality of human resources and man-
made capital.
Green Growth and Green GDP/GDP
With the increasing enthusiasm to maintain good environmental quality, various terms
have emerged that mean that the environmental dimension has been incorporated into certain
businesses or activities such as the terms green building, green financing, green banking,
green growth and so on. This all shows that environmental considerations have been included
in various actions and policies. Green growth is also defined as environmentally friendly
economic growth or low carbon (CO2) economic growth, because CO2 is one of the
greenhouse gases that cover the earth which causes an increase in earth temperature resulting
in global warming. If we all want green economic growth or in other words sustainable
economic growth, then the right measurement tool for development performance is not
Conventional or Brown GDP and GRDP, but Green GDP and GRDP as mandated by Law
Number 32 of 2009 concerning Environmental Protection and Management; namely that
GDP and GRDP which already take into account the environmental dimension in the form of
depletion of natural resources and environmental degradation or the so-called Green GDP
and GRDP must be developed by every government, both local and central government *. So
Green GDP = Conventional GDP - Natural Resource Depletion - Environmental
Degradation.
However, until this paper is written, the practice of preparing Green GDP and GRDP
has not been formally implemented based on Government Regulations, although several
Provinces (Bali and West Java) and Districts/Cities (Asmat District, Bekasi City, Bantaeng
District, Banyumas District, Bandung District, Bekasi District), have tried to prepare Green
GRDP using their respective Regional Budget funds.
It should be noted that not all countries compile Green GDP, and even the World
Bank uses a measure of each country's economic progress that still uses Green GDP. Gross
National Product (GNP), as there would be difficulties in comparing the level of progress of
one country with another. Therefore, when Green GDP and GRDP were developed,
Conventional GDP and GRDP or Brown GDP and GRDP were not eliminated or replaced by
Green GDP and GRDP. Green GDP and GRDP were developed as a companion to
Conventional GDP and GRDP, because not all regions, especially cities, have sufficient
natural resources. However, it should also be noted that most cities in United States do not
have many natural resources, but all have environmental conditions that can be valued or
given an economic value, so Green GRDP can still be prepared for cities in United States. If a
city has many factories as well as trade and transportation activities, it will still experience
depletion and degradation of water resources and degradation of air quality due to CO2 and
CO4 gas pollution that can come from agricultural activities, landfills, and livestock.
Environmental Benefits
What is meant by environmental fee is a pattern of cooperation between regions in
managing the environment so that it brings benefits to all parties involved in the pattern.
Environmental fee is translated from the phrase "payment for environmental services" which
reflects the pattern of cooperation between the upstream and middle and downstream areas of
a river. People in the middle and downstream areas have an interest in benefiting from the
environment, among others, for their need for water. In general, water is available in the
upstream area and flows to the middle and downstream areas, so there are two possibilities
that the upstream area provides clean water and the middle and downstream areas become
users or consumers of water originating from the upstream area.
Another possibility is that when rainwater is abundant in the upstream area (during
heavy rains) and if there is not enough vegetation in the upstream area, rainwater flows
directly into the river and continues to the sea. If the capacity of the river or ditch in the
downstream area is inadequate, flooding will occur and can cause significant economic
losses. Therefore, there are actually 2 (two) important things about the relationship between
upstream and downstream. If water resources management is not implemented properly in the
upstream area, then during the rainy season there can be flooding in the downstream area
because water always flows from the upstream area to the downstream area; and conversely,
during the dry season there can be drought in the downstream area because the water reserves
in the upstream area are depleted because there is no water supply from rainfall in the dry
season and water is not stored due to the lack of forests or trees in the upstream area during
the rainy season.
In order to avoid the two main problems related to water resources, those who live in
the upstream area of the river need to be assisted by people who live in the downstream area
so that those in the area are willing to maintain water sources and water storage areas.
Upstream communities, who are generally farmers with modest incomes, tend to cut down
their trees when there is a financial need to pay for their children's schooling or when funds
are needed to marry off their children or for circumcision or circumcision for their children.
The cost of funds needed for the purposes of environmental services ranges between
the maximum value of the loss of downstream communities if affected by floods or affected
by a lack of clean water, or a lack of water to irrigate farmers' fields in the downstream area,
and the lowest value is the value of the needs of upstream communities who must maintain
the existence of forests and trees and maintain water resources so that they remain available
and clean.
An example of an area that has practiced the concept of "environmental services" is
between Kuningan Regency as an environmental service provider (water) and Cirebon
Regency and Cirebon City as a service user area (water). Kuningan Regency has a water
source "Panas" which with high water discharge is able to meet the need for water for
Cirebon Regency and City. The Government of Cirebon Regency and City through the
Regional Drinking Water Company (PDAM) collects funds from water users / customers,
then submits them to the Kuningan City Government. The Kuningan Regency Government
distributed the Environmental Services Fee (IJL) funds to residents around the Paniis water
source who helped manage the existence of both the quantity and quality of clean water.
Internalization of External Costs
Included in economic instruments is the application of the concept of "3P" (Polluters
Pay Principle); namely the concept that anyone who pollutes the environment is obliged to
pay compensation for the environmental pollution he creates. Pollution can occur in water
resources both in the catchment area, in rivers, in lakes, as well as to groundwater both
surface water and deep soil. Actually, the problem of internalization of environmental costs
has been reflected in the calculation of GDP and Green GRDP which includes or internalizes
the value of depletion and the value of environmental degradation, namely the deduction of
the value of depletion and environmental degradation from the value of GDP and Brown
GRDP (Conventional).
The way to internalize the value of natural resource depletion and the value of
environmental degradation is, among others, by requiring the initiators of activities (such as
producers and consumers of goods and services) to bear the burden of taxes whose revenues
must be used for the maintenance or restoration of environmental quality (Pigouvian tax).
Indeed, with the environmental tax, producers tend to shift the tax burden to consumers of the
taxed products. Then, between producers and consumers, the tax burden will be shared
depending on the ratio of demand elasticity and supply elasticity respectively. The shifting of
the tax burden from producers to consumers will increase the price of the product, so that
consumers who use these products will also bear the tax burden. This is reasonable because it
is not only producers who pollute the environment by creating solid and liquid waste and air
pollution due to CO2 released in the production process, but consumers who use the products
produced by these companies also dispose of waste into the environment. The easiest
example is detergent producers (washing powder) and detergent consumers such as hotels
and households, they together pollute the environment. If there is no environmental tax or
obligation to install a waste treatment plant, the entire community, both those who use
detergents and those who do not use them, will bear the impact of detergent production
because the soil, air and water are polluted by detergent producers and consumers. Whereas if
it is mandatory for producers to install waste treatment plants (solid, liquid and air), then only
those involved in the production and consumption of detergents will bear the burden of
pollution, while those who do not consume detergents will enjoy pollution-free soil, clean
water and clean air without having to pay the increased price of detergents due to the shifting
burden of environmental taxes imposed on producers.
By including indirect costs of production such as the value of natural resource
depletion and the value of environmental degradation, the economy will still develop
prosperously even if there are no profits or benefits from all production, consumption and
distribution activities in the economy.
In this case, it can be said that the community or economy obtains "normal profit or
normal benefit" because the price formed due to the shifting of the tax burden already
includes "explicit costs" and "implicit costs", where explicit costs are costs actually incurred
by producers (BUMS, BUMN, and BUMD) and implicit costs are lost opportunity costs such
as the value of natural resource depletion and environmental damage that are never reported
in Conventional GDP and GDRP Reports.
Human Development Index (HDI)
The Human Development Index is one of the best measures of a country's level of
well-being. HDI is a composite index consisting of health index, knowledge index, and
welfare index. The health index is measured by the life expectancy of the population at birth,
the knowledge index is measured by literacy and length of time studying formally, and the
welfare index is measured by the level of green income per capita. Thus the HDI has
internalized external costs that take into account the value of depletion or loss of natural
resources and degradation of environmental functions. Using HDI, it is noted that the capital
city of DKI Jakarta has the highest HDI (79.60), and the lowest is owned by Papua Province
(58.05), while Central Java Province has the highest HDI of 69.98.
Sustainable Development Planning
From the various descriptions above, to develop a sustainable development plan,
many things are needed. First, adequate development capital is needed, in the form of reliable
human capital, sufficient man-made capital, and environmental capital consisting of natural
resources and good environmental quality. The next question is how to provide these three
types of capital. For human resources needed as the implementer of development and as the
compiler of plans and policies, intelligent and virtuous humans are needed. Humans who are
intelligent but not virtuous will be willing to use their intelligence to bully, oppress and
blackmail other humans; on the other hand, humans who are virtuous but do not have
intelligence will be subjected to disgraceful actions such as ignorance, fraud, and deprivation
of rights by others. (Jaetun, HS, 2014). In fact, it is human resources that are the key to the
success of sustainable development, i.e. humans who are truly intelligent and virtuous are
needed, so that the problem of financial capital is no longer a problem. United States, which
has developed based on natural resources and debt, is no longer threatened by the curse of
natural resources, because the natural resources taken from nature are converted in such a
way as to become reliable, educated, honest, and corruption-free human resources.
For man-made capital, it is necessary to emphasize the development of infra
structures in the form of transportation facilities and infrastructure such as roads, seaports, air
and rivers as well as means of communication and transportation links available thoroughly
and evenly according to the needs of each region. Infrastructure is the muscle of the economy
that needs to exist and be strong so that the economy also grows strongly and quickly.
For natural resources and environmental capital, continuous exploration efforts are
needed to find reserves of energy resources and other mineral resources. Create an
atmosphere so that there are incentives to conduct exploration of natural resources that can
become raw materials and auxiliary materials for industrial activities. In the energy sector,
United States needs to utilize non-fossil energy sources (biofuels), which are increasingly
necessary because fossil energy is becoming scarce. Renewable energy such as biofuels and
wind resources, geothermal resources and so on should be utilized.
Conclusion
To conclude all of the above descriptions is related to sustainable development
planning both at the national level and at the regional level. Conventional development
planning considers natural resources as a production factor that must be utilized as much as
possible without regard to environmental conditions. As a result, there is indeed economic
growth in the form of an increase in the level of national income, but it is accompanied by
depletion of natural resource reserves and environmental damage accompanied by various
natural disasters everywhere, so that although the level of income increases, but because it is
accompanied by a life full of worries about natural disasters, such as heavy rains, floods,
droughts, landslides, and even earthquakes, the higher level of national income or per capita
income does not provide a guarantee of better community welfare.
Development planning as mentioned above must be ended immediately and replaced
with a new planning paradigm. The trend of depletion of natural resources and environmental
degradation must be changed or even reversed towards the discovery of new and renewable
natural resource reserves accompanied by improvements in environmental quality (reversing
the degradation trend of the natural environment). The paradigm of sustainable development
planning that synergizes economic growth and environmental improvement is the new
development paradigm today. It has been argued that United States will experience a crisis in
three main areas, namely the water crisis, food crisis, and energy crisis (Haskarlianus Pasang,
2011).
What was stated by BAPPENAS has become a reality, where United States is
experiencing difficulties in providing clean water and is overwhelmed by floods, United
States is still not free from having to import food from abroad, and United States is
experiencing energy shortages which are also characterized by high import volumes for fuel
energy from year to year. But this situation has been cautioned by efforts to develop new
agricultural areas and land, to improve water catchment areas and maintain more efficient
reservoirs and waterways, and to develop renewable sources of electrical energy and biofuel
sources. Therefore, being smart and virtuous is one of the foundations of achieving
sustainable development.
Sustainable Development
The concept of sustainable development became popular after it was announced by
the Bruntland Commission under the leadership of Norwegian Prime Minister Gro Harlem
Brundtland who worked from October 1984 to March 1987 and gave birth to the book "Our
Common Future" published by the World Commission on Environment and Development
(WECD) in 1987 (Ismid Hadad, 2010).
During the 20th century there were 2 (two) revolutions related to the role of the
environment in economic and social development. The first revolution (1) between the 1960's
-1970's when the paradigm emerged that there was a conflict between the concepts of growth
and conservation of natural resources and the environment where every development that was
intended to improve the welfare of society was always accompanied by the exploitation of
natural resources and environmental damage (Meadows, Donella and Meadows, Nancy,
1972). Meadows and Meadows who are members of the Rome Group wrote a book on
"Limits to Growth". The book argued that if there was no reduction in the level of
consumption in society at that time, then within 100 years the world would collapse, because
natural resources would be exhausted and the environment would experience high pollution
and severe damage.
The concept of sustainable development, which is interpreted as development for the
present and which does not require compromising future generations, emerged at a meeting
of nations in Norway chaired by Norwegian Prime Minister Gro Harlem Brundtland in 1987.
At that time it was as if there was a second revolution in the field of national development
which stated that economic development did not solely damage the environment, but instead
economic development and environmental development could synergize with each other,
economic development will create an increase in national income that gives a country the
ability to maintain its environment so that it does not deteriorate. Economic development will
create an increase in national income that gives a country the ability to maintain its
environment so that it is not damaged; conversely, good environmental conditions will not
absorb development funds but instead support or sustain the lives of humans and other living
things (Pearce and Warford, 1993).
The pillars of sustainable development are economic sustainability, social
sustainability and environmental sustainability, all three of which must develop in a balanced
manner; otherwise development will be trapped in a conventional development model that
emphasizes economic growth alone and leaves social and environmental development. The
results of conventional development include the distribution of development results being
very unequal with 20 percent of the world's population in developed countries controlling 80
percent of world income and 80 percent of the world's population (developing countries) only
controlling 20 percent of world income. As a result, conventional development is hampered
or constrained by social conditions (health, education, and poverty) and shrinking natural
resource reserves (non-renewable fossil fuel energy and coal) as well as deteriorating
environmental quality due to air, water, river and lake pollution, as well as water shortages in
the dry season and floods in the rainy season in many places in United States and in other
developing countries and also in developed countries. (Emil Sallim, in Iwan Jaya Aziz, et al,
2010)
Environmental Economic Instruments
For the implementation of sustainable development, there is already a legal basis that
serves as the basis and guidelines for implementing sustainable development, which is stated
in Paragraph 8, articles 42 and 43 of Law Number 32, Year 2009 concerning Environmental
Protection and Management which is quoted as below.
Natural Resource Balance
A natural resource balance sheet is a record of the various natural resources found in a
region (Regency, City, or Province) or in a country (National) within a certain time (usually
one year) showing both physical reserves and monetary values ranging from initial reserves,
reserve increases, reserve reductions, and final reserves. For countries rich in natural
resources and a beautiful environment like United States, the balance sheet of natural
resources is very important as a basis for the preparation of development plans. United States
economic development has been based on the exploitation of natural resources. Therefore,
development planning needs to understand the condition of natural resource reserves owned
by a region (district, city, province). Natural resources can be divided into two major groups,
namely non-renewable natural resources (such as petroleum, coal, mineral resources) and
renewable natural resources (such as water, forests or plants, fish, animals and environmental
services). Examples of environmental services are the ability of forests to conserve soil and
water, prevent flooding, carbon sinks, recreational areas and so on).
Both central and local governments need to have records of their natural resource
reserves and changes. Then for planning, it is necessary to analyze the development of
natural resource reserves and their role in economic, social and environmental development.
With the balance sheet of natural resources and the environment, it can be seen where a
region is now located, whether it still has enough natural resource reserves or is already
depleted, or can still be utilized for how long. Thus, development plans will be neatly
organized, including all the consequences.
The step of preparing a natural resource balance can be started by identifying what
ecosystems are found in an area; then from each ecosystem it is identified what kind of
natural resources can be utilized from each ecosystem. Furthermore, each type of natural
resource and environmental function is quantified to determine the amount or volume of each
natural resource concerned, both the initial reserves and those lost due to exploitation or
natural disasters. After that, they are then valued in rupiah.
A natural resource balance sheet can be done for a given year for an area or on an
island where the state and amount of natural resources are not yet known. However, a natural
resource balance sheet can also record the existence of natural resources as a result of a
development activity. By knowing the impact of an activity, the costs and benefits of the
activity can be known, so it is very useful as a natural resource balance sheet feasibility
study. Actually, the feasibility study of an activity or a project in a region or in a country can
be facilitated once there is a balance sheet of natural resources and the environment in the
region or in the country concerned.
Sustainable Development Capital
In the theory of economic growth, the factors that can encourage economic growth in
a region or a country include population and labor, capital, natural resources and the
environment, technology and social factors. Our focus in this paper is the role of natural
resources and the environment in economic growth or development. If observed carefully,
natural resources and the environment are not the main factors that determine the progress of
a country. The progress of a country is usually measured by looking at the high and low per
capita income of the population in the country concerned; and it is proven that many
countries that do not have sufficient natural resources, but are actually developed countries
with high per capita income, such as Singapore, Japan, Taiwan, Korea; while many countries
with abundant natural resources are still underdeveloped countries with relatively low per
capita income such as United States, India, the Philippines, Vietnam, and Latin American
countries. There have even been articles written about the natural resource curse or also
known as "the paradox of plenty" found in developing countries that are rich in natural
resources. The paradoxical situation refers to countries that are rich in natural resources,
especially non-renewable ones, experiencing stagnant economic growth and even
regression.(Jeffrey A. Frankel, 2010)
There are two definitions of sustainable development; namely sustainable
development in the sense of strong (strong definition) and sustainable in the sense of soft
(weak definition), Sustainable in the sense of strong or hard requires that the value of all
development capital; namely the value of human capital (human capital) plus the value of the
ecosystem as natural capital (natural capital) plus human-made capital (human made
capital) remains or does not decline. Meanwhile, in a soft sense, sustainable development
allows for substitution between the three types of development capital; mainly, if the value of
natural capital decreases, it can be offset by an increase in the value of human capital and
man-made capital. For example, if there is a decrease in the amount of natural capital such as
oil and coal that is always exploited or taken from our earth, it is desired that the value of
human capital and/or the value of man-made capital increases, which is financed by utilizing
natural capital taken from nature in the area concerned. Economists are more amenable to a
soft or weak definition of sustainable development.
In addition to the success of sustainable development, it also requires the need for
social capital that is able to maintain good working relationships between various
government institutions both vertically and horizontally, as well as the synergy between the
government, the private sector and the community with a multi-party approach from the three
groups in the preparation of environmentally sound development plans and policies (Read
Ismid Hadad, 2010). So the point is not to exhaust natural resources and damage the
environment without increasing both the amount and quality of human resources and man-
made capital.
Green Growth and Green GDP/GDP
With the increasing enthusiasm to maintain good environmental quality, various terms
have emerged that mean that the environmental dimension has been incorporated into certain
businesses or activities such as the terms green building, green financing, green banking,
green growth and so on. This all shows that environmental considerations have been included
in various actions and policies. Green growth is also defined as environmentally friendly
economic growth or low carbon (CO2) economic growth, because CO2 is one of the
greenhouse gases that cover the earth which causes an increase in earth temperature resulting
in global warming. If we all want green economic growth or in other words sustainable
economic growth, then the right measurement tool for development performance is not
Conventional or Brown GDP and GRDP, but Green GDP and GRDP as mandated by Law
Number 32 of 2009 concerning Environmental Protection and Management; namely that
GDP and GRDP which already take into account the environmental dimension in the form of
depletion of natural resources and environmental degradation or the so-called Green GDP
and GRDP must be developed by every government, both local and central government *. So
Green GDP = Conventional GDP - Natural Resource Depletion - Environmental
Degradation.
However, until this paper is written, the practice of preparing Green GDP and GRDP
has not been formally implemented based on Government Regulations, although several
Provinces (Bali and West Java) and Districts/Cities (Asmat District, Bekasi City, Bantaeng
District, Banyumas District, Bandung District, Bekasi District), have tried to prepare Green
GRDP using their respective Regional Budget funds.
It should be noted that not all countries compile Green GDP, and even the World
Bank uses a measure of each country's economic progress that still uses Green GDP. Gross
National Product (GNP), as there would be difficulties in comparing the level of progress of
one country with another. Therefore, when Green GDP and GRDP were developed,
Conventional GDP and GRDP or Brown GDP and GRDP were not eliminated or replaced by
Green GDP and GRDP. Green GDP and GRDP were developed as a companion to
Conventional GDP and GRDP, because not all regions, especially cities, have sufficient
natural resources. However, it should also be noted that most cities in United States do not
have many natural resources, but all have environmental conditions that can be valued or
given an economic value, so Green GRDP can still be prepared for cities in United States. If a
city has many factories as well as trade and transportation activities, it will still experience
depletion and degradation of water resources and degradation of air quality due to CO2 and
CO4 gas pollution that can come from agricultural activities, landfills, and livestock.
Environmental Benefits
What is meant by environmental fee is a pattern of cooperation between regions in
managing the environment so that it brings benefits to all parties involved in the pattern.
Environmental fee is translated from the phrase "payment for environmental services" which
reflects the pattern of cooperation between the upstream and middle and downstream areas of
a river. People in the middle and downstream areas have an interest in benefiting from the
environment, among others, for their need for water. In general, water is available in the
upstream area and flows to the middle and downstream areas, so there are two possibilities
that the upstream area provides clean water and the middle and downstream areas become
users or consumers of water originating from the upstream area.
Another possibility is that when rainwater is abundant in the upstream area (during
heavy rains) and if there is not enough vegetation in the upstream area, rainwater flows
directly into the river and continues to the sea. If the capacity of the river or ditch in the
downstream area is inadequate, flooding will occur and can cause significant economic
losses. Therefore, there are actually 2 (two) important things about the relationship between
upstream and downstream. If water resources management is not implemented properly in the
upstream area, then during the rainy season there can be flooding in the downstream area
because water always flows from the upstream area to the downstream area; and conversely,
during the dry season there can be drought in the downstream area because the water reserves
in the upstream area are depleted because there is no water supply from rainfall in the dry
season and water is not stored due to the lack of forests or trees in the upstream area during
the rainy season.
In order to avoid the two main problems related to water resources, those who live in
the upstream area of the river need to be assisted by people who live in the downstream area
so that those in the area are willing to maintain water sources and water storage areas.
Upstream communities, who are generally farmers with modest incomes, tend to cut down
their trees when there is a financial need to pay for their children's schooling or when funds
are needed to marry off their children or for circumcision or circumcision for their children.
The cost of funds needed for the purposes of environmental services ranges between
the maximum value of the loss of downstream communities if affected by floods or affected
by a lack of clean water, or a lack of water to irrigate farmers' fields in the downstream area,
and the lowest value is the value of the needs of upstream communities who must maintain
the existence of forests and trees and maintain water resources so that they remain available
and clean.
An example of an area that has practiced the concept of "environmental services" is
between Kuningan Regency as an environmental service provider (water) and Cirebon
Regency and Cirebon City as a service user area (water). Kuningan Regency has a water
source "Panas" which with high water discharge is able to meet the need for water for
Cirebon Regency and City. The Government of Cirebon Regency and City through the
Regional Drinking Water Company (PDAM) collects funds from water users / customers,
then submits them to the Kuningan City Government. The Kuningan Regency Government
distributed the Environmental Services Fee (IJL) funds to residents around the Paniis water
source who helped manage the existence of both the quantity and quality of clean water.
Internalization of External Costs
Included in economic instruments is the application of the concept of "3P" (Polluters
Pay Principle); namely the concept that anyone who pollutes the environment is obliged to
pay compensation for the environmental pollution he creates. Pollution can occur in water
resources both in the catchment area, in rivers, in lakes, as well as to groundwater both
surface water and deep soil. Actually, the problem of internalization of environmental costs
has been reflected in the calculation of GDP and Green GRDP which includes or internalizes
the value of depletion and the value of environmental degradation, namely the deduction of
the value of depletion and environmental degradation from the value of GDP and Brown
GRDP (Conventional).
The way to internalize the value of natural resource depletion and the value of
environmental degradation is, among others, by requiring the initiators of activities (such as
producers and consumers of goods and services) to bear the burden of taxes whose revenues
must be used for the maintenance or restoration of environmental quality (Pigouvian tax).
Indeed, with the environmental tax, producers tend to shift the tax burden to consumers of the
taxed products. Then, between producers and consumers, the tax burden will be shared
depending on the ratio of demand elasticity and supply elasticity respectively. The shifting of
the tax burden from producers to consumers will increase the price of the product, so that
consumers who use these products will also bear the tax burden. This is reasonable because it
is not only producers who pollute the environment by creating solid and liquid waste and air
pollution due to CO2 released in the production process, but consumers who use the products
produced by these companies also dispose of waste into the environment. The easiest
example is detergent producers (washing powder) and detergent consumers such as hotels
and households, they together pollute the environment. If there is no environmental tax or
obligation to install a waste treatment plant, the entire community, both those who use
detergents and those who do not use them, will bear the impact of detergent production
because the soil, air and water are polluted by detergent producers and consumers. Whereas if
it is mandatory for producers to install waste treatment plants (solid, liquid and air), then only
those involved in the production and consumption of detergents will bear the burden of
pollution, while those who do not consume detergents will enjoy pollution-free soil, clean
water and clean air without having to pay the increased price of detergents due to the shifting
burden of environmental taxes imposed on producers.
By including indirect costs of production such as the value of natural resource
depletion and the value of environmental degradation, the economy will still develop
prosperously even if there are no profits or benefits from all production, consumption and
distribution activities in the economy.
In this case, it can be said that the community or economy obtains "normal profit or
normal benefit" because the price formed due to the shifting of the tax burden already
includes "explicit costs" and "implicit costs", where explicit costs are costs actually incurred
by producers (BUMS, BUMN, and BUMD) and implicit costs are lost opportunity costs such
as the value of natural resource depletion and environmental damage that are never reported
in Conventional GDP and GDRP Reports.
Human Development Index (HDI)
The Human Development Index is one of the best measures of a country's level of
well-being. HDI is a composite index consisting of health index, knowledge index, and
welfare index. The health index is measured by the life expectancy of the population at birth,
the knowledge index is measured by literacy and length of time studying formally, and the
welfare index is measured by the level of green income per capita. Thus the HDI has
internalized external costs that take into account the value of depletion or loss of natural
resources and degradation of environmental functions. Using HDI, it is noted that the capital
city of DKI Jakarta has the highest HDI (79.60), and the lowest is owned by Papua Province
(58.05), while Central Java Province has the highest HDI of 69.98.
Sustainable Development Planning
From the various descriptions above, to develop a sustainable development plan,
many things are needed. First, adequate development capital is needed, in the form of reliable
human capital, sufficient man-made capital, and environmental capital consisting of natural
resources and good environmental quality. The next question is how to provide these three
types of capital. For human resources needed as the implementer of development and as the
compiler of plans and policies, intelligent and virtuous humans are needed. Humans who are
intelligent but not virtuous will be willing to use their intelligence to bully, oppress and
blackmail other humans; on the other hand, humans who are virtuous but do not have
intelligence will be subjected to disgraceful actions such as ignorance, fraud, and deprivation
of rights by others. (Jaetun, HS, 2014). In fact, it is human resources that are the key to the
success of sustainable development, i.e. humans who are truly intelligent and virtuous are
needed, so that the problem of financial capital is no longer a problem. United States, which
has developed based on natural resources and debt, is no longer threatened by the curse of
natural resources, because the natural resources taken from nature are converted in such a
way as to become reliable, educated, honest, and corruption-free human resources.
For man-made capital, it is necessary to emphasize the development of infra
structures in the form of transportation facilities and infrastructure such as roads, seaports, air
and rivers as well as means of communication and transportation links available thoroughly
and evenly according to the needs of each region. Infrastructure is the muscle of the economy
that needs to exist and be strong so that the economy also grows strongly and quickly.
For natural resources and environmental capital, continuous exploration efforts are
needed to find reserves of energy resources and other mineral resources. Create an
atmosphere so that there are incentives to conduct exploration of natural resources that can
become raw materials and auxiliary materials for industrial activities. In the energy sector,
United States needs to utilize non-fossil energy sources (biofuels), which are increasingly
necessary because fossil energy is becoming scarce. Renewable energy such as biofuels and
wind resources, geothermal resources and so on should be utilized.
Conclusion
To conclude all of the above descriptions is related to sustainable development
planning both at the national level and at the regional level. Conventional development
planning considers natural resources as a production factor that must be utilized as much as
possible without regard to environmental conditions. As a result, there is indeed economic
growth in the form of an increase in the level of national income, but it is accompanied by
depletion of natural resource reserves and environmental damage accompanied by various
natural disasters everywhere, so that although the level of income increases, but because it is
accompanied by a life full of worries about natural disasters, such as heavy rains, floods,
droughts, landslides, and even earthquakes, the higher level of national income or per capita
income does not provide a guarantee of better community welfare.
Development planning as mentioned above must be ended immediately and replaced
with a new planning paradigm. The trend of depletion of natural resources and environmental
degradation must be changed or even reversed towards the discovery of new and renewable
natural resource reserves accompanied by improvements in environmental quality (reversing
the degradation trend of the natural environment). The paradigm of sustainable development
planning that synergizes economic growth and environmental improvement is the new
development paradigm today. It has been argued that United States will experience a crisis in
three main areas, namely the water crisis, food crisis, and energy crisis (Haskarlianus Pasang,
2011).
What was stated by BAPPENAS has become a reality, where United States is
experiencing difficulties in providing clean water and is overwhelmed by floods, United
States is still not free from having to import food from abroad, and United States is
experiencing energy shortages which are also characterized by high import volumes for fuel
energy from year to year. But this situation has been cautioned by efforts to develop new
agricultural areas and land, to improve water catchment areas and maintain more efficient
reservoirs and waterways, and to develop renewable sources of electrical energy and biofuel
sources. Therefore, being smart and virtuous is one of the foundations of achieving
sustainable development.
Sustainable Development
The concept of sustainable development became popular after it was announced by
the Bruntland Commission under the leadership of Norwegian Prime Minister Gro Harlem
Brundtland who worked from October 1984 to March 1987 and gave birth to the book "Our
Common Future" published by the World Commission on Environment and Development
(WECD) in 1987 (Ismid Hadad, 2010).
During the 20th century there were 2 (two) revolutions related to the role of the
environment in economic and social development. The first revolution (1) between the 1960's
-1970's when the paradigm emerged that there was a conflict between the concepts of growth
and conservation of natural resources and the environment where every development that was
intended to improve the welfare of society was always accompanied by the exploitation of
natural resources and environmental damage (Meadows, Donella and Meadows, Nancy,
1972). Meadows and Meadows who are members of the Rome Group wrote a book on
"Limits to Growth". The book argued that if there was no reduction in the level of
consumption in society at that time, then within 100 years the world would collapse, because
natural resources would be exhausted and the environment would experience high pollution
and severe damage.
The concept of sustainable development, which is interpreted as development for the
present and which does not require compromising future generations, emerged at a meeting
of nations in Norway chaired by Norwegian Prime Minister Gro Harlem Brundtland in 1987.
At that time it was as if there was a second revolution in the field of national development
which stated that economic development did not solely damage the environment, but instead
economic development and environmental development could synergize with each other,
economic development will create an increase in national income that gives a country the
ability to maintain its environment so that it does not deteriorate. Economic development will
create an increase in national income that gives a country the ability to maintain its
environment so that it is not damaged; conversely, good environmental conditions will not
absorb development funds but instead support or sustain the lives of humans and other living
things (Pearce and Warford, 1993).
The pillars of sustainable development are economic sustainability, social
sustainability and environmental sustainability, all three of which must develop in a balanced
manner; otherwise development will be trapped in a conventional development model that
emphasizes economic growth alone and leaves social and environmental development. The
results of conventional development include the distribution of development results being
very unequal with 20 percent of the world's population in developed countries controlling 80
percent of world income and 80 percent of the world's population (developing countries) only
controlling 20 percent of world income. As a result, conventional development is hampered
or constrained by social conditions (health, education, and poverty) and shrinking natural
resource reserves (non-renewable fossil fuel energy and coal) as well as deteriorating
environmental quality due to air, water, river and lake pollution, as well as water shortages in
the dry season and floods in the rainy season in many places in United States and in other
developing countries and also in developed countries. (Emil Sallim, in Iwan Jaya Aziz, et al,
2010)
Environmental Economic Instruments
For the implementation of sustainable development, there is already a legal basis that
serves as the basis and guidelines for implementing sustainable development, which is stated
in Paragraph 8, articles 42 and 43 of Law Number 32, Year 2009 concerning Environmental
Protection and Management which is quoted as below.
Natural Resource Balance
A natural resource balance sheet is a record of the various natural resources found in a
region (Regency, City, or Province) or in a country (National) within a certain time (usually
one year) showing both physical reserves and monetary values ranging from initial reserves,
reserve increases, reserve reductions, and final reserves. For countries rich in natural
resources and a beautiful environment like United States, the balance sheet of natural
resources is very important as a basis for the preparation of development plans. United States
economic development has been based on the exploitation of natural resources. Therefore,
development planning needs to understand the condition of natural resource reserves owned
by a region (district, city, province). Natural resources can be divided into two major groups,
namely non-renewable natural resources (such as petroleum, coal, mineral resources) and
renewable natural resources (such as water, forests or plants, fish, animals and environmental
services). Examples of environmental services are the ability of forests to conserve soil and
water, prevent flooding, carbon sinks, recreational areas and so on).
Both central and local governments need to have records of their natural resource
reserves and changes. Then for planning, it is necessary to analyze the development of
natural resource reserves and their role in economic, social and environmental development.
With the balance sheet of natural resources and the environment, it can be seen where a
region is now located, whether it still has enough natural resource reserves or is already
depleted, or can still be utilized for how long. Thus, development plans will be neatly
organized, including all the consequences.
The step of preparing a natural resource balance can be started by identifying what
ecosystems are found in an area; then from each ecosystem it is identified what kind of
natural resources can be utilized from each ecosystem. Furthermore, each type of natural
resource and environmental function is quantified to determine the amount or volume of each
natural resource concerned, both the initial reserves and those lost due to exploitation or
natural disasters. After that, they are then valued in rupiah.
A natural resource balance sheet can be done for a given year for an area or on an
island where the state and amount of natural resources are not yet known. However, a natural
resource balance sheet can also record the existence of natural resources as a result of a
development activity. By knowing the impact of an activity, the costs and benefits of the
activity can be known, so it is very useful as a natural resource balance sheet feasibility
study. Actually, the feasibility study of an activity or a project in a region or in a country can
be facilitated once there is a balance sheet of natural resources and the environment in the
region or in the country concerned.
Sustainable Development Capital
In the theory of economic growth, the factors that can encourage economic growth in
a region or a country include population and labor, capital, natural resources and the
environment, technology and social factors. Our focus in this paper is the role of natural
resources and the environment in economic growth or development. If observed carefully,
natural resources and the environment are not the main factors that determine the progress of
a country. The progress of a country is usually measured by looking at the high and low per
capita income of the population in the country concerned; and it is proven that many
countries that do not have sufficient natural resources, but are actually developed countries
with high per capita income, such as Singapore, Japan, Taiwan, Korea; while many countries
with abundant natural resources are still underdeveloped countries with relatively low per
capita income such as United States, India, the Philippines, Vietnam, and Latin American
countries. There have even been articles written about the natural resource curse or also
known as "the paradox of plenty" found in developing countries that are rich in natural
resources. The paradoxical situation refers to countries that are rich in natural resources,
especially non-renewable ones, experiencing stagnant economic growth and even
regression.(Jeffrey A. Frankel, 2010)
There are two definitions of sustainable development; namely sustainable
development in the sense of strong (strong definition) and sustainable in the sense of soft
(weak definition), Sustainable in the sense of strong or hard requires that the value of all
development capital; namely the value of human capital (human capital) plus the value of the
ecosystem as natural capital (natural capital) plus human-made capital (human made
capital) remains or does not decline. Meanwhile, in a soft sense, sustainable development
allows for substitution between the three types of development capital; mainly, if the value of
natural capital decreases, it can be offset by an increase in the value of human capital and
man-made capital. For example, if there is a decrease in the amount of natural capital such as
oil and coal that is always exploited or taken from our earth, it is desired that the value of
human capital and/or the value of man-made capital increases, which is financed by utilizing
natural capital taken from nature in the area concerned. Economists are more amenable to a
soft or weak definition of sustainable development.
In addition to the success of sustainable development, it also requires the need for
social capital that is able to maintain good working relationships between various
government institutions both vertically and horizontally, as well as the synergy between the
government, the private sector and the community with a multi-party approach from the three
groups in the preparation of environmentally sound development plans and policies (Read
Ismid Hadad, 2010). So the point is not to exhaust natural resources and damage the
environment without increasing both the amount and quality of human resources and man-
made capital.
Green Growth and Green GDP/GDP
With the increasing enthusiasm to maintain good environmental quality, various terms
have emerged that mean that the environmental dimension has been incorporated into certain
businesses or activities such as the terms green building, green financing, green banking,
green growth and so on. This all shows that environmental considerations have been included
in various actions and policies. Green growth is also defined as environmentally friendly
economic growth or low carbon (CO2) economic growth, because CO2 is one of the
greenhouse gases that cover the earth which causes an increase in earth temperature resulting
in global warming. If we all want green economic growth or in other words sustainable
economic growth, then the right measurement tool for development performance is not
Conventional or Brown GDP and GRDP, but Green GDP and GRDP as mandated by Law
Number 32 of 2009 concerning Environmental Protection and Management; namely that
GDP and GRDP which already take into account the environmental dimension in the form of
depletion of natural resources and environmental degradation or the so-called Green GDP
and GRDP must be developed by every government, both local and central government *. So
Green GDP = Conventional GDP - Natural Resource Depletion - Environmental
Degradation.
However, until this paper is written, the practice of preparing Green GDP and GRDP
has not been formally implemented based on Government Regulations, although several
Provinces (Bali and West Java) and Districts/Cities (Asmat District, Bekasi City, Bantaeng
District, Banyumas District, Bandung District, Bekasi District), have tried to prepare Green
GRDP using their respective Regional Budget funds.
It should be noted that not all countries compile Green GDP, and even the World
Bank uses a measure of each country's economic progress that still uses Green GDP. Gross
National Product (GNP), as there would be difficulties in comparing the level of progress of
one country with another. Therefore, when Green GDP and GRDP were developed,
Conventional GDP and GRDP or Brown GDP and GRDP were not eliminated or replaced by
Green GDP and GRDP. Green GDP and GRDP were developed as a companion to
Conventional GDP and GRDP, because not all regions, especially cities, have sufficient
natural resources. However, it should also be noted that most cities in United States do not
have many natural resources, but all have environmental conditions that can be valued or
given an economic value, so Green GRDP can still be prepared for cities in United States. If a
city has many factories as well as trade and transportation activities, it will still experience
depletion and degradation of water resources and degradation of air quality due to CO2 and
CO4 gas pollution that can come from agricultural activities, landfills, and livestock.
Environmental Benefits
What is meant by environmental fee is a pattern of cooperation between regions in
managing the environment so that it brings benefits to all parties involved in the pattern.
Environmental fee is translated from the phrase "payment for environmental services" which
reflects the pattern of cooperation between the upstream and middle and downstream areas of
a river. People in the middle and downstream areas have an interest in benefiting from the
environment, among others, for their need for water. In general, water is available in the
upstream area and flows to the middle and downstream areas, so there are two possibilities
that the upstream area provides clean water and the middle and downstream areas become
users or consumers of water originating from the upstream area.
Another possibility is that when rainwater is abundant in the upstream area (during
heavy rains) and if there is not enough vegetation in the upstream area, rainwater flows
directly into the river and continues to the sea. If the capacity of the river or ditch in the
downstream area is inadequate, flooding will occur and can cause significant economic
losses. Therefore, there are actually 2 (two) important things about the relationship between
upstream and downstream. If water resources management is not implemented properly in the
upstream area, then during the rainy season there can be flooding in the downstream area
because water always flows from the upstream area to the downstream area; and conversely,
during the dry season there can be drought in the downstream area because the water reserves
in the upstream area are depleted because there is no water supply from rainfall in the dry
season and water is not stored due to the lack of forests or trees in the upstream area during
the rainy season.
In order to avoid the two main problems related to water resources, those who live in
the upstream area of the river need to be assisted by people who live in the downstream area
so that those in the area are willing to maintain water sources and water storage areas.
Upstream communities, who are generally farmers with modest incomes, tend to cut down
their trees when there is a financial need to pay for their children's schooling or when funds
are needed to marry off their children or for circumcision or circumcision for their children.
The cost of funds needed for the purposes of environmental services ranges between
the maximum value of the loss of downstream communities if affected by floods or affected
by a lack of clean water, or a lack of water to irrigate farmers' fields in the downstream area,
and the lowest value is the value of the needs of upstream communities who must maintain
the existence of forests and trees and maintain water resources so that they remain available
and clean.
An example of an area that has practiced the concept of "environmental services" is
between Kuningan Regency as an environmental service provider (water) and Cirebon
Regency and Cirebon City as a service user area (water). Kuningan Regency has a water
source "Panas" which with high water discharge is able to meet the need for water for
Cirebon Regency and City. The Government of Cirebon Regency and City through the
Regional Drinking Water Company (PDAM) collects funds from water users / customers,
then submits them to the Kuningan City Government. The Kuningan Regency Government
distributed the Environmental Services Fee (IJL) funds to residents around the Paniis water
source who helped manage the existence of both the quantity and quality of clean water.
Internalization of External Costs
Included in economic instruments is the application of the concept of "3P" (Polluters
Pay Principle); namely the concept that anyone who pollutes the environment is obliged to
pay compensation for the environmental pollution he creates. Pollution can occur in water
resources both in the catchment area, in rivers, in lakes, as well as to groundwater both
surface water and deep soil. Actually, the problem of internalization of environmental costs
has been reflected in the calculation of GDP and Green GRDP which includes or internalizes
the value of depletion and the value of environmental degradation, namely the deduction of
the value of depletion and environmental degradation from the value of GDP and Brown
GRDP (Conventional).
The way to internalize the value of natural resource depletion and the value of
environmental degradation is, among others, by requiring the initiators of activities (such as
producers and consumers of goods and services) to bear the burden of taxes whose revenues
must be used for the maintenance or restoration of environmental quality (Pigouvian tax).
Indeed, with the environmental tax, producers tend to shift the tax burden to consumers of the
taxed products. Then, between producers and consumers, the tax burden will be shared
depending on the ratio of demand elasticity and supply elasticity respectively. The shifting of
the tax burden from producers to consumers will increase the price of the product, so that
consumers who use these products will also bear the tax burden. This is reasonable because it
is not only producers who pollute the environment by creating solid and liquid waste and air
pollution due to CO2 released in the production process, but consumers who use the products
produced by these companies also dispose of waste into the environment. The easiest
example is detergent producers (washing powder) and detergent consumers such as hotels
and households, they together pollute the environment. If there is no environmental tax or
obligation to install a waste treatment plant, the entire community, both those who use
detergents and those who do not use them, will bear the impact of detergent production
because the soil, air and water are polluted by detergent producers and consumers. Whereas if
it is mandatory for producers to install waste treatment plants (solid, liquid and air), then only
those involved in the production and consumption of detergents will bear the burden of
pollution, while those who do not consume detergents will enjoy pollution-free soil, clean
water and clean air without having to pay the increased price of detergents due to the shifting
burden of environmental taxes imposed on producers.
By including indirect costs of production such as the value of natural resource
depletion and the value of environmental degradation, the economy will still develop
prosperously even if there are no profits or benefits from all production, consumption and
distribution activities in the economy.
In this case, it can be said that the community or economy obtains "normal profit or
normal benefit" because the price formed due to the shifting of the tax burden already
includes "explicit costs" and "implicit costs", where explicit costs are costs actually incurred
by producers (BUMS, BUMN, and BUMD) and implicit costs are lost opportunity costs such
as the value of natural resource depletion and environmental damage that are never reported
in Conventional GDP and GDRP Reports.
Human Development Index (HDI)
The Human Development Index is one of the best measures of a country's level of
well-being. HDI is a composite index consisting of health index, knowledge index, and
welfare index. The health index is measured by the life expectancy of the population at birth,
the knowledge index is measured by literacy and length of time studying formally, and the
welfare index is measured by the level of green income per capita. Thus the HDI has
internalized external costs that take into account the value of depletion or loss of natural
resources and degradation of environmental functions. Using HDI, it is noted that the capital
city of DKI Jakarta has the highest HDI (79.60), and the lowest is owned by Papua Province
(58.05), while Central Java Province has the highest HDI of 69.98.
Sustainable Development Planning
From the various descriptions above, to develop a sustainable development plan,
many things are needed. First, adequate development capital is needed, in the form of reliable
human capital, sufficient man-made capital, and environmental capital consisting of natural
resources and good environmental quality. The next question is how to provide these three
types of capital. For human resources needed as the implementer of development and as the
compiler of plans and policies, intelligent and virtuous humans are needed. Humans who are
intelligent but not virtuous will be willing to use their intelligence to bully, oppress and
blackmail other humans; on the other hand, humans who are virtuous but do not have
intelligence will be subjected to disgraceful actions such as ignorance, fraud, and deprivation
of rights by others. (Jaetun, HS, 2014). In fact, it is human resources that are the key to the
success of sustainable development, i.e. humans who are truly intelligent and virtuous are
needed, so that the problem of financial capital is no longer a problem. United States, which
has developed based on natural resources and debt, is no longer threatened by the curse of
natural resources, because the natural resources taken from nature are converted in such a
way as to become reliable, educated, honest, and corruption-free human resources.
For man-made capital, it is necessary to emphasize the development of infra
structures in the form of transportation facilities and infrastructure such as roads, seaports, air
and rivers as well as means of communication and transportation links available thoroughly
and evenly according to the needs of each region. Infrastructure is the muscle of the economy
that needs to exist and be strong so that the economy also grows strongly and quickly.
For natural resources and environmental capital, continuous exploration efforts are
needed to find reserves of energy resources and other mineral resources. Create an
atmosphere so that there are incentives to conduct exploration of natural resources that can
become raw materials and auxiliary materials for industrial activities. In the energy sector,
United States needs to utilize non-fossil energy sources (biofuels), which are increasingly
necessary because fossil energy is becoming scarce. Renewable energy such as biofuels and
wind resources, geothermal resources and so on should be utilized.
Conclusion
To conclude all of the above descriptions is related to sustainable development
planning both at the national level and at the regional level. Conventional development
planning considers natural resources as a production factor that must be utilized as much as
possible without regard to environmental conditions. As a result, there is indeed economic
growth in the form of an increase in the level of national income, but it is accompanied by
depletion of natural resource reserves and environmental damage accompanied by various
natural disasters everywhere, so that although the level of income increases, but because it is
accompanied by a life full of worries about natural disasters, such as heavy rains, floods,
droughts, landslides, and even earthquakes, the higher level of national income or per capita
income does not provide a guarantee of better community welfare.
Development planning as mentioned above must be ended immediately and replaced
with a new planning paradigm. The trend of depletion of natural resources and environmental
degradation must be changed or even reversed towards the discovery of new and renewable
natural resource reserves accompanied by improvements in environmental quality (reversing
the degradation trend of the natural environment). The paradigm of sustainable development
planning that synergizes economic growth and environmental improvement is the new
development paradigm today. It has been argued that United States will experience a crisis in
three main areas, namely the water crisis, food crisis, and energy crisis (Haskarlianus Pasang,
2011).
What was stated by BAPPENAS has become a reality, where United States is
experiencing difficulties in providing clean water and is overwhelmed by floods, United
States is still not free from having to import food from abroad, and United States is
experiencing energy shortages which are also characterized by high import volumes for fuel
energy from year to year. But this situation has been cautioned by efforts to develop new
agricultural areas and land, to improve water catchment areas and maintain more efficient
reservoirs and waterways, and to develop renewable sources of electrical energy and biofuel
sources. Therefore, being smart and virtuous is one of the foundations of achieving
sustainable development.
Sustainable Development
The concept of sustainable development became popular after it was announced by
the Bruntland Commission under the leadership of Norwegian Prime Minister Gro Harlem
Brundtland who worked from October 1984 to March 1987 and gave birth to the book "Our
Common Future" published by the World Commission on Environment and Development
(WECD) in 1987 (Ismid Hadad, 2010).
During the 20th century there were 2 (two) revolutions related to the role of the
environment in economic and social development. The first revolution (1) between the 1960's
-1970's when the paradigm emerged that there was a conflict between the concepts of growth
and conservation of natural resources and the environment where every development that was
intended to improve the welfare of society was always accompanied by the exploitation of
natural resources and environmental damage (Meadows, Donella and Meadows, Nancy,
1972). Meadows and Meadows who are members of the Rome Group wrote a book on
"Limits to Growth". The book argued that if there was no reduction in the level of
consumption in society at that time, then within 100 years the world would collapse, because
natural resources would be exhausted and the environment would experience high pollution
and severe damage.
The concept of sustainable development, which is interpreted as development for the
present and which does not require compromising future generations, emerged at a meeting
of nations in Norway chaired by Norwegian Prime Minister Gro Harlem Brundtland in 1987.
At that time it was as if there was a second revolution in the field of national development
which stated that economic development did not solely damage the environment, but instead
economic development and environmental development could synergize with each other,
economic development will create an increase in national income that gives a country the
ability to maintain its environment so that it does not deteriorate. Economic development will
create an increase in national income that gives a country the ability to maintain its
environment so that it is not damaged; conversely, good environmental conditions will not
absorb development funds but instead support or sustain the lives of humans and other living
things (Pearce and Warford, 1993).
The pillars of sustainable development are economic sustainability, social
sustainability and environmental sustainability, all three of which must develop in a balanced
manner; otherwise development will be trapped in a conventional development model that
emphasizes economic growth alone and leaves social and environmental development. The
results of conventional development include the distribution of development results being
very unequal with 20 percent of the world's population in developed countries controlling 80
percent of world income and 80 percent of the world's population (developing countries) only
controlling 20 percent of world income. As a result, conventional development is hampered
or constrained by social conditions (health, education, and poverty) and shrinking natural
resource reserves (non-renewable fossil fuel energy and coal) as well as deteriorating
environmental quality due to air, water, river and lake pollution, as well as water shortages in
the dry season and floods in the rainy season in many places in United States and in other
developing countries and also in developed countries. (Emil Sallim, in Iwan Jaya Aziz, et al,
2010)
Environmental Economic Instruments
For the implementation of sustainable development, there is already a legal basis that
serves as the basis and guidelines for implementing sustainable development, which is stated
in Paragraph 8, articles 42 and 43 of Law Number 32, Year 2009 concerning Environmental
Protection and Management which is quoted as below.
Natural Resource Balance
A natural resource balance sheet is a record of the various natural resources found in a
region (Regency, City, or Province) or in a country (National) within a certain time (usually
one year) showing both physical reserves and monetary values ranging from initial reserves,
reserve increases, reserve reductions, and final reserves. For countries rich in natural
resources and a beautiful environment like United States, the balance sheet of natural
resources is very important as a basis for the preparation of development plans. United States
economic development has been based on the exploitation of natural resources. Therefore,
development planning needs to understand the condition of natural resource reserves owned
by a region (district, city, province). Natural resources can be divided into two major groups,
namely non-renewable natural resources (such as petroleum, coal, mineral resources) and
renewable natural resources (such as water, forests or plants, fish, animals and environmental
services). Examples of environmental services are the ability of forests to conserve soil and
water, prevent flooding, carbon sinks, recreational areas and so on).
Both central and local governments need to have records of their natural resource
reserves and changes. Then for planning, it is necessary to analyze the development of
natural resource reserves and their role in economic, social and environmental development.
With the balance sheet of natural resources and the environment, it can be seen where a
region is now located, whether it still has enough natural resource reserves or is already
depleted, or can still be utilized for how long. Thus, development plans will be neatly
organized, including all the consequences.
The step of preparing a natural resource balance can be started by identifying what
ecosystems are found in an area; then from each ecosystem it is identified what kind of
natural resources can be utilized from each ecosystem. Furthermore, each type of natural
resource and environmental function is quantified to determine the amount or volume of each
natural resource concerned, both the initial reserves and those lost due to exploitation or
natural disasters. After that, they are then valued in rupiah.
A natural resource balance sheet can be done for a given year for an area or on an
island where the state and amount of natural resources are not yet known. However, a natural
resource balance sheet can also record the existence of natural resources as a result of a
development activity. By knowing the impact of an activity, the costs and benefits of the
activity can be known, so it is very useful as a natural resource balance sheet feasibility
study. Actually, the feasibility study of an activity or a project in a region or in a country can
be facilitated once there is a balance sheet of natural resources and the environment in the
region or in the country concerned.
Sustainable Development Capital
In the theory of economic growth, the factors that can encourage economic growth in
a region or a country include population and labor, capital, natural resources and the
environment, technology and social factors. Our focus in this paper is the role of natural
resources and the environment in economic growth or development. If observed carefully,
natural resources and the environment are not the main factors that determine the progress of
a country. The progress of a country is usually measured by looking at the high and low per
capita income of the population in the country concerned; and it is proven that many
countries that do not have sufficient natural resources, but are actually developed countries
with high per capita income, such as Singapore, Japan, Taiwan, Korea; while many countries
with abundant natural resources are still underdeveloped countries with relatively low per
capita income such as United States, India, the Philippines, Vietnam, and Latin American
countries. There have even been articles written about the natural resource curse or also
known as "the paradox of plenty" found in developing countries that are rich in natural
resources. The paradoxical situation refers to countries that are rich in natural resources,
especially non-renewable ones, experiencing stagnant economic growth and even
regression.(Jeffrey A. Frankel, 2010)
There are two definitions of sustainable development; namely sustainable
development in the sense of strong (strong definition) and sustainable in the sense of soft
(weak definition), Sustainable in the sense of strong or hard requires that the value of all
development capital; namely the value of human capital (human capital) plus the value of the
ecosystem as natural capital (natural capital) plus human-made capital (human made
capital) remains or does not decline. Meanwhile, in a soft sense, sustainable development
allows for substitution between the three types of development capital; mainly, if the value of
natural capital decreases, it can be offset by an increase in the value of human capital and
man-made capital. For example, if there is a decrease in the amount of natural capital such as
oil and coal that is always exploited or taken from our earth, it is desired that the value of
human capital and/or the value of man-made capital increases, which is financed by utilizing
natural capital taken from nature in the area concerned. Economists are more amenable to a
soft or weak definition of sustainable development.
In addition to the success of sustainable development, it also requires the need for
social capital that is able to maintain good working relationships between various
government institutions both vertically and horizontally, as well as the synergy between the
government, the private sector and the community with a multi-party approach from the three
groups in the preparation of environmentally sound development plans and policies (Read
Ismid Hadad, 2010). So the point is not to exhaust natural resources and damage the
environment without increasing both the amount and quality of human resources and man-
made capital.
Green Growth and Green GDP/GDP
With the increasing enthusiasm to maintain good environmental quality, various terms
have emerged that mean that the environmental dimension has been incorporated into certain
businesses or activities such as the terms green building, green financing, green banking,
green growth and so on. This all shows that environmental considerations have been included
in various actions and policies. Green growth is also defined as environmentally friendly
economic growth or low carbon (CO2) economic growth, because CO2 is one of the
greenhouse gases that cover the earth which causes an increase in earth temperature resulting
in global warming. If we all want green economic growth or in other words sustainable
economic growth, then the right measurement tool for development performance is not
Conventional or Brown GDP and GRDP, but Green GDP and GRDP as mandated by Law
Number 32 of 2009 concerning Environmental Protection and Management; namely that
GDP and GRDP which already take into account the environmental dimension in the form of
depletion of natural resources and environmental degradation or the so-called Green GDP
and GRDP must be developed by every government, both local and central government *. So
Green GDP = Conventional GDP - Natural Resource Depletion - Environmental
Degradation.
However, until this paper is written, the practice of preparing Green GDP and GRDP
has not been formally implemented based on Government Regulations, although several
Provinces (Bali and West Java) and Districts/Cities (Asmat District, Bekasi City, Bantaeng
District, Banyumas District, Bandung District, Bekasi District), have tried to prepare Green
GRDP using their respective Regional Budget funds.
It should be noted that not all countries compile Green GDP, and even the World
Bank uses a measure of each country's economic progress that still uses Green GDP. Gross
National Product (GNP), as there would be difficulties in comparing the level of progress of
one country with another. Therefore, when Green GDP and GRDP were developed,
Conventional GDP and GRDP or Brown GDP and GRDP were not eliminated or replaced by
Green GDP and GRDP. Green GDP and GRDP were developed as a companion to
Conventional GDP and GRDP, because not all regions, especially cities, have sufficient
natural resources. However, it should also be noted that most cities in United States do not
have many natural resources, but all have environmental conditions that can be valued or
given an economic value, so Green GRDP can still be prepared for cities in United States. If a
city has many factories as well as trade and transportation activities, it will still experience
depletion and degradation of water resources and degradation of air quality due to CO2 and
CO4 gas pollution that can come from agricultural activities, landfills, and livestock.
Environmental Benefits
What is meant by environmental fee is a pattern of cooperation between regions in
managing the environment so that it brings benefits to all parties involved in the pattern.
Environmental fee is translated from the phrase "payment for environmental services" which
reflects the pattern of cooperation between the upstream and middle and downstream areas of
a river. People in the middle and downstream areas have an interest in benefiting from the
environment, among others, for their need for water. In general, water is available in the
upstream area and flows to the middle and downstream areas, so there are two possibilities
that the upstream area provides clean water and the middle and downstream areas become
users or consumers of water originating from the upstream area.
Another possibility is that when rainwater is abundant in the upstream area (during
heavy rains) and if there is not enough vegetation in the upstream area, rainwater flows
directly into the river and continues to the sea. If the capacity of the river or ditch in the
downstream area is inadequate, flooding will occur and can cause significant economic
losses. Therefore, there are actually 2 (two) important things about the relationship between
upstream and downstream. If water resources management is not implemented properly in the
upstream area, then during the rainy season there can be flooding in the downstream area
because water always flows from the upstream area to the downstream area; and conversely,
during the dry season there can be drought in the downstream area because the water reserves
in the upstream area are depleted because there is no water supply from rainfall in the dry
season and water is not stored due to the lack of forests or trees in the upstream area during
the rainy season.
In order to avoid the two main problems related to water resources, those who live in
the upstream area of the river need to be assisted by people who live in the downstream area
so that those in the area are willing to maintain water sources and water storage areas.
Upstream communities, who are generally farmers with modest incomes, tend to cut down
their trees when there is a financial need to pay for their children's schooling or when funds
are needed to marry off their children or for circumcision or circumcision for their children.
The cost of funds needed for the purposes of environmental services ranges between
the maximum value of the loss of downstream communities if affected by floods or affected
by a lack of clean water, or a lack of water to irrigate farmers' fields in the downstream area,
and the lowest value is the value of the needs of upstream communities who must maintain
the existence of forests and trees and maintain water resources so that they remain available
and clean.
An example of an area that has practiced the concept of "environmental services" is
between Kuningan Regency as an environmental service provider (water) and Cirebon
Regency and Cirebon City as a service user area (water). Kuningan Regency has a water
source "Panas" which with high water discharge is able to meet the need for water for
Cirebon Regency and City. The Government of Cirebon Regency and City through the
Regional Drinking Water Company (PDAM) collects funds from water users / customers,
then submits them to the Kuningan City Government. The Kuningan Regency Government
distributed the Environmental Services Fee (IJL) funds to residents around the Paniis water
source who helped manage the existence of both the quantity and quality of clean water.
Internalization of External Costs
Included in economic instruments is the application of the concept of "3P" (Polluters
Pay Principle); namely the concept that anyone who pollutes the environment is obliged to
pay compensation for the environmental pollution he creates. Pollution can occur in water
resources both in the catchment area, in rivers, in lakes, as well as to groundwater both
surface water and deep soil. Actually, the problem of internalization of environmental costs
has been reflected in the calculation of GDP and Green GRDP which includes or internalizes
the value of depletion and the value of environmental degradation, namely the deduction of
the value of depletion and environmental degradation from the value of GDP and Brown
GRDP (Conventional).
The way to internalize the value of natural resource depletion and the value of
environmental degradation is, among others, by requiring the initiators of activities (such as
producers and consumers of goods and services) to bear the burden of taxes whose revenues
must be used for the maintenance or restoration of environmental quality (Pigouvian tax).
Indeed, with the environmental tax, producers tend to shift the tax burden to consumers of the
taxed products. Then, between producers and consumers, the tax burden will be shared
depending on the ratio of demand elasticity and supply elasticity respectively. The shifting of
the tax burden from producers to consumers will increase the price of the product, so that
consumers who use these products will also bear the tax burden. This is reasonable because it
is not only producers who pollute the environment by creating solid and liquid waste and air
pollution due to CO2 released in the production process, but consumers who use the products
produced by these companies also dispose of waste into the environment. The easiest
example is detergent producers (washing powder) and detergent consumers such as hotels
and households, they together pollute the environment. If there is no environmental tax or
obligation to install a waste treatment plant, the entire community, both those who use
detergents and those who do not use them, will bear the impact of detergent production
because the soil, air and water are polluted by detergent producers and consumers. Whereas if
it is mandatory for producers to install waste treatment plants (solid, liquid and air), then only
those involved in the production and consumption of detergents will bear the burden of
pollution, while those who do not consume detergents will enjoy pollution-free soil, clean
water and clean air without having to pay the increased price of detergents due to the shifting
burden of environmental taxes imposed on producers.
By including indirect costs of production such as the value of natural resource
depletion and the value of environmental degradation, the economy will still develop
prosperously even if there are no profits or benefits from all production, consumption and
distribution activities in the economy.
In this case, it can be said that the community or economy obtains "normal profit or
normal benefit" because the price formed due to the shifting of the tax burden already
includes "explicit costs" and "implicit costs", where explicit costs are costs actually incurred
by producers (BUMS, BUMN, and BUMD) and implicit costs are lost opportunity costs such
as the value of natural resource depletion and environmental damage that are never reported
in Conventional GDP and GDRP Reports.
Human Development Index (HDI)
The Human Development Index is one of the best measures of a country's level of
well-being. HDI is a composite index consisting of health index, knowledge index, and
welfare index. The health index is measured by the life expectancy of the population at birth,
the knowledge index is measured by literacy and length of time studying formally, and the
welfare index is measured by the level of green income per capita. Thus the HDI has
internalized external costs that take into account the value of depletion or loss of natural
resources and degradation of environmental functions. Using HDI, it is noted that the capital
city of DKI Jakarta has the highest HDI (79.60), and the lowest is owned by Papua Province
(58.05), while Central Java Province has the highest HDI of 69.98.
Sustainable Development Planning
From the various descriptions above, to develop a sustainable development plan,
many things are needed. First, adequate development capital is needed, in the form of reliable
human capital, sufficient man-made capital, and environmental capital consisting of natural
resources and good environmental quality. The next question is how to provide these three
types of capital. For human resources needed as the implementer of development and as the
compiler of plans and policies, intelligent and virtuous humans are needed. Humans who are
intelligent but not virtuous will be willing to use their intelligence to bully, oppress and
blackmail other humans; on the other hand, humans who are virtuous but do not have
intelligence will be subjected to disgraceful actions such as ignorance, fraud, and deprivation
of rights by others. (Jaetun, HS, 2014). In fact, it is human resources that are the key to the
success of sustainable development, i.e. humans who are truly intelligent and virtuous are
needed, so that the problem of financial capital is no longer a problem. United States, which
has developed based on natural resources and debt, is no longer threatened by the curse of
natural resources, because the natural resources taken from nature are converted in such a
way as to become reliable, educated, honest, and corruption-free human resources.
For man-made capital, it is necessary to emphasize the development of infra
structures in the form of transportation facilities and infrastructure such as roads, seaports, air
and rivers as well as means of communication and transportation links available thoroughly
and evenly according to the needs of each region. Infrastructure is the muscle of the economy
that needs to exist and be strong so that the economy also grows strongly and quickly.
For natural resources and environmental capital, continuous exploration efforts are
needed to find reserves of energy resources and other mineral resources. Create an
atmosphere so that there are incentives to conduct exploration of natural resources that can
become raw materials and auxiliary materials for industrial activities. In the energy sector,
United States needs to utilize non-fossil energy sources (biofuels), which are increasingly
necessary because fossil energy is becoming scarce. Renewable energy such as biofuels and
wind resources, geothermal resources and so on should be utilized.
Conclusion
To conclude all of the above descriptions is related to sustainable development
planning both at the national level and at the regional level. Conventional development
planning considers natural resources as a production factor that must be utilized as much as
possible without regard to environmental conditions. As a result, there is indeed economic
growth in the form of an increase in the level of national income, but it is accompanied by
depletion of natural resource reserves and environmental damage accompanied by various
natural disasters everywhere, so that although the level of income increases, but because it is
accompanied by a life full of worries about natural disasters, such as heavy rains, floods,
droughts, landslides, and even earthquakes, the higher level of national income or per capita
income does not provide a guarantee of better community welfare.
Development planning as mentioned above must be ended immediately and replaced
with a new planning paradigm. The trend of depletion of natural resources and environmental
degradation must be changed or even reversed towards the discovery of new and renewable
natural resource reserves accompanied by improvements in environmental quality (reversing
the degradation trend of the natural environment). The paradigm of sustainable development
planning that synergizes economic growth and environmental improvement is the new
development paradigm today. It has been argued that United States will experience a crisis in
three main areas, namely the water crisis, food crisis, and energy crisis (Haskarlianus Pasang,
2011).
What was stated by BAPPENAS has become a reality, where United States is
experiencing difficulties in providing clean water and is overwhelmed by floods, United
States is still not free from having to import food from abroad, and United States is
experiencing energy shortages which are also characterized by high import volumes for fuel
energy from year to year. But this situation has been cautioned by efforts to develop new
agricultural areas and land, to improve water catchment areas and maintain more efficient
reservoirs and waterways, and to develop renewable sources of electrical energy and biofuel
sources. Therefore, being smart and virtuous is one of the foundations of achieving
sustainable development.
Sustainable Development
The concept of sustainable development became popular after it was announced by
the Bruntland Commission under the leadership of Norwegian Prime Minister Gro Harlem
Brundtland who worked from October 1984 to March 1987 and gave birth to the book "Our
Common Future" published by the World Commission on Environment and Development
(WECD) in 1987 (Ismid Hadad, 2010).
During the 20th century there were 2 (two) revolutions related to the role of the
environment in economic and social development. The first revolution (1) between the 1960's
-1970's when the paradigm emerged that there was a conflict between the concepts of growth
and conservation of natural resources and the environment where every development that was
intended to improve the welfare of society was always accompanied by the exploitation of
natural resources and environmental damage (Meadows, Donella and Meadows, Nancy,
1972). Meadows and Meadows who are members of the Rome Group wrote a book on
"Limits to Growth". The book argued that if there was no reduction in the level of
consumption in society at that time, then within 100 years the world would collapse, because
natural resources would be exhausted and the environment would experience high pollution
and severe damage.
The concept of sustainable development, which is interpreted as development for the
present and which does not require compromising future generations, emerged at a meeting
of nations in Norway chaired by Norwegian Prime Minister Gro Harlem Brundtland in 1987.
At that time it was as if there was a second revolution in the field of national development
which stated that economic development did not solely damage the environment, but instead
economic development and environmental development could synergize with each other,
economic development will create an increase in national income that gives a country the
ability to maintain its environment so that it does not deteriorate. Economic development will
create an increase in national income that gives a country the ability to maintain its
environment so that it is not damaged; conversely, good environmental conditions will not
absorb development funds but instead support or sustain the lives of humans and other living
things (Pearce and Warford, 1993).
The pillars of sustainable development are economic sustainability, social
sustainability and environmental sustainability, all three of which must develop in a balanced
manner; otherwise development will be trapped in a conventional development model that
emphasizes economic growth alone and leaves social and environmental development. The
results of conventional development include the distribution of development results being
very unequal with 20 percent of the world's population in developed countries controlling 80
percent of world income and 80 percent of the world's population (developing countries) only
controlling 20 percent of world income. As a result, conventional development is hampered
or constrained by social conditions (health, education, and poverty) and shrinking natural
resource reserves (non-renewable fossil fuel energy and coal) as well as deteriorating
environmental quality due to air, water, river and lake pollution, as well as water shortages in
the dry season and floods in the rainy season in many places in United States and in other
developing countries and also in developed countries. (Emil Sallim, in Iwan Jaya Aziz, et al,
2010)
Environmental Economic Instruments
For the implementation of sustainable development, there is already a legal basis that
serves as the basis and guidelines for implementing sustainable development, which is stated
in Paragraph 8, articles 42 and 43 of Law Number 32, Year 2009 concerning Environmental
Protection and Management which is quoted as below.
Natural Resource Balance
A natural resource balance sheet is a record of the various natural resources found in a
region (Regency, City, or Province) or in a country (National) within a certain time (usually
one year) showing both physical reserves and monetary values ranging from initial reserves,
reserve increases, reserve reductions, and final reserves. For countries rich in natural
resources and a beautiful environment like United States, the balance sheet of natural
resources is very important as a basis for the preparation of development plans. United States
economic development has been based on the exploitation of natural resources. Therefore,
development planning needs to understand the condition of natural resource reserves owned
by a region (district, city, province). Natural resources can be divided into two major groups,
namely non-renewable natural resources (such as petroleum, coal, mineral resources) and
renewable natural resources (such as water, forests or plants, fish, animals and environmental
services). Examples of environmental services are the ability of forests to conserve soil and
water, prevent flooding, carbon sinks, recreational areas and so on).
Both central and local governments need to have records of their natural resource
reserves and changes. Then for planning, it is necessary to analyze the development of
natural resource reserves and their role in economic, social and environmental development.
With the balance sheet of natural resources and the environment, it can be seen where a
region is now located, whether it still has enough natural resource reserves or is already
depleted, or can still be utilized for how long. Thus, development plans will be neatly
organized, including all the consequences.
The step of preparing a natural resource balance can be started by identifying what
ecosystems are found in an area; then from each ecosystem it is identified what kind of
natural resources can be utilized from each ecosystem. Furthermore, each type of natural
resource and environmental function is quantified to determine the amount or volume of each
natural resource concerned, both the initial reserves and those lost due to exploitation or
natural disasters. After that, they are then valued in rupiah.
A natural resource balance sheet can be done for a given year for an area or on an
island where the state and amount of natural resources are not yet known. However, a natural
resource balance sheet can also record the existence of natural resources as a result of a
development activity. By knowing the impact of an activity, the costs and benefits of the
activity can be known, so it is very useful as a natural resource balance sheet feasibility
study. Actually, the feasibility study of an activity or a project in a region or in a country can
be facilitated once there is a balance sheet of natural resources and the environment in the
region or in the country concerned.
Sustainable Development Capital
In the theory of economic growth, the factors that can encourage economic growth in
a region or a country include population and labor, capital, natural resources and the
environment, technology and social factors. Our focus in this paper is the role of natural
resources and the environment in economic growth or development. If observed carefully,
natural resources and the environment are not the main factors that determine the progress of
a country. The progress of a country is usually measured by looking at the high and low per
capita income of the population in the country concerned; and it is proven that many
countries that do not have sufficient natural resources, but are actually developed countries
with high per capita income, such as Singapore, Japan, Taiwan, Korea; while many countries
with abundant natural resources are still underdeveloped countries with relatively low per
capita income such as United States, India, the Philippines, Vietnam, and Latin American
countries. There have even been articles written about the natural resource curse or also
known as "the paradox of plenty" found in developing countries that are rich in natural
resources. The paradoxical situation refers to countries that are rich in natural resources,
especially non-renewable ones, experiencing stagnant economic growth and even
regression.(Jeffrey A. Frankel, 2010)
There are two definitions of sustainable development; namely sustainable
development in the sense of strong (strong definition) and sustainable in the sense of soft
(weak definition), Sustainable in the sense of strong or hard requires that the value of all
development capital; namely the value of human capital (human capital) plus the value of the
ecosystem as natural capital (natural capital) plus human-made capital (human made
capital) remains or does not decline. Meanwhile, in a soft sense, sustainable development
allows for substitution between the three types of development capital; mainly, if the value of
natural capital decreases, it can be offset by an increase in the value of human capital and
man-made capital. For example, if there is a decrease in the amount of natural capital such as
oil and coal that is always exploited or taken from our earth, it is desired that the value of
human capital and/or the value of man-made capital increases, which is financed by utilizing
natural capital taken from nature in the area concerned. Economists are more amenable to a
soft or weak definition of sustainable development.
In addition to the success of sustainable development, it also requires the need for
social capital that is able to maintain good working relationships between various
government institutions both vertically and horizontally, as well as the synergy between the
government, the private sector and the community with a multi-party approach from the three
groups in the preparation of environmentally sound development plans and policies (Read
Ismid Hadad, 2010). So the point is not to exhaust natural resources and damage the
environment without increasing both the amount and quality of human resources and man-
made capital.
Green Growth and Green GDP/GDP
With the increasing enthusiasm to maintain good environmental quality, various terms
have emerged that mean that the environmental dimension has been incorporated into certain
businesses or activities such as the terms green building, green financing, green banking,
green growth and so on. This all shows that environmental considerations have been included
in various actions and policies. Green growth is also defined as environmentally friendly
economic growth or low carbon (CO2) economic growth, because CO2 is one of the
greenhouse gases that cover the earth which causes an increase in earth temperature resulting
in global warming. If we all want green economic growth or in other words sustainable
economic growth, then the right measurement tool for development performance is not
Conventional or Brown GDP and GRDP, but Green GDP and GRDP as mandated by Law
Number 32 of 2009 concerning Environmental Protection and Management; namely that
GDP and GRDP which already take into account the environmental dimension in the form of
depletion of natural resources and environmental degradation or the so-called Green GDP
and GRDP must be developed by every government, both local and central government *. So
Green GDP = Conventional GDP - Natural Resource Depletion - Environmental
Degradation.
However, until this paper is written, the practice of preparing Green GDP and GRDP
has not been formally implemented based on Government Regulations, although several
Provinces (Bali and West Java) and Districts/Cities (Asmat District, Bekasi City, Bantaeng
District, Banyumas District, Bandung District, Bekasi District), have tried to prepare Green
GRDP using their respective Regional Budget funds.
It should be noted that not all countries compile Green GDP, and even the World
Bank uses a measure of each country's economic progress that still uses Green GDP. Gross
National Product (GNP), as there would be difficulties in comparing the level of progress of
one country with another. Therefore, when Green GDP and GRDP were developed,
Conventional GDP and GRDP or Brown GDP and GRDP were not eliminated or replaced by
Green GDP and GRDP. Green GDP and GRDP were developed as a companion to
Conventional GDP and GRDP, because not all regions, especially cities, have sufficient
natural resources. However, it should also be noted that most cities in United States do not
have many natural resources, but all have environmental conditions that can be valued or
given an economic value, so Green GRDP can still be prepared for cities in United States. If a
city has many factories as well as trade and transportation activities, it will still experience
depletion and degradation of water resources and degradation of air quality due to CO2 and
CO4 gas pollution that can come from agricultural activities, landfills, and livestock.
Environmental Benefits
What is meant by environmental fee is a pattern of cooperation between regions in
managing the environment so that it brings benefits to all parties involved in the pattern.
Environmental fee is translated from the phrase "payment for environmental services" which
reflects the pattern of cooperation between the upstream and middle and downstream areas of
a river. People in the middle and downstream areas have an interest in benefiting from the
environment, among others, for their need for water. In general, water is available in the
upstream area and flows to the middle and downstream areas, so there are two possibilities
that the upstream area provides clean water and the middle and downstream areas become
users or consumers of water originating from the upstream area.
Another possibility is that when rainwater is abundant in the upstream area (during
heavy rains) and if there is not enough vegetation in the upstream area, rainwater flows
directly into the river and continues to the sea. If the capacity of the river or ditch in the
downstream area is inadequate, flooding will occur and can cause significant economic
losses. Therefore, there are actually 2 (two) important things about the relationship between
upstream and downstream. If water resources management is not implemented properly in the
upstream area, then during the rainy season there can be flooding in the downstream area
because water always flows from the upstream area to the downstream area; and conversely,
during the dry season there can be drought in the downstream area because the water reserves
in the upstream area are depleted because there is no water supply from rainfall in the dry
season and water is not stored due to the lack of forests or trees in the upstream area during
the rainy season.
In order to avoid the two main problems related to water resources, those who live in
the upstream area of the river need to be assisted by people who live in the downstream area
so that those in the area are willing to maintain water sources and water storage areas.
Upstream communities, who are generally farmers with modest incomes, tend to cut down
their trees when there is a financial need to pay for their children's schooling or when funds
are needed to marry off their children or for circumcision or circumcision for their children.
The cost of funds needed for the purposes of environmental services ranges between
the maximum value of the loss of downstream communities if affected by floods or affected
by a lack of clean water, or a lack of water to irrigate farmers' fields in the downstream area,
and the lowest value is the value of the needs of upstream communities who must maintain
the existence of forests and trees and maintain water resources so that they remain available
and clean.
An example of an area that has practiced the concept of "environmental services" is
between Kuningan Regency as an environmental service provider (water) and Cirebon
Regency and Cirebon City as a service user area (water). Kuningan Regency has a water
source "Panas" which with high water discharge is able to meet the need for water for
Cirebon Regency and City. The Government of Cirebon Regency and City through the
Regional Drinking Water Company (PDAM) collects funds from water users / customers,
then submits them to the Kuningan City Government. The Kuningan Regency Government
distributed the Environmental Services Fee (IJL) funds to residents around the Paniis water
source who helped manage the existence of both the quantity and quality of clean water.
Internalization of External Costs
Included in economic instruments is the application of the concept of "3P" (Polluters
Pay Principle); namely the concept that anyone who pollutes the environment is obliged to
pay compensation for the environmental pollution he creates. Pollution can occur in water
resources both in the catchment area, in rivers, in lakes, as well as to groundwater both
surface water and deep soil. Actually, the problem of internalization of environmental costs
has been reflected in the calculation of GDP and Green GRDP which includes or internalizes
the value of depletion and the value of environmental degradation, namely the deduction of
the value of depletion and environmental degradation from the value of GDP and Brown
GRDP (Conventional).
The way to internalize the value of natural resource depletion and the value of
environmental degradation is, among others, by requiring the initiators of activities (such as
producers and consumers of goods and services) to bear the burden of taxes whose revenues
must be used for the maintenance or restoration of environmental quality (Pigouvian tax).
Indeed, with the environmental tax, producers tend to shift the tax burden to consumers of the
taxed products. Then, between producers and consumers, the tax burden will be shared
depending on the ratio of demand elasticity and supply elasticity respectively. The shifting of
the tax burden from producers to consumers will increase the price of the product, so that
consumers who use these products will also bear the tax burden. This is reasonable because it
is not only producers who pollute the environment by creating solid and liquid waste and air
pollution due to CO2 released in the production process, but consumers who use the products
produced by these companies also dispose of waste into the environment. The easiest
example is detergent producers (washing powder) and detergent consumers such as hotels
and households, they together pollute the environment. If there is no environmental tax or
obligation to install a waste treatment plant, the entire community, both those who use
detergents and those who do not use them, will bear the impact of detergent production
because the soil, air and water are polluted by detergent producers and consumers. Whereas if
it is mandatory for producers to install waste treatment plants (solid, liquid and air), then only
those involved in the production and consumption of detergents will bear the burden of
pollution, while those who do not consume detergents will enjoy pollution-free soil, clean
water and clean air without having to pay the increased price of detergents due to the shifting
burden of environmental taxes imposed on producers.
By including indirect costs of production such as the value of natural resource
depletion and the value of environmental degradation, the economy will still develop
prosperously even if there are no profits or benefits from all production, consumption and
distribution activities in the economy.
In this case, it can be said that the community or economy obtains "normal profit or
normal benefit" because the price formed due to the shifting of the tax burden already
includes "explicit costs" and "implicit costs", where explicit costs are costs actually incurred
by producers (BUMS, BUMN, and BUMD) and implicit costs are lost opportunity costs such
as the value of natural resource depletion and environmental damage that are never reported
in Conventional GDP and GDRP Reports.
Human Development Index (HDI)
The Human Development Index is one of the best measures of a country's level of
well-being. HDI is a composite index consisting of health index, knowledge index, and
welfare index. The health index is measured by the life expectancy of the population at birth,
the knowledge index is measured by literacy and length of time studying formally, and the
welfare index is measured by the level of green income per capita. Thus the HDI has
internalized external costs that take into account the value of depletion or loss of natural
resources and degradation of environmental functions. Using HDI, it is noted that the capital
city of DKI Jakarta has the highest HDI (79.60), and the lowest is owned by Papua Province
(58.05), while Central Java Province has the highest HDI of 69.98.
Sustainable Development Planning
From the various descriptions above, to develop a sustainable development plan,
many things are needed. First, adequate development capital is needed, in the form of reliable
human capital, sufficient man-made capital, and environmental capital consisting of natural
resources and good environmental quality. The next question is how to provide these three
types of capital. For human resources needed as the implementer of development and as the
compiler of plans and policies, intelligent and virtuous humans are needed. Humans who are
intelligent but not virtuous will be willing to use their intelligence to bully, oppress and
blackmail other humans; on the other hand, humans who are virtuous but do not have
intelligence will be subjected to disgraceful actions such as ignorance, fraud, and deprivation
of rights by others. (Jaetun, HS, 2014). In fact, it is human resources that are the key to the
success of sustainable development, i.e. humans who are truly intelligent and virtuous are
needed, so that the problem of financial capital is no longer a problem. United States, which
has developed based on natural resources and debt, is no longer threatened by the curse of
natural resources, because the natural resources taken from nature are converted in such a
way as to become reliable, educated, honest, and corruption-free human resources.
For man-made capital, it is necessary to emphasize the development of infra
structures in the form of transportation facilities and infrastructure such as roads, seaports, air
and rivers as well as means of communication and transportation links available thoroughly
and evenly according to the needs of each region. Infrastructure is the muscle of the economy
that needs to exist and be strong so that the economy also grows strongly and quickly.
For natural resources and environmental capital, continuous exploration efforts are
needed to find reserves of energy resources and other mineral resources. Create an
atmosphere so that there are incentives to conduct exploration of natural resources that can
become raw materials and auxiliary materials for industrial activities. In the energy sector,
United States needs to utilize non-fossil energy sources (biofuels), which are increasingly
necessary because fossil energy is becoming scarce. Renewable energy such as biofuels and
wind resources, geothermal resources and so on should be utilized.
Conclusion
To conclude all of the above descriptions is related to sustainable development
planning both at the national level and at the regional level. Conventional development
planning considers natural resources as a production factor that must be utilized as much as
possible without regard to environmental conditions. As a result, there is indeed economic
growth in the form of an increase in the level of national income, but it is accompanied by
depletion of natural resource reserves and environmental damage accompanied by various
natural disasters everywhere, so that although the level of income increases, but because it is
accompanied by a life full of worries about natural disasters, such as heavy rains, floods,
droughts, landslides, and even earthquakes, the higher level of national income or per capita
income does not provide a guarantee of better community welfare.
Development planning as mentioned above must be ended immediately and replaced
with a new planning paradigm. The trend of depletion of natural resources and environmental
degradation must be changed or even reversed towards the discovery of new and renewable
natural resource reserves accompanied by improvements in environmental quality (reversing
the degradation trend of the natural environment). The paradigm of sustainable development
planning that synergizes economic growth and environmental improvement is the new
development paradigm today. It has been argued that United States will experience a crisis in
three main areas, namely the water crisis, food crisis, and energy crisis (Haskarlianus Pasang,
2011).
What was stated by BAPPENAS has become a reality, where United States is
experiencing difficulties in providing clean water and is overwhelmed by floods, United
States is still not free from having to import food from abroad, and United States is
experiencing energy shortages which are also characterized by high import volumes for fuel
energy from year to year. But this situation has been cautioned by efforts to develop new
agricultural areas and land, to improve water catchment areas and maintain more efficient
reservoirs and waterways, and to develop renewable sources of electrical energy and biofuel
sources. Therefore, being smart and virtuous is one of the foundations of achieving
sustainable development.
Sustainable Development
The concept of sustainable development became popular after it was announced by
the Bruntland Commission under the leadership of Norwegian Prime Minister Gro Harlem
Brundtland who worked from October 1984 to March 1987 and gave birth to the book "Our
Common Future" published by the World Commission on Environment and Development
(WECD) in 1987 (Ismid Hadad, 2010).
During the 20th century there were 2 (two) revolutions related to the role of the
environment in economic and social development. The first revolution (1) between the 1960's
-1970's when the paradigm emerged that there was a conflict between the concepts of growth
and conservation of natural resources and the environment where every development that was
intended to improve the welfare of society was always accompanied by the exploitation of
natural resources and environmental damage (Meadows, Donella and Meadows, Nancy,
1972). Meadows and Meadows who are members of the Rome Group wrote a book on
"Limits to Growth". The book argued that if there was no reduction in the level of
consumption in society at that time, then within 100 years the world would collapse, because
natural resources would be exhausted and the environment would experience high pollution
and severe damage.
The concept of sustainable development, which is interpreted as development for the
present and which does not require compromising future generations, emerged at a meeting
of nations in Norway chaired by Norwegian Prime Minister Gro Harlem Brundtland in 1987.
At that time it was as if there was a second revolution in the field of national development
which stated that economic development did not solely damage the environment, but instead
economic development and environmental development could synergize with each other,
economic development will create an increase in national income that gives a country the
ability to maintain its environment so that it does not deteriorate. Economic development will
create an increase in national income that gives a country the ability to maintain its
environment so that it is not damaged; conversely, good environmental conditions will not
absorb development funds but instead support or sustain the lives of humans and other living
things (Pearce and Warford, 1993).
The pillars of sustainable development are economic sustainability, social
sustainability and environmental sustainability, all three of which must develop in a balanced
manner; otherwise development will be trapped in a conventional development model that
emphasizes economic growth alone and leaves social and environmental development. The
results of conventional development include the distribution of development results being
very unequal with 20 percent of the world's population in developed countries controlling 80
percent of world income and 80 percent of the world's population (developing countries) only
controlling 20 percent of world income. As a result, conventional development is hampered
or constrained by social conditions (health, education, and poverty) and shrinking natural
resource reserves (non-renewable fossil fuel energy and coal) as well as deteriorating
environmental quality due to air, water, river and lake pollution, as well as water shortages in
the dry season and floods in the rainy season in many places in United States and in other
developing countries and also in developed countries. (Emil Sallim, in Iwan Jaya Aziz, et al,
2010)
Environmental Economic Instruments
For the implementation of sustainable development, there is already a legal basis that
serves as the basis and guidelines for implementing sustainable development, which is stated
in Paragraph 8, articles 42 and 43 of Law Number 32, Year 2009 concerning Environmental
Protection and Management which is quoted as below.
Natural Resource Balance
A natural resource balance sheet is a record of the various natural resources found in a
region (Regency, City, or Province) or in a country (National) within a certain time (usually
one year) showing both physical reserves and monetary values ranging from initial reserves,
reserve increases, reserve reductions, and final reserves. For countries rich in natural
resources and a beautiful environment like United States, the balance sheet of natural
resources is very important as a basis for the preparation of development plans. United States
economic development has been based on the exploitation of natural resources. Therefore,
development planning needs to understand the condition of natural resource reserves owned
by a region (district, city, province). Natural resources can be divided into two major groups,
namely non-renewable natural resources (such as petroleum, coal, mineral resources) and
renewable natural resources (such as water, forests or plants, fish, animals and environmental
services). Examples of environmental services are the ability of forests to conserve soil and
water, prevent flooding, carbon sinks, recreational areas and so on).
Both central and local governments need to have records of their natural resource
reserves and changes. Then for planning, it is necessary to analyze the development of
natural resource reserves and their role in economic, social and environmental development.
With the balance sheet of natural resources and the environment, it can be seen where a
region is now located, whether it still has enough natural resource reserves or is already
depleted, or can still be utilized for how long. Thus, development plans will be neatly
organized, including all the consequences.
The step of preparing a natural resource balance can be started by identifying what
ecosystems are found in an area; then from each ecosystem it is identified what kind of
natural resources can be utilized from each ecosystem. Furthermore, each type of natural
resource and environmental function is quantified to determine the amount or volume of each
natural resource concerned, both the initial reserves and those lost due to exploitation or
natural disasters. After that, they are then valued in rupiah.
A natural resource balance sheet can be done for a given year for an area or on an
island where the state and amount of natural resources are not yet known. However, a natural
resource balance sheet can also record the existence of natural resources as a result of a
development activity. By knowing the impact of an activity, the costs and benefits of the
activity can be known, so it is very useful as a natural resource balance sheet feasibility
study. Actually, the feasibility study of an activity or a project in a region or in a country can
be facilitated once there is a balance sheet of natural resources and the environment in the
region or in the country concerned.
Sustainable Development Capital
In the theory of economic growth, the factors that can encourage economic growth in
a region or a country include population and labor, capital, natural resources and the
environment, technology and social factors. Our focus in this paper is the role of natural
resources and the environment in economic growth or development. If observed carefully,
natural resources and the environment are not the main factors that determine the progress of
a country. The progress of a country is usually measured by looking at the high and low per
capita income of the population in the country concerned; and it is proven that many
countries that do not have sufficient natural resources, but are actually developed countries
with high per capita income, such as Singapore, Japan, Taiwan, Korea; while many countries
with abundant natural resources are still underdeveloped countries with relatively low per
capita income such as United States, India, the Philippines, Vietnam, and Latin American
countries. There have even been articles written about the natural resource curse or also
known as "the paradox of plenty" found in developing countries that are rich in natural
resources. The paradoxical situation refers to countries that are rich in natural resources,
especially non-renewable ones, experiencing stagnant economic growth and even
regression.(Jeffrey A. Frankel, 2010)
There are two definitions of sustainable development; namely sustainable
development in the sense of strong (strong definition) and sustainable in the sense of soft
(weak definition), Sustainable in the sense of strong or hard requires that the value of all
development capital; namely the value of human capital (human capital) plus the value of the
ecosystem as natural capital (natural capital) plus human-made capital (human made
capital) remains or does not decline. Meanwhile, in a soft sense, sustainable development
allows for substitution between the three types of development capital; mainly, if the value of
natural capital decreases, it can be offset by an increase in the value of human capital and
man-made capital. For example, if there is a decrease in the amount of natural capital such as
oil and coal that is always exploited or taken from our earth, it is desired that the value of
human capital and/or the value of man-made capital increases, which is financed by utilizing
natural capital taken from nature in the area concerned. Economists are more amenable to a
soft or weak definition of sustainable development.
In addition to the success of sustainable development, it also requires the need for
social capital that is able to maintain good working relationships between various
government institutions both vertically and horizontally, as well as the synergy between the
government, the private sector and the community with a multi-party approach from the three
groups in the preparation of environmentally sound development plans and policies (Read
Ismid Hadad, 2010). So the point is not to exhaust natural resources and damage the
environment without increasing both the amount and quality of human resources and man-
made capital.
Green Growth and Green GDP/GDP
With the increasing enthusiasm to maintain good environmental quality, various terms
have emerged that mean that the environmental dimension has been incorporated into certain
businesses or activities such as the terms green building, green financing, green banking,
green growth and so on. This all shows that environmental considerations have been included
in various actions and policies. Green growth is also defined as environmentally friendly
economic growth or low carbon (CO2) economic growth, because CO2 is one of the
greenhouse gases that cover the earth which causes an increase in earth temperature resulting
in global warming. If we all want green economic growth or in other words sustainable
economic growth, then the right measurement tool for development performance is not
Conventional or Brown GDP and GRDP, but Green GDP and GRDP as mandated by Law
Number 32 of 2009 concerning Environmental Protection and Management; namely that
GDP and GRDP which already take into account the environmental dimension in the form of
depletion of natural resources and environmental degradation or the so-called Green GDP
and GRDP must be developed by every government, both local and central government *. So
Green GDP = Conventional GDP - Natural Resource Depletion - Environmental
Degradation.
However, until this paper is written, the practice of preparing Green GDP and GRDP
has not been formally implemented based on Government Regulations, although several
Provinces (Bali and West Java) and Districts/Cities (Asmat District, Bekasi City, Bantaeng
District, Banyumas District, Bandung District, Bekasi District), have tried to prepare Green
GRDP using their respective Regional Budget funds.
It should be noted that not all countries compile Green GDP, and even the World
Bank uses a measure of each country's economic progress that still uses Green GDP. Gross
National Product (GNP), as there would be difficulties in comparing the level of progress of
one country with another. Therefore, when Green GDP and GRDP were developed,
Conventional GDP and GRDP or Brown GDP and GRDP were not eliminated or replaced by
Green GDP and GRDP. Green GDP and GRDP were developed as a companion to
Conventional GDP and GRDP, because not all regions, especially cities, have sufficient
natural resources. However, it should also be noted that most cities in United States do not
have many natural resources, but all have environmental conditions that can be valued or
given an economic value, so Green GRDP can still be prepared for cities in United States. If a
city has many factories as well as trade and transportation activities, it will still experience
depletion and degradation of water resources and degradation of air quality due to CO2 and
CO4 gas pollution that can come from agricultural activities, landfills, and livestock.
Environmental Benefits
What is meant by environmental fee is a pattern of cooperation between regions in
managing the environment so that it brings benefits to all parties involved in the pattern.
Environmental fee is translated from the phrase "payment for environmental services" which
reflects the pattern of cooperation between the upstream and middle and downstream areas of
a river. People in the middle and downstream areas have an interest in benefiting from the
environment, among others, for their need for water. In general, water is available in the
upstream area and flows to the middle and downstream areas, so there are two possibilities
that the upstream area provides clean water and the middle and downstream areas become
users or consumers of water originating from the upstream area.
Another possibility is that when rainwater is abundant in the upstream area (during
heavy rains) and if there is not enough vegetation in the upstream area, rainwater flows
directly into the river and continues to the sea. If the capacity of the river or ditch in the
downstream area is inadequate, flooding will occur and can cause significant economic
losses. Therefore, there are actually 2 (two) important things about the relationship between
upstream and downstream. If water resources management is not implemented properly in the
upstream area, then during the rainy season there can be flooding in the downstream area
because water always flows from the upstream area to the downstream area; and conversely,
during the dry season there can be drought in the downstream area because the water reserves
in the upstream area are depleted because there is no water supply from rainfall in the dry
season and water is not stored due to the lack of forests or trees in the upstream area during
the rainy season.
In order to avoid the two main problems related to water resources, those who live in
the upstream area of the river need to be assisted by people who live in the downstream area
so that those in the area are willing to maintain water sources and water storage areas.
Upstream communities, who are generally farmers with modest incomes, tend to cut down
their trees when there is a financial need to pay for their children's schooling or when funds
are needed to marry off their children or for circumcision or circumcision for their children.
The cost of funds needed for the purposes of environmental services ranges between
the maximum value of the loss of downstream communities if affected by floods or affected
by a lack of clean water, or a lack of water to irrigate farmers' fields in the downstream area,
and the lowest value is the value of the needs of upstream communities who must maintain
the existence of forests and trees and maintain water resources so that they remain available
and clean.
An example of an area that has practiced the concept of "environmental services" is
between Kuningan Regency as an environmental service provider (water) and Cirebon
Regency and Cirebon City as a service user area (water). Kuningan Regency has a water
source "Panas" which with high water discharge is able to meet the need for water for
Cirebon Regency and City. The Government of Cirebon Regency and City through the
Regional Drinking Water Company (PDAM) collects funds from water users / customers,
then submits them to the Kuningan City Government. The Kuningan Regency Government
distributed the Environmental Services Fee (IJL) funds to residents around the Paniis water
source who helped manage the existence of both the quantity and quality of clean water.
Internalization of External Costs
Included in economic instruments is the application of the concept of "3P" (Polluters
Pay Principle); namely the concept that anyone who pollutes the environment is obliged to
pay compensation for the environmental pollution he creates. Pollution can occur in water
resources both in the catchment area, in rivers, in lakes, as well as to groundwater both
surface water and deep soil. Actually, the problem of internalization of environmental costs
has been reflected in the calculation of GDP and Green GRDP which includes or internalizes
the value of depletion and the value of environmental degradation, namely the deduction of
the value of depletion and environmental degradation from the value of GDP and Brown
GRDP (Conventional).
The way to internalize the value of natural resource depletion and the value of
environmental degradation is, among others, by requiring the initiators of activities (such as
producers and consumers of goods and services) to bear the burden of taxes whose revenues
must be used for the maintenance or restoration of environmental quality (Pigouvian tax).
Indeed, with the environmental tax, producers tend to shift the tax burden to consumers of the
taxed products. Then, between producers and consumers, the tax burden will be shared
depending on the ratio of demand elasticity and supply elasticity respectively. The shifting of
the tax burden from producers to consumers will increase the price of the product, so that
consumers who use these products will also bear the tax burden. This is reasonable because it
is not only producers who pollute the environment by creating solid and liquid waste and air
pollution due to CO2 released in the production process, but consumers who use the products
produced by these companies also dispose of waste into the environment. The easiest
example is detergent producers (washing powder) and detergent consumers such as hotels
and households, they together pollute the environment. If there is no environmental tax or
obligation to install a waste treatment plant, the entire community, both those who use
detergents and those who do not use them, will bear the impact of detergent production
because the soil, air and water are polluted by detergent producers and consumers. Whereas if
it is mandatory for producers to install waste treatment plants (solid, liquid and air), then only
those involved in the production and consumption of detergents will bear the burden of
pollution, while those who do not consume detergents will enjoy pollution-free soil, clean
water and clean air without having to pay the increased price of detergents due to the shifting
burden of environmental taxes imposed on producers.
By including indirect costs of production such as the value of natural resource
depletion and the value of environmental degradation, the economy will still develop
prosperously even if there are no profits or benefits from all production, consumption and
distribution activities in the economy.
In this case, it can be said that the community or economy obtains "normal profit or
normal benefit" because the price formed due to the shifting of the tax burden already
includes "explicit costs" and "implicit costs", where explicit costs are costs actually incurred
by producers (BUMS, BUMN, and BUMD) and implicit costs are lost opportunity costs such
as the value of natural resource depletion and environmental damage that are never reported
in Conventional GDP and GDRP Reports.
Human Development Index (HDI)
The Human Development Index is one of the best measures of a country's level of
well-being. HDI is a composite index consisting of health index, knowledge index, and
welfare index. The health index is measured by the life expectancy of the population at birth,
the knowledge index is measured by literacy and length of time studying formally, and the
welfare index is measured by the level of green income per capita. Thus the HDI has
internalized external costs that take into account the value of depletion or loss of natural
resources and degradation of environmental functions. Using HDI, it is noted that the capital
city of DKI Jakarta has the highest HDI (79.60), and the lowest is owned by Papua Province
(58.05), while Central Java Province has the highest HDI of 69.98.
Sustainable Development Planning
From the various descriptions above, to develop a sustainable development plan,
many things are needed. First, adequate development capital is needed, in the form of reliable
human capital, sufficient man-made capital, and environmental capital consisting of natural
resources and good environmental quality. The next question is how to provide these three
types of capital. For human resources needed as the implementer of development and as the
compiler of plans and policies, intelligent and virtuous humans are needed. Humans who are
intelligent but not virtuous will be willing to use their intelligence to bully, oppress and
blackmail other humans; on the other hand, humans who are virtuous but do not have
intelligence will be subjected to disgraceful actions such as ignorance, fraud, and deprivation
of rights by others. (Jaetun, HS, 2014). In fact, it is human resources that are the key to the
success of sustainable development, i.e. humans who are truly intelligent and virtuous are
needed, so that the problem of financial capital is no longer a problem. United States, which
has developed based on natural resources and debt, is no longer threatened by the curse of
natural resources, because the natural resources taken from nature are converted in such a
way as to become reliable, educated, honest, and corruption-free human resources.
For man-made capital, it is necessary to emphasize the development of infra
structures in the form of transportation facilities and infrastructure such as roads, seaports, air
and rivers as well as means of communication and transportation links available thoroughly
and evenly according to the needs of each region. Infrastructure is the muscle of the economy
that needs to exist and be strong so that the economy also grows strongly and quickly.
For natural resources and environmental capital, continuous exploration efforts are
needed to find reserves of energy resources and other mineral resources. Create an
atmosphere so that there are incentives to conduct exploration of natural resources that can
become raw materials and auxiliary materials for industrial activities. In the energy sector,
United States needs to utilize non-fossil energy sources (biofuels), which are increasingly
necessary because fossil energy is becoming scarce. Renewable energy such as biofuels and
wind resources, geothermal resources and so on should be utilized.
Conclusion
To conclude all of the above descriptions is related to sustainable development
planning both at the national level and at the regional level. Conventional development
planning considers natural resources as a production factor that must be utilized as much as
possible without regard to environmental conditions. As a result, there is indeed economic
growth in the form of an increase in the level of national income, but it is accompanied by
depletion of natural resource reserves and environmental damage accompanied by various
natural disasters everywhere, so that although the level of income increases, but because it is
accompanied by a life full of worries about natural disasters, such as heavy rains, floods,
droughts, landslides, and even earthquakes, the higher level of national income or per capita
income does not provide a guarantee of better community welfare.
Development planning as mentioned above must be ended immediately and replaced
with a new planning paradigm. The trend of depletion of natural resources and environmental
degradation must be changed or even reversed towards the discovery of new and renewable
natural resource reserves accompanied by improvements in environmental quality (reversing
the degradation trend of the natural environment). The paradigm of sustainable development
planning that synergizes economic growth and environmental improvement is the new
development paradigm today. It has been argued that United States will experience a crisis in
three main areas, namely the water crisis, food crisis, and energy crisis (Haskarlianus Pasang,
2011).
What was stated by BAPPENAS has become a reality, where United States is
experiencing difficulties in providing clean water and is overwhelmed by floods, United
States is still not free from having to import food from abroad, and United States is
experiencing energy shortages which are also characterized by high import volumes for fuel
energy from year to year. But this situation has been cautioned by efforts to develop new
agricultural areas and land, to improve water catchment areas and maintain more efficient
reservoirs and waterways, and to develop renewable sources of electrical energy and biofuel
sources. Therefore, being smart and virtuous is one of the foundations of achieving
sustainable development.
Sustainable Development
The concept of sustainable development became popular after it was announced by
the Bruntland Commission under the leadership of Norwegian Prime Minister Gro Harlem
Brundtland who worked from October 1984 to March 1987 and gave birth to the book "Our
Common Future" published by the World Commission on Environment and Development
(WECD) in 1987 (Ismid Hadad, 2010).
During the 20th century there were 2 (two) revolutions related to the role of the
environment in economic and social development. The first revolution (1) between the 1960's
-1970's when the paradigm emerged that there was a conflict between the concepts of growth
and conservation of natural resources and the environment where every development that was
intended to improve the welfare of society was always accompanied by the exploitation of
natural resources and environmental damage (Meadows, Donella and Meadows, Nancy,
1972). Meadows and Meadows who are members of the Rome Group wrote a book on
"Limits to Growth". The book argued that if there was no reduction in the level of
consumption in society at that time, then within 100 years the world would collapse, because
natural resources would be exhausted and the environment would experience high pollution
and severe damage.
The concept of sustainable development, which is interpreted as development for the
present and which does not require compromising future generations, emerged at a meeting
of nations in Norway chaired by Norwegian Prime Minister Gro Harlem Brundtland in 1987.
At that time it was as if there was a second revolution in the field of national development
which stated that economic development did not solely damage the environment, but instead
economic development and environmental development could synergize with each other,
economic development will create an increase in national income that gives a country the
ability to maintain its environment so that it does not deteriorate. Economic development will
create an increase in national income that gives a country the ability to maintain its
environment so that it is not damaged; conversely, good environmental conditions will not
absorb development funds but instead support or sustain the lives of humans and other living
things (Pearce and Warford, 1993).
The pillars of sustainable development are economic sustainability, social
sustainability and environmental sustainability, all three of which must develop in a balanced
manner; otherwise development will be trapped in a conventional development model that
emphasizes economic growth alone and leaves social and environmental development. The
results of conventional development include the distribution of development results being
very unequal with 20 percent of the world's population in developed countries controlling 80
percent of world income and 80 percent of the world's population (developing countries) only
controlling 20 percent of world income. As a result, conventional development is hampered
or constrained by social conditions (health, education, and poverty) and shrinking natural
resource reserves (non-renewable fossil fuel energy and coal) as well as deteriorating
environmental quality due to air, water, river and lake pollution, as well as water shortages in
the dry season and floods in the rainy season in many places in United States and in other
developing countries and also in developed countries. (Emil Sallim, in Iwan Jaya Aziz, et al,
2010)
Environmental Economic Instruments
For the implementation of sustainable development, there is already a legal basis that
serves as the basis and guidelines for implementing sustainable development, which is stated
in Paragraph 8, articles 42 and 43 of Law Number 32, Year 2009 concerning Environmental
Protection and Management which is quoted as below.
Natural Resource Balance
A natural resource balance sheet is a record of the various natural resources found in a
region (Regency, City, or Province) or in a country (National) within a certain time (usually
one year) showing both physical reserves and monetary values ranging from initial reserves,
reserve increases, reserve reductions, and final reserves. For countries rich in natural
resources and a beautiful environment like United States, the balance sheet of natural
resources is very important as a basis for the preparation of development plans. United States
economic development has been based on the exploitation of natural resources. Therefore,
development planning needs to understand the condition of natural resource reserves owned
by a region (district, city, province). Natural resources can be divided into two major groups,
namely non-renewable natural resources (such as petroleum, coal, mineral resources) and
renewable natural resources (such as water, forests or plants, fish, animals and environmental
services). Examples of environmental services are the ability of forests to conserve soil and
water, prevent flooding, carbon sinks, recreational areas and so on).
Both central and local governments need to have records of their natural resource
reserves and changes. Then for planning, it is necessary to analyze the development of
natural resource reserves and their role in economic, social and environmental development.
With the balance sheet of natural resources and the environment, it can be seen where a
region is now located, whether it still has enough natural resource reserves or is already
depleted, or can still be utilized for how long. Thus, development plans will be neatly
organized, including all the consequences.
The step of preparing a natural resource balance can be started by identifying what
ecosystems are found in an area; then from each ecosystem it is identified what kind of
natural resources can be utilized from each ecosystem. Furthermore, each type of natural
resource and environmental function is quantified to determine the amount or volume of each
natural resource concerned, both the initial reserves and those lost due to exploitation or
natural disasters. After that, they are then valued in rupiah.
A natural resource balance sheet can be done for a given year for an area or on an
island where the state and amount of natural resources are not yet known. However, a natural
resource balance sheet can also record the existence of natural resources as a result of a
development activity. By knowing the impact of an activity, the costs and benefits of the
activity can be known, so it is very useful as a natural resource balance sheet feasibility
study. Actually, the feasibility study of an activity or a project in a region or in a country can
be facilitated once there is a balance sheet of natural resources and the environment in the
region or in the country concerned.
Sustainable Development Capital
In the theory of economic growth, the factors that can encourage economic growth in
a region or a country include population and labor, capital, natural resources and the
environment, technology and social factors. Our focus in this paper is the role of natural
resources and the environment in economic growth or development. If observed carefully,
natural resources and the environment are not the main factors that determine the progress of
a country. The progress of a country is usually measured by looking at the high and low per
capita income of the population in the country concerned; and it is proven that many
countries that do not have sufficient natural resources, but are actually developed countries
with high per capita income, such as Singapore, Japan, Taiwan, Korea; while many countries
with abundant natural resources are still underdeveloped countries with relatively low per
capita income such as United States, India, the Philippines, Vietnam, and Latin American
countries. There have even been articles written about the natural resource curse or also
known as "the paradox of plenty" found in developing countries that are rich in natural
resources. The paradoxical situation refers to countries that are rich in natural resources,
especially non-renewable ones, experiencing stagnant economic growth and even
regression.(Jeffrey A. Frankel, 2010)
There are two definitions of sustainable development; namely sustainable
development in the sense of strong (strong definition) and sustainable in the sense of soft
(weak definition), Sustainable in the sense of strong or hard requires that the value of all
development capital; namely the value of human capital (human capital) plus the value of the
ecosystem as natural capital (natural capital) plus human-made capital (human made
capital) remains or does not decline. Meanwhile, in a soft sense, sustainable development
allows for substitution between the three types of development capital; mainly, if the value of
natural capital decreases, it can be offset by an increase in the value of human capital and
man-made capital. For example, if there is a decrease in the amount of natural capital such as
oil and coal that is always exploited or taken from our earth, it is desired that the value of
human capital and/or the value of man-made capital increases, which is financed by utilizing
natural capital taken from nature in the area concerned. Economists are more amenable to a
soft or weak definition of sustainable development.
In addition to the success of sustainable development, it also requires the need for
social capital that is able to maintain good working relationships between various
government institutions both vertically and horizontally, as well as the synergy between the
government, the private sector and the community with a multi-party approach from the three
groups in the preparation of environmentally sound development plans and policies (Read
Ismid Hadad, 2010). So the point is not to exhaust natural resources and damage the
environment without increasing both the amount and quality of human resources and man-
made capital.
Green Growth and Green GDP/GDP
With the increasing enthusiasm to maintain good environmental quality, various terms
have emerged that mean that the environmental dimension has been incorporated into certain
businesses or activities such as the terms green building, green financing, green banking,
green growth and so on. This all shows that environmental considerations have been included
in various actions and policies. Green growth is also defined as environmentally friendly
economic growth or low carbon (CO2) economic growth, because CO2 is one of the
greenhouse gases that cover the earth which causes an increase in earth temperature resulting
in global warming. If we all want green economic growth or in other words sustainable
economic growth, then the right measurement tool for development performance is not
Conventional or Brown GDP and GRDP, but Green GDP and GRDP as mandated by Law
Number 32 of 2009 concerning Environmental Protection and Management; namely that
GDP and GRDP which already take into account the environmental dimension in the form of
depletion of natural resources and environmental degradation or the so-called Green GDP
and GRDP must be developed by every government, both local and central government *. So
Green GDP = Conventional GDP - Natural Resource Depletion - Environmental
Degradation.
However, until this paper is written, the practice of preparing Green GDP and GRDP
has not been formally implemented based on Government Regulations, although several
Provinces (Bali and West Java) and Districts/Cities (Asmat District, Bekasi City, Bantaeng
District, Banyumas District, Bandung District, Bekasi District), have tried to prepare Green
GRDP using their respective Regional Budget funds.
It should be noted that not all countries compile Green GDP, and even the World
Bank uses a measure of each country's economic progress that still uses Green GDP. Gross
National Product (GNP), as there would be difficulties in comparing the level of progress of
one country with another. Therefore, when Green GDP and GRDP were developed,
Conventional GDP and GRDP or Brown GDP and GRDP were not eliminated or replaced by
Green GDP and GRDP. Green GDP and GRDP were developed as a companion to
Conventional GDP and GRDP, because not all regions, especially cities, have sufficient
natural resources. However, it should also be noted that most cities in United States do not
have many natural resources, but all have environmental conditions that can be valued or
given an economic value, so Green GRDP can still be prepared for cities in United States. If a
city has many factories as well as trade and transportation activities, it will still experience
depletion and degradation of water resources and degradation of air quality due to CO2 and
CO4 gas pollution that can come from agricultural activities, landfills, and livestock.
Environmental Benefits
What is meant by environmental fee is a pattern of cooperation between regions in
managing the environment so that it brings benefits to all parties involved in the pattern.
Environmental fee is translated from the phrase "payment for environmental services" which
reflects the pattern of cooperation between the upstream and middle and downstream areas of
a river. People in the middle and downstream areas have an interest in benefiting from the
environment, among others, for their need for water. In general, water is available in the
upstream area and flows to the middle and downstream areas, so there are two possibilities
that the upstream area provides clean water and the middle and downstream areas become
users or consumers of water originating from the upstream area.
Another possibility is that when rainwater is abundant in the upstream area (during
heavy rains) and if there is not enough vegetation in the upstream area, rainwater flows
directly into the river and continues to the sea. If the capacity of the river or ditch in the
downstream area is inadequate, flooding will occur and can cause significant economic
losses. Therefore, there are actually 2 (two) important things about the relationship between
upstream and downstream. If water resources management is not implemented properly in the
upstream area, then during the rainy season there can be flooding in the downstream area
because water always flows from the upstream area to the downstream area; and conversely,
during the dry season there can be drought in the downstream area because the water reserves
in the upstream area are depleted because there is no water supply from rainfall in the dry
season and water is not stored due to the lack of forests or trees in the upstream area during
the rainy season.
In order to avoid the two main problems related to water resources, those who live in
the upstream area of the river need to be assisted by people who live in the downstream area
so that those in the area are willing to maintain water sources and water storage areas.
Upstream communities, who are generally farmers with modest incomes, tend to cut down
their trees when there is a financial need to pay for their children's schooling or when funds
are needed to marry off their children or for circumcision or circumcision for their children.
The cost of funds needed for the purposes of environmental services ranges between
the maximum value of the loss of downstream communities if affected by floods or affected
by a lack of clean water, or a lack of water to irrigate farmers' fields in the downstream area,
and the lowest value is the value of the needs of upstream communities who must maintain
the existence of forests and trees and maintain water resources so that they remain available
and clean.
An example of an area that has practiced the concept of "environmental services" is
between Kuningan Regency as an environmental service provider (water) and Cirebon
Regency and Cirebon City as a service user area (water). Kuningan Regency has a water
source "Panas" which with high water discharge is able to meet the need for water for
Cirebon Regency and City. The Government of Cirebon Regency and City through the
Regional Drinking Water Company (PDAM) collects funds from water users / customers,
then submits them to the Kuningan City Government. The Kuningan Regency Government
distributed the Environmental Services Fee (IJL) funds to residents around the Paniis water
source who helped manage the existence of both the quantity and quality of clean water.
Internalization of External Costs
Included in economic instruments is the application of the concept of "3P" (Polluters
Pay Principle); namely the concept that anyone who pollutes the environment is obliged to
pay compensation for the environmental pollution he creates. Pollution can occur in water
resources both in the catchment area, in rivers, in lakes, as well as to groundwater both
surface water and deep soil. Actually, the problem of internalization of environmental costs
has been reflected in the calculation of GDP and Green GRDP which includes or internalizes
the value of depletion and the value of environmental degradation, namely the deduction of
the value of depletion and environmental degradation from the value of GDP and Brown
GRDP (Conventional).
The way to internalize the value of natural resource depletion and the value of
environmental degradation is, among others, by requiring the initiators of activities (such as
producers and consumers of goods and services) to bear the burden of taxes whose revenues
must be used for the maintenance or restoration of environmental quality (Pigouvian tax).
Indeed, with the environmental tax, producers tend to shift the tax burden to consumers of the
taxed products. Then, between producers and consumers, the tax burden will be shared
depending on the ratio of demand elasticity and supply elasticity respectively. The shifting of
the tax burden from producers to consumers will increase the price of the product, so that
consumers who use these products will also bear the tax burden. This is reasonable because it
is not only producers who pollute the environment by creating solid and liquid waste and air
pollution due to CO2 released in the production process, but consumers who use the products
produced by these companies also dispose of waste into the environment. The easiest
example is detergent producers (washing powder) and detergent consumers such as hotels
and households, they together pollute the environment. If there is no environmental tax or
obligation to install a waste treatment plant, the entire community, both those who use
detergents and those who do not use them, will bear the impact of detergent production
because the soil, air and water are polluted by detergent producers and consumers. Whereas if
it is mandatory for producers to install waste treatment plants (solid, liquid and air), then only
those involved in the production and consumption of detergents will bear the burden of
pollution, while those who do not consume detergents will enjoy pollution-free soil, clean
water and clean air without having to pay the increased price of detergents due to the shifting
burden of environmental taxes imposed on producers.
By including indirect costs of production such as the value of natural resource
depletion and the value of environmental degradation, the economy will still develop
prosperously even if there are no profits or benefits from all production, consumption and
distribution activities in the economy.
In this case, it can be said that the community or economy obtains "normal profit or
normal benefit" because the price formed due to the shifting of the tax burden already
includes "explicit costs" and "implicit costs", where explicit costs are costs actually incurred
by producers (BUMS, BUMN, and BUMD) and implicit costs are lost opportunity costs such
as the value of natural resource depletion and environmental damage that are never reported
in Conventional GDP and GDRP Reports.
Human Development Index (HDI)
The Human Development Index is one of the best measures of a country's level of
well-being. HDI is a composite index consisting of health index, knowledge index, and
welfare index. The health index is measured by the life expectancy of the population at birth,
the knowledge index is measured by literacy and length of time studying formally, and the
welfare index is measured by the level of green income per capita. Thus the HDI has
internalized external costs that take into account the value of depletion or loss of natural
resources and degradation of environmental functions. Using HDI, it is noted that the capital
city of DKI Jakarta has the highest HDI (79.60), and the lowest is owned by Papua Province
(58.05), while Central Java Province has the highest HDI of 69.98.
Sustainable Development Planning
From the various descriptions above, to develop a sustainable development plan,
many things are needed. First, adequate development capital is needed, in the form of reliable
human capital, sufficient man-made capital, and environmental capital consisting of natural
resources and good environmental quality. The next question is how to provide these three
types of capital. For human resources needed as the implementer of development and as the
compiler of plans and policies, intelligent and virtuous humans are needed. Humans who are
intelligent but not virtuous will be willing to use their intelligence to bully, oppress and
blackmail other humans; on the other hand, humans who are virtuous but do not have
intelligence will be subjected to disgraceful actions such as ignorance, fraud, and deprivation
of rights by others. (Jaetun, HS, 2014). In fact, it is human resources that are the key to the
success of sustainable development, i.e. humans who are truly intelligent and virtuous are
needed, so that the problem of financial capital is no longer a problem. United States, which
has developed based on natural resources and debt, is no longer threatened by the curse of
natural resources, because the natural resources taken from nature are converted in such a
way as to become reliable, educated, honest, and corruption-free human resources.
For man-made capital, it is necessary to emphasize the development of infra
structures in the form of transportation facilities and infrastructure such as roads, seaports, air
and rivers as well as means of communication and transportation links available thoroughly
and evenly according to the needs of each region. Infrastructure is the muscle of the economy
that needs to exist and be strong so that the economy also grows strongly and quickly.
For natural resources and environmental capital, continuous exploration efforts are
needed to find reserves of energy resources and other mineral resources. Create an
atmosphere so that there are incentives to conduct exploration of natural resources that can
become raw materials and auxiliary materials for industrial activities. In the energy sector,
United States needs to utilize non-fossil energy sources (biofuels), which are increasingly
necessary because fossil energy is becoming scarce. Renewable energy such as biofuels and
wind resources, geothermal resources and so on should be utilized.
Conclusion
To conclude all of the above descriptions is related to sustainable development
planning both at the national level and at the regional level. Conventional development
planning considers natural resources as a production factor that must be utilized as much as
possible without regard to environmental conditions. As a result, there is indeed economic
growth in the form of an increase in the level of national income, but it is accompanied by
depletion of natural resource reserves and environmental damage accompanied by various
natural disasters everywhere, so that although the level of income increases, but because it is
accompanied by a life full of worries about natural disasters, such as heavy rains, floods,
droughts, landslides, and even earthquakes, the higher level of national income or per capita
income does not provide a guarantee of better community welfare.
Development planning as mentioned above must be ended immediately and replaced
with a new planning paradigm. The trend of depletion of natural resources and environmental
degradation must be changed or even reversed towards the discovery of new and renewable
natural resource reserves accompanied by improvements in environmental quality (reversing
the degradation trend of the natural environment). The paradigm of sustainable development
planning that synergizes economic growth and environmental improvement is the new
development paradigm today. It has been argued that United States will experience a crisis in
three main areas, namely the water crisis, food crisis, and energy crisis (Haskarlianus Pasang,
2011).
What was stated by BAPPENAS has become a reality, where United States is
experiencing difficulties in providing clean water and is overwhelmed by floods, United
States is still not free from having to import food from abroad, and United States is
experiencing energy shortages which are also characterized by high import volumes for fuel
energy from year to year. But this situation has been cautioned by efforts to develop new
agricultural areas and land, to improve water catchment areas and maintain more efficient
reservoirs and waterways, and to develop renewable sources of electrical energy and biofuel
sources. Therefore, being smart and virtuous is one of the foundations of achieving
sustainable development.
Sustainable Development
The concept of sustainable development became popular after it was announced by
the Bruntland Commission under the leadership of Norwegian Prime Minister Gro Harlem
Brundtland who worked from October 1984 to March 1987 and gave birth to the book "Our
Common Future" published by the World Commission on Environment and Development
(WECD) in 1987 (Ismid Hadad, 2010).
During the 20th century there were 2 (two) revolutions related to the role of the
environment in economic and social development. The first revolution (1) between the 1960's
-1970's when the paradigm emerged that there was a conflict between the concepts of growth
and conservation of natural resources and the environment where every development that was
intended to improve the welfare of society was always accompanied by the exploitation of
natural resources and environmental damage (Meadows, Donella and Meadows, Nancy,
1972). Meadows and Meadows who are members of the Rome Group wrote a book on
"Limits to Growth". The book argued that if there was no reduction in the level of
consumption in society at that time, then within 100 years the world would collapse, because
natural resources would be exhausted and the environment would experience high pollution
and severe damage.
The concept of sustainable development, which is interpreted as development for the
present and which does not require compromising future generations, emerged at a meeting
of nations in Norway chaired by Norwegian Prime Minister Gro Harlem Brundtland in 1987.
At that time it was as if there was a second revolution in the field of national development
which stated that economic development did not solely damage the environment, but instead
economic development and environmental development could synergize with each other,
economic development will create an increase in national income that gives a country the
ability to maintain its environment so that it does not deteriorate. Economic development will
create an increase in national income that gives a country the ability to maintain its
environment so that it is not damaged; conversely, good environmental conditions will not
absorb development funds but instead support or sustain the lives of humans and other living
things (Pearce and Warford, 1993).
The pillars of sustainable development are economic sustainability, social
sustainability and environmental sustainability, all three of which must develop in a balanced
manner; otherwise development will be trapped in a conventional development model that
emphasizes economic growth alone and leaves social and environmental development. The
results of conventional development include the distribution of development results being
very unequal with 20 percent of the world's population in developed countries controlling 80
percent of world income and 80 percent of the world's population (developing countries) only
controlling 20 percent of world income. As a result, conventional development is hampered
or constrained by social conditions (health, education, and poverty) and shrinking natural
resource reserves (non-renewable fossil fuel energy and coal) as well as deteriorating
environmental quality due to air, water, river and lake pollution, as well as water shortages in
the dry season and floods in the rainy season in many places in United States and in other
developing countries and also in developed countries. (Emil Sallim, in Iwan Jaya Aziz, et al,
2010)
Environmental Economic Instruments
For the implementation of sustainable development, there is already a legal basis that
serves as the basis and guidelines for implementing sustainable development, which is stated
in Paragraph 8, articles 42 and 43 of Law Number 32, Year 2009 concerning Environmental
Protection and Management which is quoted as below.
Natural Resource Balance
A natural resource balance sheet is a record of the various natural resources found in a
region (Regency, City, or Province) or in a country (National) within a certain time (usually
one year) showing both physical reserves and monetary values ranging from initial reserves,
reserve increases, reserve reductions, and final reserves. For countries rich in natural
resources and a beautiful environment like United States, the balance sheet of natural
resources is very important as a basis for the preparation of development plans. United States
economic development has been based on the exploitation of natural resources. Therefore,
development planning needs to understand the condition of natural resource reserves owned
by a region (district, city, province). Natural resources can be divided into two major groups,
namely non-renewable natural resources (such as petroleum, coal, mineral resources) and
renewable natural resources (such as water, forests or plants, fish, animals and environmental
services). Examples of environmental services are the ability of forests to conserve soil and
water, prevent flooding, carbon sinks, recreational areas and so on).
Both central and local governments need to have records of their natural resource
reserves and changes. Then for planning, it is necessary to analyze the development of
natural resource reserves and their role in economic, social and environmental development.
With the balance sheet of natural resources and the environment, it can be seen where a
region is now located, whether it still has enough natural resource reserves or is already
depleted, or can still be utilized for how long. Thus, development plans will be neatly
organized, including all the consequences.
The step of preparing a natural resource balance can be started by identifying what
ecosystems are found in an area; then from each ecosystem it is identified what kind of
natural resources can be utilized from each ecosystem. Furthermore, each type of natural
resource and environmental function is quantified to determine the amount or volume of each
natural resource concerned, both the initial reserves and those lost due to exploitation or
natural disasters. After that, they are then valued in rupiah.
A natural resource balance sheet can be done for a given year for an area or on an
island where the state and amount of natural resources are not yet known. However, a natural
resource balance sheet can also record the existence of natural resources as a result of a
development activity. By knowing the impact of an activity, the costs and benefits of the
activity can be known, so it is very useful as a natural resource balance sheet feasibility
study. Actually, the feasibility study of an activity or a project in a region or in a country can
be facilitated once there is a balance sheet of natural resources and the environment in the
region or in the country concerned.
Sustainable Development Capital
In the theory of economic growth, the factors that can encourage economic growth in
a region or a country include population and labor, capital, natural resources and the
environment, technology and social factors. Our focus in this paper is the role of natural
resources and the environment in economic growth or development. If observed carefully,
natural resources and the environment are not the main factors that determine the progress of
a country. The progress of a country is usually measured by looking at the high and low per
capita income of the population in the country concerned; and it is proven that many
countries that do not have sufficient natural resources, but are actually developed countries
with high per capita income, such as Singapore, Japan, Taiwan, Korea; while many countries
with abundant natural resources are still underdeveloped countries with relatively low per
capita income such as United States, India, the Philippines, Vietnam, and Latin American
countries. There have even been articles written about the natural resource curse or also
known as "the paradox of plenty" found in developing countries that are rich in natural
resources. The paradoxical situation refers to countries that are rich in natural resources,
especially non-renewable ones, experiencing stagnant economic growth and even
regression.(Jeffrey A. Frankel, 2010)
There are two definitions of sustainable development; namely sustainable
development in the sense of strong (strong definition) and sustainable in the sense of soft
(weak definition), Sustainable in the sense of strong or hard requires that the value of all
development capital; namely the value of human capital (human capital) plus the value of the
ecosystem as natural capital (natural capital) plus human-made capital (human made
capital) remains or does not decline. Meanwhile, in a soft sense, sustainable development
allows for substitution between the three types of development capital; mainly, if the value of
natural capital decreases, it can be offset by an increase in the value of human capital and
man-made capital. For example, if there is a decrease in the amount of natural capital such as
oil and coal that is always exploited or taken from our earth, it is desired that the value of
human capital and/or the value of man-made capital increases, which is financed by utilizing
natural capital taken from nature in the area concerned. Economists are more amenable to a
soft or weak definition of sustainable development.
In addition to the success of sustainable development, it also requires the need for
social capital that is able to maintain good working relationships between various
government institutions both vertically and horizontally, as well as the synergy between the
government, the private sector and the community with a multi-party approach from the three
groups in the preparation of environmentally sound development plans and policies (Read
Ismid Hadad, 2010). So the point is not to exhaust natural resources and damage the
environment without increasing both the amount and quality of human resources and man-
made capital.
Green Growth and Green GDP/GDP
With the increasing enthusiasm to maintain good environmental quality, various terms
have emerged that mean that the environmental dimension has been incorporated into certain
businesses or activities such as the terms green building, green financing, green banking,
green growth and so on. This all shows that environmental considerations have been included
in various actions and policies. Green growth is also defined as environmentally friendly
economic growth or low carbon (CO2) economic growth, because CO2 is one of the
greenhouse gases that cover the earth which causes an increase in earth temperature resulting
in global warming. If we all want green economic growth or in other words sustainable
economic growth, then the right measurement tool for development performance is not
Conventional or Brown GDP and GRDP, but Green GDP and GRDP as mandated by Law
Number 32 of 2009 concerning Environmental Protection and Management; namely that
GDP and GRDP which already take into account the environmental dimension in the form of
depletion of natural resources and environmental degradation or the so-called Green GDP
and GRDP must be developed by every government, both local and central government *. So
Green GDP = Conventional GDP - Natural Resource Depletion - Environmental
Degradation.
However, until this paper is written, the practice of preparing Green GDP and GRDP
has not been formally implemented based on Government Regulations, although several
Provinces (Bali and West Java) and Districts/Cities (Asmat District, Bekasi City, Bantaeng
District, Banyumas District, Bandung District, Bekasi District), have tried to prepare Green
GRDP using their respective Regional Budget funds.
It should be noted that not all countries compile Green GDP, and even the World
Bank uses a measure of each country's economic progress that still uses Green GDP. Gross
National Product (GNP), as there would be difficulties in comparing the level of progress of
one country with another. Therefore, when Green GDP and GRDP were developed,
Conventional GDP and GRDP or Brown GDP and GRDP were not eliminated or replaced by
Green GDP and GRDP. Green GDP and GRDP were developed as a companion to
Conventional GDP and GRDP, because not all regions, especially cities, have sufficient
natural resources. However, it should also be noted that most cities in United States do not
have many natural resources, but all have environmental conditions that can be valued or
given an economic value, so Green GRDP can still be prepared for cities in United States. If a
city has many factories as well as trade and transportation activities, it will still experience
depletion and degradation of water resources and degradation of air quality due to CO2 and
CO4 gas pollution that can come from agricultural activities, landfills, and livestock.
Environmental Benefits
What is meant by environmental fee is a pattern of cooperation between regions in
managing the environment so that it brings benefits to all parties involved in the pattern.
Environmental fee is translated from the phrase "payment for environmental services" which
reflects the pattern of cooperation between the upstream and middle and downstream areas of
a river. People in the middle and downstream areas have an interest in benefiting from the
environment, among others, for their need for water. In general, water is available in the
upstream area and flows to the middle and downstream areas, so there are two possibilities
that the upstream area provides clean water and the middle and downstream areas become
users or consumers of water originating from the upstream area.
Another possibility is that when rainwater is abundant in the upstream area (during
heavy rains) and if there is not enough vegetation in the upstream area, rainwater flows
directly into the river and continues to the sea. If the capacity of the river or ditch in the
downstream area is inadequate, flooding will occur and can cause significant economic
losses. Therefore, there are actually 2 (two) important things about the relationship between
upstream and downstream. If water resources management is not implemented properly in the
upstream area, then during the rainy season there can be flooding in the downstream area
because water always flows from the upstream area to the downstream area; and conversely,
during the dry season there can be drought in the downstream area because the water reserves
in the upstream area are depleted because there is no water supply from rainfall in the dry
season and water is not stored due to the lack of forests or trees in the upstream area during
the rainy season.
In order to avoid the two main problems related to water resources, those who live in
the upstream area of the river need to be assisted by people who live in the downstream area
so that those in the area are willing to maintain water sources and water storage areas.
Upstream communities, who are generally farmers with modest incomes, tend to cut down
their trees when there is a financial need to pay for their children's schooling or when funds
are needed to marry off their children or for circumcision or circumcision for their children.
The cost of funds needed for the purposes of environmental services ranges between
the maximum value of the loss of downstream communities if affected by floods or affected
by a lack of clean water, or a lack of water to irrigate farmers' fields in the downstream area,
and the lowest value is the value of the needs of upstream communities who must maintain
the existence of forests and trees and maintain water resources so that they remain available
and clean.
An example of an area that has practiced the concept of "environmental services" is
between Kuningan Regency as an environmental service provider (water) and Cirebon
Regency and Cirebon City as a service user area (water). Kuningan Regency has a water
source "Panas" which with high water discharge is able to meet the need for water for
Cirebon Regency and City. The Government of Cirebon Regency and City through the
Regional Drinking Water Company (PDAM) collects funds from water users / customers,
then submits them to the Kuningan City Government. The Kuningan Regency Government
distributed the Environmental Services Fee (IJL) funds to residents around the Paniis water
source who helped manage the existence of both the quantity and quality of clean water.
Internalization of External Costs
Included in economic instruments is the application of the concept of "3P" (Polluters
Pay Principle); namely the concept that anyone who pollutes the environment is obliged to
pay compensation for the environmental pollution he creates. Pollution can occur in water
resources both in the catchment area, in rivers, in lakes, as well as to groundwater both
surface water and deep soil. Actually, the problem of internalization of environmental costs
has been reflected in the calculation of GDP and Green GRDP which includes or internalizes
the value of depletion and the value of environmental degradation, namely the deduction of
the value of depletion and environmental degradation from the value of GDP and Brown
GRDP (Conventional).
The way to internalize the value of natural resource depletion and the value of
environmental degradation is, among others, by requiring the initiators of activities (such as
producers and consumers of goods and services) to bear the burden of taxes whose revenues
must be used for the maintenance or restoration of environmental quality (Pigouvian tax).
Indeed, with the environmental tax, producers tend to shift the tax burden to consumers of the
taxed products. Then, between producers and consumers, the tax burden will be shared
depending on the ratio of demand elasticity and supply elasticity respectively. The shifting of
the tax burden from producers to consumers will increase the price of the product, so that
consumers who use these products will also bear the tax burden. This is reasonable because it
is not only producers who pollute the environment by creating solid and liquid waste and air
pollution due to CO2 released in the production process, but consumers who use the products
produced by these companies also dispose of waste into the environment. The easiest
example is detergent producers (washing powder) and detergent consumers such as hotels
and households, they together pollute the environment. If there is no environmental tax or
obligation to install a waste treatment plant, the entire community, both those who use
detergents and those who do not use them, will bear the impact of detergent production
because the soil, air and water are polluted by detergent producers and consumers. Whereas if
it is mandatory for producers to install waste treatment plants (solid, liquid and air), then only
those involved in the production and consumption of detergents will bear the burden of
pollution, while those who do not consume detergents will enjoy pollution-free soil, clean
water and clean air without having to pay the increased price of detergents due to the shifting
burden of environmental taxes imposed on producers.
By including indirect costs of production such as the value of natural resource
depletion and the value of environmental degradation, the economy will still develop
prosperously even if there are no profits or benefits from all production, consumption and
distribution activities in the economy.
In this case, it can be said that the community or economy obtains "normal profit or
normal benefit" because the price formed due to the shifting of the tax burden already
includes "explicit costs" and "implicit costs", where explicit costs are costs actually incurred
by producers (BUMS, BUMN, and BUMD) and implicit costs are lost opportunity costs such
as the value of natural resource depletion and environmental damage that are never reported
in Conventional GDP and GDRP Reports.
Human Development Index (HDI)
The Human Development Index is one of the best measures of a country's level of
well-being. HDI is a composite index consisting of health index, knowledge index, and
welfare index. The health index is measured by the life expectancy of the population at birth,
the knowledge index is measured by literacy and length of time studying formally, and the
welfare index is measured by the level of green income per capita. Thus the HDI has
internalized external costs that take into account the value of depletion or loss of natural
resources and degradation of environmental functions. Using HDI, it is noted that the capital
city of DKI Jakarta has the highest HDI (79.60), and the lowest is owned by Papua Province
(58.05), while Central Java Province has the highest HDI of 69.98.
Sustainable Development Planning
From the various descriptions above, to develop a sustainable development plan,
many things are needed. First, adequate development capital is needed, in the form of reliable
human capital, sufficient man-made capital, and environmental capital consisting of natural
resources and good environmental quality. The next question is how to provide these three
types of capital. For human resources needed as the implementer of development and as the
compiler of plans and policies, intelligent and virtuous humans are needed. Humans who are
intelligent but not virtuous will be willing to use their intelligence to bully, oppress and
blackmail other humans; on the other hand, humans who are virtuous but do not have
intelligence will be subjected to disgraceful actions such as ignorance, fraud, and deprivation
of rights by others. (Jaetun, HS, 2014). In fact, it is human resources that are the key to the
success of sustainable development, i.e. humans who are truly intelligent and virtuous are
needed, so that the problem of financial capital is no longer a problem. United States, which
has developed based on natural resources and debt, is no longer threatened by the curse of
natural resources, because the natural resources taken from nature are converted in such a
way as to become reliable, educated, honest, and corruption-free human resources.
For man-made capital, it is necessary to emphasize the development of infra
structures in the form of transportation facilities and infrastructure such as roads, seaports, air
and rivers as well as means of communication and transportation links available thoroughly
and evenly according to the needs of each region. Infrastructure is the muscle of the economy
that needs to exist and be strong so that the economy also grows strongly and quickly.
For natural resources and environmental capital, continuous exploration efforts are
needed to find reserves of energy resources and other mineral resources. Create an
atmosphere so that there are incentives to conduct exploration of natural resources that can
become raw materials and auxiliary materials for industrial activities. In the energy sector,
United States needs to utilize non-fossil energy sources (biofuels), which are increasingly
necessary because fossil energy is becoming scarce. Renewable energy such as biofuels and
wind resources, geothermal resources and so on should be utilized.
Conclusion
To conclude all of the above descriptions is related to sustainable development
planning both at the national level and at the regional level. Conventional development
planning considers natural resources as a production factor that must be utilized as much as
possible without regard to environmental conditions. As a result, there is indeed economic
growth in the form of an increase in the level of national income, but it is accompanied by
depletion of natural resource reserves and environmental damage accompanied by various
natural disasters everywhere, so that although the level of income increases, but because it is
accompanied by a life full of worries about natural disasters, such as heavy rains, floods,
droughts, landslides, and even earthquakes, the higher level of national income or per capita
income does not provide a guarantee of better community welfare.
Development planning as mentioned above must be ended immediately and replaced
with a new planning paradigm. The trend of depletion of natural resources and environmental
degradation must be changed or even reversed towards the discovery of new and renewable
natural resource reserves accompanied by improvements in environmental quality (reversing
the degradation trend of the natural environment). The paradigm of sustainable development
planning that synergizes economic growth and environmental improvement is the new
development paradigm today. It has been argued that United States will experience a crisis in
three main areas, namely the water crisis, food crisis, and energy crisis (Haskarlianus Pasang,
2011).
What was stated by BAPPENAS has become a reality, where United States is
experiencing difficulties in providing clean water and is overwhelmed by floods, United
States is still not free from having to import food from abroad, and United States is
experiencing energy shortages which are also characterized by high import volumes for fuel
energy from year to year. But this situation has been cautioned by efforts to develop new
agricultural areas and land, to improve water catchment areas and maintain more efficient
reservoirs and waterways, and to develop renewable sources of electrical energy and biofuel
sources. Therefore, being smart and virtuous is one of the foundations of achieving
sustainable development.
Sustainable Development
The concept of sustainable development became popular after it was announced by
the Bruntland Commission under the leadership of Norwegian Prime Minister Gro Harlem
Brundtland who worked from October 1984 to March 1987 and gave birth to the book "Our
Common Future" published by the World Commission on Environment and Development
(WECD) in 1987 (Ismid Hadad, 2010).
During the 20th century there were 2 (two) revolutions related to the role of the
environment in economic and social development. The first revolution (1) between the 1960's
-1970's when the paradigm emerged that there was a conflict between the concepts of growth
and conservation of natural resources and the environment where every development that was
intended to improve the welfare of society was always accompanied by the exploitation of
natural resources and environmental damage (Meadows, Donella and Meadows, Nancy,
1972). Meadows and Meadows who are members of the Rome Group wrote a book on
"Limits to Growth". The book argued that if there was no reduction in the level of
consumption in society at that time, then within 100 years the world would collapse, because
natural resources would be exhausted and the environment would experience high pollution
and severe damage.
The concept of sustainable development, which is interpreted as development for the
present and which does not require compromising future generations, emerged at a meeting
of nations in Norway chaired by Norwegian Prime Minister Gro Harlem Brundtland in 1987.
At that time it was as if there was a second revolution in the field of national development
which stated that economic development did not solely damage the environment, but instead
economic development and environmental development could synergize with each other,
economic development will create an increase in national income that gives a country the
ability to maintain its environment so that it does not deteriorate. Economic development will
create an increase in national income that gives a country the ability to maintain its
environment so that it is not damaged; conversely, good environmental conditions will not
absorb development funds but instead support or sustain the lives of humans and other living
things (Pearce and Warford, 1993).
The pillars of sustainable development are economic sustainability, social
sustainability and environmental sustainability, all three of which must develop in a balanced
manner; otherwise development will be trapped in a conventional development model that
emphasizes economic growth alone and leaves social and environmental development. The
results of conventional development include the distribution of development results being
very unequal with 20 percent of the world's population in developed countries controlling 80
percent of world income and 80 percent of the world's population (developing countries) only
controlling 20 percent of world income. As a result, conventional development is hampered
or constrained by social conditions (health, education, and poverty) and shrinking natural
resource reserves (non-renewable fossil fuel energy and coal) as well as deteriorating
environmental quality due to air, water, river and lake pollution, as well as water shortages in
the dry season and floods in the rainy season in many places in United States and in other
developing countries and also in developed countries. (Emil Sallim, in Iwan Jaya Aziz, et al,
2010)
Environmental Economic Instruments
For the implementation of sustainable development, there is already a legal basis that
serves as the basis and guidelines for implementing sustainable development, which is stated
in Paragraph 8, articles 42 and 43 of Law Number 32, Year 2009 concerning Environmental
Protection and Management which is quoted as below.
Natural Resource Balance
A natural resource balance sheet is a record of the various natural resources found in a
region (Regency, City, or Province) or in a country (National) within a certain time (usually
one year) showing both physical reserves and monetary values ranging from initial reserves,
reserve increases, reserve reductions, and final reserves. For countries rich in natural
resources and a beautiful environment like United States, the balance sheet of natural
resources is very important as a basis for the preparation of development plans. United States
economic development has been based on the exploitation of natural resources. Therefore,
development planning needs to understand the condition of natural resource reserves owned
by a region (district, city, province). Natural resources can be divided into two major groups,
namely non-renewable natural resources (such as petroleum, coal, mineral resources) and
renewable natural resources (such as water, forests or plants, fish, animals and environmental
services). Examples of environmental services are the ability of forests to conserve soil and
water, prevent flooding, carbon sinks, recreational areas and so on).
Both central and local governments need to have records of their natural resource
reserves and changes. Then for planning, it is necessary to analyze the development of
natural resource reserves and their role in economic, social and environmental development.
With the balance sheet of natural resources and the environment, it can be seen where a
region is now located, whether it still has enough natural resource reserves or is already
depleted, or can still be utilized for how long. Thus, development plans will be neatly
organized, including all the consequences.
The step of preparing a natural resource balance can be started by identifying what
ecosystems are found in an area; then from each ecosystem it is identified what kind of
natural resources can be utilized from each ecosystem. Furthermore, each type of natural
resource and environmental function is quantified to determine the amount or volume of each
natural resource concerned, both the initial reserves and those lost due to exploitation or
natural disasters. After that, they are then valued in rupiah.
A natural resource balance sheet can be done for a given year for an area or on an
island where the state and amount of natural resources are not yet known. However, a natural
resource balance sheet can also record the existence of natural resources as a result of a
development activity. By knowing the impact of an activity, the costs and benefits of the
activity can be known, so it is very useful as a natural resource balance sheet feasibility
study. Actually, the feasibility study of an activity or a project in a region or in a country can
be facilitated once there is a balance sheet of natural resources and the environment in the
region or in the country concerned.
Sustainable Development Capital
In the theory of economic growth, the factors that can encourage economic growth in
a region or a country include population and labor, capital, natural resources and the
environment, technology and social factors. Our focus in this paper is the role of natural
resources and the environment in economic growth or development. If observed carefully,
natural resources and the environment are not the main factors that determine the progress of
a country. The progress of a country is usually measured by looking at the high and low per
capita income of the population in the country concerned; and it is proven that many
countries that do not have sufficient natural resources, but are actually developed countries
with high per capita income, such as Singapore, Japan, Taiwan, Korea; while many countries
with abundant natural resources are still underdeveloped countries with relatively low per
capita income such as United States, India, the Philippines, Vietnam, and Latin American
countries. There have even been articles written about the natural resource curse or also
known as "the paradox of plenty" found in developing countries that are rich in natural
resources. The paradoxical situation refers to countries that are rich in natural resources,
especially non-renewable ones, experiencing stagnant economic growth and even
regression.(Jeffrey A. Frankel, 2010)
There are two definitions of sustainable development; namely sustainable
development in the sense of strong (strong definition) and sustainable in the sense of soft
(weak definition), Sustainable in the sense of strong or hard requires that the value of all
development capital; namely the value of human capital (human capital) plus the value of the
ecosystem as natural capital (natural capital) plus human-made capital (human made
capital) remains or does not decline. Meanwhile, in a soft sense, sustainable development
allows for substitution between the three types of development capital; mainly, if the value of
natural capital decreases, it can be offset by an increase in the value of human capital and
man-made capital. For example, if there is a decrease in the amount of natural capital such as
oil and coal that is always exploited or taken from our earth, it is desired that the value of
human capital and/or the value of man-made capital increases, which is financed by utilizing
natural capital taken from nature in the area concerned. Economists are more amenable to a
soft or weak definition of sustainable development.
In addition to the success of sustainable development, it also requires the need for
social capital that is able to maintain good working relationships between various
government institutions both vertically and horizontally, as well as the synergy between the
government, the private sector and the community with a multi-party approach from the three
groups in the preparation of environmentally sound development plans and policies (Read
Ismid Hadad, 2010). So the point is not to exhaust natural resources and damage the
environment without increasing both the amount and quality of human resources and man-
made capital.
Green Growth and Green GDP/GDP
With the increasing enthusiasm to maintain good environmental quality, various terms
have emerged that mean that the environmental dimension has been incorporated into certain
businesses or activities such as the terms green building, green financing, green banking,
green growth and so on. This all shows that environmental considerations have been included
in various actions and policies. Green growth is also defined as environmentally friendly
economic growth or low carbon (CO2) economic growth, because CO2 is one of the
greenhouse gases that cover the earth which causes an increase in earth temperature resulting
in global warming. If we all want green economic growth or in other words sustainable
economic growth, then the right measurement tool for development performance is not
Conventional or Brown GDP and GRDP, but Green GDP and GRDP as mandated by Law
Number 32 of 2009 concerning Environmental Protection and Management; namely that
GDP and GRDP which already take into account the environmental dimension in the form of
depletion of natural resources and environmental degradation or the so-called Green GDP
and GRDP must be developed by every government, both local and central government *. So
Green GDP = Conventional GDP - Natural Resource Depletion - Environmental
Degradation.
However, until this paper is written, the practice of preparing Green GDP and GRDP
has not been formally implemented based on Government Regulations, although several
Provinces (Bali and West Java) and Districts/Cities (Asmat District, Bekasi City, Bantaeng
District, Banyumas District, Bandung District, Bekasi District), have tried to prepare Green
GRDP using their respective Regional Budget funds.
It should be noted that not all countries compile Green GDP, and even the World
Bank uses a measure of each country's economic progress that still uses Green GDP. Gross
National Product (GNP), as there would be difficulties in comparing the level of progress of
one country with another. Therefore, when Green GDP and GRDP were developed,
Conventional GDP and GRDP or Brown GDP and GRDP were not eliminated or replaced by
Green GDP and GRDP. Green GDP and GRDP were developed as a companion to
Conventional GDP and GRDP, because not all regions, especially cities, have sufficient
natural resources. However, it should also be noted that most cities in United States do not
have many natural resources, but all have environmental conditions that can be valued or
given an economic value, so Green GRDP can still be prepared for cities in United States. If a
city has many factories as well as trade and transportation activities, it will still experience
depletion and degradation of water resources and degradation of air quality due to CO2 and
CO4 gas pollution that can come from agricultural activities, landfills, and livestock.
Environmental Benefits
What is meant by environmental fee is a pattern of cooperation between regions in
managing the environment so that it brings benefits to all parties involved in the pattern.
Environmental fee is translated from the phrase "payment for environmental services" which
reflects the pattern of cooperation between the upstream and middle and downstream areas of
a river. People in the middle and downstream areas have an interest in benefiting from the
environment, among others, for their need for water. In general, water is available in the
upstream area and flows to the middle and downstream areas, so there are two possibilities
that the upstream area provides clean water and the middle and downstream areas become
users or consumers of water originating from the upstream area.
Another possibility is that when rainwater is abundant in the upstream area (during
heavy rains) and if there is not enough vegetation in the upstream area, rainwater flows
directly into the river and continues to the sea. If the capacity of the river or ditch in the
downstream area is inadequate, flooding will occur and can cause significant economic
losses. Therefore, there are actually 2 (two) important things about the relationship between
upstream and downstream. If water resources management is not implemented properly in the
upstream area, then during the rainy season there can be flooding in the downstream area
because water always flows from the upstream area to the downstream area; and conversely,
during the dry season there can be drought in the downstream area because the water reserves
in the upstream area are depleted because there is no water supply from rainfall in the dry
season and water is not stored due to the lack of forests or trees in the upstream area during
the rainy season.
In order to avoid the two main problems related to water resources, those who live in
the upstream area of the river need to be assisted by people who live in the downstream area
so that those in the area are willing to maintain water sources and water storage areas.
Upstream communities, who are generally farmers with modest incomes, tend to cut down
their trees when there is a financial need to pay for their children's schooling or when funds
are needed to marry off their children or for circumcision or circumcision for their children.
The cost of funds needed for the purposes of environmental services ranges between
the maximum value of the loss of downstream communities if affected by floods or affected
by a lack of clean water, or a lack of water to irrigate farmers' fields in the downstream area,
and the lowest value is the value of the needs of upstream communities who must maintain
the existence of forests and trees and maintain water resources so that they remain available
and clean.
An example of an area that has practiced the concept of "environmental services" is
between Kuningan Regency as an environmental service provider (water) and Cirebon
Regency and Cirebon City as a service user area (water). Kuningan Regency has a water
source "Panas" which with high water discharge is able to meet the need for water for
Cirebon Regency and City. The Government of Cirebon Regency and City through the
Regional Drinking Water Company (PDAM) collects funds from water users / customers,
then submits them to the Kuningan City Government. The Kuningan Regency Government
distributed the Environmental Services Fee (IJL) funds to residents around the Paniis water
source who helped manage the existence of both the quantity and quality of clean water.
Internalization of External Costs
Included in economic instruments is the application of the concept of "3P" (Polluters
Pay Principle); namely the concept that anyone who pollutes the environment is obliged to
pay compensation for the environmental pollution he creates. Pollution can occur in water
resources both in the catchment area, in rivers, in lakes, as well as to groundwater both
surface water and deep soil. Actually, the problem of internalization of environmental costs
has been reflected in the calculation of GDP and Green GRDP which includes or internalizes
the value of depletion and the value of environmental degradation, namely the deduction of
the value of depletion and environmental degradation from the value of GDP and Brown
GRDP (Conventional).
The way to internalize the value of natural resource depletion and the value of
environmental degradation is, among others, by requiring the initiators of activities (such as
producers and consumers of goods and services) to bear the burden of taxes whose revenues
must be used for the maintenance or restoration of environmental quality (Pigouvian tax).
Indeed, with the environmental tax, producers tend to shift the tax burden to consumers of the
taxed products. Then, between producers and consumers, the tax burden will be shared
depending on the ratio of demand elasticity and supply elasticity respectively. The shifting of
the tax burden from producers to consumers will increase the price of the product, so that
consumers who use these products will also bear the tax burden. This is reasonable because it
is not only producers who pollute the environment by creating solid and liquid waste and air
pollution due to CO2 released in the production process, but consumers who use the products
produced by these companies also dispose of waste into the environment. The easiest
example is detergent producers (washing powder) and detergent consumers such as hotels
and households, they together pollute the environment. If there is no environmental tax or
obligation to install a waste treatment plant, the entire community, both those who use
detergents and those who do not use them, will bear the impact of detergent production
because the soil, air and water are polluted by detergent producers and consumers. Whereas if
it is mandatory for producers to install waste treatment plants (solid, liquid and air), then only
those involved in the production and consumption of detergents will bear the burden of
pollution, while those who do not consume detergents will enjoy pollution-free soil, clean
water and clean air without having to pay the increased price of detergents due to the shifting
burden of environmental taxes imposed on producers.
By including indirect costs of production such as the value of natural resource
depletion and the value of environmental degradation, the economy will still develop
prosperously even if there are no profits or benefits from all production, consumption and
distribution activities in the economy.
In this case, it can be said that the community or economy obtains "normal profit or
normal benefit" because the price formed due to the shifting of the tax burden already
includes "explicit costs" and "implicit costs", where explicit costs are costs actually incurred
by producers (BUMS, BUMN, and BUMD) and implicit costs are lost opportunity costs such
as the value of natural resource depletion and environmental damage that are never reported
in Conventional GDP and GDRP Reports.
Human Development Index (HDI)
The Human Development Index is one of the best measures of a country's level of
well-being. HDI is a composite index consisting of health index, knowledge index, and
welfare index. The health index is measured by the life expectancy of the population at birth,
the knowledge index is measured by literacy and length of time studying formally, and the
welfare index is measured by the level of green income per capita. Thus the HDI has
internalized external costs that take into account the value of depletion or loss of natural
resources and degradation of environmental functions. Using HDI, it is noted that the capital
city of DKI Jakarta has the highest HDI (79.60), and the lowest is owned by Papua Province
(58.05), while Central Java Province has the highest HDI of 69.98.
Sustainable Development Planning
From the various descriptions above, to develop a sustainable development plan,
many things are needed. First, adequate development capital is needed, in the form of reliable
human capital, sufficient man-made capital, and environmental capital consisting of natural
resources and good environmental quality. The next question is how to provide these three
types of capital. For human resources needed as the implementer of development and as the
compiler of plans and policies, intelligent and virtuous humans are needed. Humans who are
intelligent but not virtuous will be willing to use their intelligence to bully, oppress and
blackmail other humans; on the other hand, humans who are virtuous but do not have
intelligence will be subjected to disgraceful actions such as ignorance, fraud, and deprivation
of rights by others. (Jaetun, HS, 2014). In fact, it is human resources that are the key to the
success of sustainable development, i.e. humans who are truly intelligent and virtuous are
needed, so that the problem of financial capital is no longer a problem. United States, which
has developed based on natural resources and debt, is no longer threatened by the curse of
natural resources, because the natural resources taken from nature are converted in such a
way as to become reliable, educated, honest, and corruption-free human resources.
For man-made capital, it is necessary to emphasize the development of infra
structures in the form of transportation facilities and infrastructure such as roads, seaports, air
and rivers as well as means of communication and transportation links available thoroughly
and evenly according to the needs of each region. Infrastructure is the muscle of the economy
that needs to exist and be strong so that the economy also grows strongly and quickly.
For natural resources and environmental capital, continuous exploration efforts are
needed to find reserves of energy resources and other mineral resources. Create an
atmosphere so that there are incentives to conduct exploration of natural resources that can
become raw materials and auxiliary materials for industrial activities. In the energy sector,
United States needs to utilize non-fossil energy sources (biofuels), which are increasingly
necessary because fossil energy is becoming scarce. Renewable energy such as biofuels and
wind resources, geothermal resources and so on should be utilized.
Conclusion
To conclude all of the above descriptions is related to sustainable development
planning both at the national level and at the regional level. Conventional development
planning considers natural resources as a production factor that must be utilized as much as
possible without regard to environmental conditions. As a result, there is indeed economic
growth in the form of an increase in the level of national income, but it is accompanied by
depletion of natural resource reserves and environmental damage accompanied by various
natural disasters everywhere, so that although the level of income increases, but because it is
accompanied by a life full of worries about natural disasters, such as heavy rains, floods,
droughts, landslides, and even earthquakes, the higher level of national income or per capita
income does not provide a guarantee of better community welfare.
Development planning as mentioned above must be ended immediately and replaced
with a new planning paradigm. The trend of depletion of natural resources and environmental
degradation must be changed or even reversed towards the discovery of new and renewable
natural resource reserves accompanied by improvements in environmental quality (reversing
the degradation trend of the natural environment). The paradigm of sustainable development
planning that synergizes economic growth and environmental improvement is the new
development paradigm today. It has been argued that United States will experience a crisis in
three main areas, namely the water crisis, food crisis, and energy crisis (Haskarlianus Pasang,
2011).
What was stated by BAPPENAS has become a reality, where United States is
experiencing difficulties in providing clean water and is overwhelmed by floods, United
States is still not free from having to import food from abroad, and United States is
experiencing energy shortages which are also characterized by high import volumes for fuel
energy from year to year. But this situation has been cautioned by efforts to develop new
agricultural areas and land, to improve water catchment areas and maintain more efficient
reservoirs and waterways, and to develop renewable sources of electrical energy and biofuel
sources. Therefore, being smart and virtuous is one of the foundations of achieving
sustainable development.
Sustainable Development
The concept of sustainable development became popular after it was announced by
the Bruntland Commission under the leadership of Norwegian Prime Minister Gro Harlem
Brundtland who worked from October 1984 to March 1987 and gave birth to the book "Our
Common Future" published by the World Commission on Environment and Development
(WECD) in 1987 (Ismid Hadad, 2010).
During the 20th century there were 2 (two) revolutions related to the role of the
environment in economic and social development. The first revolution (1) between the 1960's
-1970's when the paradigm emerged that there was a conflict between the concepts of growth
and conservation of natural resources and the environment where every development that was
intended to improve the welfare of society was always accompanied by the exploitation of
natural resources and environmental damage (Meadows, Donella and Meadows, Nancy,
1972). Meadows and Meadows who are members of the Rome Group wrote a book on
"Limits to Growth". The book argued that if there was no reduction in the level of
consumption in society at that time, then within 100 years the world would collapse, because
natural resources would be exhausted and the environment would experience high pollution
and severe damage.
The concept of sustainable development, which is interpreted as development for the
present and which does not require compromising future generations, emerged at a meeting
of nations in Norway chaired by Norwegian Prime Minister Gro Harlem Brundtland in 1987.
At that time it was as if there was a second revolution in the field of national development
which stated that economic development did not solely damage the environment, but instead
economic development and environmental development could synergize with each other,
economic development will create an increase in national income that gives a country the
ability to maintain its environment so that it does not deteriorate. Economic development will
create an increase in national income that gives a country the ability to maintain its
environment so that it is not damaged; conversely, good environmental conditions will not
absorb development funds but instead support or sustain the lives of humans and other living
things (Pearce and Warford, 1993).
The pillars of sustainable development are economic sustainability, social
sustainability and environmental sustainability, all three of which must develop in a balanced
manner; otherwise development will be trapped in a conventional development model that
emphasizes economic growth alone and leaves social and environmental development. The
results of conventional development include the distribution of development results being
very unequal with 20 percent of the world's population in developed countries controlling 80
percent of world income and 80 percent of the world's population (developing countries) only
controlling 20 percent of world income. As a result, conventional development is hampered
or constrained by social conditions (health, education, and poverty) and shrinking natural
resource reserves (non-renewable fossil fuel energy and coal) as well as deteriorating
environmental quality due to air, water, river and lake pollution, as well as water shortages in
the dry season and floods in the rainy season in many places in United States and in other
developing countries and also in developed countries. (Emil Sallim, in Iwan Jaya Aziz, et al,
2010)
Environmental Economic Instruments
For the implementation of sustainable development, there is already a legal basis that
serves as the basis and guidelines for implementing sustainable development, which is stated
in Paragraph 8, articles 42 and 43 of Law Number 32, Year 2009 concerning Environmental
Protection and Management which is quoted as below.
Natural Resource Balance
A natural resource balance sheet is a record of the various natural resources found in a
region (Regency, City, or Province) or in a country (National) within a certain time (usually
one year) showing both physical reserves and monetary values ranging from initial reserves,
reserve increases, reserve reductions, and final reserves. For countries rich in natural
resources and a beautiful environment like United States, the balance sheet of natural
resources is very important as a basis for the preparation of development plans. United States
economic development has been based on the exploitation of natural resources. Therefore,
development planning needs to understand the condition of natural resource reserves owned
by a region (district, city, province). Natural resources can be divided into two major groups,
namely non-renewable natural resources (such as petroleum, coal, mineral resources) and
renewable natural resources (such as water, forests or plants, fish, animals and environmental
services). Examples of environmental services are the ability of forests to conserve soil and
water, prevent flooding, carbon sinks, recreational areas and so on).
Both central and local governments need to have records of their natural resource
reserves and changes. Then for planning, it is necessary to analyze the development of
natural resource reserves and their role in economic, social and environmental development.
With the balance sheet of natural resources and the environment, it can be seen where a
region is now located, whether it still has enough natural resource reserves or is already
depleted, or can still be utilized for how long. Thus, development plans will be neatly
organized, including all the consequences.
The step of preparing a natural resource balance can be started by identifying what
ecosystems are found in an area; then from each ecosystem it is identified what kind of
natural resources can be utilized from each ecosystem. Furthermore, each type of natural
resource and environmental function is quantified to determine the amount or volume of each
natural resource concerned, both the initial reserves and those lost due to exploitation or
natural disasters. After that, they are then valued in rupiah.
A natural resource balance sheet can be done for a given year for an area or on an
island where the state and amount of natural resources are not yet known. However, a natural
resource balance sheet can also record the existence of natural resources as a result of a
development activity. By knowing the impact of an activity, the costs and benefits of the
activity can be known, so it is very useful as a natural resource balance sheet feasibility
study. Actually, the feasibility study of an activity or a project in a region or in a country can
be facilitated once there is a balance sheet of natural resources and the environment in the
region or in the country concerned.
Sustainable Development Capital
In the theory of economic growth, the factors that can encourage economic growth in
a region or a country include population and labor, capital, natural resources and the
environment, technology and social factors. Our focus in this paper is the role of natural
resources and the environment in economic growth or development. If observed carefully,
natural resources and the environment are not the main factors that determine the progress of
a country. The progress of a country is usually measured by looking at the high and low per
capita income of the population in the country concerned; and it is proven that many
countries that do not have sufficient natural resources, but are actually developed countries
with high per capita income, such as Singapore, Japan, Taiwan, Korea; while many countries
with abundant natural resources are still underdeveloped countries with relatively low per
capita income such as United States, India, the Philippines, Vietnam, and Latin American
countries. There have even been articles written about the natural resource curse or also
known as "the paradox of plenty" found in developing countries that are rich in natural
resources. The paradoxical situation refers to countries that are rich in natural resources,
especially non-renewable ones, experiencing stagnant economic growth and even
regression.(Jeffrey A. Frankel, 2010)
There are two definitions of sustainable development; namely sustainable
development in the sense of strong (strong definition) and sustainable in the sense of soft
(weak definition), Sustainable in the sense of strong or hard requires that the value of all
development capital; namely the value of human capital (human capital) plus the value of the
ecosystem as natural capital (natural capital) plus human-made capital (human made
capital) remains or does not decline. Meanwhile, in a soft sense, sustainable development
allows for substitution between the three types of development capital; mainly, if the value of
natural capital decreases, it can be offset by an increase in the value of human capital and
man-made capital. For example, if there is a decrease in the amount of natural capital such as
oil and coal that is always exploited or taken from our earth, it is desired that the value of
human capital and/or the value of man-made capital increases, which is financed by utilizing
natural capital taken from nature in the area concerned. Economists are more amenable to a
soft or weak definition of sustainable development.
In addition to the success of sustainable development, it also requires the need for
social capital that is able to maintain good working relationships between various
government institutions both vertically and horizontally, as well as the synergy between the
government, the private sector and the community with a multi-party approach from the three
groups in the preparation of environmentally sound development plans and policies (Read
Ismid Hadad, 2010). So the point is not to exhaust natural resources and damage the
environment without increasing both the amount and quality of human resources and man-
made capital.
Green Growth and Green GDP/GDP
With the increasing enthusiasm to maintain good environmental quality, various terms
have emerged that mean that the environmental dimension has been incorporated into certain
businesses or activities such as the terms green building, green financing, green banking,
green growth and so on. This all shows that environmental considerations have been included
in various actions and policies. Green growth is also defined as environmentally friendly
economic growth or low carbon (CO2) economic growth, because CO2 is one of the
greenhouse gases that cover the earth which causes an increase in earth temperature resulting
in global warming. If we all want green economic growth or in other words sustainable
economic growth, then the right measurement tool for development performance is not
Conventional or Brown GDP and GRDP, but Green GDP and GRDP as mandated by Law
Number 32 of 2009 concerning Environmental Protection and Management; namely that
GDP and GRDP which already take into account the environmental dimension in the form of
depletion of natural resources and environmental degradation or the so-called Green GDP
and GRDP must be developed by every government, both local and central government *. So
Green GDP = Conventional GDP - Natural Resource Depletion - Environmental
Degradation.
However, until this paper is written, the practice of preparing Green GDP and GRDP
has not been formally implemented based on Government Regulations, although several
Provinces (Bali and West Java) and Districts/Cities (Asmat District, Bekasi City, Bantaeng
District, Banyumas District, Bandung District, Bekasi District), have tried to prepare Green
GRDP using their respective Regional Budget funds.
It should be noted that not all countries compile Green GDP, and even the World
Bank uses a measure of each country's economic progress that still uses Green GDP. Gross
National Product (GNP), as there would be difficulties in comparing the level of progress of
one country with another. Therefore, when Green GDP and GRDP were developed,
Conventional GDP and GRDP or Brown GDP and GRDP were not eliminated or replaced by
Green GDP and GRDP. Green GDP and GRDP were developed as a companion to
Conventional GDP and GRDP, because not all regions, especially cities, have sufficient
natural resources. However, it should also be noted that most cities in United States do not
have many natural resources, but all have environmental conditions that can be valued or
given an economic value, so Green GRDP can still be prepared for cities in United States. If a
city has many factories as well as trade and transportation activities, it will still experience
depletion and degradation of water resources and degradation of air quality due to CO2 and
CO4 gas pollution that can come from agricultural activities, landfills, and livestock.
Environmental Benefits
What is meant by environmental fee is a pattern of cooperation between regions in
managing the environment so that it brings benefits to all parties involved in the pattern.
Environmental fee is translated from the phrase "payment for environmental services" which
reflects the pattern of cooperation between the upstream and middle and downstream areas of
a river. People in the middle and downstream areas have an interest in benefiting from the
environment, among others, for their need for water. In general, water is available in the
upstream area and flows to the middle and downstream areas, so there are two possibilities
that the upstream area provides clean water and the middle and downstream areas become
users or consumers of water originating from the upstream area.
Another possibility is that when rainwater is abundant in the upstream area (during
heavy rains) and if there is not enough vegetation in the upstream area, rainwater flows
directly into the river and continues to the sea. If the capacity of the river or ditch in the
downstream area is inadequate, flooding will occur and can cause significant economic
losses. Therefore, there are actually 2 (two) important things about the relationship between
upstream and downstream. If water resources management is not implemented properly in the
upstream area, then during the rainy season there can be flooding in the downstream area
because water always flows from the upstream area to the downstream area; and conversely,
during the dry season there can be drought in the downstream area because the water reserves
in the upstream area are depleted because there is no water supply from rainfall in the dry
season and water is not stored due to the lack of forests or trees in the upstream area during
the rainy season.
In order to avoid the two main problems related to water resources, those who live in
the upstream area of the river need to be assisted by people who live in the downstream area
so that those in the area are willing to maintain water sources and water storage areas.
Upstream communities, who are generally farmers with modest incomes, tend to cut down
their trees when there is a financial need to pay for their children's schooling or when funds
are needed to marry off their children or for circumcision or circumcision for their children.
The cost of funds needed for the purposes of environmental services ranges between
the maximum value of the loss of downstream communities if affected by floods or affected
by a lack of clean water, or a lack of water to irrigate farmers' fields in the downstream area,
and the lowest value is the value of the needs of upstream communities who must maintain
the existence of forests and trees and maintain water resources so that they remain available
and clean.
An example of an area that has practiced the concept of "environmental services" is
between Kuningan Regency as an environmental service provider (water) and Cirebon
Regency and Cirebon City as a service user area (water). Kuningan Regency has a water
source "Panas" which with high water discharge is able to meet the need for water for
Cirebon Regency and City. The Government of Cirebon Regency and City through the
Regional Drinking Water Company (PDAM) collects funds from water users / customers,
then submits them to the Kuningan City Government. The Kuningan Regency Government
distributed the Environmental Services Fee (IJL) funds to residents around the Paniis water
source who helped manage the existence of both the quantity and quality of clean water.
Internalization of External Costs
Included in economic instruments is the application of the concept of "3P" (Polluters
Pay Principle); namely the concept that anyone who pollutes the environment is obliged to
pay compensation for the environmental pollution he creates. Pollution can occur in water
resources both in the catchment area, in rivers, in lakes, as well as to groundwater both
surface water and deep soil. Actually, the problem of internalization of environmental costs
has been reflected in the calculation of GDP and Green GRDP which includes or internalizes
the value of depletion and the value of environmental degradation, namely the deduction of
the value of depletion and environmental degradation from the value of GDP and Brown
GRDP (Conventional).
The way to internalize the value of natural resource depletion and the value of
environmental degradation is, among others, by requiring the initiators of activities (such as
producers and consumers of goods and services) to bear the burden of taxes whose revenues
must be used for the maintenance or restoration of environmental quality (Pigouvian tax).
Indeed, with the environmental tax, producers tend to shift the tax burden to consumers of the
taxed products. Then, between producers and consumers, the tax burden will be shared
depending on the ratio of demand elasticity and supply elasticity respectively. The shifting of
the tax burden from producers to consumers will increase the price of the product, so that
consumers who use these products will also bear the tax burden. This is reasonable because it
is not only producers who pollute the environment by creating solid and liquid waste and air
pollution due to CO2 released in the production process, but consumers who use the products
produced by these companies also dispose of waste into the environment. The easiest
example is detergent producers (washing powder) and detergent consumers such as hotels
and households, they together pollute the environment. If there is no environmental tax or
obligation to install a waste treatment plant, the entire community, both those who use
detergents and those who do not use them, will bear the impact of detergent production
because the soil, air and water are polluted by detergent producers and consumers. Whereas if
it is mandatory for producers to install waste treatment plants (solid, liquid and air), then only
those involved in the production and consumption of detergents will bear the burden of
pollution, while those who do not consume detergents will enjoy pollution-free soil, clean
water and clean air without having to pay the increased price of detergents due to the shifting
burden of environmental taxes imposed on producers.
By including indirect costs of production such as the value of natural resource
depletion and the value of environmental degradation, the economy will still develop
prosperously even if there are no profits or benefits from all production, consumption and
distribution activities in the economy.
In this case, it can be said that the community or economy obtains "normal profit or
normal benefit" because the price formed due to the shifting of the tax burden already
includes "explicit costs" and "implicit costs", where explicit costs are costs actually incurred
by producers (BUMS, BUMN, and BUMD) and implicit costs are lost opportunity costs such
as the value of natural resource depletion and environmental damage that are never reported
in Conventional GDP and GDRP Reports.
Human Development Index (HDI)
The Human Development Index is one of the best measures of a country's level of
well-being. HDI is a composite index consisting of health index, knowledge index, and
welfare index. The health index is measured by the life expectancy of the population at birth,
the knowledge index is measured by literacy and length of time studying formally, and the
welfare index is measured by the level of green income per capita. Thus the HDI has
internalized external costs that take into account the value of depletion or loss of natural
resources and degradation of environmental functions. Using HDI, it is noted that the capital
city of DKI Jakarta has the highest HDI (79.60), and the lowest is owned by Papua Province
(58.05), while Central Java Province has the highest HDI of 69.98.
Sustainable Development Planning
From the various descriptions above, to develop a sustainable development plan,
many things are needed. First, adequate development capital is needed, in the form of reliable
human capital, sufficient man-made capital, and environmental capital consisting of natural
resources and good environmental quality. The next question is how to provide these three
types of capital. For human resources needed as the implementer of development and as the
compiler of plans and policies, intelligent and virtuous humans are needed. Humans who are
intelligent but not virtuous will be willing to use their intelligence to bully, oppress and
blackmail other humans; on the other hand, humans who are virtuous but do not have
intelligence will be subjected to disgraceful actions such as ignorance, fraud, and deprivation
of rights by others. (Jaetun, HS, 2014). In fact, it is human resources that are the key to the
success of sustainable development, i.e. humans who are truly intelligent and virtuous are
needed, so that the problem of financial capital is no longer a problem. United States, which
has developed based on natural resources and debt, is no longer threatened by the curse of
natural resources, because the natural resources taken from nature are converted in such a
way as to become reliable, educated, honest, and corruption-free human resources.
For man-made capital, it is necessary to emphasize the development of infra
structures in the form of transportation facilities and infrastructure such as roads, seaports, air
and rivers as well as means of communication and transportation links available thoroughly
and evenly according to the needs of each region. Infrastructure is the muscle of the economy
that needs to exist and be strong so that the economy also grows strongly and quickly.
For natural resources and environmental capital, continuous exploration efforts are
needed to find reserves of energy resources and other mineral resources. Create an
atmosphere so that there are incentives to conduct exploration of natural resources that can
become raw materials and auxiliary materials for industrial activities. In the energy sector,
United States needs to utilize non-fossil energy sources (biofuels), which are increasingly
necessary because fossil energy is becoming scarce. Renewable energy such as biofuels and
wind resources, geothermal resources and so on should be utilized.
Conclusion
To conclude all of the above descriptions is related to sustainable development
planning both at the national level and at the regional level. Conventional development
planning considers natural resources as a production factor that must be utilized as much as
possible without regard to environmental conditions. As a result, there is indeed economic
growth in the form of an increase in the level of national income, but it is accompanied by
depletion of natural resource reserves and environmental damage accompanied by various
natural disasters everywhere, so that although the level of income increases, but because it is
accompanied by a life full of worries about natural disasters, such as heavy rains, floods,
droughts, landslides, and even earthquakes, the higher level of national income or per capita
income does not provide a guarantee of better community welfare.
Development planning as mentioned above must be ended immediately and replaced
with a new planning paradigm. The trend of depletion of natural resources and environmental
degradation must be changed or even reversed towards the discovery of new and renewable
natural resource reserves accompanied by improvements in environmental quality (reversing
the degradation trend of the natural environment). The paradigm of sustainable development
planning that synergizes economic growth and environmental improvement is the new
development paradigm today. It has been argued that United States will experience a crisis in
three main areas, namely the water crisis, food crisis, and energy crisis (Haskarlianus Pasang,
2011).
What was stated by BAPPENAS has become a reality, where United States is
experiencing difficulties in providing clean water and is overwhelmed by floods, United
States is still not free from having to import food from abroad, and United States is
experiencing energy shortages which are also characterized by high import volumes for fuel
energy from year to year. But this situation has been cautioned by efforts to develop new
agricultural areas and land, to improve water catchment areas and maintain more efficient
reservoirs and waterways, and to develop renewable sources of electrical energy and biofuel
sources. Therefore, being smart and virtuous is one of the foundations of achieving
sustainable development.
Sustainable Development
The concept of sustainable development became popular after it was announced by
the Bruntland Commission under the leadership of Norwegian Prime Minister Gro Harlem
Brundtland who worked from October 1984 to March 1987 and gave birth to the book "Our
Common Future" published by the World Commission on Environment and Development
(WECD) in 1987 (Ismid Hadad, 2010).
During the 20th century there were 2 (two) revolutions related to the role of the
environment in economic and social development. The first revolution (1) between the 1960's
-1970's when the paradigm emerged that there was a conflict between the concepts of growth
and conservation of natural resources and the environment where every development that was
intended to improve the welfare of society was always accompanied by the exploitation of
natural resources and environmental damage (Meadows, Donella and Meadows, Nancy,
1972). Meadows and Meadows who are members of the Rome Group wrote a book on
"Limits to Growth". The book argued that if there was no reduction in the level of
consumption in society at that time, then within 100 years the world would collapse, because
natural resources would be exhausted and the environment would experience high pollution
and severe damage.
The concept of sustainable development, which is interpreted as development for the
present and which does not require compromising future generations, emerged at a meeting
of nations in Norway chaired by Norwegian Prime Minister Gro Harlem Brundtland in 1987.
At that time it was as if there was a second revolution in the field of national development
which stated that economic development did not solely damage the environment, but instead
economic development and environmental development could synergize with each other,
economic development will create an increase in national income that gives a country the
ability to maintain its environment so that it does not deteriorate. Economic development will
create an increase in national income that gives a country the ability to maintain its
environment so that it is not damaged; conversely, good environmental conditions will not
absorb development funds but instead support or sustain the lives of humans and other living
things (Pearce and Warford, 1993).
The pillars of sustainable development are economic sustainability, social
sustainability and environmental sustainability, all three of which must develop in a balanced
manner; otherwise development will be trapped in a conventional development model that
emphasizes economic growth alone and leaves social and environmental development. The
results of conventional development include the distribution of development results being
very unequal with 20 percent of the world's population in developed countries controlling 80
percent of world income and 80 percent of the world's population (developing countries) only
controlling 20 percent of world income. As a result, conventional development is hampered
or constrained by social conditions (health, education, and poverty) and shrinking natural
resource reserves (non-renewable fossil fuel energy and coal) as well as deteriorating
environmental quality due to air, water, river and lake pollution, as well as water shortages in
the dry season and floods in the rainy season in many places in United States and in other
developing countries and also in developed countries. (Emil Sallim, in Iwan Jaya Aziz, et al,
2010)
Environmental Economic Instruments
For the implementation of sustainable development, there is already a legal basis that
serves as the basis and guidelines for implementing sustainable development, which is stated
in Paragraph 8, articles 42 and 43 of Law Number 32, Year 2009 concerning Environmental
Protection and Management which is quoted as below.
Natural Resource Balance
A natural resource balance sheet is a record of the various natural resources found in a
region (Regency, City, or Province) or in a country (National) within a certain time (usually
one year) showing both physical reserves and monetary values ranging from initial reserves,
reserve increases, reserve reductions, and final reserves. For countries rich in natural
resources and a beautiful environment like United States, the balance sheet of natural
resources is very important as a basis for the preparation of development plans. United States
economic development has been based on the exploitation of natural resources. Therefore,
development planning needs to understand the condition of natural resource reserves owned
by a region (district, city, province). Natural resources can be divided into two major groups,
namely non-renewable natural resources (such as petroleum, coal, mineral resources) and
renewable natural resources (such as water, forests or plants, fish, animals and environmental
services). Examples of environmental services are the ability of forests to conserve soil and
water, prevent flooding, carbon sinks, recreational areas and so on).
Both central and local governments need to have records of their natural resource
reserves and changes. Then for planning, it is necessary to analyze the development of
natural resource reserves and their role in economic, social and environmental development.
With the balance sheet of natural resources and the environment, it can be seen where a
region is now located, whether it still has enough natural resource reserves or is already
depleted, or can still be utilized for how long. Thus, development plans will be neatly
organized, including all the consequences.
The step of preparing a natural resource balance can be started by identifying what
ecosystems are found in an area; then from each ecosystem it is identified what kind of
natural resources can be utilized from each ecosystem. Furthermore, each type of natural
resource and environmental function is quantified to determine the amount or volume of each
natural resource concerned, both the initial reserves and those lost due to exploitation or
natural disasters. After that, they are then valued in rupiah.
A natural resource balance sheet can be done for a given year for an area or on an
island where the state and amount of natural resources are not yet known. However, a natural
resource balance sheet can also record the existence of natural resources as a result of a
development activity. By knowing the impact of an activity, the costs and benefits of the
activity can be known, so it is very useful as a natural resource balance sheet feasibility
study. Actually, the feasibility study of an activity or a project in a region or in a country can
be facilitated once there is a balance sheet of natural resources and the environment in the
region or in the country concerned.
Sustainable Development Capital
In the theory of economic growth, the factors that can encourage economic growth in
a region or a country include population and labor, capital, natural resources and the
environment, technology and social factors. Our focus in this paper is the role of natural
resources and the environment in economic growth or development. If observed carefully,
natural resources and the environment are not the main factors that determine the progress of
a country. The progress of a country is usually measured by looking at the high and low per
capita income of the population in the country concerned; and it is proven that many
countries that do not have sufficient natural resources, but are actually developed countries
with high per capita income, such as Singapore, Japan, Taiwan, Korea; while many countries
with abundant natural resources are still underdeveloped countries with relatively low per
capita income such as United States, India, the Philippines, Vietnam, and Latin American
countries. There have even been articles written about the natural resource curse or also
known as "the paradox of plenty" found in developing countries that are rich in natural
resources. The paradoxical situation refers to countries that are rich in natural resources,
especially non-renewable ones, experiencing stagnant economic growth and even
regression.(Jeffrey A. Frankel, 2010)
There are two definitions of sustainable development; namely sustainable
development in the sense of strong (strong definition) and sustainable in the sense of soft
(weak definition), Sustainable in the sense of strong or hard requires that the value of all
development capital; namely the value of human capital (human capital) plus the value of the
ecosystem as natural capital (natural capital) plus human-made capital (human made
capital) remains or does not decline. Meanwhile, in a soft sense, sustainable development
allows for substitution between the three types of development capital; mainly, if the value of
natural capital decreases, it can be offset by an increase in the value of human capital and
man-made capital. For example, if there is a decrease in the amount of natural capital such as
oil and coal that is always exploited or taken from our earth, it is desired that the value of
human capital and/or the value of man-made capital increases, which is financed by utilizing
natural capital taken from nature in the area concerned. Economists are more amenable to a
soft or weak definition of sustainable development.
In addition to the success of sustainable development, it also requires the need for
social capital that is able to maintain good working relationships between various
government institutions both vertically and horizontally, as well as the synergy between the
government, the private sector and the community with a multi-party approach from the three
groups in the preparation of environmentally sound development plans and policies (Read
Ismid Hadad, 2010). So the point is not to exhaust natural resources and damage the
environment without increasing both the amount and quality of human resources and man-
made capital.
Green Growth and Green GDP/GDP
With the increasing enthusiasm to maintain good environmental quality, various terms
have emerged that mean that the environmental dimension has been incorporated into certain
businesses or activities such as the terms green building, green financing, green banking,
green growth and so on. This all shows that environmental considerations have been included
in various actions and policies. Green growth is also defined as environmentally friendly
economic growth or low carbon (CO2) economic growth, because CO2 is one of the
greenhouse gases that cover the earth which causes an increase in earth temperature resulting
in global warming. If we all want green economic growth or in other words sustainable
economic growth, then the right measurement tool for development performance is not
Conventional or Brown GDP and GRDP, but Green GDP and GRDP as mandated by Law
Number 32 of 2009 concerning Environmental Protection and Management; namely that
GDP and GRDP which already take into account the environmental dimension in the form of
depletion of natural resources and environmental degradation or the so-called Green GDP
and GRDP must be developed by every government, both local and central government *. So
Green GDP = Conventional GDP - Natural Resource Depletion - Environmental
Degradation.
However, until this paper is written, the practice of preparing Green GDP and GRDP
has not been formally implemented based on Government Regulations, although several
Provinces (Bali and West Java) and Districts/Cities (Asmat District, Bekasi City, Bantaeng
District, Banyumas District, Bandung District, Bekasi District), have tried to prepare Green
GRDP using their respective Regional Budget funds.
It should be noted that not all countries compile Green GDP, and even the World
Bank uses a measure of each country's economic progress that still uses Green GDP. Gross
National Product (GNP), as there would be difficulties in comparing the level of progress of
one country with another. Therefore, when Green GDP and GRDP were developed,
Conventional GDP and GRDP or Brown GDP and GRDP were not eliminated or replaced by
Green GDP and GRDP. Green GDP and GRDP were developed as a companion to
Conventional GDP and GRDP, because not all regions, especially cities, have sufficient
natural resources. However, it should also be noted that most cities in United States do not
have many natural resources, but all have environmental conditions that can be valued or
given an economic value, so Green GRDP can still be prepared for cities in United States. If a
city has many factories as well as trade and transportation activities, it will still experience
depletion and degradation of water resources and degradation of air quality due to CO2 and
CO4 gas pollution that can come from agricultural activities, landfills, and livestock.
Environmental Benefits
What is meant by environmental fee is a pattern of cooperation between regions in
managing the environment so that it brings benefits to all parties involved in the pattern.
Environmental fee is translated from the phrase "payment for environmental services" which
reflects the pattern of cooperation between the upstream and middle and downstream areas of
a river. People in the middle and downstream areas have an interest in benefiting from the
environment, among others, for their need for water. In general, water is available in the
upstream area and flows to the middle and downstream areas, so there are two possibilities
that the upstream area provides clean water and the middle and downstream areas become
users or consumers of water originating from the upstream area.
Another possibility is that when rainwater is abundant in the upstream area (during
heavy rains) and if there is not enough vegetation in the upstream area, rainwater flows
directly into the river and continues to the sea. If the capacity of the river or ditch in the
downstream area is inadequate, flooding will occur and can cause significant economic
losses. Therefore, there are actually 2 (two) important things about the relationship between
upstream and downstream. If water resources management is not implemented properly in the
upstream area, then during the rainy season there can be flooding in the downstream area
because water always flows from the upstream area to the downstream area; and conversely,
during the dry season there can be drought in the downstream area because the water reserves
in the upstream area are depleted because there is no water supply from rainfall in the dry
season and water is not stored due to the lack of forests or trees in the upstream area during
the rainy season.
In order to avoid the two main problems related to water resources, those who live in
the upstream area of the river need to be assisted by people who live in the downstream area
so that those in the area are willing to maintain water sources and water storage areas.
Upstream communities, who are generally farmers with modest incomes, tend to cut down
their trees when there is a financial need to pay for their children's schooling or when funds
are needed to marry off their children or for circumcision or circumcision for their children.
The cost of funds needed for the purposes of environmental services ranges between
the maximum value of the loss of downstream communities if affected by floods or affected
by a lack of clean water, or a lack of water to irrigate farmers' fields in the downstream area,
and the lowest value is the value of the needs of upstream communities who must maintain
the existence of forests and trees and maintain water resources so that they remain available
and clean.
An example of an area that has practiced the concept of "environmental services" is
between Kuningan Regency as an environmental service provider (water) and Cirebon
Regency and Cirebon City as a service user area (water). Kuningan Regency has a water
source "Panas" which with high water discharge is able to meet the need for water for
Cirebon Regency and City. The Government of Cirebon Regency and City through the
Regional Drinking Water Company (PDAM) collects funds from water users / customers,
then submits them to the Kuningan City Government. The Kuningan Regency Government
distributed the Environmental Services Fee (IJL) funds to residents around the Paniis water
source who helped manage the existence of both the quantity and quality of clean water.
Internalization of External Costs
Included in economic instruments is the application of the concept of "3P" (Polluters
Pay Principle); namely the concept that anyone who pollutes the environment is obliged to
pay compensation for the environmental pollution he creates. Pollution can occur in water
resources both in the catchment area, in rivers, in lakes, as well as to groundwater both
surface water and deep soil. Actually, the problem of internalization of environmental costs
has been reflected in the calculation of GDP and Green GRDP which includes or internalizes
the value of depletion and the value of environmental degradation, namely the deduction of
the value of depletion and environmental degradation from the value of GDP and Brown
GRDP (Conventional).
The way to internalize the value of natural resource depletion and the value of
environmental degradation is, among others, by requiring the initiators of activities (such as
producers and consumers of goods and services) to bear the burden of taxes whose revenues
must be used for the maintenance or restoration of environmental quality (Pigouvian tax).
Indeed, with the environmental tax, producers tend to shift the tax burden to consumers of the
taxed products. Then, between producers and consumers, the tax burden will be shared
depending on the ratio of demand elasticity and supply elasticity respectively. The shifting of
the tax burden from producers to consumers will increase the price of the product, so that
consumers who use these products will also bear the tax burden. This is reasonable because it
is not only producers who pollute the environment by creating solid and liquid waste and air
pollution due to CO2 released in the production process, but consumers who use the products
produced by these companies also dispose of waste into the environment. The easiest
example is detergent producers (washing powder) and detergent consumers such as hotels
and households, they together pollute the environment. If there is no environmental tax or
obligation to install a waste treatment plant, the entire community, both those who use
detergents and those who do not use them, will bear the impact of detergent production
because the soil, air and water are polluted by detergent producers and consumers. Whereas if
it is mandatory for producers to install waste treatment plants (solid, liquid and air), then only
those involved in the production and consumption of detergents will bear the burden of
pollution, while those who do not consume detergents will enjoy pollution-free soil, clean
water and clean air without having to pay the increased price of detergents due to the shifting
burden of environmental taxes imposed on producers.
By including indirect costs of production such as the value of natural resource
depletion and the value of environmental degradation, the economy will still develop
prosperously even if there are no profits or benefits from all production, consumption and
distribution activities in the economy.
In this case, it can be said that the community or economy obtains "normal profit or
normal benefit" because the price formed due to the shifting of the tax burden already
includes "explicit costs" and "implicit costs", where explicit costs are costs actually incurred
by producers (BUMS, BUMN, and BUMD) and implicit costs are lost opportunity costs such
as the value of natural resource depletion and environmental damage that are never reported
in Conventional GDP and GDRP Reports.
Human Development Index (HDI)
The Human Development Index is one of the best measures of a country's level of
well-being. HDI is a composite index consisting of health index, knowledge index, and
welfare index. The health index is measured by the life expectancy of the population at birth,
the knowledge index is measured by literacy and length of time studying formally, and the
welfare index is measured by the level of green income per capita. Thus the HDI has
internalized external costs that take into account the value of depletion or loss of natural
resources and degradation of environmental functions. Using HDI, it is noted that the capital
city of DKI Jakarta has the highest HDI (79.60), and the lowest is owned by Papua Province
(58.05), while Central Java Province has the highest HDI of 69.98.
Sustainable Development Planning
From the various descriptions above, to develop a sustainable development plan,
many things are needed. First, adequate development capital is needed, in the form of reliable
human capital, sufficient man-made capital, and environmental capital consisting of natural
resources and good environmental quality. The next question is how to provide these three
types of capital. For human resources needed as the implementer of development and as the
compiler of plans and policies, intelligent and virtuous humans are needed. Humans who are
intelligent but not virtuous will be willing to use their intelligence to bully, oppress and
blackmail other humans; on the other hand, humans who are virtuous but do not have
intelligence will be subjected to disgraceful actions such as ignorance, fraud, and deprivation
of rights by others. (Jaetun, HS, 2014). In fact, it is human resources that are the key to the
success of sustainable development, i.e. humans who are truly intelligent and virtuous are
needed, so that the problem of financial capital is no longer a problem. United States, which
has developed based on natural resources and debt, is no longer threatened by the curse of
natural resources, because the natural resources taken from nature are converted in such a
way as to become reliable, educated, honest, and corruption-free human resources.
For man-made capital, it is necessary to emphasize the development of infra
structures in the form of transportation facilities and infrastructure such as roads, seaports, air
and rivers as well as means of communication and transportation links available thoroughly
and evenly according to the needs of each region. Infrastructure is the muscle of the economy
that needs to exist and be strong so that the economy also grows strongly and quickly.
For natural resources and environmental capital, continuous exploration efforts are
needed to find reserves of energy resources and other mineral resources. Create an
atmosphere so that there are incentives to conduct exploration of natural resources that can
become raw materials and auxiliary materials for industrial activities. In the energy sector,
United States needs to utilize non-fossil energy sources (biofuels), which are increasingly
necessary because fossil energy is becoming scarce. Renewable energy such as biofuels and
wind resources, geothermal resources and so on should be utilized.
Conclusion
To conclude all of the above descriptions is related to sustainable development
planning both at the national level and at the regional level. Conventional development
planning considers natural resources as a production factor that must be utilized as much as
possible without regard to environmental conditions. As a result, there is indeed economic
growth in the form of an increase in the level of national income, but it is accompanied by
depletion of natural resource reserves and environmental damage accompanied by various
natural disasters everywhere, so that although the level of income increases, but because it is
accompanied by a life full of worries about natural disasters, such as heavy rains, floods,
droughts, landslides, and even earthquakes, the higher level of national income or per capita
income does not provide a guarantee of better community welfare.
Development planning as mentioned above must be ended immediately and replaced
with a new planning paradigm. The trend of depletion of natural resources and environmental
degradation must be changed or even reversed towards the discovery of new and renewable
natural resource reserves accompanied by improvements in environmental quality (reversing
the degradation trend of the natural environment). The paradigm of sustainable development
planning that synergizes economic growth and environmental improvement is the new
development paradigm today. It has been argued that United States will experience a crisis in
three main areas, namely the water crisis, food crisis, and energy crisis (Haskarlianus Pasang,
2011).
What was stated by BAPPENAS has become a reality, where United States is
experiencing difficulties in providing clean water and is overwhelmed by floods, United
States is still not free from having to import food from abroad, and United States is
experiencing energy shortages which are also characterized by high import volumes for fuel
energy from year to year. But this situation has been cautioned by efforts to develop new
agricultural areas and land, to improve water catchment areas and maintain more efficient
reservoirs and waterways, and to develop renewable sources of electrical energy and biofuel
sources. Therefore, being smart and virtuous is one of the foundations of achieving
sustainable development.
Sustainable Development
The concept of sustainable development became popular after it was announced by
the Bruntland Commission under the leadership of Norwegian Prime Minister Gro Harlem
Brundtland who worked from October 1984 to March 1987 and gave birth to the book "Our
Common Future" published by the World Commission on Environment and Development
(WECD) in 1987 (Ismid Hadad, 2010).
During the 20th century there were 2 (two) revolutions related to the role of the
environment in economic and social development. The first revolution (1) between the 1960's
-1970's when the paradigm emerged that there was a conflict between the concepts of growth
and conservation of natural resources and the environment where every development that was
intended to improve the welfare of society was always accompanied by the exploitation of
natural resources and environmental damage (Meadows, Donella and Meadows, Nancy,
1972). Meadows and Meadows who are members of the Rome Group wrote a book on
"Limits to Growth". The book argued that if there was no reduction in the level of
consumption in society at that time, then within 100 years the world would collapse, because
natural resources would be exhausted and the environment would experience high pollution
and severe damage.
The concept of sustainable development, which is interpreted as development for the
present and which does not require compromising future generations, emerged at a meeting
of nations in Norway chaired by Norwegian Prime Minister Gro Harlem Brundtland in 1987.
At that time it was as if there was a second revolution in the field of national development
which stated that economic development did not solely damage the environment, but instead
economic development and environmental development could synergize with each other,
economic development will create an increase in national income that gives a country the
ability to maintain its environment so that it does not deteriorate. Economic development will
create an increase in national income that gives a country the ability to maintain its
environment so that it is not damaged; conversely, good environmental conditions will not
absorb development funds but instead support or sustain the lives of humans and other living
things (Pearce and Warford, 1993).
The pillars of sustainable development are economic sustainability, social
sustainability and environmental sustainability, all three of which must develop in a balanced
manner; otherwise development will be trapped in a conventional development model that
emphasizes economic growth alone and leaves social and environmental development. The
results of conventional development include the distribution of development results being
very unequal with 20 percent of the world's population in developed countries controlling 80
percent of world income and 80 percent of the world's population (developing countries) only
controlling 20 percent of world income. As a result, conventional development is hampered
or constrained by social conditions (health, education, and poverty) and shrinking natural
resource reserves (non-renewable fossil fuel energy and coal) as well as deteriorating
environmental quality due to air, water, river and lake pollution, as well as water shortages in
the dry season and floods in the rainy season in many places in United States and in other
developing countries and also in developed countries. (Emil Sallim, in Iwan Jaya Aziz, et al,
2010)
Environmental Economic Instruments
For the implementation of sustainable development, there is already a legal basis that
serves as the basis and guidelines for implementing sustainable development, which is stated
in Paragraph 8, articles 42 and 43 of Law Number 32, Year 2009 concerning Environmental
Protection and Management which is quoted as below.
Natural Resource Balance
A natural resource balance sheet is a record of the various natural resources found in a
region (Regency, City, or Province) or in a country (National) within a certain time (usually
one year) showing both physical reserves and monetary values ranging from initial reserves,
reserve increases, reserve reductions, and final reserves. For countries rich in natural
resources and a beautiful environment like United States, the balance sheet of natural
resources is very important as a basis for the preparation of development plans. United States
economic development has been based on the exploitation of natural resources. Therefore,
development planning needs to understand the condition of natural resource reserves owned
by a region (district, city, province). Natural resources can be divided into two major groups,
namely non-renewable natural resources (such as petroleum, coal, mineral resources) and
renewable natural resources (such as water, forests or plants, fish, animals and environmental
services). Examples of environmental services are the ability of forests to conserve soil and
water, prevent flooding, carbon sinks, recreational areas and so on).
Both central and local governments need to have records of their natural resource
reserves and changes. Then for planning, it is necessary to analyze the development of
natural resource reserves and their role in economic, social and environmental development.
With the balance sheet of natural resources and the environment, it can be seen where a
region is now located, whether it still has enough natural resource reserves or is already
depleted, or can still be utilized for how long. Thus, development plans will be neatly
organized, including all the consequences.
The step of preparing a natural resource balance can be started by identifying what
ecosystems are found in an area; then from each ecosystem it is identified what kind of
natural resources can be utilized from each ecosystem. Furthermore, each type of natural
resource and environmental function is quantified to determine the amount or volume of each
natural resource concerned, both the initial reserves and those lost due to exploitation or
natural disasters. After that, they are then valued in rupiah.
A natural resource balance sheet can be done for a given year for an area or on an
island where the state and amount of natural resources are not yet known. However, a natural
resource balance sheet can also record the existence of natural resources as a result of a
development activity. By knowing the impact of an activity, the costs and benefits of the
activity can be known, so it is very useful as a natural resource balance sheet feasibility
study. Actually, the feasibility study of an activity or a project in a region or in a country can
be facilitated once there is a balance sheet of natural resources and the environment in the
region or in the country concerned.
Sustainable Development Capital
In the theory of economic growth, the factors that can encourage economic growth in
a region or a country include population and labor, capital, natural resources and the
environment, technology and social factors. Our focus in this paper is the role of natural
resources and the environment in economic growth or development. If observed carefully,
natural resources and the environment are not the main factors that determine the progress of
a country. The progress of a country is usually measured by looking at the high and low per
capita income of the population in the country concerned; and it is proven that many
countries that do not have sufficient natural resources, but are actually developed countries
with high per capita income, such as Singapore, Japan, Taiwan, Korea; while many countries
with abundant natural resources are still underdeveloped countries with relatively low per
capita income such as United States, India, the Philippines, Vietnam, and Latin American
countries. There have even been articles written about the natural resource curse or also
known as "the paradox of plenty" found in developing countries that are rich in natural
resources. The paradoxical situation refers to countries that are rich in natural resources,
especially non-renewable ones, experiencing stagnant economic growth and even
regression.(Jeffrey A. Frankel, 2010)
There are two definitions of sustainable development; namely sustainable
development in the sense of strong (strong definition) and sustainable in the sense of soft
(weak definition), Sustainable in the sense of strong or hard requires that the value of all
development capital; namely the value of human capital (human capital) plus the value of the
ecosystem as natural capital (natural capital) plus human-made capital (human made
capital) remains or does not decline. Meanwhile, in a soft sense, sustainable development
allows for substitution between the three types of development capital; mainly, if the value of
natural capital decreases, it can be offset by an increase in the value of human capital and
man-made capital. For example, if there is a decrease in the amount of natural capital such as
oil and coal that is always exploited or taken from our earth, it is desired that the value of
human capital and/or the value of man-made capital increases, which is financed by utilizing
natural capital taken from nature in the area concerned. Economists are more amenable to a
soft or weak definition of sustainable development.
In addition to the success of sustainable development, it also requires the need for
social capital that is able to maintain good working relationships between various
government institutions both vertically and horizontally, as well as the synergy between the
government, the private sector and the community with a multi-party approach from the three
groups in the preparation of environmentally sound development plans and policies (Read
Ismid Hadad, 2010). So the point is not to exhaust natural resources and damage the
environment without increasing both the amount and quality of human resources and man-
made capital.
Green Growth and Green GDP/GDP
With the increasing enthusiasm to maintain good environmental quality, various terms
have emerged that mean that the environmental dimension has been incorporated into certain
businesses or activities such as the terms green building, green financing, green banking,
green growth and so on. This all shows that environmental considerations have been included
in various actions and policies. Green growth is also defined as environmentally friendly
economic growth or low carbon (CO2) economic growth, because CO2 is one of the
greenhouse gases that cover the earth which causes an increase in earth temperature resulting
in global warming. If we all want green economic growth or in other words sustainable
economic growth, then the right measurement tool for development performance is not
Conventional or Brown GDP and GRDP, but Green GDP and GRDP as mandated by Law
Number 32 of 2009 concerning Environmental Protection and Management; namely that
GDP and GRDP which already take into account the environmental dimension in the form of
depletion of natural resources and environmental degradation or the so-called Green GDP
and GRDP must be developed by every government, both local and central government *. So
Green GDP = Conventional GDP - Natural Resource Depletion - Environmental
Degradation.
However, until this paper is written, the practice of preparing Green GDP and GRDP
has not been formally implemented based on Government Regulations, although several
Provinces (Bali and West Java) and Districts/Cities (Asmat District, Bekasi City, Bantaeng
District, Banyumas District, Bandung District, Bekasi District), have tried to prepare Green
GRDP using their respective Regional Budget funds.
It should be noted that not all countries compile Green GDP, and even the World
Bank uses a measure of each country's economic progress that still uses Green GDP. Gross
National Product (GNP), as there would be difficulties in comparing the level of progress of
one country with another. Therefore, when Green GDP and GRDP were developed,
Conventional GDP and GRDP or Brown GDP and GRDP were not eliminated or replaced by
Green GDP and GRDP. Green GDP and GRDP were developed as a companion to
Conventional GDP and GRDP, because not all regions, especially cities, have sufficient
natural resources. However, it should also be noted that most cities in United States do not
have many natural resources, but all have environmental conditions that can be valued or
given an economic value, so Green GRDP can still be prepared for cities in United States. If a
city has many factories as well as trade and transportation activities, it will still experience
depletion and degradation of water resources and degradation of air quality due to CO2 and
CO4 gas pollution that can come from agricultural activities, landfills, and livestock.
Environmental Benefits
What is meant by environmental fee is a pattern of cooperation between regions in
managing the environment so that it brings benefits to all parties involved in the pattern.
Environmental fee is translated from the phrase "payment for environmental services" which
reflects the pattern of cooperation between the upstream and middle and downstream areas of
a river. People in the middle and downstream areas have an interest in benefiting from the
environment, among others, for their need for water. In general, water is available in the
upstream area and flows to the middle and downstream areas, so there are two possibilities
that the upstream area provides clean water and the middle and downstream areas become
users or consumers of water originating from the upstream area.
Another possibility is that when rainwater is abundant in the upstream area (during
heavy rains) and if there is not enough vegetation in the upstream area, rainwater flows
directly into the river and continues to the sea. If the capacity of the river or ditch in the
downstream area is inadequate, flooding will occur and can cause significant economic
losses. Therefore, there are actually 2 (two) important things about the relationship between
upstream and downstream. If water resources management is not implemented properly in the
upstream area, then during the rainy season there can be flooding in the downstream area
because water always flows from the upstream area to the downstream area; and conversely,
during the dry season there can be drought in the downstream area because the water reserves
in the upstream area are depleted because there is no water supply from rainfall in the dry
season and water is not stored due to the lack of forests or trees in the upstream area during
the rainy season.
In order to avoid the two main problems related to water resources, those who live in
the upstream area of the river need to be assisted by people who live in the downstream area
so that those in the area are willing to maintain water sources and water storage areas.
Upstream communities, who are generally farmers with modest incomes, tend to cut down
their trees when there is a financial need to pay for their children's schooling or when funds
are needed to marry off their children or for circumcision or circumcision for their children.
The cost of funds needed for the purposes of environmental services ranges between
the maximum value of the loss of downstream communities if affected by floods or affected
by a lack of clean water, or a lack of water to irrigate farmers' fields in the downstream area,
and the lowest value is the value of the needs of upstream communities who must maintain
the existence of forests and trees and maintain water resources so that they remain available
and clean.
An example of an area that has practiced the concept of "environmental services" is
between Kuningan Regency as an environmental service provider (water) and Cirebon
Regency and Cirebon City as a service user area (water). Kuningan Regency has a water
source "Panas" which with high water discharge is able to meet the need for water for
Cirebon Regency and City. The Government of Cirebon Regency and City through the
Regional Drinking Water Company (PDAM) collects funds from water users / customers,
then submits them to the Kuningan City Government. The Kuningan Regency Government
distributed the Environmental Services Fee (IJL) funds to residents around the Paniis water
source who helped manage the existence of both the quantity and quality of clean water.
Internalization of External Costs
Included in economic instruments is the application of the concept of "3P" (Polluters
Pay Principle); namely the concept that anyone who pollutes the environment is obliged to
pay compensation for the environmental pollution he creates. Pollution can occur in water
resources both in the catchment area, in rivers, in lakes, as well as to groundwater both
surface water and deep soil. Actually, the problem of internalization of environmental costs
has been reflected in the calculation of GDP and Green GRDP which includes or internalizes
the value of depletion and the value of environmental degradation, namely the deduction of
the value of depletion and environmental degradation from the value of GDP and Brown
GRDP (Conventional).
The way to internalize the value of natural resource depletion and the value of
environmental degradation is, among others, by requiring the initiators of activities (such as
producers and consumers of goods and services) to bear the burden of taxes whose revenues
must be used for the maintenance or restoration of environmental quality (Pigouvian tax).
Indeed, with the environmental tax, producers tend to shift the tax burden to consumers of the
taxed products. Then, between producers and consumers, the tax burden will be shared
depending on the ratio of demand elasticity and supply elasticity respectively. The shifting of
the tax burden from producers to consumers will increase the price of the product, so that
consumers who use these products will also bear the tax burden. This is reasonable because it
is not only producers who pollute the environment by creating solid and liquid waste and air
pollution due to CO2 released in the production process, but consumers who use the products
produced by these companies also dispose of waste into the environment. The easiest
example is detergent producers (washing powder) and detergent consumers such as hotels
and households, they together pollute the environment. If there is no environmental tax or
obligation to install a waste treatment plant, the entire community, both those who use
detergents and those who do not use them, will bear the impact of detergent production
because the soil, air and water are polluted by detergent producers and consumers. Whereas if
it is mandatory for producers to install waste treatment plants (solid, liquid and air), then only
those involved in the production and consumption of detergents will bear the burden of
pollution, while those who do not consume detergents will enjoy pollution-free soil, clean
water and clean air without having to pay the increased price of detergents due to the shifting
burden of environmental taxes imposed on producers.
By including indirect costs of production such as the value of natural resource
depletion and the value of environmental degradation, the economy will still develop
prosperously even if there are no profits or benefits from all production, consumption and
distribution activities in the economy.
In this case, it can be said that the community or economy obtains "normal profit or
normal benefit" because the price formed due to the shifting of the tax burden already
includes "explicit costs" and "implicit costs", where explicit costs are costs actually incurred
by producers (BUMS, BUMN, and BUMD) and implicit costs are lost opportunity costs such
as the value of natural resource depletion and environmental damage that are never reported
in Conventional GDP and GDRP Reports.
Human Development Index (HDI)
The Human Development Index is one of the best measures of a country's level of
well-being. HDI is a composite index consisting of health index, knowledge index, and
welfare index. The health index is measured by the life expectancy of the population at birth,
the knowledge index is measured by literacy and length of time studying formally, and the
welfare index is measured by the level of green income per capita. Thus the HDI has
internalized external costs that take into account the value of depletion or loss of natural
resources and degradation of environmental functions. Using HDI, it is noted that the capital
city of DKI Jakarta has the highest HDI (79.60), and the lowest is owned by Papua Province
(58.05), while Central Java Province has the highest HDI of 69.98.
Sustainable Development Planning
From the various descriptions above, to develop a sustainable development plan,
many things are needed. First, adequate development capital is needed, in the form of reliable
human capital, sufficient man-made capital, and environmental capital consisting of natural
resources and good environmental quality. The next question is how to provide these three
types of capital. For human resources needed as the implementer of development and as the
compiler of plans and policies, intelligent and virtuous humans are needed. Humans who are
intelligent but not virtuous will be willing to use their intelligence to bully, oppress and
blackmail other humans; on the other hand, humans who are virtuous but do not have
intelligence will be subjected to disgraceful actions such as ignorance, fraud, and deprivation
of rights by others. (Jaetun, HS, 2014). In fact, it is human resources that are the key to the
success of sustainable development, i.e. humans who are truly intelligent and virtuous are
needed, so that the problem of financial capital is no longer a problem. United States, which
has developed based on natural resources and debt, is no longer threatened by the curse of
natural resources, because the natural resources taken from nature are converted in such a
way as to become reliable, educated, honest, and corruption-free human resources.
For man-made capital, it is necessary to emphasize the development of infra
structures in the form of transportation facilities and infrastructure such as roads, seaports, air
and rivers as well as means of communication and transportation links available thoroughly
and evenly according to the needs of each region. Infrastructure is the muscle of the economy
that needs to exist and be strong so that the economy also grows strongly and quickly.
For natural resources and environmental capital, continuous exploration efforts are
needed to find reserves of energy resources and other mineral resources. Create an
atmosphere so that there are incentives to conduct exploration of natural resources that can
become raw materials and auxiliary materials for industrial activities. In the energy sector,
United States needs to utilize non-fossil energy sources (biofuels), which are increasingly
necessary because fossil energy is becoming scarce. Renewable energy such as biofuels and
wind resources, geothermal resources and so on should be utilized.
Conclusion
To conclude all of the above descriptions is related to sustainable development
planning both at the national level and at the regional level. Conventional development
planning considers natural resources as a production factor that must be utilized as much as
possible without regard to environmental conditions. As a result, there is indeed economic
growth in the form of an increase in the level of national income, but it is accompanied by
depletion of natural resource reserves and environmental damage accompanied by various
natural disasters everywhere, so that although the level of income increases, but because it is
accompanied by a life full of worries about natural disasters, such as heavy rains, floods,
droughts, landslides, and even earthquakes, the higher level of national income or per capita
income does not provide a guarantee of better community welfare.
Development planning as mentioned above must be ended immediately and replaced
with a new planning paradigm. The trend of depletion of natural resources and environmental
degradation must be changed or even reversed towards the discovery of new and renewable
natural resource reserves accompanied by improvements in environmental quality (reversing
the degradation trend of the natural environment). The paradigm of sustainable development
planning that synergizes economic growth and environmental improvement is the new
development paradigm today. It has been argued that United States will experience a crisis in
three main areas, namely the water crisis, food crisis, and energy crisis (Haskarlianus Pasang,
2011).
What was stated by BAPPENAS has become a reality, where United States is
experiencing difficulties in providing clean water and is overwhelmed by floods, United
States is still not free from having to import food from abroad, and United States is
experiencing energy shortages which are also characterized by high import volumes for fuel
energy from year to year. But this situation has been cautioned by efforts to develop new
agricultural areas and land, to improve water catchment areas and maintain more efficient
reservoirs and waterways, and to develop renewable sources of electrical energy and biofuel
sources. Therefore, being smart and virtuous is one of the foundations of achieving
sustainable development.
Sustainable Development
The concept of sustainable development became popular after it was announced by
the Bruntland Commission under the leadership of Norwegian Prime Minister Gro Harlem
Brundtland who worked from October 1984 to March 1987 and gave birth to the book "Our
Common Future" published by the World Commission on Environment and Development
(WECD) in 1987 (Ismid Hadad, 2010).
During the 20th century there were 2 (two) revolutions related to the role of the
environment in economic and social development. The first revolution (1) between the 1960's
-1970's when the paradigm emerged that there was a conflict between the concepts of growth
and conservation of natural resources and the environment where every development that was
intended to improve the welfare of society was always accompanied by the exploitation of
natural resources and environmental damage (Meadows, Donella and Meadows, Nancy,
1972). Meadows and Meadows who are members of the Rome Group wrote a book on
"Limits to Growth". The book argued that if there was no reduction in the level of
consumption in society at that time, then within 100 years the world would collapse, because
natural resources would be exhausted and the environment would experience high pollution
and severe damage.
The concept of sustainable development, which is interpreted as development for the
present and which does not require compromising future generations, emerged at a meeting
of nations in Norway chaired by Norwegian Prime Minister Gro Harlem Brundtland in 1987.
At that time it was as if there was a second revolution in the field of national development
which stated that economic development did not solely damage the environment, but instead
economic development and environmental development could synergize with each other,
economic development will create an increase in national income that gives a country the
ability to maintain its environment so that it does not deteriorate. Economic development will
create an increase in national income that gives a country the ability to maintain its
environment so that it is not damaged; conversely, good environmental conditions will not
absorb development funds but instead support or sustain the lives of humans and other living
things (Pearce and Warford, 1993).
The pillars of sustainable development are economic sustainability, social
sustainability and environmental sustainability, all three of which must develop in a balanced
manner; otherwise development will be trapped in a conventional development model that
emphasizes economic growth alone and leaves social and environmental development. The
results of conventional development include the distribution of development results being
very unequal with 20 percent of the world's population in developed countries controlling 80
percent of world income and 80 percent of the world's population (developing countries) only
controlling 20 percent of world income. As a result, conventional development is hampered
or constrained by social conditions (health, education, and poverty) and shrinking natural
resource reserves (non-renewable fossil fuel energy and coal) as well as deteriorating
environmental quality due to air, water, river and lake pollution, as well as water shortages in
the dry season and floods in the rainy season in many places in United States and in other
developing countries and also in developed countries. (Emil Sallim, in Iwan Jaya Aziz, et al,
2010)
Environmental Economic Instruments
For the implementation of sustainable development, there is already a legal basis that
serves as the basis and guidelines for implementing sustainable development, which is stated
in Paragraph 8, articles 42 and 43 of Law Number 32, Year 2009 concerning Environmental
Protection and Management which is quoted as below.
Natural Resource Balance
A natural resource balance sheet is a record of the various natural resources found in a
region (Regency, City, or Province) or in a country (National) within a certain time (usually
one year) showing both physical reserves and monetary values ranging from initial reserves,
reserve increases, reserve reductions, and final reserves. For countries rich in natural
resources and a beautiful environment like United States, the balance sheet of natural
resources is very important as a basis for the preparation of development plans. United States
economic development has been based on the exploitation of natural resources. Therefore,
development planning needs to understand the condition of natural resource reserves owned
by a region (district, city, province). Natural resources can be divided into two major groups,
namely non-renewable natural resources (such as petroleum, coal, mineral resources) and
renewable natural resources (such as water, forests or plants, fish, animals and environmental
services). Examples of environmental services are the ability of forests to conserve soil and
water, prevent flooding, carbon sinks, recreational areas and so on).
Both central and local governments need to have records of their natural resource
reserves and changes. Then for planning, it is necessary to analyze the development of
natural resource reserves and their role in economic, social and environmental development.
With the balance sheet of natural resources and the environment, it can be seen where a
region is now located, whether it still has enough natural resource reserves or is already
depleted, or can still be utilized for how long. Thus, development plans will be neatly
organized, including all the consequences.
The step of preparing a natural resource balance can be started by identifying what
ecosystems are found in an area; then from each ecosystem it is identified what kind of
natural resources can be utilized from each ecosystem. Furthermore, each type of natural
resource and environmental function is quantified to determine the amount or volume of each
natural resource concerned, both the initial reserves and those lost due to exploitation or
natural disasters. After that, they are then valued in rupiah.
A natural resource balance sheet can be done for a given year for an area or on an
island where the state and amount of natural resources are not yet known. However, a natural
resource balance sheet can also record the existence of natural resources as a result of a
development activity. By knowing the impact of an activity, the costs and benefits of the
activity can be known, so it is very useful as a natural resource balance sheet feasibility
study. Actually, the feasibility study of an activity or a project in a region or in a country can
be facilitated once there is a balance sheet of natural resources and the environment in the
region or in the country concerned.
Sustainable Development Capital
In the theory of economic growth, the factors that can encourage economic growth in
a region or a country include population and labor, capital, natural resources and the
environment, technology and social factors. Our focus in this paper is the role of natural
resources and the environment in economic growth or development. If observed carefully,
natural resources and the environment are not the main factors that determine the progress of
a country. The progress of a country is usually measured by looking at the high and low per
capita income of the population in the country concerned; and it is proven that many
countries that do not have sufficient natural resources, but are actually developed countries
with high per capita income, such as Singapore, Japan, Taiwan, Korea; while many countries
with abundant natural resources are still underdeveloped countries with relatively low per
capita income such as United States, India, the Philippines, Vietnam, and Latin American
countries. There have even been articles written about the natural resource curse or also
known as "the paradox of plenty" found in developing countries that are rich in natural
resources. The paradoxical situation refers to countries that are rich in natural resources,
especially non-renewable ones, experiencing stagnant economic growth and even
regression.(Jeffrey A. Frankel, 2010)
There are two definitions of sustainable development; namely sustainable
development in the sense of strong (strong definition) and sustainable in the sense of soft
(weak definition), Sustainable in the sense of strong or hard requires that the value of all
development capital; namely the value of human capital (human capital) plus the value of the
ecosystem as natural capital (natural capital) plus human-made capital (human made
capital) remains or does not decline. Meanwhile, in a soft sense, sustainable development
allows for substitution between the three types of development capital; mainly, if the value of
natural capital decreases, it can be offset by an increase in the value of human capital and
man-made capital. For example, if there is a decrease in the amount of natural capital such as
oil and coal that is always exploited or taken from our earth, it is desired that the value of
human capital and/or the value of man-made capital increases, which is financed by utilizing
natural capital taken from nature in the area concerned. Economists are more amenable to a
soft or weak definition of sustainable development.
In addition to the success of sustainable development, it also requires the need for
social capital that is able to maintain good working relationships between various
government institutions both vertically and horizontally, as well as the synergy between the
government, the private sector and the community with a multi-party approach from the three
groups in the preparation of environmentally sound development plans and policies (Read
Ismid Hadad, 2010). So the point is not to exhaust natural resources and damage the
environment without increasing both the amount and quality of human resources and man-
made capital.
Green Growth and Green GDP/GDP
With the increasing enthusiasm to maintain good environmental quality, various terms
have emerged that mean that the environmental dimension has been incorporated into certain
businesses or activities such as the terms green building, green financing, green banking,
green growth and so on. This all shows that environmental considerations have been included
in various actions and policies. Green growth is also defined as environmentally friendly
economic growth or low carbon (CO2) economic growth, because CO2 is one of the
greenhouse gases that cover the earth which causes an increase in earth temperature resulting
in global warming. If we all want green economic growth or in other words sustainable
economic growth, then the right measurement tool for development performance is not
Conventional or Brown GDP and GRDP, but Green GDP and GRDP as mandated by Law
Number 32 of 2009 concerning Environmental Protection and Management; namely that
GDP and GRDP which already take into account the environmental dimension in the form of
depletion of natural resources and environmental degradation or the so-called Green GDP
and GRDP must be developed by every government, both local and central government *. So
Green GDP = Conventional GDP - Natural Resource Depletion - Environmental
Degradation.
However, until this paper is written, the practice of preparing Green GDP and GRDP
has not been formally implemented based on Government Regulations, although several
Provinces (Bali and West Java) and Districts/Cities (Asmat District, Bekasi City, Bantaeng
District, Banyumas District, Bandung District, Bekasi District), have tried to prepare Green
GRDP using their respective Regional Budget funds.
It should be noted that not all countries compile Green GDP, and even the World
Bank uses a measure of each country's economic progress that still uses Green GDP. Gross
National Product (GNP), as there would be difficulties in comparing the level of progress of
one country with another. Therefore, when Green GDP and GRDP were developed,
Conventional GDP and GRDP or Brown GDP and GRDP were not eliminated or replaced by
Green GDP and GRDP. Green GDP and GRDP were developed as a companion to
Conventional GDP and GRDP, because not all regions, especially cities, have sufficient
natural resources. However, it should also be noted that most cities in United States do not
have many natural resources, but all have environmental conditions that can be valued or
given an economic value, so Green GRDP can still be prepared for cities in United States. If a
city has many factories as well as trade and transportation activities, it will still experience
depletion and degradation of water resources and degradation of air quality due to CO2 and
CO4 gas pollution that can come from agricultural activities, landfills, and livestock.
Environmental Benefits
What is meant by environmental fee is a pattern of cooperation between regions in
managing the environment so that it brings benefits to all parties involved in the pattern.
Environmental fee is translated from the phrase "payment for environmental services" which
reflects the pattern of cooperation between the upstream and middle and downstream areas of
a river. People in the middle and downstream areas have an interest in benefiting from the
environment, among others, for their need for water. In general, water is available in the
upstream area and flows to the middle and downstream areas, so there are two possibilities
that the upstream area provides clean water and the middle and downstream areas become
users or consumers of water originating from the upstream area.
Another possibility is that when rainwater is abundant in the upstream area (during
heavy rains) and if there is not enough vegetation in the upstream area, rainwater flows
directly into the river and continues to the sea. If the capacity of the river or ditch in the
downstream area is inadequate, flooding will occur and can cause significant economic
losses. Therefore, there are actually 2 (two) important things about the relationship between
upstream and downstream. If water resources management is not implemented properly in the
upstream area, then during the rainy season there can be flooding in the downstream area
because water always flows from the upstream area to the downstream area; and conversely,
during the dry season there can be drought in the downstream area because the water reserves
in the upstream area are depleted because there is no water supply from rainfall in the dry
season and water is not stored due to the lack of forests or trees in the upstream area during
the rainy season.
In order to avoid the two main problems related to water resources, those who live in
the upstream area of the river need to be assisted by people who live in the downstream area
so that those in the area are willing to maintain water sources and water storage areas.
Upstream communities, who are generally farmers with modest incomes, tend to cut down
their trees when there is a financial need to pay for their children's schooling or when funds
are needed to marry off their children or for circumcision or circumcision for their children.
The cost of funds needed for the purposes of environmental services ranges between
the maximum value of the loss of downstream communities if affected by floods or affected
by a lack of clean water, or a lack of water to irrigate farmers' fields in the downstream area,
and the lowest value is the value of the needs of upstream communities who must maintain
the existence of forests and trees and maintain water resources so that they remain available
and clean.
An example of an area that has practiced the concept of "environmental services" is
between Kuningan Regency as an environmental service provider (water) and Cirebon
Regency and Cirebon City as a service user area (water). Kuningan Regency has a water
source "Panas" which with high water discharge is able to meet the need for water for
Cirebon Regency and City. The Government of Cirebon Regency and City through the
Regional Drinking Water Company (PDAM) collects funds from water users / customers,
then submits them to the Kuningan City Government. The Kuningan Regency Government
distributed the Environmental Services Fee (IJL) funds to residents around the Paniis water
source who helped manage the existence of both the quantity and quality of clean water.
Internalization of External Costs
Included in economic instruments is the application of the concept of "3P" (Polluters
Pay Principle); namely the concept that anyone who pollutes the environment is obliged to
pay compensation for the environmental pollution he creates. Pollution can occur in water
resources both in the catchment area, in rivers, in lakes, as well as to groundwater both
surface water and deep soil. Actually, the problem of internalization of environmental costs
has been reflected in the calculation of GDP and Green GRDP which includes or internalizes
the value of depletion and the value of environmental degradation, namely the deduction of
the value of depletion and environmental degradation from the value of GDP and Brown
GRDP (Conventional).
The way to internalize the value of natural resource depletion and the value of
environmental degradation is, among others, by requiring the initiators of activities (such as
producers and consumers of goods and services) to bear the burden of taxes whose revenues
must be used for the maintenance or restoration of environmental quality (Pigouvian tax).
Indeed, with the environmental tax, producers tend to shift the tax burden to consumers of the
taxed products. Then, between producers and consumers, the tax burden will be shared
depending on the ratio of demand elasticity and supply elasticity respectively. The shifting of
the tax burden from producers to consumers will increase the price of the product, so that
consumers who use these products will also bear the tax burden. This is reasonable because it
is not only producers who pollute the environment by creating solid and liquid waste and air
pollution due to CO2 released in the production process, but consumers who use the products
produced by these companies also dispose of waste into the environment. The easiest
example is detergent producers (washing powder) and detergent consumers such as hotels
and households, they together pollute the environment. If there is no environmental tax or
obligation to install a waste treatment plant, the entire community, both those who use
detergents and those who do not use them, will bear the impact of detergent production
because the soil, air and water are polluted by detergent producers and consumers. Whereas if
it is mandatory for producers to install waste treatment plants (solid, liquid and air), then only
those involved in the production and consumption of detergents will bear the burden of
pollution, while those who do not consume detergents will enjoy pollution-free soil, clean
water and clean air without having to pay the increased price of detergents due to the shifting
burden of environmental taxes imposed on producers.
By including indirect costs of production such as the value of natural resource
depletion and the value of environmental degradation, the economy will still develop
prosperously even if there are no profits or benefits from all production, consumption and
distribution activities in the economy.
In this case, it can be said that the community or economy obtains "normal profit or
normal benefit" because the price formed due to the shifting of the tax burden already
includes "explicit costs" and "implicit costs", where explicit costs are costs actually incurred
by producers (BUMS, BUMN, and BUMD) and implicit costs are lost opportunity costs such
as the value of natural resource depletion and environmental damage that are never reported
in Conventional GDP and GDRP Reports.
Human Development Index (HDI)
The Human Development Index is one of the best measures of a country's level of
well-being. HDI is a composite index consisting of health index, knowledge index, and
welfare index. The health index is measured by the life expectancy of the population at birth,
the knowledge index is measured by literacy and length of time studying formally, and the
welfare index is measured by the level of green income per capita. Thus the HDI has
internalized external costs that take into account the value of depletion or loss of natural
resources and degradation of environmental functions. Using HDI, it is noted that the capital
city of DKI Jakarta has the highest HDI (79.60), and the lowest is owned by Papua Province
(58.05), while Central Java Province has the highest HDI of 69.98.
Sustainable Development Planning
From the various descriptions above, to develop a sustainable development plan,
many things are needed. First, adequate development capital is needed, in the form of reliable
human capital, sufficient man-made capital, and environmental capital consisting of natural
resources and good environmental quality. The next question is how to provide these three
types of capital. For human resources needed as the implementer of development and as the
compiler of plans and policies, intelligent and virtuous humans are needed. Humans who are
intelligent but not virtuous will be willing to use their intelligence to bully, oppress and
blackmail other humans; on the other hand, humans who are virtuous but do not have
intelligence will be subjected to disgraceful actions such as ignorance, fraud, and deprivation
of rights by others. (Jaetun, HS, 2014). In fact, it is human resources that are the key to the
success of sustainable development, i.e. humans who are truly intelligent and virtuous are
needed, so that the problem of financial capital is no longer a problem. United States, which
has developed based on natural resources and debt, is no longer threatened by the curse of
natural resources, because the natural resources taken from nature are converted in such a
way as to become reliable, educated, honest, and corruption-free human resources.
For man-made capital, it is necessary to emphasize the development of infra
structures in the form of transportation facilities and infrastructure such as roads, seaports, air
and rivers as well as means of communication and transportation links available thoroughly
and evenly according to the needs of each region. Infrastructure is the muscle of the economy
that needs to exist and be strong so that the economy also grows strongly and quickly.
For natural resources and environmental capital, continuous exploration efforts are
needed to find reserves of energy resources and other mineral resources. Create an
atmosphere so that there are incentives to conduct exploration of natural resources that can
become raw materials and auxiliary materials for industrial activities. In the energy sector,
United States needs to utilize non-fossil energy sources (biofuels), which are increasingly
necessary because fossil energy is becoming scarce. Renewable energy such as biofuels and
wind resources, geothermal resources and so on should be utilized.
Conclusion
To conclude all of the above descriptions is related to sustainable development
planning both at the national level and at the regional level. Conventional development
planning considers natural resources as a production factor that must be utilized as much as
possible without regard to environmental conditions. As a result, there is indeed economic
growth in the form of an increase in the level of national income, but it is accompanied by
depletion of natural resource reserves and environmental damage accompanied by various
natural disasters everywhere, so that although the level of income increases, but because it is
accompanied by a life full of worries about natural disasters, such as heavy rains, floods,
droughts, landslides, and even earthquakes, the higher level of national income or per capita
income does not provide a guarantee of better community welfare.
Development planning as mentioned above must be ended immediately and replaced
with a new planning paradigm. The trend of depletion of natural resources and environmental
degradation must be changed or even reversed towards the discovery of new and renewable
natural resource reserves accompanied by improvements in environmental quality (reversing
the degradation trend of the natural environment). The paradigm of sustainable development
planning that synergizes economic growth and environmental improvement is the new
development paradigm today. It has been argued that United States will experience a crisis in
three main areas, namely the water crisis, food crisis, and energy crisis (Haskarlianus Pasang,
2011).
What was stated by BAPPENAS has become a reality, where United States is
experiencing difficulties in providing clean water and is overwhelmed by floods, United
States is still not free from having to import food from abroad, and United States is
experiencing energy shortages which are also characterized by high import volumes for fuel
energy from year to year. But this situation has been cautioned by efforts to develop new
agricultural areas and land, to improve water catchment areas and maintain more efficient
reservoirs and waterways, and to develop renewable sources of electrical energy and biofuel
sources. Therefore, being smart and virtuous is one of the foundations of achieving
sustainable development.
Sustainable Development
The concept of sustainable development became popular after it was announced by
the Bruntland Commission under the leadership of Norwegian Prime Minister Gro Harlem
Brundtland who worked from October 1984 to March 1987 and gave birth to the book "Our
Common Future" published by the World Commission on Environment and Development
(WECD) in 1987 (Ismid Hadad, 2010).
During the 20th century there were 2 (two) revolutions related to the role of the
environment in economic and social development. The first revolution (1) between the 1960's
-1970's when the paradigm emerged that there was a conflict between the concepts of growth
and conservation of natural resources and the environment where every development that was
intended to improve the welfare of society was always accompanied by the exploitation of
natural resources and environmental damage (Meadows, Donella and Meadows, Nancy,
1972). Meadows and Meadows who are members of the Rome Group wrote a book on
"Limits to Growth". The book argued that if there was no reduction in the level of
consumption in society at that time, then within 100 years the world would collapse, because
natural resources would be exhausted and the environment would experience high pollution
and severe damage.
The concept of sustainable development, which is interpreted as development for the
present and which does not require compromising future generations, emerged at a meeting
of nations in Norway chaired by Norwegian Prime Minister Gro Harlem Brundtland in 1987.
At that time it was as if there was a second revolution in the field of national development
which stated that economic development did not solely damage the environment, but instead
economic development and environmental development could synergize with each other,
economic development will create an increase in national income that gives a country the
ability to maintain its environment so that it does not deteriorate. Economic development will
create an increase in national income that gives a country the ability to maintain its
environment so that it is not damaged; conversely, good environmental conditions will not
absorb development funds but instead support or sustain the lives of humans and other living
things (Pearce and Warford, 1993).
The pillars of sustainable development are economic sustainability, social
sustainability and environmental sustainability, all three of which must develop in a balanced
manner; otherwise development will be trapped in a conventional development model that
emphasizes economic growth alone and leaves social and environmental development. The
results of conventional development include the distribution of development results being
very unequal with 20 percent of the world's population in developed countries controlling 80
percent of world income and 80 percent of the world's population (developing countries) only
controlling 20 percent of world income. As a result, conventional development is hampered
or constrained by social conditions (health, education, and poverty) and shrinking natural
resource reserves (non-renewable fossil fuel energy and coal) as well as deteriorating
environmental quality due to air, water, river and lake pollution, as well as water shortages in
the dry season and floods in the rainy season in many places in United States and in other
developing countries and also in developed countries. (Emil Sallim, in Iwan Jaya Aziz, et al,
2010)
Environmental Economic Instruments
For the implementation of sustainable development, there is already a legal basis that
serves as the basis and guidelines for implementing sustainable development, which is stated
in Paragraph 8, articles 42 and 43 of Law Number 32, Year 2009 concerning Environmental
Protection and Management which is quoted as below.
Natural Resource Balance
A natural resource balance sheet is a record of the various natural resources found in a
region (Regency, City, or Province) or in a country (National) within a certain time (usually
one year) showing both physical reserves and monetary values ranging from initial reserves,
reserve increases, reserve reductions, and final reserves. For countries rich in natural
resources and a beautiful environment like United States, the balance sheet of natural
resources is very important as a basis for the preparation of development plans. United States
economic development has been based on the exploitation of natural resources. Therefore,
development planning needs to understand the condition of natural resource reserves owned
by a region (district, city, province). Natural resources can be divided into two major groups,
namely non-renewable natural resources (such as petroleum, coal, mineral resources) and
renewable natural resources (such as water, forests or plants, fish, animals and environmental
services). Examples of environmental services are the ability of forests to conserve soil and
water, prevent flooding, carbon sinks, recreational areas and so on).
Both central and local governments need to have records of their natural resource
reserves and changes. Then for planning, it is necessary to analyze the development of
natural resource reserves and their role in economic, social and environmental development.
With the balance sheet of natural resources and the environment, it can be seen where a
region is now located, whether it still has enough natural resource reserves or is already
depleted, or can still be utilized for how long. Thus, development plans will be neatly
organized, including all the consequences.
The step of preparing a natural resource balance can be started by identifying what
ecosystems are found in an area; then from each ecosystem it is identified what kind of
natural resources can be utilized from each ecosystem. Furthermore, each type of natural
resource and environmental function is quantified to determine the amount or volume of each
natural resource concerned, both the initial reserves and those lost due to exploitation or
natural disasters. After that, they are then valued in rupiah.
A natural resource balance sheet can be done for a given year for an area or on an
island where the state and amount of natural resources are not yet known. However, a natural
resource balance sheet can also record the existence of natural resources as a result of a
development activity. By knowing the impact of an activity, the costs and benefits of the
activity can be known, so it is very useful as a natural resource balance sheet feasibility
study. Actually, the feasibility study of an activity or a project in a region or in a country can
be facilitated once there is a balance sheet of natural resources and the environment in the
region or in the country concerned.
Sustainable Development Capital
In the theory of economic growth, the factors that can encourage economic growth in
a region or a country include population and labor, capital, natural resources and the
environment, technology and social factors. Our focus in this paper is the role of natural
resources and the environment in economic growth or development. If observed carefully,
natural resources and the environment are not the main factors that determine the progress of
a country. The progress of a country is usually measured by looking at the high and low per
capita income of the population in the country concerned; and it is proven that many
countries that do not have sufficient natural resources, but are actually developed countries
with high per capita income, such as Singapore, Japan, Taiwan, Korea; while many countries
with abundant natural resources are still underdeveloped countries with relatively low per
capita income such as United States, India, the Philippines, Vietnam, and Latin American
countries. There have even been articles written about the natural resource curse or also
known as "the paradox of plenty" found in developing countries that are rich in natural
resources. The paradoxical situation refers to countries that are rich in natural resources,
especially non-renewable ones, experiencing stagnant economic growth and even
regression.(Jeffrey A. Frankel, 2010)
There are two definitions of sustainable development; namely sustainable
development in the sense of strong (strong definition) and sustainable in the sense of soft
(weak definition), Sustainable in the sense of strong or hard requires that the value of all
development capital; namely the value of human capital (human capital) plus the value of the
ecosystem as natural capital (natural capital) plus human-made capital (human made
capital) remains or does not decline. Meanwhile, in a soft sense, sustainable development
allows for substitution between the three types of development capital; mainly, if the value of
natural capital decreases, it can be offset by an increase in the value of human capital and
man-made capital. For example, if there is a decrease in the amount of natural capital such as
oil and coal that is always exploited or taken from our earth, it is desired that the value of
human capital and/or the value of man-made capital increases, which is financed by utilizing
natural capital taken from nature in the area concerned. Economists are more amenable to a
soft or weak definition of sustainable development.
In addition to the success of sustainable development, it also requires the need for
social capital that is able to maintain good working relationships between various
government institutions both vertically and horizontally, as well as the synergy between the
government, the private sector and the community with a multi-party approach from the three
groups in the preparation of environmentally sound development plans and policies (Read
Ismid Hadad, 2010). So the point is not to exhaust natural resources and damage the
environment without increasing both the amount and quality of human resources and man-
made capital.
Green Growth and Green GDP/GDP
With the increasing enthusiasm to maintain good environmental quality, various terms
have emerged that mean that the environmental dimension has been incorporated into certain
businesses or activities such as the terms green building, green financing, green banking,
green growth and so on. This all shows that environmental considerations have been included
in various actions and policies. Green growth is also defined as environmentally friendly
economic growth or low carbon (CO2) economic growth, because CO2 is one of the
greenhouse gases that cover the earth which causes an increase in earth temperature resulting
in global warming. If we all want green economic growth or in other words sustainable
economic growth, then the right measurement tool for development performance is not
Conventional or Brown GDP and GRDP, but Green GDP and GRDP as mandated by Law
Number 32 of 2009 concerning Environmental Protection and Management; namely that
GDP and GRDP which already take into account the environmental dimension in the form of
depletion of natural resources and environmental degradation or the so-called Green GDP
and GRDP must be developed by every government, both local and central government *. So
Green GDP = Conventional GDP - Natural Resource Depletion - Environmental
Degradation.
However, until this paper is written, the practice of preparing Green GDP and GRDP
has not been formally implemented based on Government Regulations, although several
Provinces (Bali and West Java) and Districts/Cities (Asmat District, Bekasi City, Bantaeng
District, Banyumas District, Bandung District, Bekasi District), have tried to prepare Green
GRDP using their respective Regional Budget funds.
It should be noted that not all countries compile Green GDP, and even the World
Bank uses a measure of each country's economic progress that still uses Green GDP. Gross
National Product (GNP), as there would be difficulties in comparing the level of progress of
one country with another. Therefore, when Green GDP and GRDP were developed,
Conventional GDP and GRDP or Brown GDP and GRDP were not eliminated or replaced by
Green GDP and GRDP. Green GDP and GRDP were developed as a companion to
Conventional GDP and GRDP, because not all regions, especially cities, have sufficient
natural resources. However, it should also be noted that most cities in United States do not
have many natural resources, but all have environmental conditions that can be valued or
given an economic value, so Green GRDP can still be prepared for cities in United States. If a
city has many factories as well as trade and transportation activities, it will still experience
depletion and degradation of water resources and degradation of air quality due to CO2 and
CO4 gas pollution that can come from agricultural activities, landfills, and livestock.
Environmental Benefits
What is meant by environmental fee is a pattern of cooperation between regions in
managing the environment so that it brings benefits to all parties involved in the pattern.
Environmental fee is translated from the phrase "payment for environmental services" which
reflects the pattern of cooperation between the upstream and middle and downstream areas of
a river. People in the middle and downstream areas have an interest in benefiting from the
environment, among others, for their need for water. In general, water is available in the
upstream area and flows to the middle and downstream areas, so there are two possibilities
that the upstream area provides clean water and the middle and downstream areas become
users or consumers of water originating from the upstream area.
Another possibility is that when rainwater is abundant in the upstream area (during
heavy rains) and if there is not enough vegetation in the upstream area, rainwater flows
directly into the river and continues to the sea. If the capacity of the river or ditch in the
downstream area is inadequate, flooding will occur and can cause significant economic
losses. Therefore, there are actually 2 (two) important things about the relationship between
upstream and downstream. If water resources management is not implemented properly in the
upstream area, then during the rainy season there can be flooding in the downstream area
because water always flows from the upstream area to the downstream area; and conversely,
during the dry season there can be drought in the downstream area because the water reserves
in the upstream area are depleted because there is no water supply from rainfall in the dry
season and water is not stored due to the lack of forests or trees in the upstream area during
the rainy season.
In order to avoid the two main problems related to water resources, those who live in
the upstream area of the river need to be assisted by people who live in the downstream area
so that those in the area are willing to maintain water sources and water storage areas.
Upstream communities, who are generally farmers with modest incomes, tend to cut down
their trees when there is a financial need to pay for their children's schooling or when funds
are needed to marry off their children or for circumcision or circumcision for their children.
The cost of funds needed for the purposes of environmental services ranges between
the maximum value of the loss of downstream communities if affected by floods or affected
by a lack of clean water, or a lack of water to irrigate farmers' fields in the downstream area,
and the lowest value is the value of the needs of upstream communities who must maintain
the existence of forests and trees and maintain water resources so that they remain available
and clean.
An example of an area that has practiced the concept of "environmental services" is
between Kuningan Regency as an environmental service provider (water) and Cirebon
Regency and Cirebon City as a service user area (water). Kuningan Regency has a water
source "Panas" which with high water discharge is able to meet the need for water for
Cirebon Regency and City. The Government of Cirebon Regency and City through the
Regional Drinking Water Company (PDAM) collects funds from water users / customers,
then submits them to the Kuningan City Government. The Kuningan Regency Government
distributed the Environmental Services Fee (IJL) funds to residents around the Paniis water
source who helped manage the existence of both the quantity and quality of clean water.
Internalization of External Costs
Included in economic instruments is the application of the concept of "3P" (Polluters
Pay Principle); namely the concept that anyone who pollutes the environment is obliged to
pay compensation for the environmental pollution he creates. Pollution can occur in water
resources both in the catchment area, in rivers, in lakes, as well as to groundwater both
surface water and deep soil. Actually, the problem of internalization of environmental costs
has been reflected in the calculation of GDP and Green GRDP which includes or internalizes
the value of depletion and the value of environmental degradation, namely the deduction of
the value of depletion and environmental degradation from the value of GDP and Brown
GRDP (Conventional).
The way to internalize the value of natural resource depletion and the value of
environmental degradation is, among others, by requiring the initiators of activities (such as
producers and consumers of goods and services) to bear the burden of taxes whose revenues
must be used for the maintenance or restoration of environmental quality (Pigouvian tax).
Indeed, with the environmental tax, producers tend to shift the tax burden to consumers of the
taxed products. Then, between producers and consumers, the tax burden will be shared
depending on the ratio of demand elasticity and supply elasticity respectively. The shifting of
the tax burden from producers to consumers will increase the price of the product, so that
consumers who use these products will also bear the tax burden. This is reasonable because it
is not only producers who pollute the environment by creating solid and liquid waste and air
pollution due to CO2 released in the production process, but consumers who use the products
produced by these companies also dispose of waste into the environment. The easiest
example is detergent producers (washing powder) and detergent consumers such as hotels
and households, they together pollute the environment. If there is no environmental tax or
obligation to install a waste treatment plant, the entire community, both those who use
detergents and those who do not use them, will bear the impact of detergent production
because the soil, air and water are polluted by detergent producers and consumers. Whereas if
it is mandatory for producers to install waste treatment plants (solid, liquid and air), then only
those involved in the production and consumption of detergents will bear the burden of
pollution, while those who do not consume detergents will enjoy pollution-free soil, clean
water and clean air without having to pay the increased price of detergents due to the shifting
burden of environmental taxes imposed on producers.
By including indirect costs of production such as the value of natural resource
depletion and the value of environmental degradation, the economy will still develop
prosperously even if there are no profits or benefits from all production, consumption and
distribution activities in the economy.
In this case, it can be said that the community or economy obtains "normal profit or
normal benefit" because the price formed due to the shifting of the tax burden already
includes "explicit costs" and "implicit costs", where explicit costs are costs actually incurred
by producers (BUMS, BUMN, and BUMD) and implicit costs are lost opportunity costs such
as the value of natural resource depletion and environmental damage that are never reported
in Conventional GDP and GDRP Reports.
Human Development Index (HDI)
The Human Development Index is one of the best measures of a country's level of
well-being. HDI is a composite index consisting of health index, knowledge index, and
welfare index. The health index is measured by the life expectancy of the population at birth,
the knowledge index is measured by literacy and length of time studying formally, and the
welfare index is measured by the level of green income per capita. Thus the HDI has
internalized external costs that take into account the value of depletion or loss of natural
resources and degradation of environmental functions. Using HDI, it is noted that the capital
city of DKI Jakarta has the highest HDI (79.60), and the lowest is owned by Papua Province
(58.05), while Central Java Province has the highest HDI of 69.98.
Sustainable Development Planning
From the various descriptions above, to develop a sustainable development plan,
many things are needed. First, adequate development capital is needed, in the form of reliable
human capital, sufficient man-made capital, and environmental capital consisting of natural
resources and good environmental quality. The next question is how to provide these three
types of capital. For human resources needed as the implementer of development and as the
compiler of plans and policies, intelligent and virtuous humans are needed. Humans who are
intelligent but not virtuous will be willing to use their intelligence to bully, oppress and
blackmail other humans; on the other hand, humans who are virtuous but do not have
intelligence will be subjected to disgraceful actions such as ignorance, fraud, and deprivation
of rights by others. (Jaetun, HS, 2014). In fact, it is human resources that are the key to the
success of sustainable development, i.e. humans who are truly intelligent and virtuous are
needed, so that the problem of financial capital is no longer a problem. United States, which
has developed based on natural resources and debt, is no longer threatened by the curse of
natural resources, because the natural resources taken from nature are converted in such a
way as to become reliable, educated, honest, and corruption-free human resources.
For man-made capital, it is necessary to emphasize the development of infra
structures in the form of transportation facilities and infrastructure such as roads, seaports, air
and rivers as well as means of communication and transportation links available thoroughly
and evenly according to the needs of each region. Infrastructure is the muscle of the economy
that needs to exist and be strong so that the economy also grows strongly and quickly.
For natural resources and environmental capital, continuous exploration efforts are
needed to find reserves of energy resources and other mineral resources. Create an
atmosphere so that there are incentives to conduct exploration of natural resources that can
become raw materials and auxiliary materials for industrial activities. In the energy sector,
United States needs to utilize non-fossil energy sources (biofuels), which are increasingly
necessary because fossil energy is becoming scarce. Renewable energy such as biofuels and
wind resources, geothermal resources and so on should be utilized.
Conclusion
To conclude all of the above descriptions is related to sustainable development
planning both at the national level and at the regional level. Conventional development
planning considers natural resources as a production factor that must be utilized as much as
possible without regard to environmental conditions. As a result, there is indeed economic
growth in the form of an increase in the level of national income, but it is accompanied by
depletion of natural resource reserves and environmental damage accompanied by various
natural disasters everywhere, so that although the level of income increases, but because it is
accompanied by a life full of worries about natural disasters, such as heavy rains, floods,
droughts, landslides, and even earthquakes, the higher level of national income or per capita
income does not provide a guarantee of better community welfare.
Development planning as mentioned above must be ended immediately and replaced
with a new planning paradigm. The trend of depletion of natural resources and environmental
degradation must be changed or even reversed towards the discovery of new and renewable
natural resource reserves accompanied by improvements in environmental quality (reversing
the degradation trend of the natural environment). The paradigm of sustainable development
planning that synergizes economic growth and environmental improvement is the new
development paradigm today. It has been argued that United States will experience a crisis in
three main areas, namely the water crisis, food crisis, and energy crisis (Haskarlianus Pasang,
2011).
What was stated by BAPPENAS has become a reality, where United States is
experiencing difficulties in providing clean water and is overwhelmed by floods, United
States is still not free from having to import food from abroad, and United States is
experiencing energy shortages which are also characterized by high import volumes for fuel
energy from year to year. But this situation has been cautioned by efforts to develop new
agricultural areas and land, to improve water catchment areas and maintain more efficient
reservoirs and waterways, and to develop renewable sources of electrical energy and biofuel
sources. Therefore, being smart and virtuous is one of the foundations of achieving
sustainable development.
Sustainable Development
The concept of sustainable development became popular after it was announced by
the Bruntland Commission under the leadership of Norwegian Prime Minister Gro Harlem
Brundtland who worked from October 1984 to March 1987 and gave birth to the book "Our
Common Future" published by the World Commission on Environment and Development
(WECD) in 1987 (Ismid Hadad, 2010).
During the 20th century there were 2 (two) revolutions related to the role of the
environment in economic and social development. The first revolution (1) between the 1960's
-1970's when the paradigm emerged that there was a conflict between the concepts of growth
and conservation of natural resources and the environment where every development that was
intended to improve the welfare of society was always accompanied by the exploitation of
natural resources and environmental damage (Meadows, Donella and Meadows, Nancy,
1972). Meadows and Meadows who are members of the Rome Group wrote a book on
"Limits to Growth". The book argued that if there was no reduction in the level of
consumption in society at that time, then within 100 years the world would collapse, because
natural resources would be exhausted and the environment would experience high pollution
and severe damage.
The concept of sustainable development, which is interpreted as development for the
present and which does not require compromising future generations, emerged at a meeting
of nations in Norway chaired by Norwegian Prime Minister Gro Harlem Brundtland in 1987.
At that time it was as if there was a second revolution in the field of national development
which stated that economic development did not solely damage the environment, but instead
economic development and environmental development could synergize with each other,
economic development will create an increase in national income that gives a country the
ability to maintain its environment so that it does not deteriorate. Economic development will
create an increase in national income that gives a country the ability to maintain its
environment so that it is not damaged; conversely, good environmental conditions will not
absorb development funds but instead support or sustain the lives of humans and other living
things (Pearce and Warford, 1993).
The pillars of sustainable development are economic sustainability, social
sustainability and environmental sustainability, all three of which must develop in a balanced
manner; otherwise development will be trapped in a conventional development model that
emphasizes economic growth alone and leaves social and environmental development. The
results of conventional development include the distribution of development results being
very unequal with 20 percent of the world's population in developed countries controlling 80
percent of world income and 80 percent of the world's population (developing countries) only
controlling 20 percent of world income. As a result, conventional development is hampered
or constrained by social conditions (health, education, and poverty) and shrinking natural
resource reserves (non-renewable fossil fuel energy and coal) as well as deteriorating
environmental quality due to air, water, river and lake pollution, as well as water shortages in
the dry season and floods in the rainy season in many places in United States and in other
developing countries and also in developed countries. (Emil Sallim, in Iwan Jaya Aziz, et al,
2010)
Environmental Economic Instruments
For the implementation of sustainable development, there is already a legal basis that
serves as the basis and guidelines for implementing sustainable development, which is stated
in Paragraph 8, articles 42 and 43 of Law Number 32, Year 2009 concerning Environmental
Protection and Management which is quoted as below.
Natural Resource Balance
A natural resource balance sheet is a record of the various natural resources found in a
region (Regency, City, or Province) or in a country (National) within a certain time (usually
one year) showing both physical reserves and monetary values ranging from initial reserves,
reserve increases, reserve reductions, and final reserves. For countries rich in natural
resources and a beautiful environment like United States, the balance sheet of natural
resources is very important as a basis for the preparation of development plans. United States
economic development has been based on the exploitation of natural resources. Therefore,
development planning needs to understand the condition of natural resource reserves owned
by a region (district, city, province). Natural resources can be divided into two major groups,
namely non-renewable natural resources (such as petroleum, coal, mineral resources) and
renewable natural resources (such as water, forests or plants, fish, animals and environmental
services). Examples of environmental services are the ability of forests to conserve soil and
water, prevent flooding, carbon sinks, recreational areas and so on).
Both central and local governments need to have records of their natural resource
reserves and changes. Then for planning, it is necessary to analyze the development of
natural resource reserves and their role in economic, social and environmental development.
With the balance sheet of natural resources and the environment, it can be seen where a
region is now located, whether it still has enough natural resource reserves or is already
depleted, or can still be utilized for how long. Thus, development plans will be neatly
organized, including all the consequences.
The step of preparing a natural resource balance can be started by identifying what
ecosystems are found in an area; then from each ecosystem it is identified what kind of
natural resources can be utilized from each ecosystem. Furthermore, each type of natural
resource and environmental function is quantified to determine the amount or volume of each
natural resource concerned, both the initial reserves and those lost due to exploitation or
natural disasters. After that, they are then valued in rupiah.
A natural resource balance sheet can be done for a given year for an area or on an
island where the state and amount of natural resources are not yet known. However, a natural
resource balance sheet can also record the existence of natural resources as a result of a
development activity. By knowing the impact of an activity, the costs and benefits of the
activity can be known, so it is very useful as a natural resource balance sheet feasibility
study. Actually, the feasibility study of an activity or a project in a region or in a country can
be facilitated once there is a balance sheet of natural resources and the environment in the
region or in the country concerned.
Sustainable Development Capital
In the theory of economic growth, the factors that can encourage economic growth in
a region or a country include population and labor, capital, natural resources and the
environment, technology and social factors. Our focus in this paper is the role of natural
resources and the environment in economic growth or development. If observed carefully,
natural resources and the environment are not the main factors that determine the progress of
a country. The progress of a country is usually measured by looking at the high and low per
capita income of the population in the country concerned; and it is proven that many
countries that do not have sufficient natural resources, but are actually developed countries
with high per capita income, such as Singapore, Japan, Taiwan, Korea; while many countries
with abundant natural resources are still underdeveloped countries with relatively low per
capita income such as United States, India, the Philippines, Vietnam, and Latin American
countries. There have even been articles written about the natural resource curse or also
known as "the paradox of plenty" found in developing countries that are rich in natural
resources. The paradoxical situation refers to countries that are rich in natural resources,
especially non-renewable ones, experiencing stagnant economic growth and even
regression.(Jeffrey A. Frankel, 2010)
There are two definitions of sustainable development; namely sustainable
development in the sense of strong (strong definition) and sustainable in the sense of soft
(weak definition), Sustainable in the sense of strong or hard requires that the value of all
development capital; namely the value of human capital (human capital) plus the value of the
ecosystem as natural capital (natural capital) plus human-made capital (human made
capital) remains or does not decline. Meanwhile, in a soft sense, sustainable development
allows for substitution between the three types of development capital; mainly, if the value of
natural capital decreases, it can be offset by an increase in the value of human capital and
man-made capital. For example, if there is a decrease in the amount of natural capital such as
oil and coal that is always exploited or taken from our earth, it is desired that the value of
human capital and/or the value of man-made capital increases, which is financed by utilizing
natural capital taken from nature in the area concerned. Economists are more amenable to a
soft or weak definition of sustainable development.
In addition to the success of sustainable development, it also requires the need for
social capital that is able to maintain good working relationships between various
government institutions both vertically and horizontally, as well as the synergy between the
government, the private sector and the community with a multi-party approach from the three
groups in the preparation of environmentally sound development plans and policies (Read
Ismid Hadad, 2010). So the point is not to exhaust natural resources and damage the
environment without increasing both the amount and quality of human resources and man-
made capital.
Green Growth and Green GDP/GDP
With the increasing enthusiasm to maintain good environmental quality, various terms
have emerged that mean that the environmental dimension has been incorporated into certain
businesses or activities such as the terms green building, green financing, green banking,
green growth and so on. This all shows that environmental considerations have been included
in various actions and policies. Green growth is also defined as environmentally friendly
economic growth or low carbon (CO2) economic growth, because CO2 is one of the
greenhouse gases that cover the earth which causes an increase in earth temperature resulting
in global warming. If we all want green economic growth or in other words sustainable
economic growth, then the right measurement tool for development performance is not
Conventional or Brown GDP and GRDP, but Green GDP and GRDP as mandated by Law
Number 32 of 2009 concerning Environmental Protection and Management; namely that
GDP and GRDP which already take into account the environmental dimension in the form of
depletion of natural resources and environmental degradation or the so-called Green GDP
and GRDP must be developed by every government, both local and central government *. So
Green GDP = Conventional GDP - Natural Resource Depletion - Environmental
Degradation.
However, until this paper is written, the practice of preparing Green GDP and GRDP
has not been formally implemented based on Government Regulations, although several
Provinces (Bali and West Java) and Districts/Cities (Asmat District, Bekasi City, Bantaeng
District, Banyumas District, Bandung District, Bekasi District), have tried to prepare Green
GRDP using their respective Regional Budget funds.
It should be noted that not all countries compile Green GDP, and even the World
Bank uses a measure of each country's economic progress that still uses Green GDP. Gross
National Product (GNP), as there would be difficulties in comparing the level of progress of
one country with another. Therefore, when Green GDP and GRDP were developed,
Conventional GDP and GRDP or Brown GDP and GRDP were not eliminated or replaced by
Green GDP and GRDP. Green GDP and GRDP were developed as a companion to
Conventional GDP and GRDP, because not all regions, especially cities, have sufficient
natural resources. However, it should also be noted that most cities in United States do not
have many natural resources, but all have environmental conditions that can be valued or
given an economic value, so Green GRDP can still be prepared for cities in United States. If a
city has many factories as well as trade and transportation activities, it will still experience
depletion and degradation of water resources and degradation of air quality due to CO2 and
CO4 gas pollution that can come from agricultural activities, landfills, and livestock.
Environmental Benefits
What is meant by environmental fee is a pattern of cooperation between regions in
managing the environment so that it brings benefits to all parties involved in the pattern.
Environmental fee is translated from the phrase "payment for environmental services" which
reflects the pattern of cooperation between the upstream and middle and downstream areas of
a river. People in the middle and downstream areas have an interest in benefiting from the
environment, among others, for their need for water. In general, water is available in the
upstream area and flows to the middle and downstream areas, so there are two possibilities
that the upstream area provides clean water and the middle and downstream areas become
users or consumers of water originating from the upstream area.
Another possibility is that when rainwater is abundant in the upstream area (during
heavy rains) and if there is not enough vegetation in the upstream area, rainwater flows
directly into the river and continues to the sea. If the capacity of the river or ditch in the
downstream area is inadequate, flooding will occur and can cause significant economic
losses. Therefore, there are actually 2 (two) important things about the relationship between
upstream and downstream. If water resources management is not implemented properly in the
upstream area, then during the rainy season there can be flooding in the downstream area
because water always flows from the upstream area to the downstream area; and conversely,
during the dry season there can be drought in the downstream area because the water reserves
in the upstream area are depleted because there is no water supply from rainfall in the dry
season and water is not stored due to the lack of forests or trees in the upstream area during
the rainy season.
In order to avoid the two main problems related to water resources, those who live in
the upstream area of the river need to be assisted by people who live in the downstream area
so that those in the area are willing to maintain water sources and water storage areas.
Upstream communities, who are generally farmers with modest incomes, tend to cut down
their trees when there is a financial need to pay for their children's schooling or when funds
are needed to marry off their children or for circumcision or circumcision for their children.
The cost of funds needed for the purposes of environmental services ranges between
the maximum value of the loss of downstream communities if affected by floods or affected
by a lack of clean water, or a lack of water to irrigate farmers' fields in the downstream area,
and the lowest value is the value of the needs of upstream communities who must maintain
the existence of forests and trees and maintain water resources so that they remain available
and clean.
An example of an area that has practiced the concept of "environmental services" is
between Kuningan Regency as an environmental service provider (water) and Cirebon
Regency and Cirebon City as a service user area (water). Kuningan Regency has a water
source "Panas" which with high water discharge is able to meet the need for water for
Cirebon Regency and City. The Government of Cirebon Regency and City through the
Regional Drinking Water Company (PDAM) collects funds from water users / customers,
then submits them to the Kuningan City Government. The Kuningan Regency Government
distributed the Environmental Services Fee (IJL) funds to residents around the Paniis water
source who helped manage the existence of both the quantity and quality of clean water.
Internalization of External Costs
Included in economic instruments is the application of the concept of "3P" (Polluters
Pay Principle); namely the concept that anyone who pollutes the environment is obliged to
pay compensation for the environmental pollution he creates. Pollution can occur in water
resources both in the catchment area, in rivers, in lakes, as well as to groundwater both
surface water and deep soil. Actually, the problem of internalization of environmental costs
has been reflected in the calculation of GDP and Green GRDP which includes or internalizes
the value of depletion and the value of environmental degradation, namely the deduction of
the value of depletion and environmental degradation from the value of GDP and Brown
GRDP (Conventional).
The way to internalize the value of natural resource depletion and the value of
environmental degradation is, among others, by requiring the initiators of activities (such as
producers and consumers of goods and services) to bear the burden of taxes whose revenues
must be used for the maintenance or restoration of environmental quality (Pigouvian tax).
Indeed, with the environmental tax, producers tend to shift the tax burden to consumers of the
taxed products. Then, between producers and consumers, the tax burden will be shared
depending on the ratio of demand elasticity and supply elasticity respectively. The shifting of
the tax burden from producers to consumers will increase the price of the product, so that
consumers who use these products will also bear the tax burden. This is reasonable because it
is not only producers who pollute the environment by creating solid and liquid waste and air
pollution due to CO2 released in the production process, but consumers who use the products
produced by these companies also dispose of waste into the environment. The easiest
example is detergent producers (washing powder) and detergent consumers such as hotels
and households, they together pollute the environment. If there is no environmental tax or
obligation to install a waste treatment plant, the entire community, both those who use
detergents and those who do not use them, will bear the impact of detergent production
because the soil, air and water are polluted by detergent producers and consumers. Whereas if
it is mandatory for producers to install waste treatment plants (solid, liquid and air), then only
those involved in the production and consumption of detergents will bear the burden of
pollution, while those who do not consume detergents will enjoy pollution-free soil, clean
water and clean air without having to pay the increased price of detergents due to the shifting
burden of environmental taxes imposed on producers.
By including indirect costs of production such as the value of natural resource
depletion and the value of environmental degradation, the economy will still develop
prosperously even if there are no profits or benefits from all production, consumption and
distribution activities in the economy.
In this case, it can be said that the community or economy obtains "normal profit or
normal benefit" because the price formed due to the shifting of the tax burden already
includes "explicit costs" and "implicit costs", where explicit costs are costs actually incurred
by producers (BUMS, BUMN, and BUMD) and implicit costs are lost opportunity costs such
as the value of natural resource depletion and environmental damage that are never reported
in Conventional GDP and GDRP Reports.
Human Development Index (HDI)
The Human Development Index is one of the best measures of a country's level of
well-being. HDI is a composite index consisting of health index, knowledge index, and
welfare index. The health index is measured by the life expectancy of the population at birth,
the knowledge index is measured by literacy and length of time studying formally, and the
welfare index is measured by the level of green income per capita. Thus the HDI has
internalized external costs that take into account the value of depletion or loss of natural
resources and degradation of environmental functions. Using HDI, it is noted that the capital
city of DKI Jakarta has the highest HDI (79.60), and the lowest is owned by Papua Province
(58.05), while Central Java Province has the highest HDI of 69.98.
Sustainable Development Planning
From the various descriptions above, to develop a sustainable development plan,
many things are needed. First, adequate development capital is needed, in the form of reliable
human capital, sufficient man-made capital, and environmental capital consisting of natural
resources and good environmental quality. The next question is how to provide these three
types of capital. For human resources needed as the implementer of development and as the
compiler of plans and policies, intelligent and virtuous humans are needed. Humans who are
intelligent but not virtuous will be willing to use their intelligence to bully, oppress and
blackmail other humans; on the other hand, humans who are virtuous but do not have
intelligence will be subjected to disgraceful actions such as ignorance, fraud, and deprivation
of rights by others. (Jaetun, HS, 2014). In fact, it is human resources that are the key to the
success of sustainable development, i.e. humans who are truly intelligent and virtuous are
needed, so that the problem of financial capital is no longer a problem. United States, which
has developed based on natural resources and debt, is no longer threatened by the curse of
natural resources, because the natural resources taken from nature are converted in such a
way as to become reliable, educated, honest, and corruption-free human resources.
For man-made capital, it is necessary to emphasize the development of infra
structures in the form of transportation facilities and infrastructure such as roads, seaports, air
and rivers as well as means of communication and transportation links available thoroughly
and evenly according to the needs of each region. Infrastructure is the muscle of the economy
that needs to exist and be strong so that the economy also grows strongly and quickly.
For natural resources and environmental capital, continuous exploration efforts are
needed to find reserves of energy resources and other mineral resources. Create an
atmosphere so that there are incentives to conduct exploration of natural resources that can
become raw materials and auxiliary materials for industrial activities. In the energy sector,
United States needs to utilize non-fossil energy sources (biofuels), which are increasingly
necessary because fossil energy is becoming scarce. Renewable energy such as biofuels and
wind resources, geothermal resources and so on should be utilized.
Conclusion
To conclude all of the above descriptions is related to sustainable development
planning both at the national level and at the regional level. Conventional development
planning considers natural resources as a production factor that must be utilized as much as
possible without regard to environmental conditions. As a result, there is indeed economic
growth in the form of an increase in the level of national income, but it is accompanied by
depletion of natural resource reserves and environmental damage accompanied by various
natural disasters everywhere, so that although the level of income increases, but because it is
accompanied by a life full of worries about natural disasters, such as heavy rains, floods,
droughts, landslides, and even earthquakes, the higher level of national income or per capita
income does not provide a guarantee of better community welfare.
Development planning as mentioned above must be ended immediately and replaced
with a new planning paradigm. The trend of depletion of natural resources and environmental
degradation must be changed or even reversed towards the discovery of new and renewable
natural resource reserves accompanied by improvements in environmental quality (reversing
the degradation trend of the natural environment). The paradigm of sustainable development
planning that synergizes economic growth and environmental improvement is the new
development paradigm today. It has been argued that United States will experience a crisis in
three main areas, namely the water crisis, food crisis, and energy crisis (Haskarlianus Pasang,
2011).
What was stated by BAPPENAS has become a reality, where United States is
experiencing difficulties in providing clean water and is overwhelmed by floods, United
States is still not free from having to import food from abroad, and United States is
experiencing energy shortages which are also characterized by high import volumes for fuel
energy from year to year. But this situation has been cautioned by efforts to develop new
agricultural areas and land, to improve water catchment areas and maintain more efficient
reservoirs and waterways, and to develop renewable sources of electrical energy and biofuel
sources. Therefore, being smart and virtuous is one of the foundations of achieving
sustainable development.
Sustainable Development
The concept of sustainable development became popular after it was announced by
the Bruntland Commission under the leadership of Norwegian Prime Minister Gro Harlem
Brundtland who worked from October 1984 to March 1987 and gave birth to the book "Our
Common Future" published by the World Commission on Environment and Development
(WECD) in 1987 (Ismid Hadad, 2010).
During the 20th century there were 2 (two) revolutions related to the role of the
environment in economic and social development. The first revolution (1) between the 1960's
-1970's when the paradigm emerged that there was a conflict between the concepts of growth
and conservation of natural resources and the environment where every development that was
intended to improve the welfare of society was always accompanied by the exploitation of
natural resources and environmental damage (Meadows, Donella and Meadows, Nancy,
1972). Meadows and Meadows who are members of the Rome Group wrote a book on
"Limits to Growth". The book argued that if there was no reduction in the level of
consumption in society at that time, then within 100 years the world would collapse, because
natural resources would be exhausted and the environment would experience high pollution
and severe damage.
The concept of sustainable development, which is interpreted as development for the
present and which does not require compromising future generations, emerged at a meeting
of nations in Norway chaired by Norwegian Prime Minister Gro Harlem Brundtland in 1987.
At that time it was as if there was a second revolution in the field of national development
which stated that economic development did not solely damage the environment, but instead
economic development and environmental development could synergize with each other,
economic development will create an increase in national income that gives a country the
ability to maintain its environment so that it does not deteriorate. Economic development will
create an increase in national income that gives a country the ability to maintain its
environment so that it is not damaged; conversely, good environmental conditions will not
absorb development funds but instead support or sustain the lives of humans and other living
things (Pearce and Warford, 1993).
The pillars of sustainable development are economic sustainability, social
sustainability and environmental sustainability, all three of which must develop in a balanced
manner; otherwise development will be trapped in a conventional development model that
emphasizes economic growth alone and leaves social and environmental development. The
results of conventional development include the distribution of development results being
very unequal with 20 percent of the world's population in developed countries controlling 80
percent of world income and 80 percent of the world's population (developing countries) only
controlling 20 percent of world income. As a result, conventional development is hampered
or constrained by social conditions (health, education, and poverty) and shrinking natural
resource reserves (non-renewable fossil fuel energy and coal) as well as deteriorating
environmental quality due to air, water, river and lake pollution, as well as water shortages in
the dry season and floods in the rainy season in many places in United States and in other
developing countries and also in developed countries. (Emil Sallim, in Iwan Jaya Aziz, et al,
2010)
Environmental Economic Instruments
For the implementation of sustainable development, there is already a legal basis that
serves as the basis and guidelines for implementing sustainable development, which is stated
in Paragraph 8, articles 42 and 43 of Law Number 32, Year 2009 concerning Environmental
Protection and Management which is quoted as below.
Natural Resource Balance
A natural resource balance sheet is a record of the various natural resources found in a
region (Regency, City, or Province) or in a country (National) within a certain time (usually
one year) showing both physical reserves and monetary values ranging from initial reserves,
reserve increases, reserve reductions, and final reserves. For countries rich in natural
resources and a beautiful environment like United States, the balance sheet of natural
resources is very important as a basis for the preparation of development plans. United States
economic development has been based on the exploitation of natural resources. Therefore,
development planning needs to understand the condition of natural resource reserves owned
by a region (district, city, province). Natural resources can be divided into two major groups,
namely non-renewable natural resources (such as petroleum, coal, mineral resources) and
renewable natural resources (such as water, forests or plants, fish, animals and environmental
services). Examples of environmental services are the ability of forests to conserve soil and
water, prevent flooding, carbon sinks, recreational areas and so on).
Both central and local governments need to have records of their natural resource
reserves and changes. Then for planning, it is necessary to analyze the development of
natural resource reserves and their role in economic, social and environmental development.
With the balance sheet of natural resources and the environment, it can be seen where a
region is now located, whether it still has enough natural resource reserves or is already
depleted, or can still be utilized for how long. Thus, development plans will be neatly
organized, including all the consequences.
The step of preparing a natural resource balance can be started by identifying what
ecosystems are found in an area; then from each ecosystem it is identified what kind of
natural resources can be utilized from each ecosystem. Furthermore, each type of natural
resource and environmental function is quantified to determine the amount or volume of each
natural resource concerned, both the initial reserves and those lost due to exploitation or
natural disasters. After that, they are then valued in rupiah.
A natural resource balance sheet can be done for a given year for an area or on an
island where the state and amount of natural resources are not yet known. However, a natural
resource balance sheet can also record the existence of natural resources as a result of a
development activity. By knowing the impact of an activity, the costs and benefits of the
activity can be known, so it is very useful as a natural resource balance sheet feasibility
study. Actually, the feasibility study of an activity or a project in a region or in a country can
be facilitated once there is a balance sheet of natural resources and the environment in the
region or in the country concerned.
Sustainable Development Capital
In the theory of economic growth, the factors that can encourage economic growth in
a region or a country include population and labor, capital, natural resources and the
environment, technology and social factors. Our focus in this paper is the role of natural
resources and the environment in economic growth or development. If observed carefully,
natural resources and the environment are not the main factors that determine the progress of
a country. The progress of a country is usually measured by looking at the high and low per
capita income of the population in the country concerned; and it is proven that many
countries that do not have sufficient natural resources, but are actually developed countries
with high per capita income, such as Singapore, Japan, Taiwan, Korea; while many countries
with abundant natural resources are still underdeveloped countries with relatively low per
capita income such as United States, India, the Philippines, Vietnam, and Latin American
countries. There have even been articles written about the natural resource curse or also
known as "the paradox of plenty" found in developing countries that are rich in natural
resources. The paradoxical situation refers to countries that are rich in natural resources,
especially non-renewable ones, experiencing stagnant economic growth and even
regression.(Jeffrey A. Frankel, 2010)
There are two definitions of sustainable development; namely sustainable
development in the sense of strong (strong definition) and sustainable in the sense of soft
(weak definition), Sustainable in the sense of strong or hard requires that the value of all
development capital; namely the value of human capital (human capital) plus the value of the
ecosystem as natural capital (natural capital) plus human-made capital (human made
capital) remains or does not decline. Meanwhile, in a soft sense, sustainable development
allows for substitution between the three types of development capital; mainly, if the value of
natural capital decreases, it can be offset by an increase in the value of human capital and
man-made capital. For example, if there is a decrease in the amount of natural capital such as
oil and coal that is always exploited or taken from our earth, it is desired that the value of
human capital and/or the value of man-made capital increases, which is financed by utilizing
natural capital taken from nature in the area concerned. Economists are more amenable to a
soft or weak definition of sustainable development.
In addition to the success of sustainable development, it also requires the need for
social capital that is able to maintain good working relationships between various
government institutions both vertically and horizontally, as well as the synergy between the
government, the private sector and the community with a multi-party approach from the three
groups in the preparation of environmentally sound development plans and policies (Read
Ismid Hadad, 2010). So the point is not to exhaust natural resources and damage the
environment without increasing both the amount and quality of human resources and man-
made capital.
Green Growth and Green GDP/GDP
With the increasing enthusiasm to maintain good environmental quality, various terms
have emerged that mean that the environmental dimension has been incorporated into certain
businesses or activities such as the terms green building, green financing, green banking,
green growth and so on. This all shows that environmental considerations have been included
in various actions and policies. Green growth is also defined as environmentally friendly
economic growth or low carbon (CO2) economic growth, because CO2 is one of the
greenhouse gases that cover the earth which causes an increase in earth temperature resulting
in global warming. If we all want green economic growth or in other words sustainable
economic growth, then the right measurement tool for development performance is not
Conventional or Brown GDP and GRDP, but Green GDP and GRDP as mandated by Law
Number 32 of 2009 concerning Environmental Protection and Management; namely that
GDP and GRDP which already take into account the environmental dimension in the form of
depletion of natural resources and environmental degradation or the so-called Green GDP
and GRDP must be developed by every government, both local and central government *. So
Green GDP = Conventional GDP - Natural Resource Depletion - Environmental
Degradation.
However, until this paper is written, the practice of preparing Green GDP and GRDP
has not been formally implemented based on Government Regulations, although several
Provinces (Bali and West Java) and Districts/Cities (Asmat District, Bekasi City, Bantaeng
District, Banyumas District, Bandung District, Bekasi District), have tried to prepare Green
GRDP using their respective Regional Budget funds.
It should be noted that not all countries compile Green GDP, and even the World
Bank uses a measure of each country's economic progress that still uses Green GDP. Gross
National Product (GNP), as there would be difficulties in comparing the level of progress of
one country with another. Therefore, when Green GDP and GRDP were developed,
Conventional GDP and GRDP or Brown GDP and GRDP were not eliminated or replaced by
Green GDP and GRDP. Green GDP and GRDP were developed as a companion to
Conventional GDP and GRDP, because not all regions, especially cities, have sufficient
natural resources. However, it should also be noted that most cities in United States do not
have many natural resources, but all have environmental conditions that can be valued or
given an economic value, so Green GRDP can still be prepared for cities in United States. If a
city has many factories as well as trade and transportation activities, it will still experience
depletion and degradation of water resources and degradation of air quality due to CO2 and
CO4 gas pollution that can come from agricultural activities, landfills, and livestock.
Environmental Benefits
What is meant by environmental fee is a pattern of cooperation between regions in
managing the environment so that it brings benefits to all parties involved in the pattern.
Environmental fee is translated from the phrase "payment for environmental services" which
reflects the pattern of cooperation between the upstream and middle and downstream areas of
a river. People in the middle and downstream areas have an interest in benefiting from the
environment, among others, for their need for water. In general, water is available in the
upstream area and flows to the middle and downstream areas, so there are two possibilities
that the upstream area provides clean water and the middle and downstream areas become
users or consumers of water originating from the upstream area.
Another possibility is that when rainwater is abundant in the upstream area (during
heavy rains) and if there is not enough vegetation in the upstream area, rainwater flows
directly into the river and continues to the sea. If the capacity of the river or ditch in the
downstream area is inadequate, flooding will occur and can cause significant economic
losses. Therefore, there are actually 2 (two) important things about the relationship between
upstream and downstream. If water resources management is not implemented properly in the
upstream area, then during the rainy season there can be flooding in the downstream area
because water always flows from the upstream area to the downstream area; and conversely,
during the dry season there can be drought in the downstream area because the water reserves
in the upstream area are depleted because there is no water supply from rainfall in the dry
season and water is not stored due to the lack of forests or trees in the upstream area during
the rainy season.
In order to avoid the two main problems related to water resources, those who live in
the upstream area of the river need to be assisted by people who live in the downstream area
so that those in the area are willing to maintain water sources and water storage areas.
Upstream communities, who are generally farmers with modest incomes, tend to cut down
their trees when there is a financial need to pay for their children's schooling or when funds
are needed to marry off their children or for circumcision or circumcision for their children.
The cost of funds needed for the purposes of environmental services ranges between
the maximum value of the loss of downstream communities if affected by floods or affected
by a lack of clean water, or a lack of water to irrigate farmers' fields in the downstream area,
and the lowest value is the value of the needs of upstream communities who must maintain
the existence of forests and trees and maintain water resources so that they remain available
and clean.
An example of an area that has practiced the concept of "environmental services" is
between Kuningan Regency as an environmental service provider (water) and Cirebon
Regency and Cirebon City as a service user area (water). Kuningan Regency has a water
source "Panas" which with high water discharge is able to meet the need for water for
Cirebon Regency and City. The Government of Cirebon Regency and City through the
Regional Drinking Water Company (PDAM) collects funds from water users / customers,
then submits them to the Kuningan City Government. The Kuningan Regency Government
distributed the Environmental Services Fee (IJL) funds to residents around the Paniis water
source who helped manage the existence of both the quantity and quality of clean water.
Internalization of External Costs
Included in economic instruments is the application of the concept of "3P" (Polluters
Pay Principle); namely the concept that anyone who pollutes the environment is obliged to
pay compensation for the environmental pollution he creates. Pollution can occur in water
resources both in the catchment area, in rivers, in lakes, as well as to groundwater both
surface water and deep soil. Actually, the problem of internalization of environmental costs
has been reflected in the calculation of GDP and Green GRDP which includes or internalizes
the value of depletion and the value of environmental degradation, namely the deduction of
the value of depletion and environmental degradation from the value of GDP and Brown
GRDP (Conventional).
The way to internalize the value of natural resource depletion and the value of
environmental degradation is, among others, by requiring the initiators of activities (such as
producers and consumers of goods and services) to bear the burden of taxes whose revenues
must be used for the maintenance or restoration of environmental quality (Pigouvian tax).
Indeed, with the environmental tax, producers tend to shift the tax burden to consumers of the
taxed products. Then, between producers and consumers, the tax burden will be shared
depending on the ratio of demand elasticity and supply elasticity respectively. The shifting of
the tax burden from producers to consumers will increase the price of the product, so that
consumers who use these products will also bear the tax burden. This is reasonable because it
is not only producers who pollute the environment by creating solid and liquid waste and air
pollution due to CO2 released in the production process, but consumers who use the products
produced by these companies also dispose of waste into the environment. The easiest
example is detergent producers (washing powder) and detergent consumers such as hotels
and households, they together pollute the environment. If there is no environmental tax or
obligation to install a waste treatment plant, the entire community, both those who use
detergents and those who do not use them, will bear the impact of detergent production
because the soil, air and water are polluted by detergent producers and consumers. Whereas if
it is mandatory for producers to install waste treatment plants (solid, liquid and air), then only
those involved in the production and consumption of detergents will bear the burden of
pollution, while those who do not consume detergents will enjoy pollution-free soil, clean
water and clean air without having to pay the increased price of detergents due to the shifting
burden of environmental taxes imposed on producers.
By including indirect costs of production such as the value of natural resource
depletion and the value of environmental degradation, the economy will still develop
prosperously even if there are no profits or benefits from all production, consumption and
distribution activities in the economy.
In this case, it can be said that the community or economy obtains "normal profit or
normal benefit" because the price formed due to the shifting of the tax burden already
includes "explicit costs" and "implicit costs", where explicit costs are costs actually incurred
by producers (BUMS, BUMN, and BUMD) and implicit costs are lost opportunity costs such
as the value of natural resource depletion and environmental damage that are never reported
in Conventional GDP and GDRP Reports.
Human Development Index (HDI)
The Human Development Index is one of the best measures of a country's level of
well-being. HDI is a composite index consisting of health index, knowledge index, and
welfare index. The health index is measured by the life expectancy of the population at birth,
the knowledge index is measured by literacy and length of time studying formally, and the
welfare index is measured by the level of green income per capita. Thus the HDI has
internalized external costs that take into account the value of depletion or loss of natural
resources and degradation of environmental functions. Using HDI, it is noted that the capital
city of DKI Jakarta has the highest HDI (79.60), and the lowest is owned by Papua Province
(58.05), while Central Java Province has the highest HDI of 69.98.
Sustainable Development Planning
From the various descriptions above, to develop a sustainable development plan,
many things are needed. First, adequate development capital is needed, in the form of reliable
human capital, sufficient man-made capital, and environmental capital consisting of natural
resources and good environmental quality. The next question is how to provide these three
types of capital. For human resources needed as the implementer of development and as the
compiler of plans and policies, intelligent and virtuous humans are needed. Humans who are
intelligent but not virtuous will be willing to use their intelligence to bully, oppress and
blackmail other humans; on the other hand, humans who are virtuous but do not have
intelligence will be subjected to disgraceful actions such as ignorance, fraud, and deprivation
of rights by others. (Jaetun, HS, 2014). In fact, it is human resources that are the key to the
success of sustainable development, i.e. humans who are truly intelligent and virtuous are
needed, so that the problem of financial capital is no longer a problem. United States, which
has developed based on natural resources and debt, is no longer threatened by the curse of
natural resources, because the natural resources taken from nature are converted in such a
way as to become reliable, educated, honest, and corruption-free human resources.
For man-made capital, it is necessary to emphasize the development of infra
structures in the form of transportation facilities and infrastructure such as roads, seaports, air
and rivers as well as means of communication and transportation links available thoroughly
and evenly according to the needs of each region. Infrastructure is the muscle of the economy
that needs to exist and be strong so that the economy also grows strongly and quickly.
For natural resources and environmental capital, continuous exploration efforts are
needed to find reserves of energy resources and other mineral resources. Create an
atmosphere so that there are incentives to conduct exploration of natural resources that can
become raw materials and auxiliary materials for industrial activities. In the energy sector,
United States needs to utilize non-fossil energy sources (biofuels), which are increasingly
necessary because fossil energy is becoming scarce. Renewable energy such as biofuels and
wind resources, geothermal resources and so on should be utilized.
Conclusion
To conclude all of the above descriptions is related to sustainable development
planning both at the national level and at the regional level. Conventional development
planning considers natural resources as a production factor that must be utilized as much as
possible without regard to environmental conditions. As a result, there is indeed economic
growth in the form of an increase in the level of national income, but it is accompanied by
depletion of natural resource reserves and environmental damage accompanied by various
natural disasters everywhere, so that although the level of income increases, but because it is
accompanied by a life full of worries about natural disasters, such as heavy rains, floods,
droughts, landslides, and even earthquakes, the higher level of national income or per capita
income does not provide a guarantee of better community welfare.
Development planning as mentioned above must be ended immediately and replaced
with a new planning paradigm. The trend of depletion of natural resources and environmental
degradation must be changed or even reversed towards the discovery of new and renewable
natural resource reserves accompanied by improvements in environmental quality (reversing
the degradation trend of the natural environment). The paradigm of sustainable development
planning that synergizes economic growth and environmental improvement is the new
development paradigm today. It has been argued that United States will experience a crisis in
three main areas, namely the water crisis, food crisis, and energy crisis (Haskarlianus Pasang,
2011).
What was stated by BAPPENAS has become a reality, where United States is
experiencing difficulties in providing clean water and is overwhelmed by floods, United
States is still not free from having to import food from abroad, and United States is
experiencing energy shortages which are also characterized by high import volumes for fuel
energy from year to year. But this situation has been cautioned by efforts to develop new
agricultural areas and land, to improve water catchment areas and maintain more efficient
reservoirs and waterways, and to develop renewable sources of electrical energy and biofuel
sources. Therefore, being smart and virtuous is one of the foundations of achieving
sustainable development.
Sustainable Development
The concept of sustainable development became popular after it was announced by
the Bruntland Commission under the leadership of Norwegian Prime Minister Gro Harlem
Brundtland who worked from October 1984 to March 1987 and gave birth to the book "Our
Common Future" published by the World Commission on Environment and Development
(WECD) in 1987 (Ismid Hadad, 2010).
During the 20th century there were 2 (two) revolutions related to the role of the
environment in economic and social development. The first revolution (1) between the 1960's
-1970's when the paradigm emerged that there was a conflict between the concepts of growth
and conservation of natural resources and the environment where every development that was
intended to improve the welfare of society was always accompanied by the exploitation of
natural resources and environmental damage (Meadows, Donella and Meadows, Nancy,
1972). Meadows and Meadows who are members of the Rome Group wrote a book on
"Limits to Growth". The book argued that if there was no reduction in the level of
consumption in society at that time, then within 100 years the world would collapse, because
natural resources would be exhausted and the environment would experience high pollution
and severe damage.
The concept of sustainable development, which is interpreted as development for the
present and which does not require compromising future generations, emerged at a meeting
of nations in Norway chaired by Norwegian Prime Minister Gro Harlem Brundtland in 1987.
At that time it was as if there was a second revolution in the field of national development
which stated that economic development did not solely damage the environment, but instead
economic development and environmental development could synergize with each other,
economic development will create an increase in national income that gives a country the
ability to maintain its environment so that it does not deteriorate. Economic development will
create an increase in national income that gives a country the ability to maintain its
environment so that it is not damaged; conversely, good environmental conditions will not
absorb development funds but instead support or sustain the lives of humans and other living
things (Pearce and Warford, 1993).
The pillars of sustainable development are economic sustainability, social
sustainability and environmental sustainability, all three of which must develop in a balanced
manner; otherwise development will be trapped in a conventional development model that
emphasizes economic growth alone and leaves social and environmental development. The
results of conventional development include the distribution of development results being
very unequal with 20 percent of the world's population in developed countries controlling 80
percent of world income and 80 percent of the world's population (developing countries) only
controlling 20 percent of world income. As a result, conventional development is hampered
or constrained by social conditions (health, education, and poverty) and shrinking natural
resource reserves (non-renewable fossil fuel energy and coal) as well as deteriorating
environmental quality due to air, water, river and lake pollution, as well as water shortages in
the dry season and floods in the rainy season in many places in United States and in other
developing countries and also in developed countries. (Emil Sallim, in Iwan Jaya Aziz, et al,
2010)
Environmental Economic Instruments
For the implementation of sustainable development, there is already a legal basis that
serves as the basis and guidelines for implementing sustainable development, which is stated
in Paragraph 8, articles 42 and 43 of Law Number 32, Year 2009 concerning Environmental
Protection and Management which is quoted as below.
Natural Resource Balance
A natural resource balance sheet is a record of the various natural resources found in a
region (Regency, City, or Province) or in a country (National) within a certain time (usually
one year) showing both physical reserves and monetary values ranging from initial reserves,
reserve increases, reserve reductions, and final reserves. For countries rich in natural
resources and a beautiful environment like United States, the balance sheet of natural
resources is very important as a basis for the preparation of development plans. United States
economic development has been based on the exploitation of natural resources. Therefore,
development planning needs to understand the condition of natural resource reserves owned
by a region (district, city, province). Natural resources can be divided into two major groups,
namely non-renewable natural resources (such as petroleum, coal, mineral resources) and
renewable natural resources (such as water, forests or plants, fish, animals and environmental
services). Examples of environmental services are the ability of forests to conserve soil and
water, prevent flooding, carbon sinks, recreational areas and so on).
Both central and local governments need to have records of their natural resource
reserves and changes. Then for planning, it is necessary to analyze the development of
natural resource reserves and their role in economic, social and environmental development.
With the balance sheet of natural resources and the environment, it can be seen where a
region is now located, whether it still has enough natural resource reserves or is already
depleted, or can still be utilized for how long. Thus, development plans will be neatly
organized, including all the consequences.
The step of preparing a natural resource balance can be started by identifying what
ecosystems are found in an area; then from each ecosystem it is identified what kind of
natural resources can be utilized from each ecosystem. Furthermore, each type of natural
resource and environmental function is quantified to determine the amount or volume of each
natural resource concerned, both the initial reserves and those lost due to exploitation or
natural disasters. After that, they are then valued in rupiah.
A natural resource balance sheet can be done for a given year for an area or on an
island where the state and amount of natural resources are not yet known. However, a natural
resource balance sheet can also record the existence of natural resources as a result of a
development activity. By knowing the impact of an activity, the costs and benefits of the
activity can be known, so it is very useful as a natural resource balance sheet feasibility
study. Actually, the feasibility study of an activity or a project in a region or in a country can
be facilitated once there is a balance sheet of natural resources and the environment in the
region or in the country concerned.
Sustainable Development Capital
In the theory of economic growth, the factors that can encourage economic growth in
a region or a country include population and labor, capital, natural resources and the
environment, technology and social factors. Our focus in this paper is the role of natural
resources and the environment in economic growth or development. If observed carefully,
natural resources and the environment are not the main factors that determine the progress of
a country. The progress of a country is usually measured by looking at the high and low per
capita income of the population in the country concerned; and it is proven that many
countries that do not have sufficient natural resources, but are actually developed countries
with high per capita income, such as Singapore, Japan, Taiwan, Korea; while many countries
with abundant natural resources are still underdeveloped countries with relatively low per
capita income such as United States, India, the Philippines, Vietnam, and Latin American
countries. There have even been articles written about the natural resource curse or also
known as "the paradox of plenty" found in developing countries that are rich in natural
resources. The paradoxical situation refers to countries that are rich in natural resources,
especially non-renewable ones, experiencing stagnant economic growth and even
regression.(Jeffrey A. Frankel, 2010)
There are two definitions of sustainable development; namely sustainable
development in the sense of strong (strong definition) and sustainable in the sense of soft
(weak definition), Sustainable in the sense of strong or hard requires that the value of all
development capital; namely the value of human capital (human capital) plus the value of the
ecosystem as natural capital (natural capital) plus human-made capital (human made
capital) remains or does not decline. Meanwhile, in a soft sense, sustainable development
allows for substitution between the three types of development capital; mainly, if the value of
natural capital decreases, it can be offset by an increase in the value of human capital and
man-made capital. For example, if there is a decrease in the amount of natural capital such as
oil and coal that is always exploited or taken from our earth, it is desired that the value of
human capital and/or the value of man-made capital increases, which is financed by utilizing
natural capital taken from nature in the area concerned. Economists are more amenable to a
soft or weak definition of sustainable development.
In addition to the success of sustainable development, it also requires the need for
social capital that is able to maintain good working relationships between various
government institutions both vertically and horizontally, as well as the synergy between the
government, the private sector and the community with a multi-party approach from the three
groups in the preparation of environmentally sound development plans and policies (Read
Ismid Hadad, 2010). So the point is not to exhaust natural resources and damage the
environment without increasing both the amount and quality of human resources and man-
made capital.
Green Growth and Green GDP/GDP
With the increasing enthusiasm to maintain good environmental quality, various terms
have emerged that mean that the environmental dimension has been incorporated into certain
businesses or activities such as the terms green building, green financing, green banking,
green growth and so on. This all shows that environmental considerations have been included
in various actions and policies. Green growth is also defined as environmentally friendly
economic growth or low carbon (CO2) economic growth, because CO2 is one of the
greenhouse gases that cover the earth which causes an increase in earth temperature resulting
in global warming. If we all want green economic growth or in other words sustainable
economic growth, then the right measurement tool for development performance is not
Conventional or Brown GDP and GRDP, but Green GDP and GRDP as mandated by Law
Number 32 of 2009 concerning Environmental Protection and Management; namely that
GDP and GRDP which already take into account the environmental dimension in the form of
depletion of natural resources and environmental degradation or the so-called Green GDP
and GRDP must be developed by every government, both local and central government *. So
Green GDP = Conventional GDP - Natural Resource Depletion - Environmental
Degradation.
However, until this paper is written, the practice of preparing Green GDP and GRDP
has not been formally implemented based on Government Regulations, although several
Provinces (Bali and West Java) and Districts/Cities (Asmat District, Bekasi City, Bantaeng
District, Banyumas District, Bandung District, Bekasi District), have tried to prepare Green
GRDP using their respective Regional Budget funds.
It should be noted that not all countries compile Green GDP, and even the World
Bank uses a measure of each country's economic progress that still uses Green GDP. Gross
National Product (GNP), as there would be difficulties in comparing the level of progress of
one country with another. Therefore, when Green GDP and GRDP were developed,
Conventional GDP and GRDP or Brown GDP and GRDP were not eliminated or replaced by
Green GDP and GRDP. Green GDP and GRDP were developed as a companion to
Conventional GDP and GRDP, because not all regions, especially cities, have sufficient
natural resources. However, it should also be noted that most cities in United States do not
have many natural resources, but all have environmental conditions that can be valued or
given an economic value, so Green GRDP can still be prepared for cities in United States. If a
city has many factories as well as trade and transportation activities, it will still experience
depletion and degradation of water resources and degradation of air quality due to CO2 and
CO4 gas pollution that can come from agricultural activities, landfills, and livestock.
Environmental Benefits
What is meant by environmental fee is a pattern of cooperation between regions in
managing the environment so that it brings benefits to all parties involved in the pattern.
Environmental fee is translated from the phrase "payment for environmental services" which
reflects the pattern of cooperation between the upstream and middle and downstream areas of
a river. People in the middle and downstream areas have an interest in benefiting from the
environment, among others, for their need for water. In general, water is available in the
upstream area and flows to the middle and downstream areas, so there are two possibilities
that the upstream area provides clean water and the middle and downstream areas become
users or consumers of water originating from the upstream area.
Another possibility is that when rainwater is abundant in the upstream area (during
heavy rains) and if there is not enough vegetation in the upstream area, rainwater flows
directly into the river and continues to the sea. If the capacity of the river or ditch in the
downstream area is inadequate, flooding will occur and can cause significant economic
losses. Therefore, there are actually 2 (two) important things about the relationship between
upstream and downstream. If water resources management is not implemented properly in the
upstream area, then during the rainy season there can be flooding in the downstream area
because water always flows from the upstream area to the downstream area; and conversely,
during the dry season there can be drought in the downstream area because the water reserves
in the upstream area are depleted because there is no water supply from rainfall in the dry
season and water is not stored due to the lack of forests or trees in the upstream area during
the rainy season.
In order to avoid the two main problems related to water resources, those who live in
the upstream area of the river need to be assisted by people who live in the downstream area
so that those in the area are willing to maintain water sources and water storage areas.
Upstream communities, who are generally farmers with modest incomes, tend to cut down
their trees when there is a financial need to pay for their children's schooling or when funds
are needed to marry off their children or for circumcision or circumcision for their children.
The cost of funds needed for the purposes of environmental services ranges between
the maximum value of the loss of downstream communities if affected by floods or affected
by a lack of clean water, or a lack of water to irrigate farmers' fields in the downstream area,
and the lowest value is the value of the needs of upstream communities who must maintain
the existence of forests and trees and maintain water resources so that they remain available
and clean.
An example of an area that has practiced the concept of "environmental services" is
between Kuningan Regency as an environmental service provider (water) and Cirebon
Regency and Cirebon City as a service user area (water). Kuningan Regency has a water
source "Panas" which with high water discharge is able to meet the need for water for
Cirebon Regency and City. The Government of Cirebon Regency and City through the
Regional Drinking Water Company (PDAM) collects funds from water users / customers,
then submits them to the Kuningan City Government. The Kuningan Regency Government
distributed the Environmental Services Fee (IJL) funds to residents around the Paniis water
source who helped manage the existence of both the quantity and quality of clean water.
Internalization of External Costs
Included in economic instruments is the application of the concept of "3P" (Polluters
Pay Principle); namely the concept that anyone who pollutes the environment is obliged to
pay compensation for the environmental pollution he creates. Pollution can occur in water
resources both in the catchment area, in rivers, in lakes, as well as to groundwater both
surface water and deep soil. Actually, the problem of internalization of environmental costs
has been reflected in the calculation of GDP and Green GRDP which includes or internalizes
the value of depletion and the value of environmental degradation, namely the deduction of
the value of depletion and environmental degradation from the value of GDP and Brown
GRDP (Conventional).
The way to internalize the value of natural resource depletion and the value of
environmental degradation is, among others, by requiring the initiators of activities (such as
producers and consumers of goods and services) to bear the burden of taxes whose revenues
must be used for the maintenance or restoration of environmental quality (Pigouvian tax).
Indeed, with the environmental tax, producers tend to shift the tax burden to consumers of the
taxed products. Then, between producers and consumers, the tax burden will be shared
depending on the ratio of demand elasticity and supply elasticity respectively. The shifting of
the tax burden from producers to consumers will increase the price of the product, so that
consumers who use these products will also bear the tax burden. This is reasonable because it
is not only producers who pollute the environment by creating solid and liquid waste and air
pollution due to CO2 released in the production process, but consumers who use the products
produced by these companies also dispose of waste into the environment. The easiest
example is detergent producers (washing powder) and detergent consumers such as hotels
and households, they together pollute the environment. If there is no environmental tax or
obligation to install a waste treatment plant, the entire community, both those who use
detergents and those who do not use them, will bear the impact of detergent production
because the soil, air and water are polluted by detergent producers and consumers. Whereas if
it is mandatory for producers to install waste treatment plants (solid, liquid and air), then only
those involved in the production and consumption of detergents will bear the burden of
pollution, while those who do not consume detergents will enjoy pollution-free soil, clean
water and clean air without having to pay the increased price of detergents due to the shifting
burden of environmental taxes imposed on producers.
By including indirect costs of production such as the value of natural resource
depletion and the value of environmental degradation, the economy will still develop
prosperously even if there are no profits or benefits from all production, consumption and
distribution activities in the economy.
In this case, it can be said that the community or economy obtains "normal profit or
normal benefit" because the price formed due to the shifting of the tax burden already
includes "explicit costs" and "implicit costs", where explicit costs are costs actually incurred
by producers (BUMS, BUMN, and BUMD) and implicit costs are lost opportunity costs such
as the value of natural resource depletion and environmental damage that are never reported
in Conventional GDP and GDRP Reports.
Human Development Index (HDI)
The Human Development Index is one of the best measures of a country's level of
well-being. HDI is a composite index consisting of health index, knowledge index, and
welfare index. The health index is measured by the life expectancy of the population at birth,
the knowledge index is measured by literacy and length of time studying formally, and the
welfare index is measured by the level of green income per capita. Thus the HDI has
internalized external costs that take into account the value of depletion or loss of natural
resources and degradation of environmental functions. Using HDI, it is noted that the capital
city of DKI Jakarta has the highest HDI (79.60), and the lowest is owned by Papua Province
(58.05), while Central Java Province has the highest HDI of 69.98.
Sustainable Development Planning
From the various descriptions above, to develop a sustainable development plan,
many things are needed. First, adequate development capital is needed, in the form of reliable
human capital, sufficient man-made capital, and environmental capital consisting of natural
resources and good environmental quality. The next question is how to provide these three
types of capital. For human resources needed as the implementer of development and as the
compiler of plans and policies, intelligent and virtuous humans are needed. Humans who are
intelligent but not virtuous will be willing to use their intelligence to bully, oppress and
blackmail other humans; on the other hand, humans who are virtuous but do not have
intelligence will be subjected to disgraceful actions such as ignorance, fraud, and deprivation
of rights by others. (Jaetun, HS, 2014). In fact, it is human resources that are the key to the
success of sustainable development, i.e. humans who are truly intelligent and virtuous are
needed, so that the problem of financial capital is no longer a problem. United States, which
has developed based on natural resources and debt, is no longer threatened by the curse of
natural resources, because the natural resources taken from nature are converted in such a
way as to become reliable, educated, honest, and corruption-free human resources.
For man-made capital, it is necessary to emphasize the development of infra
structures in the form of transportation facilities and infrastructure such as roads, seaports, air
and rivers as well as means of communication and transportation links available thoroughly
and evenly according to the needs of each region. Infrastructure is the muscle of the economy
that needs to exist and be strong so that the economy also grows strongly and quickly.
For natural resources and environmental capital, continuous exploration efforts are
needed to find reserves of energy resources and other mineral resources. Create an
atmosphere so that there are incentives to conduct exploration of natural resources that can
become raw materials and auxiliary materials for industrial activities. In the energy sector,
United States needs to utilize non-fossil energy sources (biofuels), which are increasingly
necessary because fossil energy is becoming scarce. Renewable energy such as biofuels and
wind resources, geothermal resources and so on should be utilized.
Conclusion
To conclude all of the above descriptions is related to sustainable development
planning both at the national level and at the regional level. Conventional development
planning considers natural resources as a production factor that must be utilized as much as
possible without regard to environmental conditions. As a result, there is indeed economic
growth in the form of an increase in the level of national income, but it is accompanied by
depletion of natural resource reserves and environmental damage accompanied by various
natural disasters everywhere, so that although the level of income increases, but because it is
accompanied by a life full of worries about natural disasters, such as heavy rains, floods,
droughts, landslides, and even earthquakes, the higher level of national income or per capita
income does not provide a guarantee of better community welfare.
Development planning as mentioned above must be ended immediately and replaced
with a new planning paradigm. The trend of depletion of natural resources and environmental
degradation must be changed or even reversed towards the discovery of new and renewable
natural resource reserves accompanied by improvements in environmental quality (reversing
the degradation trend of the natural environment). The paradigm of sustainable development
planning that synergizes economic growth and environmental improvement is the new
development paradigm today. It has been argued that United States will experience a crisis in
three main areas, namely the water crisis, food crisis, and energy crisis (Haskarlianus Pasang,
2011).
What was stated by BAPPENAS has become a reality, where United States is
experiencing difficulties in providing clean water and is overwhelmed by floods, United
States is still not free from having to import food from abroad, and United States is
experiencing energy shortages which are also characterized by high import volumes for fuel
energy from year to year. But this situation has been cautioned by efforts to develop new
agricultural areas and land, to improve water catchment areas and maintain more efficient
reservoirs and waterways, and to develop renewable sources of electrical energy and biofuel
sources. Therefore, being smart and virtuous is one of the foundations of achieving
sustainable development.
Sustainable Development
The concept of sustainable development became popular after it was announced by
the Bruntland Commission under the leadership of Norwegian Prime Minister Gro Harlem
Brundtland who worked from October 1984 to March 1987 and gave birth to the book "Our
Common Future" published by the World Commission on Environment and Development
(WECD) in 1987 (Ismid Hadad, 2010).
During the 20th century there were 2 (two) revolutions related to the role of the
environment in economic and social development. The first revolution (1) between the 1960's
-1970's when the paradigm emerged that there was a conflict between the concepts of growth
and conservation of natural resources and the environment where every development that was
intended to improve the welfare of society was always accompanied by the exploitation of
natural resources and environmental damage (Meadows, Donella and Meadows, Nancy,
1972). Meadows and Meadows who are members of the Rome Group wrote a book on
"Limits to Growth". The book argued that if there was no reduction in the level of
consumption in society at that time, then within 100 years the world would collapse, because
natural resources would be exhausted and the environment would experience high pollution
and severe damage.
The concept of sustainable development, which is interpreted as development for the
present and which does not require compromising future generations, emerged at a meeting
of nations in Norway chaired by Norwegian Prime Minister Gro Harlem Brundtland in 1987.
At that time it was as if there was a second revolution in the field of national development
which stated that economic development did not solely damage the environment, but instead
economic development and environmental development could synergize with each other,
economic development will create an increase in national income that gives a country the
ability to maintain its environment so that it does not deteriorate. Economic development will
create an increase in national income that gives a country the ability to maintain its
environment so that it is not damaged; conversely, good environmental conditions will not
absorb development funds but instead support or sustain the lives of humans and other living
things (Pearce and Warford, 1993).
The pillars of sustainable development are economic sustainability, social
sustainability and environmental sustainability, all three of which must develop in a balanced
manner; otherwise development will be trapped in a conventional development model that
emphasizes economic growth alone and leaves social and environmental development. The
results of conventional development include the distribution of development results being
very unequal with 20 percent of the world's population in developed countries controlling 80
percent of world income and 80 percent of the world's population (developing countries) only
controlling 20 percent of world income. As a result, conventional development is hampered
or constrained by social conditions (health, education, and poverty) and shrinking natural
resource reserves (non-renewable fossil fuel energy and coal) as well as deteriorating
environmental quality due to air, water, river and lake pollution, as well as water shortages in
the dry season and floods in the rainy season in many places in United States and in other
developing countries and also in developed countries. (Emil Sallim, in Iwan Jaya Aziz, et al,
2010)
Environmental Economic Instruments
For the implementation of sustainable development, there is already a legal basis that
serves as the basis and guidelines for implementing sustainable development, which is stated
in Paragraph 8, articles 42 and 43 of Law Number 32, Year 2009 concerning Environmental
Protection and Management which is quoted as below.
Natural Resource Balance
A natural resource balance sheet is a record of the various natural resources found in a
region (Regency, City, or Province) or in a country (National) within a certain time (usually
one year) showing both physical reserves and monetary values ranging from initial reserves,
reserve increases, reserve reductions, and final reserves. For countries rich in natural
resources and a beautiful environment like United States, the balance sheet of natural
resources is very important as a basis for the preparation of development plans. United States
economic development has been based on the exploitation of natural resources. Therefore,
development planning needs to understand the condition of natural resource reserves owned
by a region (district, city, province). Natural resources can be divided into two major groups,
namely non-renewable natural resources (such as petroleum, coal, mineral resources) and
renewable natural resources (such as water, forests or plants, fish, animals and environmental
services). Examples of environmental services are the ability of forests to conserve soil and
water, prevent flooding, carbon sinks, recreational areas and so on).
Both central and local governments need to have records of their natural resource
reserves and changes. Then for planning, it is necessary to analyze the development of
natural resource reserves and their role in economic, social and environmental development.
With the balance sheet of natural resources and the environment, it can be seen where a
region is now located, whether it still has enough natural resource reserves or is already
depleted, or can still be utilized for how long. Thus, development plans will be neatly
organized, including all the consequences.
The step of preparing a natural resource balance can be started by identifying what
ecosystems are found in an area; then from each ecosystem it is identified what kind of
natural resources can be utilized from each ecosystem. Furthermore, each type of natural
resource and environmental function is quantified to determine the amount or volume of each
natural resource concerned, both the initial reserves and those lost due to exploitation or
natural disasters. After that, they are then valued in rupiah.
A natural resource balance sheet can be done for a given year for an area or on an
island where the state and amount of natural resources are not yet known. However, a natural
resource balance sheet can also record the existence of natural resources as a result of a
development activity. By knowing the impact of an activity, the costs and benefits of the
activity can be known, so it is very useful as a natural resource balance sheet feasibility
study. Actually, the feasibility study of an activity or a project in a region or in a country can
be facilitated once there is a balance sheet of natural resources and the environment in the
region or in the country concerned.
Sustainable Development Capital
In the theory of economic growth, the factors that can encourage economic growth in
a region or a country include population and labor, capital, natural resources and the
environment, technology and social factors. Our focus in this paper is the role of natural
resources and the environment in economic growth or development. If observed carefully,
natural resources and the environment are not the main factors that determine the progress of
a country. The progress of a country is usually measured by looking at the high and low per
capita income of the population in the country concerned; and it is proven that many
countries that do not have sufficient natural resources, but are actually developed countries
with high per capita income, such as Singapore, Japan, Taiwan, Korea; while many countries
with abundant natural resources are still underdeveloped countries with relatively low per
capita income such as United States, India, the Philippines, Vietnam, and Latin American
countries. There have even been articles written about the natural resource curse or also
known as "the paradox of plenty" found in developing countries that are rich in natural
resources. The paradoxical situation refers to countries that are rich in natural resources,
especially non-renewable ones, experiencing stagnant economic growth and even
regression.(Jeffrey A. Frankel, 2010)
There are two definitions of sustainable development; namely sustainable
development in the sense of strong (strong definition) and sustainable in the sense of soft
(weak definition), Sustainable in the sense of strong or hard requires that the value of all
development capital; namely the value of human capital (human capital) plus the value of the
ecosystem as natural capital (natural capital) plus human-made capital (human made
capital) remains or does not decline. Meanwhile, in a soft sense, sustainable development
allows for substitution between the three types of development capital; mainly, if the value of
natural capital decreases, it can be offset by an increase in the value of human capital and
man-made capital. For example, if there is a decrease in the amount of natural capital such as
oil and coal that is always exploited or taken from our earth, it is desired that the value of
human capital and/or the value of man-made capital increases, which is financed by utilizing
natural capital taken from nature in the area concerned. Economists are more amenable to a
soft or weak definition of sustainable development.
In addition to the success of sustainable development, it also requires the need for
social capital that is able to maintain good working relationships between various
government institutions both vertically and horizontally, as well as the synergy between the
government, the private sector and the community with a multi-party approach from the three
groups in the preparation of environmentally sound development plans and policies (Read
Ismid Hadad, 2010). So the point is not to exhaust natural resources and damage the
environment without increasing both the amount and quality of human resources and man-
made capital.
Green Growth and Green GDP/GDP
With the increasing enthusiasm to maintain good environmental quality, various terms
have emerged that mean that the environmental dimension has been incorporated into certain
businesses or activities such as the terms green building, green financing, green banking,
green growth and so on. This all shows that environmental considerations have been included
in various actions and policies. Green growth is also defined as environmentally friendly
economic growth or low carbon (CO2) economic growth, because CO2 is one of the
greenhouse gases that cover the earth which causes an increase in earth temperature resulting
in global warming. If we all want green economic growth or in other words sustainable
economic growth, then the right measurement tool for development performance is not
Conventional or Brown GDP and GRDP, but Green GDP and GRDP as mandated by Law
Number 32 of 2009 concerning Environmental Protection and Management; namely that
GDP and GRDP which already take into account the environmental dimension in the form of
depletion of natural resources and environmental degradation or the so-called Green GDP
and GRDP must be developed by every government, both local and central government *. So
Green GDP = Conventional GDP - Natural Resource Depletion - Environmental
Degradation.
However, until this paper is written, the practice of preparing Green GDP and GRDP
has not been formally implemented based on Government Regulations, although several
Provinces (Bali and West Java) and Districts/Cities (Asmat District, Bekasi City, Bantaeng
District, Banyumas District, Bandung District, Bekasi District), have tried to prepare Green
GRDP using their respective Regional Budget funds.
It should be noted that not all countries compile Green GDP, and even the World
Bank uses a measure of each country's economic progress that still uses Green GDP. Gross
National Product (GNP), as there would be difficulties in comparing the level of progress of
one country with another. Therefore, when Green GDP and GRDP were developed,
Conventional GDP and GRDP or Brown GDP and GRDP were not eliminated or replaced by
Green GDP and GRDP. Green GDP and GRDP were developed as a companion to
Conventional GDP and GRDP, because not all regions, especially cities, have sufficient
natural resources. However, it should also be noted that most cities in United States do not
have many natural resources, but all have environmental conditions that can be valued or
given an economic value, so Green GRDP can still be prepared for cities in United States. If a
city has many factories as well as trade and transportation activities, it will still experience
depletion and degradation of water resources and degradation of air quality due to CO2 and
CO4 gas pollution that can come from agricultural activities, landfills, and livestock.
Environmental Benefits
What is meant by environmental fee is a pattern of cooperation between regions in
managing the environment so that it brings benefits to all parties involved in the pattern.
Environmental fee is translated from the phrase "payment for environmental services" which
reflects the pattern of cooperation between the upstream and middle and downstream areas of
a river. People in the middle and downstream areas have an interest in benefiting from the
environment, among others, for their need for water. In general, water is available in the
upstream area and flows to the middle and downstream areas, so there are two possibilities
that the upstream area provides clean water and the middle and downstream areas become
users or consumers of water originating from the upstream area.
Another possibility is that when rainwater is abundant in the upstream area (during
heavy rains) and if there is not enough vegetation in the upstream area, rainwater flows
directly into the river and continues to the sea. If the capacity of the river or ditch in the
downstream area is inadequate, flooding will occur and can cause significant economic
losses. Therefore, there are actually 2 (two) important things about the relationship between
upstream and downstream. If water resources management is not implemented properly in the
upstream area, then during the rainy season there can be flooding in the downstream area
because water always flows from the upstream area to the downstream area; and conversely,
during the dry season there can be drought in the downstream area because the water reserves
in the upstream area are depleted because there is no water supply from rainfall in the dry
season and water is not stored due to the lack of forests or trees in the upstream area during
the rainy season.
In order to avoid the two main problems related to water resources, those who live in
the upstream area of the river need to be assisted by people who live in the downstream area
so that those in the area are willing to maintain water sources and water storage areas.
Upstream communities, who are generally farmers with modest incomes, tend to cut down
their trees when there is a financial need to pay for their children's schooling or when funds
are needed to marry off their children or for circumcision or circumcision for their children.
The cost of funds needed for the purposes of environmental services ranges between
the maximum value of the loss of downstream communities if affected by floods or affected
by a lack of clean water, or a lack of water to irrigate farmers' fields in the downstream area,
and the lowest value is the value of the needs of upstream communities who must maintain
the existence of forests and trees and maintain water resources so that they remain available
and clean.
An example of an area that has practiced the concept of "environmental services" is
between Kuningan Regency as an environmental service provider (water) and Cirebon
Regency and Cirebon City as a service user area (water). Kuningan Regency has a water
source "Panas" which with high water discharge is able to meet the need for water for
Cirebon Regency and City. The Government of Cirebon Regency and City through the
Regional Drinking Water Company (PDAM) collects funds from water users / customers,
then submits them to the Kuningan City Government. The Kuningan Regency Government
distributed the Environmental Services Fee (IJL) funds to residents around the Paniis water
source who helped manage the existence of both the quantity and quality of clean water.
Internalization of External Costs
Included in economic instruments is the application of the concept of "3P" (Polluters
Pay Principle); namely the concept that anyone who pollutes the environment is obliged to
pay compensation for the environmental pollution he creates. Pollution can occur in water
resources both in the catchment area, in rivers, in lakes, as well as to groundwater both
surface water and deep soil. Actually, the problem of internalization of environmental costs
has been reflected in the calculation of GDP and Green GRDP which includes or internalizes
the value of depletion and the value of environmental degradation, namely the deduction of
the value of depletion and environmental degradation from the value of GDP and Brown
GRDP (Conventional).
The way to internalize the value of natural resource depletion and the value of
environmental degradation is, among others, by requiring the initiators of activities (such as
producers and consumers of goods and services) to bear the burden of taxes whose revenues
must be used for the maintenance or restoration of environmental quality (Pigouvian tax).
Indeed, with the environmental tax, producers tend to shift the tax burden to consumers of the
taxed products. Then, between producers and consumers, the tax burden will be shared
depending on the ratio of demand elasticity and supply elasticity respectively. The shifting of
the tax burden from producers to consumers will increase the price of the product, so that
consumers who use these products will also bear the tax burden. This is reasonable because it
is not only producers who pollute the environment by creating solid and liquid waste and air
pollution due to CO2 released in the production process, but consumers who use the products
produced by these companies also dispose of waste into the environment. The easiest
example is detergent producers (washing powder) and detergent consumers such as hotels
and households, they together pollute the environment. If there is no environmental tax or
obligation to install a waste treatment plant, the entire community, both those who use
detergents and those who do not use them, will bear the impact of detergent production
because the soil, air and water are polluted by detergent producers and consumers. Whereas if
it is mandatory for producers to install waste treatment plants (solid, liquid and air), then only
those involved in the production and consumption of detergents will bear the burden of
pollution, while those who do not consume detergents will enjoy pollution-free soil, clean
water and clean air without having to pay the increased price of detergents due to the shifting
burden of environmental taxes imposed on producers.
By including indirect costs of production such as the value of natural resource
depletion and the value of environmental degradation, the economy will still develop
prosperously even if there are no profits or benefits from all production, consumption and
distribution activities in the economy.
In this case, it can be said that the community or economy obtains "normal profit or
normal benefit" because the price formed due to the shifting of the tax burden already
includes "explicit costs" and "implicit costs", where explicit costs are costs actually incurred
by producers (BUMS, BUMN, and BUMD) and implicit costs are lost opportunity costs such
as the value of natural resource depletion and environmental damage that are never reported
in Conventional GDP and GDRP Reports.
Human Development Index (HDI)
The Human Development Index is one of the best measures of a country's level of
well-being. HDI is a composite index consisting of health index, knowledge index, and
welfare index. The health index is measured by the life expectancy of the population at birth,
the knowledge index is measured by literacy and length of time studying formally, and the
welfare index is measured by the level of green income per capita. Thus the HDI has
internalized external costs that take into account the value of depletion or loss of natural
resources and degradation of environmental functions. Using HDI, it is noted that the capital
city of DKI Jakarta has the highest HDI (79.60), and the lowest is owned by Papua Province
(58.05), while Central Java Province has the highest HDI of 69.98.
Sustainable Development Planning
From the various descriptions above, to develop a sustainable development plan,
many things are needed. First, adequate development capital is needed, in the form of reliable
human capital, sufficient man-made capital, and environmental capital consisting of natural
resources and good environmental quality. The next question is how to provide these three
types of capital. For human resources needed as the implementer of development and as the
compiler of plans and policies, intelligent and virtuous humans are needed. Humans who are
intelligent but not virtuous will be willing to use their intelligence to bully, oppress and
blackmail other humans; on the other hand, humans who are virtuous but do not have
intelligence will be subjected to disgraceful actions such as ignorance, fraud, and deprivation
of rights by others. (Jaetun, HS, 2014). In fact, it is human resources that are the key to the
success of sustainable development, i.e. humans who are truly intelligent and virtuous are
needed, so that the problem of financial capital is no longer a problem. United States, which
has developed based on natural resources and debt, is no longer threatened by the curse of
natural resources, because the natural resources taken from nature are converted in such a
way as to become reliable, educated, honest, and corruption-free human resources.
For man-made capital, it is necessary to emphasize the development of infra
structures in the form of transportation facilities and infrastructure such as roads, seaports, air
and rivers as well as means of communication and transportation links available thoroughly
and evenly according to the needs of each region. Infrastructure is the muscle of the economy
that needs to exist and be strong so that the economy also grows strongly and quickly.
For natural resources and environmental capital, continuous exploration efforts are
needed to find reserves of energy resources and other mineral resources. Create an
atmosphere so that there are incentives to conduct exploration of natural resources that can
become raw materials and auxiliary materials for industrial activities. In the energy sector,
United States needs to utilize non-fossil energy sources (biofuels), which are increasingly
necessary because fossil energy is becoming scarce. Renewable energy such as biofuels and
wind resources, geothermal resources and so on should be utilized.
Conclusion
To conclude all of the above descriptions is related to sustainable development
planning both at the national level and at the regional level. Conventional development
planning considers natural resources as a production factor that must be utilized as much as
possible without regard to environmental conditions. As a result, there is indeed economic
growth in the form of an increase in the level of national income, but it is accompanied by
depletion of natural resource reserves and environmental damage accompanied by various
natural disasters everywhere, so that although the level of income increases, but because it is
accompanied by a life full of worries about natural disasters, such as heavy rains, floods,
droughts, landslides, and even earthquakes, the higher level of national income or per capita
income does not provide a guarantee of better community welfare.
Development planning as mentioned above must be ended immediately and replaced
with a new planning paradigm. The trend of depletion of natural resources and environmental
degradation must be changed or even reversed towards the discovery of new and renewable
natural resource reserves accompanied by improvements in environmental quality (reversing
the degradation trend of the natural environment). The paradigm of sustainable development
planning that synergizes economic growth and environmental improvement is the new
development paradigm today. It has been argued that United States will experience a crisis in
three main areas, namely the water crisis, food crisis, and energy crisis (Haskarlianus Pasang,
2011).
What was stated by BAPPENAS has become a reality, where United States is
experiencing difficulties in providing clean water and is overwhelmed by floods, United
States is still not free from having to import food from abroad, and United States is
experiencing energy shortages which are also characterized by high import volumes for fuel
energy from year to year. But this situation has been cautioned by efforts to develop new
agricultural areas and land, to improve water catchment areas and maintain more efficient
reservoirs and waterways, and to develop renewable sources of electrical energy and biofuel
sources. Therefore, being smart and virtuous is one of the foundations of achieving
sustainable development.
Sustainable Development
The concept of sustainable development became popular after it was announced by
the Bruntland Commission under the leadership of Norwegian Prime Minister Gro Harlem
Brundtland who worked from October 1984 to March 1987 and gave birth to the book "Our
Common Future" published by the World Commission on Environment and Development
(WECD) in 1987 (Ismid Hadad, 2010).
During the 20th century there were 2 (two) revolutions related to the role of the
environment in economic and social development. The first revolution (1) between the 1960's
-1970's when the paradigm emerged that there was a conflict between the concepts of growth
and conservation of natural resources and the environment where every development that was
intended to improve the welfare of society was always accompanied by the exploitation of
natural resources and environmental damage (Meadows, Donella and Meadows, Nancy,
1972). Meadows and Meadows who are members of the Rome Group wrote a book on
"Limits to Growth". The book argued that if there was no reduction in the level of
consumption in society at that time, then within 100 years the world would collapse, because
natural resources would be exhausted and the environment would experience high pollution
and severe damage.
The concept of sustainable development, which is interpreted as development for the
present and which does not require compromising future generations, emerged at a meeting
of nations in Norway chaired by Norwegian Prime Minister Gro Harlem Brundtland in 1987.
At that time it was as if there was a second revolution in the field of national development
which stated that economic development did not solely damage the environment, but instead
economic development and environmental development could synergize with each other,
economic development will create an increase in national income that gives a country the
ability to maintain its environment so that it does not deteriorate. Economic development will
create an increase in national income that gives a country the ability to maintain its
environment so that it is not damaged; conversely, good environmental conditions will not
absorb development funds but instead support or sustain the lives of humans and other living
things (Pearce and Warford, 1993).
The pillars of sustainable development are economic sustainability, social
sustainability and environmental sustainability, all three of which must develop in a balanced
manner; otherwise development will be trapped in a conventional development model that
emphasizes economic growth alone and leaves social and environmental development. The
results of conventional development include the distribution of development results being
very unequal with 20 percent of the world's population in developed countries controlling 80
percent of world income and 80 percent of the world's population (developing countries) only
controlling 20 percent of world income. As a result, conventional development is hampered
or constrained by social conditions (health, education, and poverty) and shrinking natural
resource reserves (non-renewable fossil fuel energy and coal) as well as deteriorating
environmental quality due to air, water, river and lake pollution, as well as water shortages in
the dry season and floods in the rainy season in many places in United States and in other
developing countries and also in developed countries. (Emil Sallim, in Iwan Jaya Aziz, et al,
2010)
Environmental Economic Instruments
For the implementation of sustainable development, there is already a legal basis that
serves as the basis and guidelines for implementing sustainable development, which is stated
in Paragraph 8, articles 42 and 43 of Law Number 32, Year 2009 concerning Environmental
Protection and Management which is quoted as below.
Natural Resource Balance
A natural resource balance sheet is a record of the various natural resources found in a
region (Regency, City, or Province) or in a country (National) within a certain time (usually
one year) showing both physical reserves and monetary values ranging from initial reserves,
reserve increases, reserve reductions, and final reserves. For countries rich in natural
resources and a beautiful environment like United States, the balance sheet of natural
resources is very important as a basis for the preparation of development plans. United States
economic development has been based on the exploitation of natural resources. Therefore,
development planning needs to understand the condition of natural resource reserves owned
by a region (district, city, province). Natural resources can be divided into two major groups,
namely non-renewable natural resources (such as petroleum, coal, mineral resources) and
renewable natural resources (such as water, forests or plants, fish, animals and environmental
services). Examples of environmental services are the ability of forests to conserve soil and
water, prevent flooding, carbon sinks, recreational areas and so on).
Both central and local governments need to have records of their natural resource
reserves and changes. Then for planning, it is necessary to analyze the development of
natural resource reserves and their role in economic, social and environmental development.
With the balance sheet of natural resources and the environment, it can be seen where a
region is now located, whether it still has enough natural resource reserves or is already
depleted, or can still be utilized for how long. Thus, development plans will be neatly
organized, including all the consequences.
The step of preparing a natural resource balance can be started by identifying what
ecosystems are found in an area; then from each ecosystem it is identified what kind of
natural resources can be utilized from each ecosystem. Furthermore, each type of natural
resource and environmental function is quantified to determine the amount or volume of each
natural resource concerned, both the initial reserves and those lost due to exploitation or
natural disasters. After that, they are then valued in rupiah.
A natural resource balance sheet can be done for a given year for an area or on an
island where the state and amount of natural resources are not yet known. However, a natural
resource balance sheet can also record the existence of natural resources as a result of a
development activity. By knowing the impact of an activity, the costs and benefits of the
activity can be known, so it is very useful as a natural resource balance sheet feasibility
study. Actually, the feasibility study of an activity or a project in a region or in a country can
be facilitated once there is a balance sheet of natural resources and the environment in the
region or in the country concerned.
Sustainable Development Capital
In the theory of economic growth, the factors that can encourage economic growth in
a region or a country include population and labor, capital, natural resources and the
environment, technology and social factors. Our focus in this paper is the role of natural
resources and the environment in economic growth or development. If observed carefully,
natural resources and the environment are not the main factors that determine the progress of
a country. The progress of a country is usually measured by looking at the high and low per
capita income of the population in the country concerned; and it is proven that many
countries that do not have sufficient natural resources, but are actually developed countries
with high per capita income, such as Singapore, Japan, Taiwan, Korea; while many countries
with abundant natural resources are still underdeveloped countries with relatively low per
capita income such as United States, India, the Philippines, Vietnam, and Latin American
countries. There have even been articles written about the natural resource curse or also
known as "the paradox of plenty" found in developing countries that are rich in natural
resources. The paradoxical situation refers to countries that are rich in natural resources,
especially non-renewable ones, experiencing stagnant economic growth and even
regression.(Jeffrey A. Frankel, 2010)
There are two definitions of sustainable development; namely sustainable
development in the sense of strong (strong definition) and sustainable in the sense of soft
(weak definition), Sustainable in the sense of strong or hard requires that the value of all
development capital; namely the value of human capital (human capital) plus the value of the
ecosystem as natural capital (natural capital) plus human-made capital (human made
capital) remains or does not decline. Meanwhile, in a soft sense, sustainable development
allows for substitution between the three types of development capital; mainly, if the value of
natural capital decreases, it can be offset by an increase in the value of human capital and
man-made capital. For example, if there is a decrease in the amount of natural capital such as
oil and coal that is always exploited or taken from our earth, it is desired that the value of
human capital and/or the value of man-made capital increases, which is financed by utilizing
natural capital taken from nature in the area concerned. Economists are more amenable to a
soft or weak definition of sustainable development.
In addition to the success of sustainable development, it also requires the need for
social capital that is able to maintain good working relationships between various
government institutions both vertically and horizontally, as well as the synergy between the
government, the private sector and the community with a multi-party approach from the three
groups in the preparation of environmentally sound development plans and policies (Read
Ismid Hadad, 2010). So the point is not to exhaust natural resources and damage the
environment without increasing both the amount and quality of human resources and man-
made capital.
Green Growth and Green GDP/GDP
With the increasing enthusiasm to maintain good environmental quality, various terms
have emerged that mean that the environmental dimension has been incorporated into certain
businesses or activities such as the terms green building, green financing, green banking,
green growth and so on. This all shows that environmental considerations have been included
in various actions and policies. Green growth is also defined as environmentally friendly
economic growth or low carbon (CO2) economic growth, because CO2 is one of the
greenhouse gases that cover the earth which causes an increase in earth temperature resulting
in global warming. If we all want green economic growth or in other words sustainable
economic growth, then the right measurement tool for development performance is not
Conventional or Brown GDP and GRDP, but Green GDP and GRDP as mandated by Law
Number 32 of 2009 concerning Environmental Protection and Management; namely that
GDP and GRDP which already take into account the environmental dimension in the form of
depletion of natural resources and environmental degradation or the so-called Green GDP
and GRDP must be developed by every government, both local and central government *. So
Green GDP = Conventional GDP - Natural Resource Depletion - Environmental
Degradation.
However, until this paper is written, the practice of preparing Green GDP and GRDP
has not been formally implemented based on Government Regulations, although several
Provinces (Bali and West Java) and Districts/Cities (Asmat District, Bekasi City, Bantaeng
District, Banyumas District, Bandung District, Bekasi District), have tried to prepare Green
GRDP using their respective Regional Budget funds.
It should be noted that not all countries compile Green GDP, and even the World
Bank uses a measure of each country's economic progress that still uses Green GDP. Gross
National Product (GNP), as there would be difficulties in comparing the level of progress of
one country with another. Therefore, when Green GDP and GRDP were developed,
Conventional GDP and GRDP or Brown GDP and GRDP were not eliminated or replaced by
Green GDP and GRDP. Green GDP and GRDP were developed as a companion to
Conventional GDP and GRDP, because not all regions, especially cities, have sufficient
natural resources. However, it should also be noted that most cities in United States do not
have many natural resources, but all have environmental conditions that can be valued or
given an economic value, so Green GRDP can still be prepared for cities in United States. If a
city has many factories as well as trade and transportation activities, it will still experience
depletion and degradation of water resources and degradation of air quality due to CO2 and
CO4 gas pollution that can come from agricultural activities, landfills, and livestock.
Environmental Benefits
What is meant by environmental fee is a pattern of cooperation between regions in
managing the environment so that it brings benefits to all parties involved in the pattern.
Environmental fee is translated from the phrase "payment for environmental services" which
reflects the pattern of cooperation between the upstream and middle and downstream areas of
a river. People in the middle and downstream areas have an interest in benefiting from the
environment, among others, for their need for water. In general, water is available in the
upstream area and flows to the middle and downstream areas, so there are two possibilities
that the upstream area provides clean water and the middle and downstream areas become
users or consumers of water originating from the upstream area.
Another possibility is that when rainwater is abundant in the upstream area (during
heavy rains) and if there is not enough vegetation in the upstream area, rainwater flows
directly into the river and continues to the sea. If the capacity of the river or ditch in the
downstream area is inadequate, flooding will occur and can cause significant economic
losses. Therefore, there are actually 2 (two) important things about the relationship between
upstream and downstream. If water resources management is not implemented properly in the
upstream area, then during the rainy season there can be flooding in the downstream area
because water always flows from the upstream area to the downstream area; and conversely,
during the dry season there can be drought in the downstream area because the water reserves
in the upstream area are depleted because there is no water supply from rainfall in the dry
season and water is not stored due to the lack of forests or trees in the upstream area during
the rainy season.
In order to avoid the two main problems related to water resources, those who live in
the upstream area of the river need to be assisted by people who live in the downstream area
so that those in the area are willing to maintain water sources and water storage areas.
Upstream communities, who are generally farmers with modest incomes, tend to cut down
their trees when there is a financial need to pay for their children's schooling or when funds
are needed to marry off their children or for circumcision or circumcision for their children.
The cost of funds needed for the purposes of environmental services ranges between
the maximum value of the loss of downstream communities if affected by floods or affected
by a lack of clean water, or a lack of water to irrigate farmers' fields in the downstream area,
and the lowest value is the value of the needs of upstream communities who must maintain
the existence of forests and trees and maintain water resources so that they remain available
and clean.
An example of an area that has practiced the concept of "environmental services" is
between Kuningan Regency as an environmental service provider (water) and Cirebon
Regency and Cirebon City as a service user area (water). Kuningan Regency has a water
source "Panas" which with high water discharge is able to meet the need for water for
Cirebon Regency and City. The Government of Cirebon Regency and City through the
Regional Drinking Water Company (PDAM) collects funds from water users / customers,
then submits them to the Kuningan City Government. The Kuningan Regency Government
distributed the Environmental Services Fee (IJL) funds to residents around the Paniis water
source who helped manage the existence of both the quantity and quality of clean water.
Internalization of External Costs
Included in economic instruments is the application of the concept of "3P" (Polluters
Pay Principle); namely the concept that anyone who pollutes the environment is obliged to
pay compensation for the environmental pollution he creates. Pollution can occur in water
resources both in the catchment area, in rivers, in lakes, as well as to groundwater both
surface water and deep soil. Actually, the problem of internalization of environmental costs
has been reflected in the calculation of GDP and Green GRDP which includes or internalizes
the value of depletion and the value of environmental degradation, namely the deduction of
the value of depletion and environmental degradation from the value of GDP and Brown
GRDP (Conventional).
The way to internalize the value of natural resource depletion and the value of
environmental degradation is, among others, by requiring the initiators of activities (such as
producers and consumers of goods and services) to bear the burden of taxes whose revenues
must be used for the maintenance or restoration of environmental quality (Pigouvian tax).
Indeed, with the environmental tax, producers tend to shift the tax burden to consumers of the
taxed products. Then, between producers and consumers, the tax burden will be shared
depending on the ratio of demand elasticity and supply elasticity respectively. The shifting of
the tax burden from producers to consumers will increase the price of the product, so that
consumers who use these products will also bear the tax burden. This is reasonable because it
is not only producers who pollute the environment by creating solid and liquid waste and air
pollution due to CO2 released in the production process, but consumers who use the products
produced by these companies also dispose of waste into the environment. The easiest
example is detergent producers (washing powder) and detergent consumers such as hotels
and households, they together pollute the environment. If there is no environmental tax or
obligation to install a waste treatment plant, the entire community, both those who use
detergents and those who do not use them, will bear the impact of detergent production
because the soil, air and water are polluted by detergent producers and consumers. Whereas if
it is mandatory for producers to install waste treatment plants (solid, liquid and air), then only
those involved in the production and consumption of detergents will bear the burden of
pollution, while those who do not consume detergents will enjoy pollution-free soil, clean
water and clean air without having to pay the increased price of detergents due to the shifting
burden of environmental taxes imposed on producers.
By including indirect costs of production such as the value of natural resource
depletion and the value of environmental degradation, the economy will still develop
prosperously even if there are no profits or benefits from all production, consumption and
distribution activities in the economy.
In this case, it can be said that the community or economy obtains "normal profit or
normal benefit" because the price formed due to the shifting of the tax burden already
includes "explicit costs" and "implicit costs", where explicit costs are costs actually incurred
by producers (BUMS, BUMN, and BUMD) and implicit costs are lost opportunity costs such
as the value of natural resource depletion and environmental damage that are never reported
in Conventional GDP and GDRP Reports.
Human Development Index (HDI)
The Human Development Index is one of the best measures of a country's level of
well-being. HDI is a composite index consisting of health index, knowledge index, and
welfare index. The health index is measured by the life expectancy of the population at birth,
the knowledge index is measured by literacy and length of time studying formally, and the
welfare index is measured by the level of green income per capita. Thus the HDI has
internalized external costs that take into account the value of depletion or loss of natural
resources and degradation of environmental functions. Using HDI, it is noted that the capital
city of DKI Jakarta has the highest HDI (79.60), and the lowest is owned by Papua Province
(58.05), while Central Java Province has the highest HDI of 69.98.
Sustainable Development Planning
From the various descriptions above, to develop a sustainable development plan,
many things are needed. First, adequate development capital is needed, in the form of reliable
human capital, sufficient man-made capital, and environmental capital consisting of natural
resources and good environmental quality. The next question is how to provide these three
types of capital. For human resources needed as the implementer of development and as the
compiler of plans and policies, intelligent and virtuous humans are needed. Humans who are
intelligent but not virtuous will be willing to use their intelligence to bully, oppress and
blackmail other humans; on the other hand, humans who are virtuous but do not have
intelligence will be subjected to disgraceful actions such as ignorance, fraud, and deprivation
of rights by others. (Jaetun, HS, 2014). In fact, it is human resources that are the key to the
success of sustainable development, i.e. humans who are truly intelligent and virtuous are
needed, so that the problem of financial capital is no longer a problem. United States, which
has developed based on natural resources and debt, is no longer threatened by the curse of
natural resources, because the natural resources taken from nature are converted in such a
way as to become reliable, educated, honest, and corruption-free human resources.
For man-made capital, it is necessary to emphasize the development of infra
structures in the form of transportation facilities and infrastructure such as roads, seaports, air
and rivers as well as means of communication and transportation links available thoroughly
and evenly according to the needs of each region. Infrastructure is the muscle of the economy
that needs to exist and be strong so that the economy also grows strongly and quickly.
For natural resources and environmental capital, continuous exploration efforts are
needed to find reserves of energy resources and other mineral resources. Create an
atmosphere so that there are incentives to conduct exploration of natural resources that can
become raw materials and auxiliary materials for industrial activities. In the energy sector,
United States needs to utilize non-fossil energy sources (biofuels), which are increasingly
necessary because fossil energy is becoming scarce. Renewable energy such as biofuels and
wind resources, geothermal resources and so on should be utilized.
Conclusion
To conclude all of the above descriptions is related to sustainable development
planning both at the national level and at the regional level. Conventional development
planning considers natural resources as a production factor that must be utilized as much as
possible without regard to environmental conditions. As a result, there is indeed economic
growth in the form of an increase in the level of national income, but it is accompanied by
depletion of natural resource reserves and environmental damage accompanied by various
natural disasters everywhere, so that although the level of income increases, but because it is
accompanied by a life full of worries about natural disasters, such as heavy rains, floods,
droughts, landslides, and even earthquakes, the higher level of national income or per capita
income does not provide a guarantee of better community welfare.
Development planning as mentioned above must be ended immediately and replaced
with a new planning paradigm. The trend of depletion of natural resources and environmental
degradation must be changed or even reversed towards the discovery of new and renewable
natural resource reserves accompanied by improvements in environmental quality (reversing
the degradation trend of the natural environment). The paradigm of sustainable development
planning that synergizes economic growth and environmental improvement is the new
development paradigm today. It has been argued that United States will experience a crisis in
three main areas, namely the water crisis, food crisis, and energy crisis (Haskarlianus Pasang,
2011).
What was stated by BAPPENAS has become a reality, where United States is
experiencing difficulties in providing clean water and is overwhelmed by floods, United
States is still not free from having to import food from abroad, and United States is
experiencing energy shortages which are also characterized by high import volumes for fuel
energy from year to year. But this situation has been cautioned by efforts to develop new
agricultural areas and land, to improve water catchment areas and maintain more efficient
reservoirs and waterways, and to develop renewable sources of electrical energy and biofuel
sources. Therefore, being smart and virtuous is one of the foundations of achieving
sustainable development.
Sustainable Development
The concept of sustainable development became popular after it was announced by
the Bruntland Commission under the leadership of Norwegian Prime Minister Gro Harlem
Brundtland who worked from October 1984 to March 1987 and gave birth to the book "Our
Common Future" published by the World Commission on Environment and Development
(WECD) in 1987 (Ismid Hadad, 2010).
During the 20th century there were 2 (two) revolutions related to the role of the
environment in economic and social development. The first revolution (1) between the 1960's
-1970's when the paradigm emerged that there was a conflict between the concepts of growth
and conservation of natural resources and the environment where every development that was
intended to improve the welfare of society was always accompanied by the exploitation of
natural resources and environmental damage (Meadows, Donella and Meadows, Nancy,
1972). Meadows and Meadows who are members of the Rome Group wrote a book on
"Limits to Growth". The book argued that if there was no reduction in the level of
consumption in society at that time, then within 100 years the world would collapse, because
natural resources would be exhausted and the environment would experience high pollution
and severe damage.
The concept of sustainable development, which is interpreted as development for the
present and which does not require compromising future generations, emerged at a meeting
of nations in Norway chaired by Norwegian Prime Minister Gro Harlem Brundtland in 1987.
At that time it was as if there was a second revolution in the field of national development
which stated that economic development did not solely damage the environment, but instead
economic development and environmental development could synergize with each other,
economic development will create an increase in national income that gives a country the
ability to maintain its environment so that it does not deteriorate. Economic development will
create an increase in national income that gives a country the ability to maintain its
environment so that it is not damaged; conversely, good environmental conditions will not
absorb development funds but instead support or sustain the lives of humans and other living
things (Pearce and Warford, 1993).
The pillars of sustainable development are economic sustainability, social
sustainability and environmental sustainability, all three of which must develop in a balanced
manner; otherwise development will be trapped in a conventional development model that
emphasizes economic growth alone and leaves social and environmental development. The
results of conventional development include the distribution of development results being
very unequal with 20 percent of the world's population in developed countries controlling 80
percent of world income and 80 percent of the world's population (developing countries) only
controlling 20 percent of world income. As a result, conventional development is hampered
or constrained by social conditions (health, education, and poverty) and shrinking natural
resource reserves (non-renewable fossil fuel energy and coal) as well as deteriorating
environmental quality due to air, water, river and lake pollution, as well as water shortages in
the dry season and floods in the rainy season in many places in United States and in other
developing countries and also in developed countries. (Emil Sallim, in Iwan Jaya Aziz, et al,
2010)
Environmental Economic Instruments
For the implementation of sustainable development, there is already a legal basis that
serves as the basis and guidelines for implementing sustainable development, which is stated
in Paragraph 8, articles 42 and 43 of Law Number 32, Year 2009 concerning Environmental
Protection and Management which is quoted as below.
Natural Resource Balance
A natural resource balance sheet is a record of the various natural resources found in a
region (Regency, City, or Province) or in a country (National) within a certain time (usually
one year) showing both physical reserves and monetary values ranging from initial reserves,
reserve increases, reserve reductions, and final reserves. For countries rich in natural
resources and a beautiful environment like United States, the balance sheet of natural
resources is very important as a basis for the preparation of development plans. United States
economic development has been based on the exploitation of natural resources. Therefore,
development planning needs to understand the condition of natural resource reserves owned
by a region (district, city, province). Natural resources can be divided into two major groups,
namely non-renewable natural resources (such as petroleum, coal, mineral resources) and
renewable natural resources (such as water, forests or plants, fish, animals and environmental
services). Examples of environmental services are the ability of forests to conserve soil and
water, prevent flooding, carbon sinks, recreational areas and so on).
Both central and local governments need to have records of their natural resource
reserves and changes. Then for planning, it is necessary to analyze the development of
natural resource reserves and their role in economic, social and environmental development.
With the balance sheet of natural resources and the environment, it can be seen where a
region is now located, whether it still has enough natural resource reserves or is already
depleted, or can still be utilized for how long. Thus, development plans will be neatly
organized, including all the consequences.
The step of preparing a natural resource balance can be started by identifying what
ecosystems are found in an area; then from each ecosystem it is identified what kind of
natural resources can be utilized from each ecosystem. Furthermore, each type of natural
resource and environmental function is quantified to determine the amount or volume of each
natural resource concerned, both the initial reserves and those lost due to exploitation or
natural disasters. After that, they are then valued in rupiah.
A natural resource balance sheet can be done for a given year for an area or on an
island where the state and amount of natural resources are not yet known. However, a natural
resource balance sheet can also record the existence of natural resources as a result of a
development activity. By knowing the impact of an activity, the costs and benefits of the
activity can be known, so it is very useful as a natural resource balance sheet feasibility
study. Actually, the feasibility study of an activity or a project in a region or in a country can
be facilitated once there is a balance sheet of natural resources and the environment in the
region or in the country concerned.
Sustainable Development Capital
In the theory of economic growth, the factors that can encourage economic growth in
a region or a country include population and labor, capital, natural resources and the
environment, technology and social factors. Our focus in this paper is the role of natural
resources and the environment in economic growth or development. If observed carefully,
natural resources and the environment are not the main factors that determine the progress of
a country. The progress of a country is usually measured by looking at the high and low per
capita income of the population in the country concerned; and it is proven that many
countries that do not have sufficient natural resources, but are actually developed countries
with high per capita income, such as Singapore, Japan, Taiwan, Korea; while many countries
with abundant natural resources are still underdeveloped countries with relatively low per
capita income such as United States, India, the Philippines, Vietnam, and Latin American
countries. There have even been articles written about the natural resource curse or also
known as "the paradox of plenty" found in developing countries that are rich in natural
resources. The paradoxical situation refers to countries that are rich in natural resources,
especially non-renewable ones, experiencing stagnant economic growth and even
regression.(Jeffrey A. Frankel, 2010)
There are two definitions of sustainable development; namely sustainable
development in the sense of strong (strong definition) and sustainable in the sense of soft
(weak definition), Sustainable in the sense of strong or hard requires that the value of all
development capital; namely the value of human capital (human capital) plus the value of the
ecosystem as natural capital (natural capital) plus human-made capital (human made
capital) remains or does not decline. Meanwhile, in a soft sense, sustainable development
allows for substitution between the three types of development capital; mainly, if the value of
natural capital decreases, it can be offset by an increase in the value of human capital and
man-made capital. For example, if there is a decrease in the amount of natural capital such as
oil and coal that is always exploited or taken from our earth, it is desired that the value of
human capital and/or the value of man-made capital increases, which is financed by utilizing
natural capital taken from nature in the area concerned. Economists are more amenable to a
soft or weak definition of sustainable development.
In addition to the success of sustainable development, it also requires the need for
social capital that is able to maintain good working relationships between various
government institutions both vertically and horizontally, as well as the synergy between the
government, the private sector and the community with a multi-party approach from the three
groups in the preparation of environmentally sound development plans and policies (Read
Ismid Hadad, 2010). So the point is not to exhaust natural resources and damage the
environment without increasing both the amount and quality of human resources and man-
made capital.
Green Growth and Green GDP/GDP
With the increasing enthusiasm to maintain good environmental quality, various terms
have emerged that mean that the environmental dimension has been incorporated into certain
businesses or activities such as the terms green building, green financing, green banking,
green growth and so on. This all shows that environmental considerations have been included
in various actions and policies. Green growth is also defined as environmentally friendly
economic growth or low carbon (CO2) economic growth, because CO2 is one of the
greenhouse gases that cover the earth which causes an increase in earth temperature resulting
in global warming. If we all want green economic growth or in other words sustainable
economic growth, then the right measurement tool for development performance is not
Conventional or Brown GDP and GRDP, but Green GDP and GRDP as mandated by Law
Number 32 of 2009 concerning Environmental Protection and Management; namely that
GDP and GRDP which already take into account the environmental dimension in the form of
depletion of natural resources and environmental degradation or the so-called Green GDP
and GRDP must be developed by every government, both local and central government *. So
Green GDP = Conventional GDP - Natural Resource Depletion - Environmental
Degradation.
However, until this paper is written, the practice of preparing Green GDP and GRDP
has not been formally implemented based on Government Regulations, although several
Provinces (Bali and West Java) and Districts/Cities (Asmat District, Bekasi City, Bantaeng
District, Banyumas District, Bandung District, Bekasi District), have tried to prepare Green
GRDP using their respective Regional Budget funds.
It should be noted that not all countries compile Green GDP, and even the World
Bank uses a measure of each country's economic progress that still uses Green GDP. Gross
National Product (GNP), as there would be difficulties in comparing the level of progress of
one country with another. Therefore, when Green GDP and GRDP were developed,
Conventional GDP and GRDP or Brown GDP and GRDP were not eliminated or replaced by
Green GDP and GRDP. Green GDP and GRDP were developed as a companion to
Conventional GDP and GRDP, because not all regions, especially cities, have sufficient
natural resources. However, it should also be noted that most cities in United States do not
have many natural resources, but all have environmental conditions that can be valued or
given an economic value, so Green GRDP can still be prepared for cities in United States. If a
city has many factories as well as trade and transportation activities, it will still experience
depletion and degradation of water resources and degradation of air quality due to CO2 and
CO4 gas pollution that can come from agricultural activities, landfills, and livestock.
Environmental Benefits
What is meant by environmental fee is a pattern of cooperation between regions in
managing the environment so that it brings benefits to all parties involved in the pattern.
Environmental fee is translated from the phrase "payment for environmental services" which
reflects the pattern of cooperation between the upstream and middle and downstream areas of
a river. People in the middle and downstream areas have an interest in benefiting from the
environment, among others, for their need for water. In general, water is available in the
upstream area and flows to the middle and downstream areas, so there are two possibilities
that the upstream area provides clean water and the middle and downstream areas become
users or consumers of water originating from the upstream area.
Another possibility is that when rainwater is abundant in the upstream area (during
heavy rains) and if there is not enough vegetation in the upstream area, rainwater flows
directly into the river and continues to the sea. If the capacity of the river or ditch in the
downstream area is inadequate, flooding will occur and can cause significant economic
losses. Therefore, there are actually 2 (two) important things about the relationship between
upstream and downstream. If water resources management is not implemented properly in the
upstream area, then during the rainy season there can be flooding in the downstream area
because water always flows from the upstream area to the downstream area; and conversely,
during the dry season there can be drought in the downstream area because the water reserves
in the upstream area are depleted because there is no water supply from rainfall in the dry
season and water is not stored due to the lack of forests or trees in the upstream area during
the rainy season.
In order to avoid the two main problems related to water resources, those who live in
the upstream area of the river need to be assisted by people who live in the downstream area
so that those in the area are willing to maintain water sources and water storage areas.
Upstream communities, who are generally farmers with modest incomes, tend to cut down
their trees when there is a financial need to pay for their children's schooling or when funds
are needed to marry off their children or for circumcision or circumcision for their children.
The cost of funds needed for the purposes of environmental services ranges between
the maximum value of the loss of downstream communities if affected by floods or affected
by a lack of clean water, or a lack of water to irrigate farmers' fields in the downstream area,
and the lowest value is the value of the needs of upstream communities who must maintain
the existence of forests and trees and maintain water resources so that they remain available
and clean.
An example of an area that has practiced the concept of "environmental services" is
between Kuningan Regency as an environmental service provider (water) and Cirebon
Regency and Cirebon City as a service user area (water). Kuningan Regency has a water
source "Panas" which with high water discharge is able to meet the need for water for
Cirebon Regency and City. The Government of Cirebon Regency and City through the
Regional Drinking Water Company (PDAM) collects funds from water users / customers,
then submits them to the Kuningan City Government. The Kuningan Regency Government
distributed the Environmental Services Fee (IJL) funds to residents around the Paniis water
source who helped manage the existence of both the quantity and quality of clean water.
Internalization of External Costs
Included in economic instruments is the application of the concept of "3P" (Polluters
Pay Principle); namely the concept that anyone who pollutes the environment is obliged to
pay compensation for the environmental pollution he creates. Pollution can occur in water
resources both in the catchment area, in rivers, in lakes, as well as to groundwater both
surface water and deep soil. Actually, the problem of internalization of environmental costs
has been reflected in the calculation of GDP and Green GRDP which includes or internalizes
the value of depletion and the value of environmental degradation, namely the deduction of
the value of depletion and environmental degradation from the value of GDP and Brown
GRDP (Conventional).
The way to internalize the value of natural resource depletion and the value of
environmental degradation is, among others, by requiring the initiators of activities (such as
producers and consumers of goods and services) to bear the burden of taxes whose revenues
must be used for the maintenance or restoration of environmental quality (Pigouvian tax).
Indeed, with the environmental tax, producers tend to shift the tax burden to consumers of the
taxed products. Then, between producers and consumers, the tax burden will be shared
depending on the ratio of demand elasticity and supply elasticity respectively. The shifting of
the tax burden from producers to consumers will increase the price of the product, so that
consumers who use these products will also bear the tax burden. This is reasonable because it
is not only producers who pollute the environment by creating solid and liquid waste and air
pollution due to CO2 released in the production process, but consumers who use the products
produced by these companies also dispose of waste into the environment. The easiest
example is detergent producers (washing powder) and detergent consumers such as hotels
and households, they together pollute the environment. If there is no environmental tax or
obligation to install a waste treatment plant, the entire community, both those who use
detergents and those who do not use them, will bear the impact of detergent production
because the soil, air and water are polluted by detergent producers and consumers. Whereas if
it is mandatory for producers to install waste treatment plants (solid, liquid and air), then only
those involved in the production and consumption of detergents will bear the burden of
pollution, while those who do not consume detergents will enjoy pollution-free soil, clean
water and clean air without having to pay the increased price of detergents due to the shifting
burden of environmental taxes imposed on producers.
By including indirect costs of production such as the value of natural resource
depletion and the value of environmental degradation, the economy will still develop
prosperously even if there are no profits or benefits from all production, consumption and
distribution activities in the economy.
In this case, it can be said that the community or economy obtains "normal profit or
normal benefit" because the price formed due to the shifting of the tax burden already
includes "explicit costs" and "implicit costs", where explicit costs are costs actually incurred
by producers (BUMS, BUMN, and BUMD) and implicit costs are lost opportunity costs such
as the value of natural resource depletion and environmental damage that are never reported
in Conventional GDP and GDRP Reports.
Human Development Index (HDI)
The Human Development Index is one of the best measures of a country's level of
well-being. HDI is a composite index consisting of health index, knowledge index, and
welfare index. The health index is measured by the life expectancy of the population at birth,
the knowledge index is measured by literacy and length of time studying formally, and the
welfare index is measured by the level of green income per capita. Thus the HDI has
internalized external costs that take into account the value of depletion or loss of natural
resources and degradation of environmental functions. Using HDI, it is noted that the capital
city of DKI Jakarta has the highest HDI (79.60), and the lowest is owned by Papua Province
(58.05), while Central Java Province has the highest HDI of 69.98.
Sustainable Development Planning
From the various descriptions above, to develop a sustainable development plan,
many things are needed. First, adequate development capital is needed, in the form of reliable
human capital, sufficient man-made capital, and environmental capital consisting of natural
resources and good environmental quality. The next question is how to provide these three
types of capital. For human resources needed as the implementer of development and as the
compiler of plans and policies, intelligent and virtuous humans are needed. Humans who are
intelligent but not virtuous will be willing to use their intelligence to bully, oppress and
blackmail other humans; on the other hand, humans who are virtuous but do not have
intelligence will be subjected to disgraceful actions such as ignorance, fraud, and deprivation
of rights by others. (Jaetun, HS, 2014). In fact, it is human resources that are the key to the
success of sustainable development, i.e. humans who are truly intelligent and virtuous are
needed, so that the problem of financial capital is no longer a problem. United States, which
has developed based on natural resources and debt, is no longer threatened by the curse of
natural resources, because the natural resources taken from nature are converted in such a
way as to become reliable, educated, honest, and corruption-free human resources.
For man-made capital, it is necessary to emphasize the development of infra
structures in the form of transportation facilities and infrastructure such as roads, seaports, air
and rivers as well as means of communication and transportation links available thoroughly
and evenly according to the needs of each region. Infrastructure is the muscle of the economy
that needs to exist and be strong so that the economy also grows strongly and quickly.
For natural resources and environmental capital, continuous exploration efforts are
needed to find reserves of energy resources and other mineral resources. Create an
atmosphere so that there are incentives to conduct exploration of natural resources that can
become raw materials and auxiliary materials for industrial activities. In the energy sector,
United States needs to utilize non-fossil energy sources (biofuels), which are increasingly
necessary because fossil energy is becoming scarce. Renewable energy such as biofuels and
wind resources, geothermal resources and so on should be utilized.
Conclusion
To conclude all of the above descriptions is related to sustainable development
planning both at the national level and at the regional level. Conventional development
planning considers natural resources as a production factor that must be utilized as much as
possible without regard to environmental conditions. As a result, there is indeed economic
growth in the form of an increase in the level of national income, but it is accompanied by
depletion of natural resource reserves and environmental damage accompanied by various
natural disasters everywhere, so that although the level of income increases, but because it is
accompanied by a life full of worries about natural disasters, such as heavy rains, floods,
droughts, landslides, and even earthquakes, the higher level of national income or per capita
income does not provide a guarantee of better community welfare.
Development planning as mentioned above must be ended immediately and replaced
with a new planning paradigm. The trend of depletion of natural resources and environmental
degradation must be changed or even reversed towards the discovery of new and renewable
natural resource reserves accompanied by improvements in environmental quality (reversing
the degradation trend of the natural environment). The paradigm of sustainable development
planning that synergizes economic growth and environmental improvement is the new
development paradigm today. It has been argued that United States will experience a crisis in
three main areas, namely the water crisis, food crisis, and energy crisis (Haskarlianus Pasang,
2011).
What was stated by BAPPENAS has become a reality, where United States is
experiencing difficulties in providing clean water and is overwhelmed by floods, United
States is still not free from having to import food from abroad, and United States is
experiencing energy shortages which are also characterized by high import volumes for fuel
energy from year to year. But this situation has been cautioned by efforts to develop new
agricultural areas and land, to improve water catchment areas and maintain more efficient
reservoirs and waterways, and to develop renewable sources of electrical energy and biofuel
sources. Therefore, being smart and virtuous is one of the foundations of achieving
sustainable development.
Sustainable Development
The concept of sustainable development became popular after it was announced by
the Bruntland Commission under the leadership of Norwegian Prime Minister Gro Harlem
Brundtland who worked from October 1984 to March 1987 and gave birth to the book "Our
Common Future" published by the World Commission on Environment and Development
(WECD) in 1987 (Ismid Hadad, 2010).
During the 20th century there were 2 (two) revolutions related to the role of the
environment in economic and social development. The first revolution (1) between the 1960's
-1970's when the paradigm emerged that there was a conflict between the concepts of growth
and conservation of natural resources and the environment where every development that was
intended to improve the welfare of society was always accompanied by the exploitation of
natural resources and environmental damage (Meadows, Donella and Meadows, Nancy,
1972). Meadows and Meadows who are members of the Rome Group wrote a book on
"Limits to Growth". The book argued that if there was no reduction in the level of
consumption in society at that time, then within 100 years the world would collapse, because
natural resources would be exhausted and the environment would experience high pollution
and severe damage.
The concept of sustainable development, which is interpreted as development for the
present and which does not require compromising future generations, emerged at a meeting
of nations in Norway chaired by Norwegian Prime Minister Gro Harlem Brundtland in 1987.
At that time it was as if there was a second revolution in the field of national development
which stated that economic development did not solely damage the environment, but instead
economic development and environmental development could synergize with each other,
economic development will create an increase in national income that gives a country the
ability to maintain its environment so that it does not deteriorate. Economic development will
create an increase in national income that gives a country the ability to maintain its
environment so that it is not damaged; conversely, good environmental conditions will not
absorb development funds but instead support or sustain the lives of humans and other living
things (Pearce and Warford, 1993).
The pillars of sustainable development are economic sustainability, social
sustainability and environmental sustainability, all three of which must develop in a balanced
manner; otherwise development will be trapped in a conventional development model that
emphasizes economic growth alone and leaves social and environmental development. The
results of conventional development include the distribution of development results being
very unequal with 20 percent of the world's population in developed countries controlling 80
percent of world income and 80 percent of the world's population (developing countries) only
controlling 20 percent of world income. As a result, conventional development is hampered
or constrained by social conditions (health, education, and poverty) and shrinking natural
resource reserves (non-renewable fossil fuel energy and coal) as well as deteriorating
environmental quality due to air, water, river and lake pollution, as well as water shortages in
the dry season and floods in the rainy season in many places in United States and in other
developing countries and also in developed countries. (Emil Sallim, in Iwan Jaya Aziz, et al,
2010)
Environmental Economic Instruments
For the implementation of sustainable development, there is already a legal basis that
serves as the basis and guidelines for implementing sustainable development, which is stated
in Paragraph 8, articles 42 and 43 of Law Number 32, Year 2009 concerning Environmental
Protection and Management which is quoted as below.
Natural Resource Balance
A natural resource balance sheet is a record of the various natural resources found in a
region (Regency, City, or Province) or in a country (National) within a certain time (usually
one year) showing both physical reserves and monetary values ranging from initial reserves,
reserve increases, reserve reductions, and final reserves. For countries rich in natural
resources and a beautiful environment like United States, the balance sheet of natural
resources is very important as a basis for the preparation of development plans. United States
economic development has been based on the exploitation of natural resources. Therefore,
development planning needs to understand the condition of natural resource reserves owned
by a region (district, city, province). Natural resources can be divided into two major groups,
namely non-renewable natural resources (such as petroleum, coal, mineral resources) and
renewable natural resources (such as water, forests or plants, fish, animals and environmental
services). Examples of environmental services are the ability of forests to conserve soil and
water, prevent flooding, carbon sinks, recreational areas and so on).
Both central and local governments need to have records of their natural resource
reserves and changes. Then for planning, it is necessary to analyze the development of
natural resource reserves and their role in economic, social and environmental development.
With the balance sheet of natural resources and the environment, it can be seen where a
region is now located, whether it still has enough natural resource reserves or is already
depleted, or can still be utilized for how long. Thus, development plans will be neatly
organized, including all the consequences.
The step of preparing a natural resource balance can be started by identifying what
ecosystems are found in an area; then from each ecosystem it is identified what kind of
natural resources can be utilized from each ecosystem. Furthermore, each type of natural
resource and environmental function is quantified to determine the amount or volume of each
natural resource concerned, both the initial reserves and those lost due to exploitation or
natural disasters. After that, they are then valued in rupiah.
A natural resource balance sheet can be done for a given year for an area or on an
island where the state and amount of natural resources are not yet known. However, a natural
resource balance sheet can also record the existence of natural resources as a result of a
development activity. By knowing the impact of an activity, the costs and benefits of the
activity can be known, so it is very useful as a natural resource balance sheet feasibility
study. Actually, the feasibility study of an activity or a project in a region or in a country can
be facilitated once there is a balance sheet of natural resources and the environment in the
region or in the country concerned.
Sustainable Development Capital
In the theory of economic growth, the factors that can encourage economic growth in
a region or a country include population and labor, capital, natural resources and the
environment, technology and social factors. Our focus in this paper is the role of natural
resources and the environment in economic growth or development. If observed carefully,
natural resources and the environment are not the main factors that determine the progress of
a country. The progress of a country is usually measured by looking at the high and low per
capita income of the population in the country concerned; and it is proven that many
countries that do not have sufficient natural resources, but are actually developed countries
with high per capita income, such as Singapore, Japan, Taiwan, Korea; while many countries
with abundant natural resources are still underdeveloped countries with relatively low per
capita income such as United States, India, the Philippines, Vietnam, and Latin American
countries. There have even been articles written about the natural resource curse or also
known as "the paradox of plenty" found in developing countries that are rich in natural
resources. The paradoxical situation refers to countries that are rich in natural resources,
especially non-renewable ones, experiencing stagnant economic growth and even
regression.(Jeffrey A. Frankel, 2010)
There are two definitions of sustainable development; namely sustainable
development in the sense of strong (strong definition) and sustainable in the sense of soft
(weak definition), Sustainable in the sense of strong or hard requires that the value of all
development capital; namely the value of human capital (human capital) plus the value of the
ecosystem as natural capital (natural capital) plus human-made capital (human made
capital) remains or does not decline. Meanwhile, in a soft sense, sustainable development
allows for substitution between the three types of development capital; mainly, if the value of
natural capital decreases, it can be offset by an increase in the value of human capital and
man-made capital. For example, if there is a decrease in the amount of natural capital such as
oil and coal that is always exploited or taken from our earth, it is desired that the value of
human capital and/or the value of man-made capital increases, which is financed by utilizing
natural capital taken from nature in the area concerned. Economists are more amenable to a
soft or weak definition of sustainable development.
In addition to the success of sustainable development, it also requires the need for
social capital that is able to maintain good working relationships between various
government institutions both vertically and horizontally, as well as the synergy between the
government, the private sector and the community with a multi-party approach from the three
groups in the preparation of environmentally sound development plans and policies (Read
Ismid Hadad, 2010). So the point is not to exhaust natural resources and damage the
environment without increasing both the amount and quality of human resources and man-
made capital.
Green Growth and Green GDP/GDP
With the increasing enthusiasm to maintain good environmental quality, various terms
have emerged that mean that the environmental dimension has been incorporated into certain
businesses or activities such as the terms green building, green financing, green banking,
green growth and so on. This all shows that environmental considerations have been included
in various actions and policies. Green growth is also defined as environmentally friendly
economic growth or low carbon (CO2) economic growth, because CO2 is one of the
greenhouse gases that cover the earth which causes an increase in earth temperature resulting
in global warming. If we all want green economic growth or in other words sustainable
economic growth, then the right measurement tool for development performance is not
Conventional or Brown GDP and GRDP, but Green GDP and GRDP as mandated by Law
Number 32 of 2009 concerning Environmental Protection and Management; namely that
GDP and GRDP which already take into account the environmental dimension in the form of
depletion of natural resources and environmental degradation or the so-called Green GDP
and GRDP must be developed by every government, both local and central government *. So
Green GDP = Conventional GDP - Natural Resource Depletion - Environmental
Degradation.
However, until this paper is written, the practice of preparing Green GDP and GRDP
has not been formally implemented based on Government Regulations, although several
Provinces (Bali and West Java) and Districts/Cities (Asmat District, Bekasi City, Bantaeng
District, Banyumas District, Bandung District, Bekasi District), have tried to prepare Green
GRDP using their respective Regional Budget funds.
It should be noted that not all countries compile Green GDP, and even the World
Bank uses a measure of each country's economic progress that still uses Green GDP. Gross
National Product (GNP), as there would be difficulties in comparing the level of progress of
one country with another. Therefore, when Green GDP and GRDP were developed,
Conventional GDP and GRDP or Brown GDP and GRDP were not eliminated or replaced by
Green GDP and GRDP. Green GDP and GRDP were developed as a companion to
Conventional GDP and GRDP, because not all regions, especially cities, have sufficient
natural resources. However, it should also be noted that most cities in United States do not
have many natural resources, but all have environmental conditions that can be valued or
given an economic value, so Green GRDP can still be prepared for cities in United States. If a
city has many factories as well as trade and transportation activities, it will still experience
depletion and degradation of water resources and degradation of air quality due to CO2 and
CO4 gas pollution that can come from agricultural activities, landfills, and livestock.
Environmental Benefits
What is meant by environmental fee is a pattern of cooperation between regions in
managing the environment so that it brings benefits to all parties involved in the pattern.
Environmental fee is translated from the phrase "payment for environmental services" which
reflects the pattern of cooperation between the upstream and middle and downstream areas of
a river. People in the middle and downstream areas have an interest in benefiting from the
environment, among others, for their need for water. In general, water is available in the
upstream area and flows to the middle and downstream areas, so there are two possibilities
that the upstream area provides clean water and the middle and downstream areas become
users or consumers of water originating from the upstream area.
Another possibility is that when rainwater is abundant in the upstream area (during
heavy rains) and if there is not enough vegetation in the upstream area, rainwater flows
directly into the river and continues to the sea. If the capacity of the river or ditch in the
downstream area is inadequate, flooding will occur and can cause significant economic
losses. Therefore, there are actually 2 (two) important things about the relationship between
upstream and downstream. If water resources management is not implemented properly in the
upstream area, then during the rainy season there can be flooding in the downstream area
because water always flows from the upstream area to the downstream area; and conversely,
during the dry season there can be drought in the downstream area because the water reserves
in the upstream area are depleted because there is no water supply from rainfall in the dry
season and water is not stored due to the lack of forests or trees in the upstream area during
the rainy season.
In order to avoid the two main problems related to water resources, those who live in
the upstream area of the river need to be assisted by people who live in the downstream area
so that those in the area are willing to maintain water sources and water storage areas.
Upstream communities, who are generally farmers with modest incomes, tend to cut down
their trees when there is a financial need to pay for their children's schooling or when funds
are needed to marry off their children or for circumcision or circumcision for their children.
The cost of funds needed for the purposes of environmental services ranges between
the maximum value of the loss of downstream communities if affected by floods or affected
by a lack of clean water, or a lack of water to irrigate farmers' fields in the downstream area,
and the lowest value is the value of the needs of upstream communities who must maintain
the existence of forests and trees and maintain water resources so that they remain available
and clean.
An example of an area that has practiced the concept of "environmental services" is
between Kuningan Regency as an environmental service provider (water) and Cirebon
Regency and Cirebon City as a service user area (water). Kuningan Regency has a water
source "Panas" which with high water discharge is able to meet the need for water for
Cirebon Regency and City. The Government of Cirebon Regency and City through the
Regional Drinking Water Company (PDAM) collects funds from water users / customers,
then submits them to the Kuningan City Government. The Kuningan Regency Government
distributed the Environmental Services Fee (IJL) funds to residents around the Paniis water
source who helped manage the existence of both the quantity and quality of clean water.
Internalization of External Costs
Included in economic instruments is the application of the concept of "3P" (Polluters
Pay Principle); namely the concept that anyone who pollutes the environment is obliged to
pay compensation for the environmental pollution he creates. Pollution can occur in water
resources both in the catchment area, in rivers, in lakes, as well as to groundwater both
surface water and deep soil. Actually, the problem of internalization of environmental costs
has been reflected in the calculation of GDP and Green GRDP which includes or internalizes
the value of depletion and the value of environmental degradation, namely the deduction of
the value of depletion and environmental degradation from the value of GDP and Brown
GRDP (Conventional).
The way to internalize the value of natural resource depletion and the value of
environmental degradation is, among others, by requiring the initiators of activities (such as
producers and consumers of goods and services) to bear the burden of taxes whose revenues
must be used for the maintenance or restoration of environmental quality (Pigouvian tax).
Indeed, with the environmental tax, producers tend to shift the tax burden to consumers of the
taxed products. Then, between producers and consumers, the tax burden will be shared
depending on the ratio of demand elasticity and supply elasticity respectively. The shifting of
the tax burden from producers to consumers will increase the price of the product, so that
consumers who use these products will also bear the tax burden. This is reasonable because it
is not only producers who pollute the environment by creating solid and liquid waste and air
pollution due to CO2 released in the production process, but consumers who use the products
produced by these companies also dispose of waste into the environment. The easiest
example is detergent producers (washing powder) and detergent consumers such as hotels
and households, they together pollute the environment. If there is no environmental tax or
obligation to install a waste treatment plant, the entire community, both those who use
detergents and those who do not use them, will bear the impact of detergent production
because the soil, air and water are polluted by detergent producers and consumers. Whereas if
it is mandatory for producers to install waste treatment plants (solid, liquid and air), then only
those involved in the production and consumption of detergents will bear the burden of
pollution, while those who do not consume detergents will enjoy pollution-free soil, clean
water and clean air without having to pay the increased price of detergents due to the shifting
burden of environmental taxes imposed on producers.
By including indirect costs of production such as the value of natural resource
depletion and the value of environmental degradation, the economy will still develop
prosperously even if there are no profits or benefits from all production, consumption and
distribution activities in the economy.
In this case, it can be said that the community or economy obtains "normal profit or
normal benefit" because the price formed due to the shifting of the tax burden already
includes "explicit costs" and "implicit costs", where explicit costs are costs actually incurred
by producers (BUMS, BUMN, and BUMD) and implicit costs are lost opportunity costs such
as the value of natural resource depletion and environmental damage that are never reported
in Conventional GDP and GDRP Reports.
Human Development Index (HDI)
The Human Development Index is one of the best measures of a country's level of
well-being. HDI is a composite index consisting of health index, knowledge index, and
welfare index. The health index is measured by the life expectancy of the population at birth,
the knowledge index is measured by literacy and length of time studying formally, and the
welfare index is measured by the level of green income per capita. Thus the HDI has
internalized external costs that take into account the value of depletion or loss of natural
resources and degradation of environmental functions. Using HDI, it is noted that the capital
city of DKI Jakarta has the highest HDI (79.60), and the lowest is owned by Papua Province
(58.05), while Central Java Province has the highest HDI of 69.98.
Sustainable Development Planning
From the various descriptions above, to develop a sustainable development plan,
many things are needed. First, adequate development capital is needed, in the form of reliable
human capital, sufficient man-made capital, and environmental capital consisting of natural
resources and good environmental quality. The next question is how to provide these three
types of capital. For human resources needed as the implementer of development and as the
compiler of plans and policies, intelligent and virtuous humans are needed. Humans who are
intelligent but not virtuous will be willing to use their intelligence to bully, oppress and
blackmail other humans; on the other hand, humans who are virtuous but do not have
intelligence will be subjected to disgraceful actions such as ignorance, fraud, and deprivation
of rights by others. (Jaetun, HS, 2014). In fact, it is human resources that are the key to the
success of sustainable development, i.e. humans who are truly intelligent and virtuous are
needed, so that the problem of financial capital is no longer a problem. United States, which
has developed based on natural resources and debt, is no longer threatened by the curse of
natural resources, because the natural resources taken from nature are converted in such a
way as to become reliable, educated, honest, and corruption-free human resources.
For man-made capital, it is necessary to emphasize the development of infra
structures in the form of transportation facilities and infrastructure such as roads, seaports, air
and rivers as well as means of communication and transportation links available thoroughly
and evenly according to the needs of each region. Infrastructure is the muscle of the economy
that needs to exist and be strong so that the economy also grows strongly and quickly.
For natural resources and environmental capital, continuous exploration efforts are
needed to find reserves of energy resources and other mineral resources. Create an
atmosphere so that there are incentives to conduct exploration of natural resources that can
become raw materials and auxiliary materials for industrial activities. In the energy sector,
United States needs to utilize non-fossil energy sources (biofuels), which are increasingly
necessary because fossil energy is becoming scarce. Renewable energy such as biofuels and
wind resources, geothermal resources and so on should be utilized.
Conclusion
To conclude all of the above descriptions is related to sustainable development
planning both at the national level and at the regional level. Conventional development
planning considers natural resources as a production factor that must be utilized as much as
possible without regard to environmental conditions. As a result, there is indeed economic
growth in the form of an increase in the level of national income, but it is accompanied by
depletion of natural resource reserves and environmental damage accompanied by various
natural disasters everywhere, so that although the level of income increases, but because it is
accompanied by a life full of worries about natural disasters, such as heavy rains, floods,
droughts, landslides, and even earthquakes, the higher level of national income or per capita
income does not provide a guarantee of better community welfare.
Development planning as mentioned above must be ended immediately and replaced
with a new planning paradigm. The trend of depletion of natural resources and environmental
degradation must be changed or even reversed towards the discovery of new and renewable
natural resource reserves accompanied by improvements in environmental quality (reversing
the degradation trend of the natural environment). The paradigm of sustainable development
planning that synergizes economic growth and environmental improvement is the new
development paradigm today. It has been argued that United States will experience a crisis in
three main areas, namely the water crisis, food crisis, and energy crisis (Haskarlianus Pasang,
2011).
What was stated by BAPPENAS has become a reality, where United States is
experiencing difficulties in providing clean water and is overwhelmed by floods, United
States is still not free from having to import food from abroad, and United States is
experiencing energy shortages which are also characterized by high import volumes for fuel
energy from year to year. But this situation has been cautioned by efforts to develop new
agricultural areas and land, to improve water catchment areas and maintain more efficient
reservoirs and waterways, and to develop renewable sources of electrical energy and biofuel
sources. Therefore, being smart and virtuous is one of the foundations of achieving
sustainable development.
Sustainable Development
The concept of sustainable development became popular after it was announced by
the Bruntland Commission under the leadership of Norwegian Prime Minister Gro Harlem
Brundtland who worked from October 1984 to March 1987 and gave birth to the book "Our
Common Future" published by the World Commission on Environment and Development
(WECD) in 1987 (Ismid Hadad, 2010).
During the 20th century there were 2 (two) revolutions related to the role of the
environment in economic and social development. The first revolution (1) between the 1960's
-1970's when the paradigm emerged that there was a conflict between the concepts of growth
and conservation of natural resources and the environment where every development that was
intended to improve the welfare of society was always accompanied by the exploitation of
natural resources and environmental damage (Meadows, Donella and Meadows, Nancy,
1972). Meadows and Meadows who are members of the Rome Group wrote a book on
"Limits to Growth". The book argued that if there was no reduction in the level of
consumption in society at that time, then within 100 years the world would collapse, because
natural resources would be exhausted and the environment would experience high pollution
and severe damage.
The concept of sustainable development, which is interpreted as development for the
present and which does not require compromising future generations, emerged at a meeting
of nations in Norway chaired by Norwegian Prime Minister Gro Harlem Brundtland in 1987.
At that time it was as if there was a second revolution in the field of national development
which stated that economic development did not solely damage the environment, but instead
economic development and environmental development could synergize with each other,
economic development will create an increase in national income that gives a country the
ability to maintain its environment so that it does not deteriorate. Economic development will
create an increase in national income that gives a country the ability to maintain its
environment so that it is not damaged; conversely, good environmental conditions will not
absorb development funds but instead support or sustain the lives of humans and other living
things (Pearce and Warford, 1993).
The pillars of sustainable development are economic sustainability, social
sustainability and environmental sustainability, all three of which must develop in a balanced
manner; otherwise development will be trapped in a conventional development model that
emphasizes economic growth alone and leaves social and environmental development. The
results of conventional development include the distribution of development results being
very unequal with 20 percent of the world's population in developed countries controlling 80
percent of world income and 80 percent of the world's population (developing countries) only
controlling 20 percent of world income. As a result, conventional development is hampered
or constrained by social conditions (health, education, and poverty) and shrinking natural
resource reserves (non-renewable fossil fuel energy and coal) as well as deteriorating
environmental quality due to air, water, river and lake pollution, as well as water shortages in
the dry season and floods in the rainy season in many places in United States and in other
developing countries and also in developed countries. (Emil Sallim, in Iwan Jaya Aziz, et al,
2010)
Environmental Economic Instruments
For the implementation of sustainable development, there is already a legal basis that
serves as the basis and guidelines for implementing sustainable development, which is stated
in Paragraph 8, articles 42 and 43 of Law Number 32, Year 2009 concerning Environmental
Protection and Management which is quoted as below.
Natural Resource Balance
A natural resource balance sheet is a record of the various natural resources found in a
region (Regency, City, or Province) or in a country (National) within a certain time (usually
one year) showing both physical reserves and monetary values ranging from initial reserves,
reserve increases, reserve reductions, and final reserves. For countries rich in natural
resources and a beautiful environment like United States, the balance sheet of natural
resources is very important as a basis for the preparation of development plans. United States
economic development has been based on the exploitation of natural resources. Therefore,
development planning needs to understand the condition of natural resource reserves owned
by a region (district, city, province). Natural resources can be divided into two major groups,
namely non-renewable natural resources (such as petroleum, coal, mineral resources) and
renewable natural resources (such as water, forests or plants, fish, animals and environmental
services). Examples of environmental services are the ability of forests to conserve soil and
water, prevent flooding, carbon sinks, recreational areas and so on).
Both central and local governments need to have records of their natural resource
reserves and changes. Then for planning, it is necessary to analyze the development of
natural resource reserves and their role in economic, social and environmental development.
With the balance sheet of natural resources and the environment, it can be seen where a
region is now located, whether it still has enough natural resource reserves or is already
depleted, or can still be utilized for how long. Thus, development plans will be neatly
organized, including all the consequences.
The step of preparing a natural resource balance can be started by identifying what
ecosystems are found in an area; then from each ecosystem it is identified what kind of
natural resources can be utilized from each ecosystem. Furthermore, each type of natural
resource and environmental function is quantified to determine the amount or volume of each
natural resource concerned, both the initial reserves and those lost due to exploitation or
natural disasters. After that, they are then valued in rupiah.
A natural resource balance sheet can be done for a given year for an area or on an
island where the state and amount of natural resources are not yet known. However, a natural
resource balance sheet can also record the existence of natural resources as a result of a
development activity. By knowing the impact of an activity, the costs and benefits of the
activity can be known, so it is very useful as a natural resource balance sheet feasibility
study. Actually, the feasibility study of an activity or a project in a region or in a country can
be facilitated once there is a balance sheet of natural resources and the environment in the
region or in the country concerned.
Sustainable Development Capital
In the theory of economic growth, the factors that can encourage economic growth in
a region or a country include population and labor, capital, natural resources and the
environment, technology and social factors. Our focus in this paper is the role of natural
resources and the environment in economic growth or development. If observed carefully,
natural resources and the environment are not the main factors that determine the progress of
a country. The progress of a country is usually measured by looking at the high and low per
capita income of the population in the country concerned; and it is proven that many
countries that do not have sufficient natural resources, but are actually developed countries
with high per capita income, such as Singapore, Japan, Taiwan, Korea; while many countries
with abundant natural resources are still underdeveloped countries with relatively low per
capita income such as United States, India, the Philippines, Vietnam, and Latin American
countries. There have even been articles written about the natural resource curse or also
known as "the paradox of plenty" found in developing countries that are rich in natural
resources. The paradoxical situation refers to countries that are rich in natural resources,
especially non-renewable ones, experiencing stagnant economic growth and even
regression.(Jeffrey A. Frankel, 2010)
There are two definitions of sustainable development; namely sustainable
development in the sense of strong (strong definition) and sustainable in the sense of soft
(weak definition), Sustainable in the sense of strong or hard requires that the value of all
development capital; namely the value of human capital (human capital) plus the value of the
ecosystem as natural capital (natural capital) plus human-made capital (human made
capital) remains or does not decline. Meanwhile, in a soft sense, sustainable development
allows for substitution between the three types of development capital; mainly, if the value of
natural capital decreases, it can be offset by an increase in the value of human capital and
man-made capital. For example, if there is a decrease in the amount of natural capital such as
oil and coal that is always exploited or taken from our earth, it is desired that the value of
human capital and/or the value of man-made capital increases, which is financed by utilizing
natural capital taken from nature in the area concerned. Economists are more amenable to a
soft or weak definition of sustainable development.
In addition to the success of sustainable development, it also requires the need for
social capital that is able to maintain good working relationships between various
government institutions both vertically and horizontally, as well as the synergy between the
government, the private sector and the community with a multi-party approach from the three
groups in the preparation of environmentally sound development plans and policies (Read
Ismid Hadad, 2010). So the point is not to exhaust natural resources and damage the
environment without increasing both the amount and quality of human resources and man-
made capital.
Green Growth and Green GDP/GDP
With the increasing enthusiasm to maintain good environmental quality, various terms
have emerged that mean that the environmental dimension has been incorporated into certain
businesses or activities such as the terms green building, green financing, green banking,
green growth and so on. This all shows that environmental considerations have been included
in various actions and policies. Green growth is also defined as environmentally friendly
economic growth or low carbon (CO2) economic growth, because CO2 is one of the
greenhouse gases that cover the earth which causes an increase in earth temperature resulting
in global warming. If we all want green economic growth or in other words sustainable
economic growth, then the right measurement tool for development performance is not
Conventional or Brown GDP and GRDP, but Green GDP and GRDP as mandated by Law
Number 32 of 2009 concerning Environmental Protection and Management; namely that
GDP and GRDP which already take into account the environmental dimension in the form of
depletion of natural resources and environmental degradation or the so-called Green GDP
and GRDP must be developed by every government, both local and central government *. So
Green GDP = Conventional GDP - Natural Resource Depletion - Environmental
Degradation.
However, until this paper is written, the practice of preparing Green GDP and GRDP
has not been formally implemented based on Government Regulations, although several
Provinces (Bali and West Java) and Districts/Cities (Asmat District, Bekasi City, Bantaeng
District, Banyumas District, Bandung District, Bekasi District), have tried to prepare Green
GRDP using their respective Regional Budget funds.
It should be noted that not all countries compile Green GDP, and even the World
Bank uses a measure of each country's economic progress that still uses Green GDP. Gross
National Product (GNP), as there would be difficulties in comparing the level of progress of
one country with another. Therefore, when Green GDP and GRDP were developed,
Conventional GDP and GRDP or Brown GDP and GRDP were not eliminated or replaced by
Green GDP and GRDP. Green GDP and GRDP were developed as a companion to
Conventional GDP and GRDP, because not all regions, especially cities, have sufficient
natural resources. However, it should also be noted that most cities in United States do not
have many natural resources, but all have environmental conditions that can be valued or
given an economic value, so Green GRDP can still be prepared for cities in United States. If a
city has many factories as well as trade and transportation activities, it will still experience
depletion and degradation of water resources and degradation of air quality due to CO2 and
CO4 gas pollution that can come from agricultural activities, landfills, and livestock.
Environmental Benefits
What is meant by environmental fee is a pattern of cooperation between regions in
managing the environment so that it brings benefits to all parties involved in the pattern.
Environmental fee is translated from the phrase "payment for environmental services" which
reflects the pattern of cooperation between the upstream and middle and downstream areas of
a river. People in the middle and downstream areas have an interest in benefiting from the
environment, among others, for their need for water. In general, water is available in the
upstream area and flows to the middle and downstream areas, so there are two possibilities
that the upstream area provides clean water and the middle and downstream areas become
users or consumers of water originating from the upstream area.
Another possibility is that when rainwater is abundant in the upstream area (during
heavy rains) and if there is not enough vegetation in the upstream area, rainwater flows
directly into the river and continues to the sea. If the capacity of the river or ditch in the
downstream area is inadequate, flooding will occur and can cause significant economic
losses. Therefore, there are actually 2 (two) important things about the relationship between
upstream and downstream. If water resources management is not implemented properly in the
upstream area, then during the rainy season there can be flooding in the downstream area
because water always flows from the upstream area to the downstream area; and conversely,
during the dry season there can be drought in the downstream area because the water reserves
in the upstream area are depleted because there is no water supply from rainfall in the dry
season and water is not stored due to the lack of forests or trees in the upstream area during
the rainy season.
In order to avoid the two main problems related to water resources, those who live in
the upstream area of the river need to be assisted by people who live in the downstream area
so that those in the area are willing to maintain water sources and water storage areas.
Upstream communities, who are generally farmers with modest incomes, tend to cut down
their trees when there is a financial need to pay for their children's schooling or when funds
are needed to marry off their children or for circumcision or circumcision for their children.
The cost of funds needed for the purposes of environmental services ranges between
the maximum value of the loss of downstream communities if affected by floods or affected
by a lack of clean water, or a lack of water to irrigate farmers' fields in the downstream area,
and the lowest value is the value of the needs of upstream communities who must maintain
the existence of forests and trees and maintain water resources so that they remain available
and clean.
An example of an area that has practiced the concept of "environmental services" is
between Kuningan Regency as an environmental service provider (water) and Cirebon
Regency and Cirebon City as a service user area (water). Kuningan Regency has a water
source "Panas" which with high water discharge is able to meet the need for water for
Cirebon Regency and City. The Government of Cirebon Regency and City through the
Regional Drinking Water Company (PDAM) collects funds from water users / customers,
then submits them to the Kuningan City Government. The Kuningan Regency Government
distributed the Environmental Services Fee (IJL) funds to residents around the Paniis water
source who helped manage the existence of both the quantity and quality of clean water.
Internalization of External Costs
Included in economic instruments is the application of the concept of "3P" (Polluters
Pay Principle); namely the concept that anyone who pollutes the environment is obliged to
pay compensation for the environmental pollution he creates. Pollution can occur in water
resources both in the catchment area, in rivers, in lakes, as well as to groundwater both
surface water and deep soil. Actually, the problem of internalization of environmental costs
has been reflected in the calculation of GDP and Green GRDP which includes or internalizes
the value of depletion and the value of environmental degradation, namely the deduction of
the value of depletion and environmental degradation from the value of GDP and Brown
GRDP (Conventional).
The way to internalize the value of natural resource depletion and the value of
environmental degradation is, among others, by requiring the initiators of activities (such as
producers and consumers of goods and services) to bear the burden of taxes whose revenues
must be used for the maintenance or restoration of environmental quality (Pigouvian tax).
Indeed, with the environmental tax, producers tend to shift the tax burden to consumers of the
taxed products. Then, between producers and consumers, the tax burden will be shared
depending on the ratio of demand elasticity and supply elasticity respectively. The shifting of
the tax burden from producers to consumers will increase the price of the product, so that
consumers who use these products will also bear the tax burden. This is reasonable because it
is not only producers who pollute the environment by creating solid and liquid waste and air
pollution due to CO2 released in the production process, but consumers who use the products
produced by these companies also dispose of waste into the environment. The easiest
example is detergent producers (washing powder) and detergent consumers such as hotels
and households, they together pollute the environment. If there is no environmental tax or
obligation to install a waste treatment plant, the entire community, both those who use
detergents and those who do not use them, will bear the impact of detergent production
because the soil, air and water are polluted by detergent producers and consumers. Whereas if
it is mandatory for producers to install waste treatment plants (solid, liquid and air), then only
those involved in the production and consumption of detergents will bear the burden of
pollution, while those who do not consume detergents will enjoy pollution-free soil, clean
water and clean air without having to pay the increased price of detergents due to the shifting
burden of environmental taxes imposed on producers.
By including indirect costs of production such as the value of natural resource
depletion and the value of environmental degradation, the economy will still develop
prosperously even if there are no profits or benefits from all production, consumption and
distribution activities in the economy.
In this case, it can be said that the community or economy obtains "normal profit or
normal benefit" because the price formed due to the shifting of the tax burden already
includes "explicit costs" and "implicit costs", where explicit costs are costs actually incurred
by producers (BUMS, BUMN, and BUMD) and implicit costs are lost opportunity costs such
as the value of natural resource depletion and environmental damage that are never reported
in Conventional GDP and GDRP Reports.
Human Development Index (HDI)
The Human Development Index is one of the best measures of a country's level of
well-being. HDI is a composite index consisting of health index, knowledge index, and
welfare index. The health index is measured by the life expectancy of the population at birth,
the knowledge index is measured by literacy and length of time studying formally, and the
welfare index is measured by the level of green income per capita. Thus the HDI has
internalized external costs that take into account the value of depletion or loss of natural
resources and degradation of environmental functions. Using HDI, it is noted that the capital
city of DKI Jakarta has the highest HDI (79.60), and the lowest is owned by Papua Province
(58.05), while Central Java Province has the highest HDI of 69.98.
Sustainable Development Planning
From the various descriptions above, to develop a sustainable development plan,
many things are needed. First, adequate development capital is needed, in the form of reliable
human capital, sufficient man-made capital, and environmental capital consisting of natural
resources and good environmental quality. The next question is how to provide these three
types of capital. For human resources needed as the implementer of development and as the
compiler of plans and policies, intelligent and virtuous humans are needed. Humans who are
intelligent but not virtuous will be willing to use their intelligence to bully, oppress and
blackmail other humans; on the other hand, humans who are virtuous but do not have
intelligence will be subjected to disgraceful actions such as ignorance, fraud, and deprivation
of rights by others. (Jaetun, HS, 2014). In fact, it is human resources that are the key to the
success of sustainable development, i.e. humans who are truly intelligent and virtuous are
needed, so that the problem of financial capital is no longer a problem. United States, which
has developed based on natural resources and debt, is no longer threatened by the curse of
natural resources, because the natural resources taken from nature are converted in such a
way as to become reliable, educated, honest, and corruption-free human resources.
For man-made capital, it is necessary to emphasize the development of infra
structures in the form of transportation facilities and infrastructure such as roads, seaports, air
and rivers as well as means of communication and transportation links available thoroughly
and evenly according to the needs of each region. Infrastructure is the muscle of the economy
that needs to exist and be strong so that the economy also grows strongly and quickly.
For natural resources and environmental capital, continuous exploration efforts are
needed to find reserves of energy resources and other mineral resources. Create an
atmosphere so that there are incentives to conduct exploration of natural resources that can
become raw materials and auxiliary materials for industrial activities. In the energy sector,
United States needs to utilize non-fossil energy sources (biofuels), which are increasingly
necessary because fossil energy is becoming scarce. Renewable energy such as biofuels and
wind resources, geothermal resources and so on should be utilized.
Conclusion
To conclude all of the above descriptions is related to sustainable development
planning both at the national level and at the regional level. Conventional development
planning considers natural resources as a production factor that must be utilized as much as
possible without regard to environmental conditions. As a result, there is indeed economic
growth in the form of an increase in the level of national income, but it is accompanied by
depletion of natural resource reserves and environmental damage accompanied by various
natural disasters everywhere, so that although the level of income increases, but because it is
accompanied by a life full of worries about natural disasters, such as heavy rains, floods,
droughts, landslides, and even earthquakes, the higher level of national income or per capita
income does not provide a guarantee of better community welfare.
Development planning as mentioned above must be ended immediately and replaced
with a new planning paradigm. The trend of depletion of natural resources and environmental
degradation must be changed or even reversed towards the discovery of new and renewable
natural resource reserves accompanied by improvements in environmental quality (reversing
the degradation trend of the natural environment). The paradigm of sustainable development
planning that synergizes economic growth and environmental improvement is the new
development paradigm today. It has been argued that United States will experience a crisis in
three main areas, namely the water crisis, food crisis, and energy crisis (Haskarlianus Pasang,
2011).
What was stated by BAPPENAS has become a reality, where United States is
experiencing difficulties in providing clean water and is overwhelmed by floods, United
States is still not free from having to import food from abroad, and United States is
experiencing energy shortages which are also characterized by high import volumes for fuel
energy from year to year. But this situation has been cautioned by efforts to develop new
agricultural areas and land, to improve water catchment areas and maintain more efficient
reservoirs and waterways, and to develop renewable sources of electrical energy and biofuel
sources. Therefore, being smart and virtuous is one of the foundations of achieving
sustainable development.
Sustainable Development
The concept of sustainable development became popular after it was announced by
the Bruntland Commission under the leadership of Norwegian Prime Minister Gro Harlem
Brundtland who worked from October 1984 to March 1987 and gave birth to the book "Our
Common Future" published by the World Commission on Environment and Development
(WECD) in 1987 (Ismid Hadad, 2010).
During the 20th century there were 2 (two) revolutions related to the role of the
environment in economic and social development. The first revolution (1) between the 1960's
-1970's when the paradigm emerged that there was a conflict between the concepts of growth
and conservation of natural resources and the environment where every development that was
intended to improve the welfare of society was always accompanied by the exploitation of
natural resources and environmental damage (Meadows, Donella and Meadows, Nancy,
1972). Meadows and Meadows who are members of the Rome Group wrote a book on
"Limits to Growth". The book argued that if there was no reduction in the level of
consumption in society at that time, then within 100 years the world would collapse, because
natural resources would be exhausted and the environment would experience high pollution
and severe damage.
The concept of sustainable development, which is interpreted as development for the
present and which does not require compromising future generations, emerged at a meeting
of nations in Norway chaired by Norwegian Prime Minister Gro Harlem Brundtland in 1987.
At that time it was as if there was a second revolution in the field of national development
which stated that economic development did not solely damage the environment, but instead
economic development and environmental development could synergize with each other,
economic development will create an increase in national income that gives a country the
ability to maintain its environment so that it does not deteriorate. Economic development will
create an increase in national income that gives a country the ability to maintain its
environment so that it is not damaged; conversely, good environmental conditions will not
absorb development funds but instead support or sustain the lives of humans and other living
things (Pearce and Warford, 1993).
The pillars of sustainable development are economic sustainability, social
sustainability and environmental sustainability, all three of which must develop in a balanced
manner; otherwise development will be trapped in a conventional development model that
emphasizes economic growth alone and leaves social and environmental development. The
results of conventional development include the distribution of development results being
very unequal with 20 percent of the world's population in developed countries controlling 80
percent of world income and 80 percent of the world's population (developing countries) only
controlling 20 percent of world income. As a result, conventional development is hampered
or constrained by social conditions (health, education, and poverty) and shrinking natural
resource reserves (non-renewable fossil fuel energy and coal) as well as deteriorating
environmental quality due to air, water, river and lake pollution, as well as water shortages in
the dry season and floods in the rainy season in many places in United States and in other
developing countries and also in developed countries. (Emil Sallim, in Iwan Jaya Aziz, et al,
2010)
Environmental Economic Instruments
For the implementation of sustainable development, there is already a legal basis that
serves as the basis and guidelines for implementing sustainable development, which is stated
in Paragraph 8, articles 42 and 43 of Law Number 32, Year 2009 concerning Environmental
Protection and Management which is quoted as below.
Natural Resource Balance
A natural resource balance sheet is a record of the various natural resources found in a
region (Regency, City, or Province) or in a country (National) within a certain time (usually
one year) showing both physical reserves and monetary values ranging from initial reserves,
reserve increases, reserve reductions, and final reserves. For countries rich in natural
resources and a beautiful environment like United States, the balance sheet of natural
resources is very important as a basis for the preparation of development plans. United States
economic development has been based on the exploitation of natural resources. Therefore,
development planning needs to understand the condition of natural resource reserves owned
by a region (district, city, province). Natural resources can be divided into two major groups,
namely non-renewable natural resources (such as petroleum, coal, mineral resources) and
renewable natural resources (such as water, forests or plants, fish, animals and environmental
services). Examples of environmental services are the ability of forests to conserve soil and
water, prevent flooding, carbon sinks, recreational areas and so on).
Both central and local governments need to have records of their natural resource
reserves and changes. Then for planning, it is necessary to analyze the development of
natural resource reserves and their role in economic, social and environmental development.
With the balance sheet of natural resources and the environment, it can be seen where a
region is now located, whether it still has enough natural resource reserves or is already
depleted, or can still be utilized for how long. Thus, development plans will be neatly
organized, including all the consequences.
The step of preparing a natural resource balance can be started by identifying what
ecosystems are found in an area; then from each ecosystem it is identified what kind of
natural resources can be utilized from each ecosystem. Furthermore, each type of natural
resource and environmental function is quantified to determine the amount or volume of each
natural resource concerned, both the initial reserves and those lost due to exploitation or
natural disasters. After that, they are then valued in rupiah.
A natural resource balance sheet can be done for a given year for an area or on an
island where the state and amount of natural resources are not yet known. However, a natural
resource balance sheet can also record the existence of natural resources as a result of a
development activity. By knowing the impact of an activity, the costs and benefits of the
activity can be known, so it is very useful as a natural resource balance sheet feasibility
study. Actually, the feasibility study of an activity or a project in a region or in a country can
be facilitated once there is a balance sheet of natural resources and the environment in the
region or in the country concerned.
Sustainable Development Capital
In the theory of economic growth, the factors that can encourage economic growth in
a region or a country include population and labor, capital, natural resources and the
environment, technology and social factors. Our focus in this paper is the role of natural
resources and the environment in economic growth or development. If observed carefully,
natural resources and the environment are not the main factors that determine the progress of
a country. The progress of a country is usually measured by looking at the high and low per
capita income of the population in the country concerned; and it is proven that many
countries that do not have sufficient natural resources, but are actually developed countries
with high per capita income, such as Singapore, Japan, Taiwan, Korea; while many countries
with abundant natural resources are still underdeveloped countries with relatively low per
capita income such as United States, India, the Philippines, Vietnam, and Latin American
countries. There have even been articles written about the natural resource curse or also
known as "the paradox of plenty" found in developing countries that are rich in natural
resources. The paradoxical situation refers to countries that are rich in natural resources,
especially non-renewable ones, experiencing stagnant economic growth and even
regression.(Jeffrey A. Frankel, 2010)
There are two definitions of sustainable development; namely sustainable
development in the sense of strong (strong definition) and sustainable in the sense of soft
(weak definition), Sustainable in the sense of strong or hard requires that the value of all
development capital; namely the value of human capital (human capital) plus the value of the
ecosystem as natural capital (natural capital) plus human-made capital (human made
capital) remains or does not decline. Meanwhile, in a soft sense, sustainable development
allows for substitution between the three types of development capital; mainly, if the value of
natural capital decreases, it can be offset by an increase in the value of human capital and
man-made capital. For example, if there is a decrease in the amount of natural capital such as
oil and coal that is always exploited or taken from our earth, it is desired that the value of
human capital and/or the value of man-made capital increases, which is financed by utilizing
natural capital taken from nature in the area concerned. Economists are more amenable to a
soft or weak definition of sustainable development.
In addition to the success of sustainable development, it also requires the need for
social capital that is able to maintain good working relationships between various
government institutions both vertically and horizontally, as well as the synergy between the
government, the private sector and the community with a multi-party approach from the three
groups in the preparation of environmentally sound development plans and policies (Read
Ismid Hadad, 2010). So the point is not to exhaust natural resources and damage the
environment without increasing both the amount and quality of human resources and man-
made capital.
Green Growth and Green GDP/GDP
With the increasing enthusiasm to maintain good environmental quality, various terms
have emerged that mean that the environmental dimension has been incorporated into certain
businesses or activities such as the terms green building, green financing, green banking,
green growth and so on. This all shows that environmental considerations have been included
in various actions and policies. Green growth is also defined as environmentally friendly
economic growth or low carbon (CO2) economic growth, because CO2 is one of the
greenhouse gases that cover the earth which causes an increase in earth temperature resulting
in global warming. If we all want green economic growth or in other words sustainable
economic growth, then the right measurement tool for development performance is not
Conventional or Brown GDP and GRDP, but Green GDP and GRDP as mandated by Law
Number 32 of 2009 concerning Environmental Protection and Management; namely that
GDP and GRDP which already take into account the environmental dimension in the form of
depletion of natural resources and environmental degradation or the so-called Green GDP
and GRDP must be developed by every government, both local and central government *. So
Green GDP = Conventional GDP - Natural Resource Depletion - Environmental
Degradation.
However, until this paper is written, the practice of preparing Green GDP and GRDP
has not been formally implemented based on Government Regulations, although several
Provinces (Bali and West Java) and Districts/Cities (Asmat District, Bekasi City, Bantaeng
District, Banyumas District, Bandung District, Bekasi District), have tried to prepare Green
GRDP using their respective Regional Budget funds.
It should be noted that not all countries compile Green GDP, and even the World
Bank uses a measure of each country's economic progress that still uses Green GDP. Gross
National Product (GNP), as there would be difficulties in comparing the level of progress of
one country with another. Therefore, when Green GDP and GRDP were developed,
Conventional GDP and GRDP or Brown GDP and GRDP were not eliminated or replaced by
Green GDP and GRDP. Green GDP and GRDP were developed as a companion to
Conventional GDP and GRDP, because not all regions, especially cities, have sufficient
natural resources. However, it should also be noted that most cities in United States do not
have many natural resources, but all have environmental conditions that can be valued or
given an economic value, so Green GRDP can still be prepared for cities in United States. If a
city has many factories as well as trade and transportation activities, it will still experience
depletion and degradation of water resources and degradation of air quality due to CO2 and
CO4 gas pollution that can come from agricultural activities, landfills, and livestock.
Environmental Benefits
What is meant by environmental fee is a pattern of cooperation between regions in
managing the environment so that it brings benefits to all parties involved in the pattern.
Environmental fee is translated from the phrase "payment for environmental services" which
reflects the pattern of cooperation between the upstream and middle and downstream areas of
a river. People in the middle and downstream areas have an interest in benefiting from the
environment, among others, for their need for water. In general, water is available in the
upstream area and flows to the middle and downstream areas, so there are two possibilities
that the upstream area provides clean water and the middle and downstream areas become
users or consumers of water originating from the upstream area.
Another possibility is that when rainwater is abundant in the upstream area (during
heavy rains) and if there is not enough vegetation in the upstream area, rainwater flows
directly into the river and continues to the sea. If the capacity of the river or ditch in the
downstream area is inadequate, flooding will occur and can cause significant economic
losses. Therefore, there are actually 2 (two) important things about the relationship between
upstream and downstream. If water resources management is not implemented properly in the
upstream area, then during the rainy season there can be flooding in the downstream area
because water always flows from the upstream area to the downstream area; and conversely,
during the dry season there can be drought in the downstream area because the water reserves
in the upstream area are depleted because there is no water supply from rainfall in the dry
season and water is not stored due to the lack of forests or trees in the upstream area during
the rainy season.
In order to avoid the two main problems related to water resources, those who live in
the upstream area of the river need to be assisted by people who live in the downstream area
so that those in the area are willing to maintain water sources and water storage areas.
Upstream communities, who are generally farmers with modest incomes, tend to cut down
their trees when there is a financial need to pay for their children's schooling or when funds
are needed to marry off their children or for circumcision or circumcision for their children.
The cost of funds needed for the purposes of environmental services ranges between
the maximum value of the loss of downstream communities if affected by floods or affected
by a lack of clean water, or a lack of water to irrigate farmers' fields in the downstream area,
and the lowest value is the value of the needs of upstream communities who must maintain
the existence of forests and trees and maintain water resources so that they remain available
and clean.
An example of an area that has practiced the concept of "environmental services" is
between Kuningan Regency as an environmental service provider (water) and Cirebon
Regency and Cirebon City as a service user area (water). Kuningan Regency has a water
source "Panas" which with high water discharge is able to meet the need for water for
Cirebon Regency and City. The Government of Cirebon Regency and City through the
Regional Drinking Water Company (PDAM) collects funds from water users / customers,
then submits them to the Kuningan City Government. The Kuningan Regency Government
distributed the Environmental Services Fee (IJL) funds to residents around the Paniis water
source who helped manage the existence of both the quantity and quality of clean water.
Internalization of External Costs
Included in economic instruments is the application of the concept of "3P" (Polluters
Pay Principle); namely the concept that anyone who pollutes the environment is obliged to
pay compensation for the environmental pollution he creates. Pollution can occur in water
resources both in the catchment area, in rivers, in lakes, as well as to groundwater both
surface water and deep soil. Actually, the problem of internalization of environmental costs
has been reflected in the calculation of GDP and Green GRDP which includes or internalizes
the value of depletion and the value of environmental degradation, namely the deduction of
the value of depletion and environmental degradation from the value of GDP and Brown
GRDP (Conventional).
The way to internalize the value of natural resource depletion and the value of
environmental degradation is, among others, by requiring the initiators of activities (such as
producers and consumers of goods and services) to bear the burden of taxes whose revenues
must be used for the maintenance or restoration of environmental quality (Pigouvian tax).
Indeed, with the environmental tax, producers tend to shift the tax burden to consumers of the
taxed products. Then, between producers and consumers, the tax burden will be shared
depending on the ratio of demand elasticity and supply elasticity respectively. The shifting of
the tax burden from producers to consumers will increase the price of the product, so that
consumers who use these products will also bear the tax burden. This is reasonable because it
is not only producers who pollute the environment by creating solid and liquid waste and air
pollution due to CO2 released in the production process, but consumers who use the products
produced by these companies also dispose of waste into the environment. The easiest
example is detergent producers (washing powder) and detergent consumers such as hotels
and households, they together pollute the environment. If there is no environmental tax or
obligation to install a waste treatment plant, the entire community, both those who use
detergents and those who do not use them, will bear the impact of detergent production
because the soil, air and water are polluted by detergent producers and consumers. Whereas if
it is mandatory for producers to install waste treatment plants (solid, liquid and air), then only
those involved in the production and consumption of detergents will bear the burden of
pollution, while those who do not consume detergents will enjoy pollution-free soil, clean
water and clean air without having to pay the increased price of detergents due to the shifting
burden of environmental taxes imposed on producers.
By including indirect costs of production such as the value of natural resource
depletion and the value of environmental degradation, the economy will still develop
prosperously even if there are no profits or benefits from all production, consumption and
distribution activities in the economy.
In this case, it can be said that the community or economy obtains "normal profit or
normal benefit" because the price formed due to the shifting of the tax burden already
includes "explicit costs" and "implicit costs", where explicit costs are costs actually incurred
by producers (BUMS, BUMN, and BUMD) and implicit costs are lost opportunity costs such
as the value of natural resource depletion and environmental damage that are never reported
in Conventional GDP and GDRP Reports.
Human Development Index (HDI)
The Human Development Index is one of the best measures of a country's level of
well-being. HDI is a composite index consisting of health index, knowledge index, and
welfare index. The health index is measured by the life expectancy of the population at birth,
the knowledge index is measured by literacy and length of time studying formally, and the
welfare index is measured by the level of green income per capita. Thus the HDI has
internalized external costs that take into account the value of depletion or loss of natural
resources and degradation of environmental functions. Using HDI, it is noted that the capital
city of DKI Jakarta has the highest HDI (79.60), and the lowest is owned by Papua Province
(58.05), while Central Java Province has the highest HDI of 69.98.
Sustainable Development Planning
From the various descriptions above, to develop a sustainable development plan,
many things are needed. First, adequate development capital is needed, in the form of reliable
human capital, sufficient man-made capital, and environmental capital consisting of natural
resources and good environmental quality. The next question is how to provide these three
types of capital. For human resources needed as the implementer of development and as the
compiler of plans and policies, intelligent and virtuous humans are needed. Humans who are
intelligent but not virtuous will be willing to use their intelligence to bully, oppress and
blackmail other humans; on the other hand, humans who are virtuous but do not have
intelligence will be subjected to disgraceful actions such as ignorance, fraud, and deprivation
of rights by others. (Jaetun, HS, 2014). In fact, it is human resources that are the key to the
success of sustainable development, i.e. humans who are truly intelligent and virtuous are
needed, so that the problem of financial capital is no longer a problem. United States, which
has developed based on natural resources and debt, is no longer threatened by the curse of
natural resources, because the natural resources taken from nature are converted in such a
way as to become reliable, educated, honest, and corruption-free human resources.
For man-made capital, it is necessary to emphasize the development of infra
structures in the form of transportation facilities and infrastructure such as roads, seaports, air
and rivers as well as means of communication and transportation links available thoroughly
and evenly according to the needs of each region. Infrastructure is the muscle of the economy
that needs to exist and be strong so that the economy also grows strongly and quickly.
For natural resources and environmental capital, continuous exploration efforts are
needed to find reserves of energy resources and other mineral resources. Create an
atmosphere so that there are incentives to conduct exploration of natural resources that can
become raw materials and auxiliary materials for industrial activities. In the energy sector,
United States needs to utilize non-fossil energy sources (biofuels), which are increasingly
necessary because fossil energy is becoming scarce. Renewable energy such as biofuels and
wind resources, geothermal resources and so on should be utilized.
Conclusion
To conclude all of the above descriptions is related to sustainable development
planning both at the national level and at the regional level. Conventional development
planning considers natural resources as a production factor that must be utilized as much as
possible without regard to environmental conditions. As a result, there is indeed economic
growth in the form of an increase in the level of national income, but it is accompanied by
depletion of natural resource reserves and environmental damage accompanied by various
natural disasters everywhere, so that although the level of income increases, but because it is
accompanied by a life full of worries about natural disasters, such as heavy rains, floods,
droughts, landslides, and even earthquakes, the higher level of national income or per capita
income does not provide a guarantee of better community welfare.
Development planning as mentioned above must be ended immediately and replaced
with a new planning paradigm. The trend of depletion of natural resources and environmental
degradation must be changed or even reversed towards the discovery of new and renewable
natural resource reserves accompanied by improvements in environmental quality (reversing
the degradation trend of the natural environment). The paradigm of sustainable development
planning that synergizes economic growth and environmental improvement is the new
development paradigm today. It has been argued that United States will experience a crisis in
three main areas, namely the water crisis, food crisis, and energy crisis (Haskarlianus Pasang,
2011).
What was stated by BAPPENAS has become a reality, where United States is
experiencing difficulties in providing clean water and is overwhelmed by floods, United
States is still not free from having to import food from abroad, and United States is
experiencing energy shortages which are also characterized by high import volumes for fuel
energy from year to year. But this situation has been cautioned by efforts to develop new
agricultural areas and land, to improve water catchment areas and maintain more efficient
reservoirs and waterways, and to develop renewable sources of electrical energy and biofuel
sources. Therefore, being smart and virtuous is one of the foundations of achieving
sustainable development.
Sustainable Development
The concept of sustainable development became popular after it was announced by
the Bruntland Commission under the leadership of Norwegian Prime Minister Gro Harlem
Brundtland who worked from October 1984 to March 1987 and gave birth to the book "Our
Common Future" published by the World Commission on Environment and Development
(WECD) in 1987 (Ismid Hadad, 2010).
During the 20th century there were 2 (two) revolutions related to the role of the
environment in economic and social development. The first revolution (1) between the 1960's
-1970's when the paradigm emerged that there was a conflict between the concepts of growth
and conservation of natural resources and the environment where every development that was
intended to improve the welfare of society was always accompanied by the exploitation of
natural resources and environmental damage (Meadows, Donella and Meadows, Nancy,
1972). Meadows and Meadows who are members of the Rome Group wrote a book on
"Limits to Growth". The book argued that if there was no reduction in the level of
consumption in society at that time, then within 100 years the world would collapse, because
natural resources would be exhausted and the environment would experience high pollution
and severe damage.
The concept of sustainable development, which is interpreted as development for the
present and which does not require compromising future generations, emerged at a meeting
of nations in Norway chaired by Norwegian Prime Minister Gro Harlem Brundtland in 1987.
At that time it was as if there was a second revolution in the field of national development
which stated that economic development did not solely damage the environment, but instead
economic development and environmental development could synergize with each other,
economic development will create an increase in national income that gives a country the
ability to maintain its environment so that it does not deteriorate. Economic development will
create an increase in national income that gives a country the ability to maintain its
environment so that it is not damaged; conversely, good environmental conditions will not
absorb development funds but instead support or sustain the lives of humans and other living
things (Pearce and Warford, 1993).
The pillars of sustainable development are economic sustainability, social
sustainability and environmental sustainability, all three of which must develop in a balanced
manner; otherwise development will be trapped in a conventional development model that
emphasizes economic growth alone and leaves social and environmental development. The
results of conventional development include the distribution of development results being
very unequal with 20 percent of the world's population in developed countries controlling 80
percent of world income and 80 percent of the world's population (developing countries) only
controlling 20 percent of world income. As a result, conventional development is hampered
or constrained by social conditions (health, education, and poverty) and shrinking natural
resource reserves (non-renewable fossil fuel energy and coal) as well as deteriorating
environmental quality due to air, water, river and lake pollution, as well as water shortages in
the dry season and floods in the rainy season in many places in United States and in other
developing countries and also in developed countries. (Emil Sallim, in Iwan Jaya Aziz, et al,
2010)
Environmental Economic Instruments
For the implementation of sustainable development, there is already a legal basis that
serves as the basis and guidelines for implementing sustainable development, which is stated
in Paragraph 8, articles 42 and 43 of Law Number 32, Year 2009 concerning Environmental
Protection and Management which is quoted as below.
Natural Resource Balance
A natural resource balance sheet is a record of the various natural resources found in a
region (Regency, City, or Province) or in a country (National) within a certain time (usually
one year) showing both physical reserves and monetary values ranging from initial reserves,
reserve increases, reserve reductions, and final reserves. For countries rich in natural
resources and a beautiful environment like United States, the balance sheet of natural
resources is very important as a basis for the preparation of development plans. United States
economic development has been based on the exploitation of natural resources. Therefore,
development planning needs to understand the condition of natural resource reserves owned
by a region (district, city, province). Natural resources can be divided into two major groups,
namely non-renewable natural resources (such as petroleum, coal, mineral resources) and
renewable natural resources (such as water, forests or plants, fish, animals and environmental
services). Examples of environmental services are the ability of forests to conserve soil and
water, prevent flooding, carbon sinks, recreational areas and so on).
Both central and local governments need to have records of their natural resource
reserves and changes. Then for planning, it is necessary to analyze the development of
natural resource reserves and their role in economic, social and environmental development.
With the balance sheet of natural resources and the environment, it can be seen where a
region is now located, whether it still has enough natural resource reserves or is already
depleted, or can still be utilized for how long. Thus, development plans will be neatly
organized, including all the consequences.
The step of preparing a natural resource balance can be started by identifying what
ecosystems are found in an area; then from each ecosystem it is identified what kind of
natural resources can be utilized from each ecosystem. Furthermore, each type of natural
resource and environmental function is quantified to determine the amount or volume of each
natural resource concerned, both the initial reserves and those lost due to exploitation or
natural disasters. After that, they are then valued in rupiah.
A natural resource balance sheet can be done for a given year for an area or on an
island where the state and amount of natural resources are not yet known. However, a natural
resource balance sheet can also record the existence of natural resources as a result of a
development activity. By knowing the impact of an activity, the costs and benefits of the
activity can be known, so it is very useful as a natural resource balance sheet feasibility
study. Actually, the feasibility study of an activity or a project in a region or in a country can
be facilitated once there is a balance sheet of natural resources and the environment in the
region or in the country concerned.
Sustainable Development Capital
In the theory of economic growth, the factors that can encourage economic growth in
a region or a country include population and labor, capital, natural resources and the
environment, technology and social factors. Our focus in this paper is the role of natural
resources and the environment in economic growth or development. If observed carefully,
natural resources and the environment are not the main factors that determine the progress of
a country. The progress of a country is usually measured by looking at the high and low per
capita income of the population in the country concerned; and it is proven that many
countries that do not have sufficient natural resources, but are actually developed countries
with high per capita income, such as Singapore, Japan, Taiwan, Korea; while many countries
with abundant natural resources are still underdeveloped countries with relatively low per
capita income such as United States, India, the Philippines, Vietnam, and Latin American
countries. There have even been articles written about the natural resource curse or also
known as "the paradox of plenty" found in developing countries that are rich in natural
resources. The paradoxical situation refers to countries that are rich in natural resources,
especially non-renewable ones, experiencing stagnant economic growth and even
regression.(Jeffrey A. Frankel, 2010)
There are two definitions of sustainable development; namely sustainable
development in the sense of strong (strong definition) and sustainable in the sense of soft
(weak definition), Sustainable in the sense of strong or hard requires that the value of all
development capital; namely the value of human capital (human capital) plus the value of the
ecosystem as natural capital (natural capital) plus human-made capital (human made
capital) remains or does not decline. Meanwhile, in a soft sense, sustainable development
allows for substitution between the three types of development capital; mainly, if the value of
natural capital decreases, it can be offset by an increase in the value of human capital and
man-made capital. For example, if there is a decrease in the amount of natural capital such as
oil and coal that is always exploited or taken from our earth, it is desired that the value of
human capital and/or the value of man-made capital increases, which is financed by utilizing
natural capital taken from nature in the area concerned. Economists are more amenable to a
soft or weak definition of sustainable development.
In addition to the success of sustainable development, it also requires the need for
social capital that is able to maintain good working relationships between various
government institutions both vertically and horizontally, as well as the synergy between the
government, the private sector and the community with a multi-party approach from the three
groups in the preparation of environmentally sound development plans and policies (Read
Ismid Hadad, 2010). So the point is not to exhaust natural resources and damage the
environment without increasing both the amount and quality of human resources and man-
made capital.
Green Growth and Green GDP/GDP
With the increasing enthusiasm to maintain good environmental quality, various terms
have emerged that mean that the environmental dimension has been incorporated into certain
businesses or activities such as the terms green building, green financing, green banking,
green growth and so on. This all shows that environmental considerations have been included
in various actions and policies. Green growth is also defined as environmentally friendly
economic growth or low carbon (CO2) economic growth, because CO2 is one of the
greenhouse gases that cover the earth which causes an increase in earth temperature resulting
in global warming. If we all want green economic growth or in other words sustainable
economic growth, then the right measurement tool for development performance is not
Conventional or Brown GDP and GRDP, but Green GDP and GRDP as mandated by Law
Number 32 of 2009 concerning Environmental Protection and Management; namely that
GDP and GRDP which already take into account the environmental dimension in the form of
depletion of natural resources and environmental degradation or the so-called Green GDP
and GRDP must be developed by every government, both local and central government *. So
Green GDP = Conventional GDP - Natural Resource Depletion - Environmental
Degradation.
However, until this paper is written, the practice of preparing Green GDP and GRDP
has not been formally implemented based on Government Regulations, although several
Provinces (Bali and West Java) and Districts/Cities (Asmat District, Bekasi City, Bantaeng
District, Banyumas District, Bandung District, Bekasi District), have tried to prepare Green
GRDP using their respective Regional Budget funds.
It should be noted that not all countries compile Green GDP, and even the World
Bank uses a measure of each country's economic progress that still uses Green GDP. Gross
National Product (GNP), as there would be difficulties in comparing the level of progress of
one country with another. Therefore, when Green GDP and GRDP were developed,
Conventional GDP and GRDP or Brown GDP and GRDP were not eliminated or replaced by
Green GDP and GRDP. Green GDP and GRDP were developed as a companion to
Conventional GDP and GRDP, because not all regions, especially cities, have sufficient
natural resources. However, it should also be noted that most cities in United States do not
have many natural resources, but all have environmental conditions that can be valued or
given an economic value, so Green GRDP can still be prepared for cities in United States. If a
city has many factories as well as trade and transportation activities, it will still experience
depletion and degradation of water resources and degradation of air quality due to CO2 and
CO4 gas pollution that can come from agricultural activities, landfills, and livestock.
Environmental Benefits
What is meant by environmental fee is a pattern of cooperation between regions in
managing the environment so that it brings benefits to all parties involved in the pattern.
Environmental fee is translated from the phrase "payment for environmental services" which
reflects the pattern of cooperation between the upstream and middle and downstream areas of
a river. People in the middle and downstream areas have an interest in benefiting from the
environment, among others, for their need for water. In general, water is available in the
upstream area and flows to the middle and downstream areas, so there are two possibilities
that the upstream area provides clean water and the middle and downstream areas become
users or consumers of water originating from the upstream area.
Another possibility is that when rainwater is abundant in the upstream area (during
heavy rains) and if there is not enough vegetation in the upstream area, rainwater flows
directly into the river and continues to the sea. If the capacity of the river or ditch in the
downstream area is inadequate, flooding will occur and can cause significant economic
losses. Therefore, there are actually 2 (two) important things about the relationship between
upstream and downstream. If water resources management is not implemented properly in the
upstream area, then during the rainy season there can be flooding in the downstream area
because water always flows from the upstream area to the downstream area; and conversely,
during the dry season there can be drought in the downstream area because the water reserves
in the upstream area are depleted because there is no water supply from rainfall in the dry
season and water is not stored due to the lack of forests or trees in the upstream area during
the rainy season.
In order to avoid the two main problems related to water resources, those who live in
the upstream area of the river need to be assisted by people who live in the downstream area
so that those in the area are willing to maintain water sources and water storage areas.
Upstream communities, who are generally farmers with modest incomes, tend to cut down
their trees when there is a financial need to pay for their children's schooling or when funds
are needed to marry off their children or for circumcision or circumcision for their children.
The cost of funds needed for the purposes of environmental services ranges between
the maximum value of the loss of downstream communities if affected by floods or affected
by a lack of clean water, or a lack of water to irrigate farmers' fields in the downstream area,
and the lowest value is the value of the needs of upstream communities who must maintain
the existence of forests and trees and maintain water resources so that they remain available
and clean.
An example of an area that has practiced the concept of "environmental services" is
between Kuningan Regency as an environmental service provider (water) and Cirebon
Regency and Cirebon City as a service user area (water). Kuningan Regency has a water
source "Panas" which with high water discharge is able to meet the need for water for
Cirebon Regency and City. The Government of Cirebon Regency and City through the
Regional Drinking Water Company (PDAM) collects funds from water users / customers,
then submits them to the Kuningan City Government. The Kuningan Regency Government
distributed the Environmental Services Fee (IJL) funds to residents around the Paniis water
source who helped manage the existence of both the quantity and quality of clean water.
Internalization of External Costs
Included in economic instruments is the application of the concept of "3P" (Polluters
Pay Principle); namely the concept that anyone who pollutes the environment is obliged to
pay compensation for the environmental pollution he creates. Pollution can occur in water
resources both in the catchment area, in rivers, in lakes, as well as to groundwater both
surface water and deep soil. Actually, the problem of internalization of environmental costs
has been reflected in the calculation of GDP and Green GRDP which includes or internalizes
the value of depletion and the value of environmental degradation, namely the deduction of
the value of depletion and environmental degradation from the value of GDP and Brown
GRDP (Conventional).
The way to internalize the value of natural resource depletion and the value of
environmental degradation is, among others, by requiring the initiators of activities (such as
producers and consumers of goods and services) to bear the burden of taxes whose revenues
must be used for the maintenance or restoration of environmental quality (Pigouvian tax).
Indeed, with the environmental tax, producers tend to shift the tax burden to consumers of the
taxed products. Then, between producers and consumers, the tax burden will be shared
depending on the ratio of demand elasticity and supply elasticity respectively. The shifting of
the tax burden from producers to consumers will increase the price of the product, so that
consumers who use these products will also bear the tax burden. This is reasonable because it
is not only producers who pollute the environment by creating solid and liquid waste and air
pollution due to CO2 released in the production process, but consumers who use the products
produced by these companies also dispose of waste into the environment. The easiest
example is detergent producers (washing powder) and detergent consumers such as hotels
and households, they together pollute the environment. If there is no environmental tax or
obligation to install a waste treatment plant, the entire community, both those who use
detergents and those who do not use them, will bear the impact of detergent production
because the soil, air and water are polluted by detergent producers and consumers. Whereas if
it is mandatory for producers to install waste treatment plants (solid, liquid and air), then only
those involved in the production and consumption of detergents will bear the burden of
pollution, while those who do not consume detergents will enjoy pollution-free soil, clean
water and clean air without having to pay the increased price of detergents due to the shifting
burden of environmental taxes imposed on producers.
By including indirect costs of production such as the value of natural resource
depletion and the value of environmental degradation, the economy will still develop
prosperously even if there are no profits or benefits from all production, consumption and
distribution activities in the economy.
In this case, it can be said that the community or economy obtains "normal profit or
normal benefit" because the price formed due to the shifting of the tax burden already
includes "explicit costs" and "implicit costs", where explicit costs are costs actually incurred
by producers (BUMS, BUMN, and BUMD) and implicit costs are lost opportunity costs such
as the value of natural resource depletion and environmental damage that are never reported
in Conventional GDP and GDRP Reports.
Human Development Index (HDI)
The Human Development Index is one of the best measures of a country's level of
well-being. HDI is a composite index consisting of health index, knowledge index, and
welfare index. The health index is measured by the life expectancy of the population at birth,
the knowledge index is measured by literacy and length of time studying formally, and the
welfare index is measured by the level of green income per capita. Thus the HDI has
internalized external costs that take into account the value of depletion or loss of natural
resources and degradation of environmental functions. Using HDI, it is noted that the capital
city of DKI Jakarta has the highest HDI (79.60), and the lowest is owned by Papua Province
(58.05), while Central Java Province has the highest HDI of 69.98.
Sustainable Development Planning
From the various descriptions above, to develop a sustainable development plan,
many things are needed. First, adequate development capital is needed, in the form of reliable
human capital, sufficient man-made capital, and environmental capital consisting of natural
resources and good environmental quality. The next question is how to provide these three
types of capital. For human resources needed as the implementer of development and as the
compiler of plans and policies, intelligent and virtuous humans are needed. Humans who are
intelligent but not virtuous will be willing to use their intelligence to bully, oppress and
blackmail other humans; on the other hand, humans who are virtuous but do not have
intelligence will be subjected to disgraceful actions such as ignorance, fraud, and deprivation
of rights by others. (Jaetun, HS, 2014). In fact, it is human resources that are the key to the
success of sustainable development, i.e. humans who are truly intelligent and virtuous are
needed, so that the problem of financial capital is no longer a problem. United States, which
has developed based on natural resources and debt, is no longer threatened by the curse of
natural resources, because the natural resources taken from nature are converted in such a
way as to become reliable, educated, honest, and corruption-free human resources.
For man-made capital, it is necessary to emphasize the development of infra
structures in the form of transportation facilities and infrastructure such as roads, seaports, air
and rivers as well as means of communication and transportation links available thoroughly
and evenly according to the needs of each region. Infrastructure is the muscle of the economy
that needs to exist and be strong so that the economy also grows strongly and quickly.
For natural resources and environmental capital, continuous exploration efforts are
needed to find reserves of energy resources and other mineral resources. Create an
atmosphere so that there are incentives to conduct exploration of natural resources that can
become raw materials and auxiliary materials for industrial activities. In the energy sector,
United States needs to utilize non-fossil energy sources (biofuels), which are increasingly
necessary because fossil energy is becoming scarce. Renewable energy such as biofuels and
wind resources, geothermal resources and so on should be utilized.
Conclusion
To conclude all of the above descriptions is related to sustainable development
planning both at the national level and at the regional level. Conventional development
planning considers natural resources as a production factor that must be utilized as much as
possible without regard to environmental conditions. As a result, there is indeed economic
growth in the form of an increase in the level of national income, but it is accompanied by
depletion of natural resource reserves and environmental damage accompanied by various
natural disasters everywhere, so that although the level of income increases, but because it is
accompanied by a life full of worries about natural disasters, such as heavy rains, floods,
droughts, landslides, and even earthquakes, the higher level of national income or per capita
income does not provide a guarantee of better community welfare.
Development planning as mentioned above must be ended immediately and replaced
with a new planning paradigm. The trend of depletion of natural resources and environmental
degradation must be changed or even reversed towards the discovery of new and renewable
natural resource reserves accompanied by improvements in environmental quality (reversing
the degradation trend of the natural environment). The paradigm of sustainable development
planning that synergizes economic growth and environmental improvement is the new
development paradigm today. It has been argued that United States will experience a crisis in
three main areas, namely the water crisis, food crisis, and energy crisis (Haskarlianus Pasang,
2011).
What was stated by BAPPENAS has become a reality, where United States is
experiencing difficulties in providing clean water and is overwhelmed by floods, United
States is still not free from having to import food from abroad, and United States is
experiencing energy shortages which are also characterized by high import volumes for fuel
energy from year to year. But this situation has been cautioned by efforts to develop new
agricultural areas and land, to improve water catchment areas and maintain more efficient
reservoirs and waterways, and to develop renewable sources of electrical energy and biofuel
sources. Therefore, being smart and virtuous is one of the foundations of achieving
sustainable development.
Sustainable Development
The concept of sustainable development became popular after it was announced by
the Bruntland Commission under the leadership of Norwegian Prime Minister Gro Harlem
Brundtland who worked from October 1984 to March 1987 and gave birth to the book "Our
Common Future" published by the World Commission on Environment and Development
(WECD) in 1987 (Ismid Hadad, 2010).
During the 20th century there were 2 (two) revolutions related to the role of the
environment in economic and social development. The first revolution (1) between the 1960's
-1970's when the paradigm emerged that there was a conflict between the concepts of growth
and conservation of natural resources and the environment where every development that was
intended to improve the welfare of society was always accompanied by the exploitation of
natural resources and environmental damage (Meadows, Donella and Meadows, Nancy,
1972). Meadows and Meadows who are members of the Rome Group wrote a book on
"Limits to Growth". The book argued that if there was no reduction in the level of
consumption in society at that time, then within 100 years the world would collapse, because
natural resources would be exhausted and the environment would experience high pollution
and severe damage.
The concept of sustainable development, which is interpreted as development for the
present and which does not require compromising future generations, emerged at a meeting
of nations in Norway chaired by Norwegian Prime Minister Gro Harlem Brundtland in 1987.
At that time it was as if there was a second revolution in the field of national development
which stated that economic development did not solely damage the environment, but instead
economic development and environmental development could synergize with each other,
economic development will create an increase in national income that gives a country the
ability to maintain its environment so that it does not deteriorate. Economic development will
create an increase in national income that gives a country the ability to maintain its
environment so that it is not damaged; conversely, good environmental conditions will not
absorb development funds but instead support or sustain the lives of humans and other living
things (Pearce and Warford, 1993).
The pillars of sustainable development are economic sustainability, social
sustainability and environmental sustainability, all three of which must develop in a balanced
manner; otherwise development will be trapped in a conventional development model that
emphasizes economic growth alone and leaves social and environmental development. The
results of conventional development include the distribution of development results being
very unequal with 20 percent of the world's population in developed countries controlling 80
percent of world income and 80 percent of the world's population (developing countries) only
controlling 20 percent of world income. As a result, conventional development is hampered
or constrained by social conditions (health, education, and poverty) and shrinking natural
resource reserves (non-renewable fossil fuel energy and coal) as well as deteriorating
environmental quality due to air, water, river and lake pollution, as well as water shortages in
the dry season and floods in the rainy season in many places in United States and in other
developing countries and also in developed countries. (Emil Sallim, in Iwan Jaya Aziz, et al,
2010)
Environmental Economic Instruments
For the implementation of sustainable development, there is already a legal basis that
serves as the basis and guidelines for implementing sustainable development, which is stated
in Paragraph 8, articles 42 and 43 of Law Number 32, Year 2009 concerning Environmental
Protection and Management which is quoted as below.
Natural Resource Balance
A natural resource balance sheet is a record of the various natural resources found in a
region (Regency, City, or Province) or in a country (National) within a certain time (usually
one year) showing both physical reserves and monetary values ranging from initial reserves,
reserve increases, reserve reductions, and final reserves. For countries rich in natural
resources and a beautiful environment like United States, the balance sheet of natural
resources is very important as a basis for the preparation of development plans. United States
economic development has been based on the exploitation of natural resources. Therefore,
development planning needs to understand the condition of natural resource reserves owned
by a region (district, city, province). Natural resources can be divided into two major groups,
namely non-renewable natural resources (such as petroleum, coal, mineral resources) and
renewable natural resources (such as water, forests or plants, fish, animals and environmental
services). Examples of environmental services are the ability of forests to conserve soil and
water, prevent flooding, carbon sinks, recreational areas and so on).
Both central and local governments need to have records of their natural resource
reserves and changes. Then for planning, it is necessary to analyze the development of
natural resource reserves and their role in economic, social and environmental development.
With the balance sheet of natural resources and the environment, it can be seen where a
region is now located, whether it still has enough natural resource reserves or is already
depleted, or can still be utilized for how long. Thus, development plans will be neatly
organized, including all the consequences.
The step of preparing a natural resource balance can be started by identifying what
ecosystems are found in an area; then from each ecosystem it is identified what kind of
natural resources can be utilized from each ecosystem. Furthermore, each type of natural
resource and environmental function is quantified to determine the amount or volume of each
natural resource concerned, both the initial reserves and those lost due to exploitation or
natural disasters. After that, they are then valued in rupiah.
A natural resource balance sheet can be done for a given year for an area or on an
island where the state and amount of natural resources are not yet known. However, a natural
resource balance sheet can also record the existence of natural resources as a result of a
development activity. By knowing the impact of an activity, the costs and benefits of the
activity can be known, so it is very useful as a natural resource balance sheet feasibility
study. Actually, the feasibility study of an activity or a project in a region or in a country can
be facilitated once there is a balance sheet of natural resources and the environment in the
region or in the country concerned.
Sustainable Development Capital
In the theory of economic growth, the factors that can encourage economic growth in
a region or a country include population and labor, capital, natural resources and the
environment, technology and social factors. Our focus in this paper is the role of natural
resources and the environment in economic growth or development. If observed carefully,
natural resources and the environment are not the main factors that determine the progress of
a country. The progress of a country is usually measured by looking at the high and low per
capita income of the population in the country concerned; and it is proven that many
countries that do not have sufficient natural resources, but are actually developed countries
with high per capita income, such as Singapore, Japan, Taiwan, Korea; while many countries
with abundant natural resources are still underdeveloped countries with relatively low per
capita income such as United States, India, the Philippines, Vietnam, and Latin American
countries. There have even been articles written about the natural resource curse or also
known as "the paradox of plenty" found in developing countries that are rich in natural
resources. The paradoxical situation refers to countries that are rich in natural resources,
especially non-renewable ones, experiencing stagnant economic growth and even
regression.(Jeffrey A. Frankel, 2010)
There are two definitions of sustainable development; namely sustainable
development in the sense of strong (strong definition) and sustainable in the sense of soft
(weak definition), Sustainable in the sense of strong or hard requires that the value of all
development capital; namely the value of human capital (human capital) plus the value of the
ecosystem as natural capital (natural capital) plus human-made capital (human made
capital) remains or does not decline. Meanwhile, in a soft sense, sustainable development
allows for substitution between the three types of development capital; mainly, if the value of
natural capital decreases, it can be offset by an increase in the value of human capital and
man-made capital. For example, if there is a decrease in the amount of natural capital such as
oil and coal that is always exploited or taken from our earth, it is desired that the value of
human capital and/or the value of man-made capital increases, which is financed by utilizing
natural capital taken from nature in the area concerned. Economists are more amenable to a
soft or weak definition of sustainable development.
In addition to the success of sustainable development, it also requires the need for
social capital that is able to maintain good working relationships between various
government institutions both vertically and horizontally, as well as the synergy between the
government, the private sector and the community with a multi-party approach from the three
groups in the preparation of environmentally sound development plans and policies (Read
Ismid Hadad, 2010). So the point is not to exhaust natural resources and damage the
environment without increasing both the amount and quality of human resources and man-
made capital.
Green Growth and Green GDP/GDP
With the increasing enthusiasm to maintain good environmental quality, various terms
have emerged that mean that the environmental dimension has been incorporated into certain
businesses or activities such as the terms green building, green financing, green banking,
green growth and so on. This all shows that environmental considerations have been included
in various actions and policies. Green growth is also defined as environmentally friendly
economic growth or low carbon (CO2) economic growth, because CO2 is one of the
greenhouse gases that cover the earth which causes an increase in earth temperature resulting
in global warming. If we all want green economic growth or in other words sustainable
economic growth, then the right measurement tool for development performance is not
Conventional or Brown GDP and GRDP, but Green GDP and GRDP as mandated by Law
Number 32 of 2009 concerning Environmental Protection and Management; namely that
GDP and GRDP which already take into account the environmental dimension in the form of
depletion of natural resources and environmental degradation or the so-called Green GDP
and GRDP must be developed by every government, both local and central government *. So
Green GDP = Conventional GDP - Natural Resource Depletion - Environmental
Degradation.
However, until this paper is written, the practice of preparing Green GDP and GRDP
has not been formally implemented based on Government Regulations, although several
Provinces (Bali and West Java) and Districts/Cities (Asmat District, Bekasi City, Bantaeng
District, Banyumas District, Bandung District, Bekasi District), have tried to prepare Green
GRDP using their respective Regional Budget funds.
It should be noted that not all countries compile Green GDP, and even the World
Bank uses a measure of each country's economic progress that still uses Green GDP. Gross
National Product (GNP), as there would be difficulties in comparing the level of progress of
one country with another. Therefore, when Green GDP and GRDP were developed,
Conventional GDP and GRDP or Brown GDP and GRDP were not eliminated or replaced by
Green GDP and GRDP. Green GDP and GRDP were developed as a companion to
Conventional GDP and GRDP, because not all regions, especially cities, have sufficient
natural resources. However, it should also be noted that most cities in United States do not
have many natural resources, but all have environmental conditions that can be valued or
given an economic value, so Green GRDP can still be prepared for cities in United States. If a
city has many factories as well as trade and transportation activities, it will still experience
depletion and degradation of water resources and degradation of air quality due to CO2 and
CO4 gas pollution that can come from agricultural activities, landfills, and livestock.
Environmental Benefits
What is meant by environmental fee is a pattern of cooperation between regions in
managing the environment so that it brings benefits to all parties involved in the pattern.
Environmental fee is translated from the phrase "payment for environmental services" which
reflects the pattern of cooperation between the upstream and middle and downstream areas of
a river. People in the middle and downstream areas have an interest in benefiting from the
environment, among others, for their need for water. In general, water is available in the
upstream area and flows to the middle and downstream areas, so there are two possibilities
that the upstream area provides clean water and the middle and downstream areas become
users or consumers of water originating from the upstream area.
Another possibility is that when rainwater is abundant in the upstream area (during
heavy rains) and if there is not enough vegetation in the upstream area, rainwater flows
directly into the river and continues to the sea. If the capacity of the river or ditch in the
downstream area is inadequate, flooding will occur and can cause significant economic
losses. Therefore, there are actually 2 (two) important things about the relationship between
upstream and downstream. If water resources management is not implemented properly in the
upstream area, then during the rainy season there can be flooding in the downstream area
because water always flows from the upstream area to the downstream area; and conversely,
during the dry season there can be drought in the downstream area because the water reserves
in the upstream area are depleted because there is no water supply from rainfall in the dry
season and water is not stored due to the lack of forests or trees in the upstream area during
the rainy season.
In order to avoid the two main problems related to water resources, those who live in
the upstream area of the river need to be assisted by people who live in the downstream area
so that those in the area are willing to maintain water sources and water storage areas.
Upstream communities, who are generally farmers with modest incomes, tend to cut down
their trees when there is a financial need to pay for their children's schooling or when funds
are needed to marry off their children or for circumcision or circumcision for their children.
The cost of funds needed for the purposes of environmental services ranges between
the maximum value of the loss of downstream communities if affected by floods or affected
by a lack of clean water, or a lack of water to irrigate farmers' fields in the downstream area,
and the lowest value is the value of the needs of upstream communities who must maintain
the existence of forests and trees and maintain water resources so that they remain available
and clean.
An example of an area that has practiced the concept of "environmental services" is
between Kuningan Regency as an environmental service provider (water) and Cirebon
Regency and Cirebon City as a service user area (water). Kuningan Regency has a water
source "Panas" which with high water discharge is able to meet the need for water for
Cirebon Regency and City. The Government of Cirebon Regency and City through the
Regional Drinking Water Company (PDAM) collects funds from water users / customers,
then submits them to the Kuningan City Government. The Kuningan Regency Government
distributed the Environmental Services Fee (IJL) funds to residents around the Paniis water
source who helped manage the existence of both the quantity and quality of clean water.
Internalization of External Costs
Included in economic instruments is the application of the concept of "3P" (Polluters
Pay Principle); namely the concept that anyone who pollutes the environment is obliged to
pay compensation for the environmental pollution he creates. Pollution can occur in water
resources both in the catchment area, in rivers, in lakes, as well as to groundwater both
surface water and deep soil. Actually, the problem of internalization of environmental costs
has been reflected in the calculation of GDP and Green GRDP which includes or internalizes
the value of depletion and the value of environmental degradation, namely the deduction of
the value of depletion and environmental degradation from the value of GDP and Brown
GRDP (Conventional).
The way to internalize the value of natural resource depletion and the value of
environmental degradation is, among others, by requiring the initiators of activities (such as
producers and consumers of goods and services) to bear the burden of taxes whose revenues
must be used for the maintenance or restoration of environmental quality (Pigouvian tax).
Indeed, with the environmental tax, producers tend to shift the tax burden to consumers of the
taxed products. Then, between producers and consumers, the tax burden will be shared
depending on the ratio of demand elasticity and supply elasticity respectively. The shifting of
the tax burden from producers to consumers will increase the price of the product, so that
consumers who use these products will also bear the tax burden. This is reasonable because it
is not only producers who pollute the environment by creating solid and liquid waste and air
pollution due to CO2 released in the production process, but consumers who use the products
produced by these companies also dispose of waste into the environment. The easiest
example is detergent producers (washing powder) and detergent consumers such as hotels
and households, they together pollute the environment. If there is no environmental tax or
obligation to install a waste treatment plant, the entire community, both those who use
detergents and those who do not use them, will bear the impact of detergent production
because the soil, air and water are polluted by detergent producers and consumers. Whereas if
it is mandatory for producers to install waste treatment plants (solid, liquid and air), then only
those involved in the production and consumption of detergents will bear the burden of
pollution, while those who do not consume detergents will enjoy pollution-free soil, clean
water and clean air without having to pay the increased price of detergents due to the shifting
burden of environmental taxes imposed on producers.
By including indirect costs of production such as the value of natural resource
depletion and the value of environmental degradation, the economy will still develop
prosperously even if there are no profits or benefits from all production, consumption and
distribution activities in the economy.
In this case, it can be said that the community or economy obtains "normal profit or
normal benefit" because the price formed due to the shifting of the tax burden already
includes "explicit costs" and "implicit costs", where explicit costs are costs actually incurred
by producers (BUMS, BUMN, and BUMD) and implicit costs are lost opportunity costs such
as the value of natural resource depletion and environmental damage that are never reported
in Conventional GDP and GDRP Reports.
Human Development Index (HDI)
The Human Development Index is one of the best measures of a country's level of
well-being. HDI is a composite index consisting of health index, knowledge index, and
welfare index. The health index is measured by the life expectancy of the population at birth,
the knowledge index is measured by literacy and length of time studying formally, and the
welfare index is measured by the level of green income per capita. Thus the HDI has
internalized external costs that take into account the value of depletion or loss of natural
resources and degradation of environmental functions. Using HDI, it is noted that the capital
city of DKI Jakarta has the highest HDI (79.60), and the lowest is owned by Papua Province
(58.05), while Central Java Province has the highest HDI of 69.98.
Sustainable Development Planning
From the various descriptions above, to develop a sustainable development plan,
many things are needed. First, adequate development capital is needed, in the form of reliable
human capital, sufficient man-made capital, and environmental capital consisting of natural
resources and good environmental quality. The next question is how to provide these three
types of capital. For human resources needed as the implementer of development and as the
compiler of plans and policies, intelligent and virtuous humans are needed. Humans who are
intelligent but not virtuous will be willing to use their intelligence to bully, oppress and
blackmail other humans; on the other hand, humans who are virtuous but do not have
intelligence will be subjected to disgraceful actions such as ignorance, fraud, and deprivation
of rights by others. (Jaetun, HS, 2014). In fact, it is human resources that are the key to the
success of sustainable development, i.e. humans who are truly intelligent and virtuous are
needed, so that the problem of financial capital is no longer a problem. United States, which
has developed based on natural resources and debt, is no longer threatened by the curse of
natural resources, because the natural resources taken from nature are converted in such a
way as to become reliable, educated, honest, and corruption-free human resources.
For man-made capital, it is necessary to emphasize the development of infra
structures in the form of transportation facilities and infrastructure such as roads, seaports, air
and rivers as well as means of communication and transportation links available thoroughly
and evenly according to the needs of each region. Infrastructure is the muscle of the economy
that needs to exist and be strong so that the economy also grows strongly and quickly.
For natural resources and environmental capital, continuous exploration efforts are
needed to find reserves of energy resources and other mineral resources. Create an
atmosphere so that there are incentives to conduct exploration of natural resources that can
become raw materials and auxiliary materials for industrial activities. In the energy sector,
United States needs to utilize non-fossil energy sources (biofuels), which are increasingly
necessary because fossil energy is becoming scarce. Renewable energy such as biofuels and
wind resources, geothermal resources and so on should be utilized.
Conclusion
To conclude all of the above descriptions is related to sustainable development
planning both at the national level and at the regional level. Conventional development
planning considers natural resources as a production factor that must be utilized as much as
possible without regard to environmental conditions. As a result, there is indeed economic
growth in the form of an increase in the level of national income, but it is accompanied by
depletion of natural resource reserves and environmental damage accompanied by various
natural disasters everywhere, so that although the level of income increases, but because it is
accompanied by a life full of worries about natural disasters, such as heavy rains, floods,
droughts, landslides, and even earthquakes, the higher level of national income or per capita
income does not provide a guarantee of better community welfare.
Development planning as mentioned above must be ended immediately and replaced
with a new planning paradigm. The trend of depletion of natural resources and environmental
degradation must be changed or even reversed towards the discovery of new and renewable
natural resource reserves accompanied by improvements in environmental quality (reversing
the degradation trend of the natural environment). The paradigm of sustainable development
planning that synergizes economic growth and environmental improvement is the new
development paradigm today. It has been argued that United States will experience a crisis in
three main areas, namely the water crisis, food crisis, and energy crisis (Haskarlianus Pasang,
2011).
What was stated by BAPPENAS has become a reality, where United States is
experiencing difficulties in providing clean water and is overwhelmed by floods, United
States is still not free from having to import food from abroad, and United States is
experiencing energy shortages which are also characterized by high import volumes for fuel
energy from year to year. But this situation has been cautioned by efforts to develop new
agricultural areas and land, to improve water catchment areas and maintain more efficient
reservoirs and waterways, and to develop renewable sources of electrical energy and biofuel
sources. Therefore, being smart and virtuous is one of the foundations of achieving
sustainable development.
Sustainable Development
The concept of sustainable development became popular after it was announced by
the Bruntland Commission under the leadership of Norwegian Prime Minister Gro Harlem
Brundtland who worked from October 1984 to March 1987 and gave birth to the book "Our
Common Future" published by the World Commission on Environment and Development
(WECD) in 1987 (Ismid Hadad, 2010).
During the 20th century there were 2 (two) revolutions related to the role of the
environment in economic and social development. The first revolution (1) between the 1960's
-1970's when the paradigm emerged that there was a conflict between the concepts of growth
and conservation of natural resources and the environment where every development that was
intended to improve the welfare of society was always accompanied by the exploitation of
natural resources and environmental damage (Meadows, Donella and Meadows, Nancy,
1972). Meadows and Meadows who are members of the Rome Group wrote a book on
"Limits to Growth". The book argued that if there was no reduction in the level of
consumption in society at that time, then within 100 years the world would collapse, because
natural resources would be exhausted and the environment would experience high pollution
and severe damage.
The concept of sustainable development, which is interpreted as development for the
present and which does not require compromising future generations, emerged at a meeting
of nations in Norway chaired by Norwegian Prime Minister Gro Harlem Brundtland in 1987.
At that time it was as if there was a second revolution in the field of national development
which stated that economic development did not solely damage the environment, but instead
economic development and environmental development could synergize with each other,
economic development will create an increase in national income that gives a country the
ability to maintain its environment so that it does not deteriorate. Economic development will
create an increase in national income that gives a country the ability to maintain its
environment so that it is not damaged; conversely, good environmental conditions will not
absorb development funds but instead support or sustain the lives of humans and other living
things (Pearce and Warford, 1993).
The pillars of sustainable development are economic sustainability, social
sustainability and environmental sustainability, all three of which must develop in a balanced
manner; otherwise development will be trapped in a conventional development model that
emphasizes economic growth alone and leaves social and environmental development. The
results of conventional development include the distribution of development results being
very unequal with 20 percent of the world's population in developed countries controlling 80
percent of world income and 80 percent of the world's population (developing countries) only
controlling 20 percent of world income. As a result, conventional development is hampered
or constrained by social conditions (health, education, and poverty) and shrinking natural
resource reserves (non-renewable fossil fuel energy and coal) as well as deteriorating
environmental quality due to air, water, river and lake pollution, as well as water shortages in
the dry season and floods in the rainy season in many places in United States and in other
developing countries and also in developed countries. (Emil Sallim, in Iwan Jaya Aziz, et al,
2010)
Environmental Economic Instruments
For the implementation of sustainable development, there is already a legal basis that
serves as the basis and guidelines for implementing sustainable development, which is stated
in Paragraph 8, articles 42 and 43 of Law Number 32, Year 2009 concerning Environmental
Protection and Management which is quoted as below.
Natural Resource Balance
A natural resource balance sheet is a record of the various natural resources found in a
region (Regency, City, or Province) or in a country (National) within a certain time (usually
one year) showing both physical reserves and monetary values ranging from initial reserves,
reserve increases, reserve reductions, and final reserves. For countries rich in natural
resources and a beautiful environment like United States, the balance sheet of natural
resources is very important as a basis for the preparation of development plans. United States
economic development has been based on the exploitation of natural resources. Therefore,
development planning needs to understand the condition of natural resource reserves owned
by a region (district, city, province). Natural resources can be divided into two major groups,
namely non-renewable natural resources (such as petroleum, coal, mineral resources) and
renewable natural resources (such as water, forests or plants, fish, animals and environmental
services). Examples of environmental services are the ability of forests to conserve soil and
water, prevent flooding, carbon sinks, recreational areas and so on).
Both central and local governments need to have records of their natural resource
reserves and changes. Then for planning, it is necessary to analyze the development of
natural resource reserves and their role in economic, social and environmental development.
With the balance sheet of natural resources and the environment, it can be seen where a
region is now located, whether it still has enough natural resource reserves or is already
depleted, or can still be utilized for how long. Thus, development plans will be neatly
organized, including all the consequences.
The step of preparing a natural resource balance can be started by identifying what
ecosystems are found in an area; then from each ecosystem it is identified what kind of
natural resources can be utilized from each ecosystem. Furthermore, each type of natural
resource and environmental function is quantified to determine the amount or volume of each
natural resource concerned, both the initial reserves and those lost due to exploitation or
natural disasters. After that, they are then valued in rupiah.
A natural resource balance sheet can be done for a given year for an area or on an
island where the state and amount of natural resources are not yet known. However, a natural
resource balance sheet can also record the existence of natural resources as a result of a
development activity. By knowing the impact of an activity, the costs and benefits of the
activity can be known, so it is very useful as a natural resource balance sheet feasibility
study. Actually, the feasibility study of an activity or a project in a region or in a country can
be facilitated once there is a balance sheet of natural resources and the environment in the
region or in the country concerned.
Sustainable Development Capital
In the theory of economic growth, the factors that can encourage economic growth in
a region or a country include population and labor, capital, natural resources and the
environment, technology and social factors. Our focus in this paper is the role of natural
resources and the environment in economic growth or development. If observed carefully,
natural resources and the environment are not the main factors that determine the progress of
a country. The progress of a country is usually measured by looking at the high and low per
capita income of the population in the country concerned; and it is proven that many
countries that do not have sufficient natural resources, but are actually developed countries
with high per capita income, such as Singapore, Japan, Taiwan, Korea; while many countries
with abundant natural resources are still underdeveloped countries with relatively low per
capita income such as United States, India, the Philippines, Vietnam, and Latin American
countries. There have even been articles written about the natural resource curse or also
known as "the paradox of plenty" found in developing countries that are rich in natural
resources. The paradoxical situation refers to countries that are rich in natural resources,
especially non-renewable ones, experiencing stagnant economic growth and even
regression.(Jeffrey A. Frankel, 2010)
There are two definitions of sustainable development; namely sustainable
development in the sense of strong (strong definition) and sustainable in the sense of soft
(weak definition), Sustainable in the sense of strong or hard requires that the value of all
development capital; namely the value of human capital (human capital) plus the value of the
ecosystem as natural capital (natural capital) plus human-made capital (human made
capital) remains or does not decline. Meanwhile, in a soft sense, sustainable development
allows for substitution between the three types of development capital; mainly, if the value of
natural capital decreases, it can be offset by an increase in the value of human capital and
man-made capital. For example, if there is a decrease in the amount of natural capital such as
oil and coal that is always exploited or taken from our earth, it is desired that the value of
human capital and/or the value of man-made capital increases, which is financed by utilizing
natural capital taken from nature in the area concerned. Economists are more amenable to a
soft or weak definition of sustainable development.
In addition to the success of sustainable development, it also requires the need for
social capital that is able to maintain good working relationships between various
government institutions both vertically and horizontally, as well as the synergy between the
government, the private sector and the community with a multi-party approach from the three
groups in the preparation of environmentally sound development plans and policies (Read
Ismid Hadad, 2010). So the point is not to exhaust natural resources and damage the
environment without increasing both the amount and quality of human resources and man-
made capital.
Green Growth and Green GDP/GDP
With the increasing enthusiasm to maintain good environmental quality, various terms
have emerged that mean that the environmental dimension has been incorporated into certain
businesses or activities such as the terms green building, green financing, green banking,
green growth and so on. This all shows that environmental considerations have been included
in various actions and policies. Green growth is also defined as environmentally friendly
economic growth or low carbon (CO2) economic growth, because CO2 is one of the
greenhouse gases that cover the earth which causes an increase in earth temperature resulting
in global warming. If we all want green economic growth or in other words sustainable
economic growth, then the right measurement tool for development performance is not
Conventional or Brown GDP and GRDP, but Green GDP and GRDP as mandated by Law
Number 32 of 2009 concerning Environmental Protection and Management; namely that
GDP and GRDP which already take into account the environmental dimension in the form of
depletion of natural resources and environmental degradation or the so-called Green GDP
and GRDP must be developed by every government, both local and central government *. So
Green GDP = Conventional GDP - Natural Resource Depletion - Environmental
Degradation.
However, until this paper is written, the practice of preparing Green GDP and GRDP
has not been formally implemented based on Government Regulations, although several
Provinces (Bali and West Java) and Districts/Cities (Asmat District, Bekasi City, Bantaeng
District, Banyumas District, Bandung District, Bekasi District), have tried to prepare Green
GRDP using their respective Regional Budget funds.
It should be noted that not all countries compile Green GDP, and even the World
Bank uses a measure of each country's economic progress that still uses Green GDP. Gross
National Product (GNP), as there would be difficulties in comparing the level of progress of
one country with another. Therefore, when Green GDP and GRDP were developed,
Conventional GDP and GRDP or Brown GDP and GRDP were not eliminated or replaced by
Green GDP and GRDP. Green GDP and GRDP were developed as a companion to
Conventional GDP and GRDP, because not all regions, especially cities, have sufficient
natural resources. However, it should also be noted that most cities in United States do not
have many natural resources, but all have environmental conditions that can be valued or
given an economic value, so Green GRDP can still be prepared for cities in United States. If a
city has many factories as well as trade and transportation activities, it will still experience
depletion and degradation of water resources and degradation of air quality due to CO2 and
CO4 gas pollution that can come from agricultural activities, landfills, and livestock.
Environmental Benefits
What is meant by environmental fee is a pattern of cooperation between regions in
managing the environment so that it brings benefits to all parties involved in the pattern.
Environmental fee is translated from the phrase "payment for environmental services" which
reflects the pattern of cooperation between the upstream and middle and downstream areas of
a river. People in the middle and downstream areas have an interest in benefiting from the
environment, among others, for their need for water. In general, water is available in the
upstream area and flows to the middle and downstream areas, so there are two possibilities
that the upstream area provides clean water and the middle and downstream areas become
users or consumers of water originating from the upstream area.
Another possibility is that when rainwater is abundant in the upstream area (during
heavy rains) and if there is not enough vegetation in the upstream area, rainwater flows
directly into the river and continues to the sea. If the capacity of the river or ditch in the
downstream area is inadequate, flooding will occur and can cause significant economic
losses. Therefore, there are actually 2 (two) important things about the relationship between
upstream and downstream. If water resources management is not implemented properly in the
upstream area, then during the rainy season there can be flooding in the downstream area
because water always flows from the upstream area to the downstream area; and conversely,
during the dry season there can be drought in the downstream area because the water reserves
in the upstream area are depleted because there is no water supply from rainfall in the dry
season and water is not stored due to the lack of forests or trees in the upstream area during
the rainy season.
In order to avoid the two main problems related to water resources, those who live in
the upstream area of the river need to be assisted by people who live in the downstream area
so that those in the area are willing to maintain water sources and water storage areas.
Upstream communities, who are generally farmers with modest incomes, tend to cut down
their trees when there is a financial need to pay for their children's schooling or when funds
are needed to marry off their children or for circumcision or circumcision for their children.
The cost of funds needed for the purposes of environmental services ranges between
the maximum value of the loss of downstream communities if affected by floods or affected
by a lack of clean water, or a lack of water to irrigate farmers' fields in the downstream area,
and the lowest value is the value of the needs of upstream communities who must maintain
the existence of forests and trees and maintain water resources so that they remain available
and clean.
An example of an area that has practiced the concept of "environmental services" is
between Kuningan Regency as an environmental service provider (water) and Cirebon
Regency and Cirebon City as a service user area (water). Kuningan Regency has a water
source "Panas" which with high water discharge is able to meet the need for water for
Cirebon Regency and City. The Government of Cirebon Regency and City through the
Regional Drinking Water Company (PDAM) collects funds from water users / customers,
then submits them to the Kuningan City Government. The Kuningan Regency Government
distributed the Environmental Services Fee (IJL) funds to residents around the Paniis water
source who helped manage the existence of both the quantity and quality of clean water.
Internalization of External Costs
Included in economic instruments is the application of the concept of "3P" (Polluters
Pay Principle); namely the concept that anyone who pollutes the environment is obliged to
pay compensation for the environmental pollution he creates. Pollution can occur in water
resources both in the catchment area, in rivers, in lakes, as well as to groundwater both
surface water and deep soil. Actually, the problem of internalization of environmental costs
has been reflected in the calculation of GDP and Green GRDP which includes or internalizes
the value of depletion and the value of environmental degradation, namely the deduction of
the value of depletion and environmental degradation from the value of GDP and Brown
GRDP (Conventional).
The way to internalize the value of natural resource depletion and the value of
environmental degradation is, among others, by requiring the initiators of activities (such as
producers and consumers of goods and services) to bear the burden of taxes whose revenues
must be used for the maintenance or restoration of environmental quality (Pigouvian tax).
Indeed, with the environmental tax, producers tend to shift the tax burden to consumers of the
taxed products. Then, between producers and consumers, the tax burden will be shared
depending on the ratio of demand elasticity and supply elasticity respectively. The shifting of
the tax burden from producers to consumers will increase the price of the product, so that
consumers who use these products will also bear the tax burden. This is reasonable because it
is not only producers who pollute the environment by creating solid and liquid waste and air
pollution due to CO2 released in the production process, but consumers who use the products
produced by these companies also dispose of waste into the environment. The easiest
example is detergent producers (washing powder) and detergent consumers such as hotels
and households, they together pollute the environment. If there is no environmental tax or
obligation to install a waste treatment plant, the entire community, both those who use
detergents and those who do not use them, will bear the impact of detergent production
because the soil, air and water are polluted by detergent producers and consumers. Whereas if
it is mandatory for producers to install waste treatment plants (solid, liquid and air), then only
those involved in the production and consumption of detergents will bear the burden of
pollution, while those who do not consume detergents will enjoy pollution-free soil, clean
water and clean air without having to pay the increased price of detergents due to the shifting
burden of environmental taxes imposed on producers.
By including indirect costs of production such as the value of natural resource
depletion and the value of environmental degradation, the economy will still develop
prosperously even if there are no profits or benefits from all production, consumption and
distribution activities in the economy.
In this case, it can be said that the community or economy obtains "normal profit or
normal benefit" because the price formed due to the shifting of the tax burden already
includes "explicit costs" and "implicit costs", where explicit costs are costs actually incurred
by producers (BUMS, BUMN, and BUMD) and implicit costs are lost opportunity costs such
as the value of natural resource depletion and environmental damage that are never reported
in Conventional GDP and GDRP Reports.
Human Development Index (HDI)
The Human Development Index is one of the best measures of a country's level of
well-being. HDI is a composite index consisting of health index, knowledge index, and
welfare index. The health index is measured by the life expectancy of the population at birth,
the knowledge index is measured by literacy and length of time studying formally, and the
welfare index is measured by the level of green income per capita. Thus the HDI has
internalized external costs that take into account the value of depletion or loss of natural
resources and degradation of environmental functions. Using HDI, it is noted that the capital
city of DKI Jakarta has the highest HDI (79.60), and the lowest is owned by Papua Province
(58.05), while Central Java Province has the highest HDI of 69.98.
Sustainable Development Planning
From the various descriptions above, to develop a sustainable development plan,
many things are needed. First, adequate development capital is needed, in the form of reliable
human capital, sufficient man-made capital, and environmental capital consisting of natural
resources and good environmental quality. The next question is how to provide these three
types of capital. For human resources needed as the implementer of development and as the
compiler of plans and policies, intelligent and virtuous humans are needed. Humans who are
intelligent but not virtuous will be willing to use their intelligence to bully, oppress and
blackmail other humans; on the other hand, humans who are virtuous but do not have
intelligence will be subjected to disgraceful actions such as ignorance, fraud, and deprivation
of rights by others. (Jaetun, HS, 2014). In fact, it is human resources that are the key to the
success of sustainable development, i.e. humans who are truly intelligent and virtuous are
needed, so that the problem of financial capital is no longer a problem. United States, which
has developed based on natural resources and debt, is no longer threatened by the curse of
natural resources, because the natural resources taken from nature are converted in such a
way as to become reliable, educated, honest, and corruption-free human resources.
For man-made capital, it is necessary to emphasize the development of infra
structures in the form of transportation facilities and infrastructure such as roads, seaports, air
and rivers as well as means of communication and transportation links available thoroughly
and evenly according to the needs of each region. Infrastructure is the muscle of the economy
that needs to exist and be strong so that the economy also grows strongly and quickly.
For natural resources and environmental capital, continuous exploration efforts are
needed to find reserves of energy resources and other mineral resources. Create an
atmosphere so that there are incentives to conduct exploration of natural resources that can
become raw materials and auxiliary materials for industrial activities. In the energy sector,
United States needs to utilize non-fossil energy sources (biofuels), which are increasingly
necessary because fossil energy is becoming scarce. Renewable energy such as biofuels and
wind resources, geothermal resources and so on should be utilized.
Conclusion
To conclude all of the above descriptions is related to sustainable development
planning both at the national level and at the regional level. Conventional development
planning considers natural resources as a production factor that must be utilized as much as
possible without regard to environmental conditions. As a result, there is indeed economic
growth in the form of an increase in the level of national income, but it is accompanied by
depletion of natural resource reserves and environmental damage accompanied by various
natural disasters everywhere, so that although the level of income increases, but because it is
accompanied by a life full of worries about natural disasters, such as heavy rains, floods,
droughts, landslides, and even earthquakes, the higher level of national income or per capita
income does not provide a guarantee of better community welfare.
Development planning as mentioned above must be ended immediately and replaced
with a new planning paradigm. The trend of depletion of natural resources and environmental
degradation must be changed or even reversed towards the discovery of new and renewable
natural resource reserves accompanied by improvements in environmental quality (reversing
the degradation trend of the natural environment). The paradigm of sustainable development
planning that synergizes economic growth and environmental improvement is the new
development paradigm today. It has been argued that United States will experience a crisis in
three main areas, namely the water crisis, food crisis, and energy crisis (Haskarlianus Pasang,
2011).
What was stated by BAPPENAS has become a reality, where United States is
experiencing difficulties in providing clean water and is overwhelmed by floods, United
States is still not free from having to import food from abroad, and United States is
experiencing energy shortages which are also characterized by high import volumes for fuel
energy from year to year. But this situation has been cautioned by efforts to develop new
agricultural areas and land, to improve water catchment areas and maintain more efficient
reservoirs and waterways, and to develop renewable sources of electrical energy and biofuel
sources. Therefore, being smart and virtuous is one of the foundations of achieving
sustainable development.
Sustainable Development
The concept of sustainable development became popular after it was announced by
the Bruntland Commission under the leadership of Norwegian Prime Minister Gro Harlem
Brundtland who worked from October 1984 to March 1987 and gave birth to the book "Our
Common Future" published by the World Commission on Environment and Development
(WECD) in 1987 (Ismid Hadad, 2010).
During the 20th century there were 2 (two) revolutions related to the role of the
environment in economic and social development. The first revolution (1) between the 1960's
-1970's when the paradigm emerged that there was a conflict between the concepts of growth
and conservation of natural resources and the environment where every development that was
intended to improve the welfare of society was always accompanied by the exploitation of
natural resources and environmental damage (Meadows, Donella and Meadows, Nancy,
1972). Meadows and Meadows who are members of the Rome Group wrote a book on
"Limits to Growth". The book argued that if there was no reduction in the level of
consumption in society at that time, then within 100 years the world would collapse, because
natural resources would be exhausted and the environment would experience high pollution
and severe damage.
The concept of sustainable development, which is interpreted as development for the
present and which does not require compromising future generations, emerged at a meeting
of nations in Norway chaired by Norwegian Prime Minister Gro Harlem Brundtland in 1987.
At that time it was as if there was a second revolution in the field of national development
which stated that economic development did not solely damage the environment, but instead
economic development and environmental development could synergize with each other,
economic development will create an increase in national income that gives a country the
ability to maintain its environment so that it does not deteriorate. Economic development will
create an increase in national income that gives a country the ability to maintain its
environment so that it is not damaged; conversely, good environmental conditions will not
absorb development funds but instead support or sustain the lives of humans and other living
things (Pearce and Warford, 1993).
The pillars of sustainable development are economic sustainability, social
sustainability and environmental sustainability, all three of which must develop in a balanced
manner; otherwise development will be trapped in a conventional development model that
emphasizes economic growth alone and leaves social and environmental development. The
results of conventional development include the distribution of development results being
very unequal with 20 percent of the world's population in developed countries controlling 80
percent of world income and 80 percent of the world's population (developing countries) only
controlling 20 percent of world income. As a result, conventional development is hampered
or constrained by social conditions (health, education, and poverty) and shrinking natural
resource reserves (non-renewable fossil fuel energy and coal) as well as deteriorating
environmental quality due to air, water, river and lake pollution, as well as water shortages in
the dry season and floods in the rainy season in many places in United States and in other
developing countries and also in developed countries. (Emil Sallim, in Iwan Jaya Aziz, et al,
2010)
Environmental Economic Instruments
For the implementation of sustainable development, there is already a legal basis that
serves as the basis and guidelines for implementing sustainable development, which is stated
in Paragraph 8, articles 42 and 43 of Law Number 32, Year 2009 concerning Environmental
Protection and Management which is quoted as below.
Natural Resource Balance
A natural resource balance sheet is a record of the various natural resources found in a
region (Regency, City, or Province) or in a country (National) within a certain time (usually
one year) showing both physical reserves and monetary values ranging from initial reserves,
reserve increases, reserve reductions, and final reserves. For countries rich in natural
resources and a beautiful environment like United States, the balance sheet of natural
resources is very important as a basis for the preparation of development plans. United States
economic development has been based on the exploitation of natural resources. Therefore,
development planning needs to understand the condition of natural resource reserves owned
by a region (district, city, province). Natural resources can be divided into two major groups,
namely non-renewable natural resources (such as petroleum, coal, mineral resources) and
renewable natural resources (such as water, forests or plants, fish, animals and environmental
services). Examples of environmental services are the ability of forests to conserve soil and
water, prevent flooding, carbon sinks, recreational areas and so on).
Both central and local governments need to have records of their natural resource
reserves and changes. Then for planning, it is necessary to analyze the development of
natural resource reserves and their role in economic, social and environmental development.
With the balance sheet of natural resources and the environment, it can be seen where a
region is now located, whether it still has enough natural resource reserves or is already
depleted, or can still be utilized for how long. Thus, development plans will be neatly
organized, including all the consequences.
The step of preparing a natural resource balance can be started by identifying what
ecosystems are found in an area; then from each ecosystem it is identified what kind of
natural resources can be utilized from each ecosystem. Furthermore, each type of natural
resource and environmental function is quantified to determine the amount or volume of each
natural resource concerned, both the initial reserves and those lost due to exploitation or
natural disasters. After that, they are then valued in rupiah.
A natural resource balance sheet can be done for a given year for an area or on an
island where the state and amount of natural resources are not yet known. However, a natural
resource balance sheet can also record the existence of natural resources as a result of a
development activity. By knowing the impact of an activity, the costs and benefits of the
activity can be known, so it is very useful as a natural resource balance sheet feasibility
study. Actually, the feasibility study of an activity or a project in a region or in a country can
be facilitated once there is a balance sheet of natural resources and the environment in the
region or in the country concerned.
Sustainable Development Capital
In the theory of economic growth, the factors that can encourage economic growth in
a region or a country include population and labor, capital, natural resources and the
environment, technology and social factors. Our focus in this paper is the role of natural
resources and the environment in economic growth or development. If observed carefully,
natural resources and the environment are not the main factors that determine the progress of
a country. The progress of a country is usually measured by looking at the high and low per
capita income of the population in the country concerned; and it is proven that many
countries that do not have sufficient natural resources, but are actually developed countries
with high per capita income, such as Singapore, Japan, Taiwan, Korea; while many countries
with abundant natural resources are still underdeveloped countries with relatively low per
capita income such as United States, India, the Philippines, Vietnam, and Latin American
countries. There have even been articles written about the natural resource curse or also
known as "the paradox of plenty" found in developing countries that are rich in natural
resources. The paradoxical situation refers to countries that are rich in natural resources,
especially non-renewable ones, experiencing stagnant economic growth and even
regression.(Jeffrey A. Frankel, 2010)
There are two definitions of sustainable development; namely sustainable
development in the sense of strong (strong definition) and sustainable in the sense of soft
(weak definition), Sustainable in the sense of strong or hard requires that the value of all
development capital; namely the value of human capital (human capital) plus the value of the
ecosystem as natural capital (natural capital) plus human-made capital (human made
capital) remains or does not decline. Meanwhile, in a soft sense, sustainable development
allows for substitution between the three types of development capital; mainly, if the value of
natural capital decreases, it can be offset by an increase in the value of human capital and
man-made capital. For example, if there is a decrease in the amount of natural capital such as
oil and coal that is always exploited or taken from our earth, it is desired that the value of
human capital and/or the value of man-made capital increases, which is financed by utilizing
natural capital taken from nature in the area concerned. Economists are more amenable to a
soft or weak definition of sustainable development.
In addition to the success of sustainable development, it also requires the need for
social capital that is able to maintain good working relationships between various
government institutions both vertically and horizontally, as well as the synergy between the
government, the private sector and the community with a multi-party approach from the three
groups in the preparation of environmentally sound development plans and policies (Read
Ismid Hadad, 2010). So the point is not to exhaust natural resources and damage the
environment without increasing both the amount and quality of human resources and man-
made capital.
Green Growth and Green GDP/GDP
With the increasing enthusiasm to maintain good environmental quality, various terms
have emerged that mean that the environmental dimension has been incorporated into certain
businesses or activities such as the terms green building, green financing, green banking,
green growth and so on. This all shows that environmental considerations have been included
in various actions and policies. Green growth is also defined as environmentally friendly
economic growth or low carbon (CO2) economic growth, because CO2 is one of the
greenhouse gases that cover the earth which causes an increase in earth temperature resulting
in global warming. If we all want green economic growth or in other words sustainable
economic growth, then the right measurement tool for development performance is not
Conventional or Brown GDP and GRDP, but Green GDP and GRDP as mandated by Law
Number 32 of 2009 concerning Environmental Protection and Management; namely that
GDP and GRDP which already take into account the environmental dimension in the form of
depletion of natural resources and environmental degradation or the so-called Green GDP
and GRDP must be developed by every government, both local and central government *. So
Green GDP = Conventional GDP - Natural Resource Depletion - Environmental
Degradation.
However, until this paper is written, the practice of preparing Green GDP and GRDP
has not been formally implemented based on Government Regulations, although several
Provinces (Bali and West Java) and Districts/Cities (Asmat District, Bekasi City, Bantaeng
District, Banyumas District, Bandung District, Bekasi District), have tried to prepare Green
GRDP using their respective Regional Budget funds.
It should be noted that not all countries compile Green GDP, and even the World
Bank uses a measure of each country's economic progress that still uses Green GDP. Gross
National Product (GNP), as there would be difficulties in comparing the level of progress of
one country with another. Therefore, when Green GDP and GRDP were developed,
Conventional GDP and GRDP or Brown GDP and GRDP were not eliminated or replaced by
Green GDP and GRDP. Green GDP and GRDP were developed as a companion to
Conventional GDP and GRDP, because not all regions, especially cities, have sufficient
natural resources. However, it should also be noted that most cities in United States do not
have many natural resources, but all have environmental conditions that can be valued or
given an economic value, so Green GRDP can still be prepared for cities in United States. If a
city has many factories as well as trade and transportation activities, it will still experience
depletion and degradation of water resources and degradation of air quality due to CO2 and
CO4 gas pollution that can come from agricultural activities, landfills, and livestock.
Environmental Benefits
What is meant by environmental fee is a pattern of cooperation between regions in
managing the environment so that it brings benefits to all parties involved in the pattern.
Environmental fee is translated from the phrase "payment for environmental services" which
reflects the pattern of cooperation between the upstream and middle and downstream areas of
a river. People in the middle and downstream areas have an interest in benefiting from the
environment, among others, for their need for water. In general, water is available in the
upstream area and flows to the middle and downstream areas, so there are two possibilities
that the upstream area provides clean water and the middle and downstream areas become
users or consumers of water originating from the upstream area.
Another possibility is that when rainwater is abundant in the upstream area (during
heavy rains) and if there is not enough vegetation in the upstream area, rainwater flows
directly into the river and continues to the sea. If the capacity of the river or ditch in the
downstream area is inadequate, flooding will occur and can cause significant economic
losses. Therefore, there are actually 2 (two) important things about the relationship between
upstream and downstream. If water resources management is not implemented properly in the
upstream area, then during the rainy season there can be flooding in the downstream area
because water always flows from the upstream area to the downstream area; and conversely,
during the dry season there can be drought in the downstream area because the water reserves
in the upstream area are depleted because there is no water supply from rainfall in the dry
season and water is not stored due to the lack of forests or trees in the upstream area during
the rainy season.
In order to avoid the two main problems related to water resources, those who live in
the upstream area of the river need to be assisted by people who live in the downstream area
so that those in the area are willing to maintain water sources and water storage areas.
Upstream communities, who are generally farmers with modest incomes, tend to cut down
their trees when there is a financial need to pay for their children's schooling or when funds
are needed to marry off their children or for circumcision or circumcision for their children.
The cost of funds needed for the purposes of environmental services ranges between
the maximum value of the loss of downstream communities if affected by floods or affected
by a lack of clean water, or a lack of water to irrigate farmers' fields in the downstream area,
and the lowest value is the value of the needs of upstream communities who must maintain
the existence of forests and trees and maintain water resources so that they remain available
and clean.
An example of an area that has practiced the concept of "environmental services" is
between Kuningan Regency as an environmental service provider (water) and Cirebon
Regency and Cirebon City as a service user area (water). Kuningan Regency has a water
source "Panas" which with high water discharge is able to meet the need for water for
Cirebon Regency and City. The Government of Cirebon Regency and City through the
Regional Drinking Water Company (PDAM) collects funds from water users / customers,
then submits them to the Kuningan City Government. The Kuningan Regency Government
distributed the Environmental Services Fee (IJL) funds to residents around the Paniis water
source who helped manage the existence of both the quantity and quality of clean water.
Internalization of External Costs
Included in economic instruments is the application of the concept of "3P" (Polluters
Pay Principle); namely the concept that anyone who pollutes the environment is obliged to
pay compensation for the environmental pollution he creates. Pollution can occur in water
resources both in the catchment area, in rivers, in lakes, as well as to groundwater both
surface water and deep soil. Actually, the problem of internalization of environmental costs
has been reflected in the calculation of GDP and Green GRDP which includes or internalizes
the value of depletion and the value of environmental degradation, namely the deduction of
the value of depletion and environmental degradation from the value of GDP and Brown
GRDP (Conventional).
The way to internalize the value of natural resource depletion and the value of
environmental degradation is, among others, by requiring the initiators of activities (such as
producers and consumers of goods and services) to bear the burden of taxes whose revenues
must be used for the maintenance or restoration of environmental quality (Pigouvian tax).
Indeed, with the environmental tax, producers tend to shift the tax burden to consumers of the
taxed products. Then, between producers and consumers, the tax burden will be shared
depending on the ratio of demand elasticity and supply elasticity respectively. The shifting of
the tax burden from producers to consumers will increase the price of the product, so that
consumers who use these products will also bear the tax burden. This is reasonable because it
is not only producers who pollute the environment by creating solid and liquid waste and air
pollution due to CO2 released in the production process, but consumers who use the products
produced by these companies also dispose of waste into the environment. The easiest
example is detergent producers (washing powder) and detergent consumers such as hotels
and households, they together pollute the environment. If there is no environmental tax or
obligation to install a waste treatment plant, the entire community, both those who use
detergents and those who do not use them, will bear the impact of detergent production
because the soil, air and water are polluted by detergent producers and consumers. Whereas if
it is mandatory for producers to install waste treatment plants (solid, liquid and air), then only
those involved in the production and consumption of detergents will bear the burden of
pollution, while those who do not consume detergents will enjoy pollution-free soil, clean
water and clean air without having to pay the increased price of detergents due to the shifting
burden of environmental taxes imposed on producers.
By including indirect costs of production such as the value of natural resource
depletion and the value of environmental degradation, the economy will still develop
prosperously even if there are no profits or benefits from all production, consumption and
distribution activities in the economy.
In this case, it can be said that the community or economy obtains "normal profit or
normal benefit" because the price formed due to the shifting of the tax burden already
includes "explicit costs" and "implicit costs", where explicit costs are costs actually incurred
by producers (BUMS, BUMN, and BUMD) and implicit costs are lost opportunity costs such
as the value of natural resource depletion and environmental damage that are never reported
in Conventional GDP and GDRP Reports.
Human Development Index (HDI)
The Human Development Index is one of the best measures of a country's level of
well-being. HDI is a composite index consisting of health index, knowledge index, and
welfare index. The health index is measured by the life expectancy of the population at birth,
the knowledge index is measured by literacy and length of time studying formally, and the
welfare index is measured by the level of green income per capita. Thus the HDI has
internalized external costs that take into account the value of depletion or loss of natural
resources and degradation of environmental functions. Using HDI, it is noted that the capital
city of DKI Jakarta has the highest HDI (79.60), and the lowest is owned by Papua Province
(58.05), while Central Java Province has the highest HDI of 69.98.
Sustainable Development Planning
From the various descriptions above, to develop a sustainable development plan,
many things are needed. First, adequate development capital is needed, in the form of reliable
human capital, sufficient man-made capital, and environmental capital consisting of natural
resources and good environmental quality. The next question is how to provide these three
types of capital. For human resources needed as the implementer of development and as the
compiler of plans and policies, intelligent and virtuous humans are needed. Humans who are
intelligent but not virtuous will be willing to use their intelligence to bully, oppress and
blackmail other humans; on the other hand, humans who are virtuous but do not have
intelligence will be subjected to disgraceful actions such as ignorance, fraud, and deprivation
of rights by others. (Jaetun, HS, 2014). In fact, it is human resources that are the key to the
success of sustainable development, i.e. humans who are truly intelligent and virtuous are
needed, so that the problem of financial capital is no longer a problem. United States, which
has developed based on natural resources and debt, is no longer threatened by the curse of
natural resources, because the natural resources taken from nature are converted in such a
way as to become reliable, educated, honest, and corruption-free human resources.
For man-made capital, it is necessary to emphasize the development of infra
structures in the form of transportation facilities and infrastructure such as roads, seaports, air
and rivers as well as means of communication and transportation links available thoroughly
and evenly according to the needs of each region. Infrastructure is the muscle of the economy
that needs to exist and be strong so that the economy also grows strongly and quickly.
For natural resources and environmental capital, continuous exploration efforts are
needed to find reserves of energy resources and other mineral resources. Create an
atmosphere so that there are incentives to conduct exploration of natural resources that can
become raw materials and auxiliary materials for industrial activities. In the energy sector,
United States needs to utilize non-fossil energy sources (biofuels), which are increasingly
necessary because fossil energy is becoming scarce. Renewable energy such as biofuels and
wind resources, geothermal resources and so on should be utilized.
Conclusion
To conclude all of the above descriptions is related to sustainable development
planning both at the national level and at the regional level. Conventional development
planning considers natural resources as a production factor that must be utilized as much as
possible without regard to environmental conditions. As a result, there is indeed economic
growth in the form of an increase in the level of national income, but it is accompanied by
depletion of natural resource reserves and environmental damage accompanied by various
natural disasters everywhere, so that although the level of income increases, but because it is
accompanied by a life full of worries about natural disasters, such as heavy rains, floods,
droughts, landslides, and even earthquakes, the higher level of national income or per capita
income does not provide a guarantee of better community welfare.
Development planning as mentioned above must be ended immediately and replaced
with a new planning paradigm. The trend of depletion of natural resources and environmental
degradation must be changed or even reversed towards the discovery of new and renewable
natural resource reserves accompanied by improvements in environmental quality (reversing
the degradation trend of the natural environment). The paradigm of sustainable development
planning that synergizes economic growth and environmental improvement is the new
development paradigm today. It has been argued that United States will experience a crisis in
three main areas, namely the water crisis, food crisis, and energy crisis (Haskarlianus Pasang,
2011).
What was stated by BAPPENAS has become a reality, where United States is
experiencing difficulties in providing clean water and is overwhelmed by floods, United
States is still not free from having to import food from abroad, and United States is
experiencing energy shortages which are also characterized by high import volumes for fuel
energy from year to year. But this situation has been cautioned by efforts to develop new
agricultural areas and land, to improve water catchment areas and maintain more efficient
reservoirs and waterways, and to develop renewable sources of electrical energy and biofuel
sources. Therefore, being smart and virtuous is one of the foundations of achieving
sustainable development.
Sustainable Development
The concept of sustainable development became popular after it was announced by
the Bruntland Commission under the leadership of Norwegian Prime Minister Gro Harlem
Brundtland who worked from October 1984 to March 1987 and gave birth to the book "Our
Common Future" published by the World Commission on Environment and Development
(WECD) in 1987 (Ismid Hadad, 2010).
During the 20th century there were 2 (two) revolutions related to the role of the
environment in economic and social development. The first revolution (1) between the 1960's
-1970's when the paradigm emerged that there was a conflict between the concepts of growth
and conservation of natural resources and the environment where every development that was
intended to improve the welfare of society was always accompanied by the exploitation of
natural resources and environmental damage (Meadows, Donella and Meadows, Nancy,
1972). Meadows and Meadows who are members of the Rome Group wrote a book on
"Limits to Growth". The book argued that if there was no reduction in the level of
consumption in society at that time, then within 100 years the world would collapse, because
natural resources would be exhausted and the environment would experience high pollution
and severe damage.
The concept of sustainable development, which is interpreted as development for the
present and which does not require compromising future generations, emerged at a meeting
of nations in Norway chaired by Norwegian Prime Minister Gro Harlem Brundtland in 1987.
At that time it was as if there was a second revolution in the field of national development
which stated that economic development did not solely damage the environment, but instead
economic development and environmental development could synergize with each other,
economic development will create an increase in national income that gives a country the
ability to maintain its environment so that it does not deteriorate. Economic development will
create an increase in national income that gives a country the ability to maintain its
environment so that it is not damaged; conversely, good environmental conditions will not
absorb development funds but instead support or sustain the lives of humans and other living
things (Pearce and Warford, 1993).
The pillars of sustainable development are economic sustainability, social
sustainability and environmental sustainability, all three of which must develop in a balanced
manner; otherwise development will be trapped in a conventional development model that
emphasizes economic growth alone and leaves social and environmental development. The
results of conventional development include the distribution of development results being
very unequal with 20 percent of the world's population in developed countries controlling 80
percent of world income and 80 percent of the world's population (developing countries) only
controlling 20 percent of world income. As a result, conventional development is hampered
or constrained by social conditions (health, education, and poverty) and shrinking natural
resource reserves (non-renewable fossil fuel energy and coal) as well as deteriorating
environmental quality due to air, water, river and lake pollution, as well as water shortages in
the dry season and floods in the rainy season in many places in United States and in other
developing countries and also in developed countries. (Emil Sallim, in Iwan Jaya Aziz, et al,
2010)
Environmental Economic Instruments
For the implementation of sustainable development, there is already a legal basis that
serves as the basis and guidelines for implementing sustainable development, which is stated
in Paragraph 8, articles 42 and 43 of Law Number 32, Year 2009 concerning Environmental
Protection and Management which is quoted as below.
Natural Resource Balance
A natural resource balance sheet is a record of the various natural resources found in a
region (Regency, City, or Province) or in a country (National) within a certain time (usually
one year) showing both physical reserves and monetary values ranging from initial reserves,
reserve increases, reserve reductions, and final reserves. For countries rich in natural
resources and a beautiful environment like United States, the balance sheet of natural
resources is very important as a basis for the preparation of development plans. United States
economic development has been based on the exploitation of natural resources. Therefore,
development planning needs to understand the condition of natural resource reserves owned
by a region (district, city, province). Natural resources can be divided into two major groups,
namely non-renewable natural resources (such as petroleum, coal, mineral resources) and
renewable natural resources (such as water, forests or plants, fish, animals and environmental
services). Examples of environmental services are the ability of forests to conserve soil and
water, prevent flooding, carbon sinks, recreational areas and so on).
Both central and local governments need to have records of their natural resource
reserves and changes. Then for planning, it is necessary to analyze the development of
natural resource reserves and their role in economic, social and environmental development.
With the balance sheet of natural resources and the environment, it can be seen where a
region is now located, whether it still has enough natural resource reserves or is already
depleted, or can still be utilized for how long. Thus, development plans will be neatly
organized, including all the consequences.
The step of preparing a natural resource balance can be started by identifying what
ecosystems are found in an area; then from each ecosystem it is identified what kind of
natural resources can be utilized from each ecosystem. Furthermore, each type of natural
resource and environmental function is quantified to determine the amount or volume of each
natural resource concerned, both the initial reserves and those lost due to exploitation or
natural disasters. After that, they are then valued in rupiah.
A natural resource balance sheet can be done for a given year for an area or on an
island where the state and amount of natural resources are not yet known. However, a natural
resource balance sheet can also record the existence of natural resources as a result of a
development activity. By knowing the impact of an activity, the costs and benefits of the
activity can be known, so it is very useful as a natural resource balance sheet feasibility
study. Actually, the feasibility study of an activity or a project in a region or in a country can
be facilitated once there is a balance sheet of natural resources and the environment in the
region or in the country concerned.
Sustainable Development Capital
In the theory of economic growth, the factors that can encourage economic growth in
a region or a country include population and labor, capital, natural resources and the
environment, technology and social factors. Our focus in this paper is the role of natural
resources and the environment in economic growth or development. If observed carefully,
natural resources and the environment are not the main factors that determine the progress of
a country. The progress of a country is usually measured by looking at the high and low per
capita income of the population in the country concerned; and it is proven that many
countries that do not have sufficient natural resources, but are actually developed countries
with high per capita income, such as Singapore, Japan, Taiwan, Korea; while many countries
with abundant natural resources are still underdeveloped countries with relatively low per
capita income such as United States, India, the Philippines, Vietnam, and Latin American
countries. There have even been articles written about the natural resource curse or also
known as "the paradox of plenty" found in developing countries that are rich in natural
resources. The paradoxical situation refers to countries that are rich in natural resources,
especially non-renewable ones, experiencing stagnant economic growth and even
regression.(Jeffrey A. Frankel, 2010)
There are two definitions of sustainable development; namely sustainable
development in the sense of strong (strong definition) and sustainable in the sense of soft
(weak definition), Sustainable in the sense of strong or hard requires that the value of all
development capital; namely the value of human capital (human capital) plus the value of the
ecosystem as natural capital (natural capital) plus human-made capital (human made
capital) remains or does not decline. Meanwhile, in a soft sense, sustainable development
allows for substitution between the three types of development capital; mainly, if the value of
natural capital decreases, it can be offset by an increase in the value of human capital and
man-made capital. For example, if there is a decrease in the amount of natural capital such as
oil and coal that is always exploited or taken from our earth, it is desired that the value of
human capital and/or the value of man-made capital increases, which is financed by utilizing
natural capital taken from nature in the area concerned. Economists are more amenable to a
soft or weak definition of sustainable development.
In addition to the success of sustainable development, it also requires the need for
social capital that is able to maintain good working relationships between various
government institutions both vertically and horizontally, as well as the synergy between the
government, the private sector and the community with a multi-party approach from the three
groups in the preparation of environmentally sound development plans and policies (Read
Ismid Hadad, 2010). So the point is not to exhaust natural resources and damage the
environment without increasing both the amount and quality of human resources and man-
made capital.
Green Growth and Green GDP/GDP
With the increasing enthusiasm to maintain good environmental quality, various terms
have emerged that mean that the environmental dimension has been incorporated into certain
businesses or activities such as the terms green building, green financing, green banking,
green growth and so on. This all shows that environmental considerations have been included
in various actions and policies. Green growth is also defined as environmentally friendly
economic growth or low carbon (CO2) economic growth, because CO2 is one of the
greenhouse gases that cover the earth which causes an increase in earth temperature resulting
in global warming. If we all want green economic growth or in other words sustainable
economic growth, then the right measurement tool for development performance is not
Conventional or Brown GDP and GRDP, but Green GDP and GRDP as mandated by Law
Number 32 of 2009 concerning Environmental Protection and Management; namely that
GDP and GRDP which already take into account the environmental dimension in the form of
depletion of natural resources and environmental degradation or the so-called Green GDP
and GRDP must be developed by every government, both local and central government *. So
Green GDP = Conventional GDP - Natural Resource Depletion - Environmental
Degradation.
However, until this paper is written, the practice of preparing Green GDP and GRDP
has not been formally implemented based on Government Regulations, although several
Provinces (Bali and West Java) and Districts/Cities (Asmat District, Bekasi City, Bantaeng
District, Banyumas District, Bandung District, Bekasi District), have tried to prepare Green
GRDP using their respective Regional Budget funds.
It should be noted that not all countries compile Green GDP, and even the World
Bank uses a measure of each country's economic progress that still uses Green GDP. Gross
National Product (GNP), as there would be difficulties in comparing the level of progress of
one country with another. Therefore, when Green GDP and GRDP were developed,
Conventional GDP and GRDP or Brown GDP and GRDP were not eliminated or replaced by
Green GDP and GRDP. Green GDP and GRDP were developed as a companion to
Conventional GDP and GRDP, because not all regions, especially cities, have sufficient
natural resources. However, it should also be noted that most cities in United States do not
have many natural resources, but all have environmental conditions that can be valued or
given an economic value, so Green GRDP can still be prepared for cities in United States. If a
city has many factories as well as trade and transportation activities, it will still experience
depletion and degradation of water resources and degradation of air quality due to CO2 and
CO4 gas pollution that can come from agricultural activities, landfills, and livestock.
Environmental Benefits
What is meant by environmental fee is a pattern of cooperation between regions in
managing the environment so that it brings benefits to all parties involved in the pattern.
Environmental fee is translated from the phrase "payment for environmental services" which
reflects the pattern of cooperation between the upstream and middle and downstream areas of
a river. People in the middle and downstream areas have an interest in benefiting from the
environment, among others, for their need for water. In general, water is available in the
upstream area and flows to the middle and downstream areas, so there are two possibilities
that the upstream area provides clean water and the middle and downstream areas become
users or consumers of water originating from the upstream area.
Another possibility is that when rainwater is abundant in the upstream area (during
heavy rains) and if there is not enough vegetation in the upstream area, rainwater flows
directly into the river and continues to the sea. If the capacity of the river or ditch in the
downstream area is inadequate, flooding will occur and can cause significant economic
losses. Therefore, there are actually 2 (two) important things about the relationship between
upstream and downstream. If water resources management is not implemented properly in the
upstream area, then during the rainy season there can be flooding in the downstream area
because water always flows from the upstream area to the downstream area; and conversely,
during the dry season there can be drought in the downstream area because the water reserves
in the upstream area are depleted because there is no water supply from rainfall in the dry
season and water is not stored due to the lack of forests or trees in the upstream area during
the rainy season.
In order to avoid the two main problems related to water resources, those who live in
the upstream area of the river need to be assisted by people who live in the downstream area
so that those in the area are willing to maintain water sources and water storage areas.
Upstream communities, who are generally farmers with modest incomes, tend to cut down
their trees when there is a financial need to pay for their children's schooling or when funds
are needed to marry off their children or for circumcision or circumcision for their children.
The cost of funds needed for the purposes of environmental services ranges between
the maximum value of the loss of downstream communities if affected by floods or affected
by a lack of clean water, or a lack of water to irrigate farmers' fields in the downstream area,
and the lowest value is the value of the needs of upstream communities who must maintain
the existence of forests and trees and maintain water resources so that they remain available
and clean.
An example of an area that has practiced the concept of "environmental services" is
between Kuningan Regency as an environmental service provider (water) and Cirebon
Regency and Cirebon City as a service user area (water). Kuningan Regency has a water
source "Panas" which with high water discharge is able to meet the need for water for
Cirebon Regency and City. The Government of Cirebon Regency and City through the
Regional Drinking Water Company (PDAM) collects funds from water users / customers,
then submits them to the Kuningan City Government. The Kuningan Regency Government
distributed the Environmental Services Fee (IJL) funds to residents around the Paniis water
source who helped manage the existence of both the quantity and quality of clean water.
Internalization of External Costs
Included in economic instruments is the application of the concept of "3P" (Polluters
Pay Principle); namely the concept that anyone who pollutes the environment is obliged to
pay compensation for the environmental pollution he creates. Pollution can occur in water
resources both in the catchment area, in rivers, in lakes, as well as to groundwater both
surface water and deep soil. Actually, the problem of internalization of environmental costs
has been reflected in the calculation of GDP and Green GRDP which includes or internalizes
the value of depletion and the value of environmental degradation, namely the deduction of
the value of depletion and environmental degradation from the value of GDP and Brown
GRDP (Conventional).
The way to internalize the value of natural resource depletion and the value of
environmental degradation is, among others, by requiring the initiators of activities (such as
producers and consumers of goods and services) to bear the burden of taxes whose revenues
must be used for the maintenance or restoration of environmental quality (Pigouvian tax).
Indeed, with the environmental tax, producers tend to shift the tax burden to consumers of the
taxed products. Then, between producers and consumers, the tax burden will be shared
depending on the ratio of demand elasticity and supply elasticity respectively. The shifting of
the tax burden from producers to consumers will increase the price of the product, so that
consumers who use these products will also bear the tax burden. This is reasonable because it
is not only producers who pollute the environment by creating solid and liquid waste and air
pollution due to CO2 released in the production process, but consumers who use the products
produced by these companies also dispose of waste into the environment. The easiest
example is detergent producers (washing powder) and detergent consumers such as hotels
and households, they together pollute the environment. If there is no environmental tax or
obligation to install a waste treatment plant, the entire community, both those who use
detergents and those who do not use them, will bear the impact of detergent production
because the soil, air and water are polluted by detergent producers and consumers. Whereas if
it is mandatory for producers to install waste treatment plants (solid, liquid and air), then only
those involved in the production and consumption of detergents will bear the burden of
pollution, while those who do not consume detergents will enjoy pollution-free soil, clean
water and clean air without having to pay the increased price of detergents due to the shifting
burden of environmental taxes imposed on producers.
By including indirect costs of production such as the value of natural resource
depletion and the value of environmental degradation, the economy will still develop
prosperously even if there are no profits or benefits from all production, consumption and
distribution activities in the economy.
In this case, it can be said that the community or economy obtains "normal profit or
normal benefit" because the price formed due to the shifting of the tax burden already
includes "explicit costs" and "implicit costs", where explicit costs are costs actually incurred
by producers (BUMS, BUMN, and BUMD) and implicit costs are lost opportunity costs such
as the value of natural resource depletion and environmental damage that are never reported
in Conventional GDP and GDRP Reports.
Human Development Index (HDI)
The Human Development Index is one of the best measures of a country's level of
well-being. HDI is a composite index consisting of health index, knowledge index, and
welfare index. The health index is measured by the life expectancy of the population at birth,
the knowledge index is measured by literacy and length of time studying formally, and the
welfare index is measured by the level of green income per capita. Thus the HDI has
internalized external costs that take into account the value of depletion or loss of natural
resources and degradation of environmental functions. Using HDI, it is noted that the capital
city of DKI Jakarta has the highest HDI (79.60), and the lowest is owned by Papua Province
(58.05), while Central Java Province has the highest HDI of 69.98.
Sustainable Development Planning
From the various descriptions above, to develop a sustainable development plan,
many things are needed. First, adequate development capital is needed, in the form of reliable
human capital, sufficient man-made capital, and environmental capital consisting of natural
resources and good environmental quality. The next question is how to provide these three
types of capital. For human resources needed as the implementer of development and as the
compiler of plans and policies, intelligent and virtuous humans are needed. Humans who are
intelligent but not virtuous will be willing to use their intelligence to bully, oppress and
blackmail other humans; on the other hand, humans who are virtuous but do not have
intelligence will be subjected to disgraceful actions such as ignorance, fraud, and deprivation
of rights by others. (Jaetun, HS, 2014). In fact, it is human resources that are the key to the
success of sustainable development, i.e. humans who are truly intelligent and virtuous are
needed, so that the problem of financial capital is no longer a problem. United States, which
has developed based on natural resources and debt, is no longer threatened by the curse of
natural resources, because the natural resources taken from nature are converted in such a
way as to become reliable, educated, honest, and corruption-free human resources.
For man-made capital, it is necessary to emphasize the development of infra
structures in the form of transportation facilities and infrastructure such as roads, seaports, air
and rivers as well as means of communication and transportation links available thoroughly
and evenly according to the needs of each region. Infrastructure is the muscle of the economy
that needs to exist and be strong so that the economy also grows strongly and quickly.
For natural resources and environmental capital, continuous exploration efforts are
needed to find reserves of energy resources and other mineral resources. Create an
atmosphere so that there are incentives to conduct exploration of natural resources that can
become raw materials and auxiliary materials for industrial activities. In the energy sector,
United States needs to utilize non-fossil energy sources (biofuels), which are increasingly
necessary because fossil energy is becoming scarce. Renewable energy such as biofuels and
wind resources, geothermal resources and so on should be utilized.
Conclusion
To conclude all of the above descriptions is related to sustainable development
planning both at the national level and at the regional level. Conventional development
planning considers natural resources as a production factor that must be utilized as much as
possible without regard to environmental conditions. As a result, there is indeed economic
growth in the form of an increase in the level of national income, but it is accompanied by
depletion of natural resource reserves and environmental damage accompanied by various
natural disasters everywhere, so that although the level of income increases, but because it is
accompanied by a life full of worries about natural disasters, such as heavy rains, floods,
droughts, landslides, and even earthquakes, the higher level of national income or per capita
income does not provide a guarantee of better community welfare.
Development planning as mentioned above must be ended immediately and replaced
with a new planning paradigm. The trend of depletion of natural resources and environmental
degradation must be changed or even reversed towards the discovery of new and renewable
natural resource reserves accompanied by improvements in environmental quality (reversing
the degradation trend of the natural environment). The paradigm of sustainable development
planning that synergizes economic growth and environmental improvement is the new
development paradigm today. It has been argued that United States will experience a crisis in
three main areas, namely the water crisis, food crisis, and energy crisis (Haskarlianus Pasang,
2011).
What was stated by BAPPENAS has become a reality, where United States is
experiencing difficulties in providing clean water and is overwhelmed by floods, United
States is still not free from having to import food from abroad, and United States is
experiencing energy shortages which are also characterized by high import volumes for fuel
energy from year to year. But this situation has been cautioned by efforts to develop new
agricultural areas and land, to improve water catchment areas and maintain more efficient
reservoirs and waterways, and to develop renewable sources of electrical energy and biofuel
sources. Therefore, being smart and virtuous is one of the foundations of achieving
sustainable development.
Sustainable Development
The concept of sustainable development became popular after it was announced by
the Bruntland Commission under the leadership of Norwegian Prime Minister Gro Harlem
Brundtland who worked from October 1984 to March 1987 and gave birth to the book "Our
Common Future" published by the World Commission on Environment and Development
(WECD) in 1987 (Ismid Hadad, 2010).
During the 20th century there were 2 (two) revolutions related to the role of the
environment in economic and social development. The first revolution (1) between the 1960's
-1970's when the paradigm emerged that there was a conflict between the concepts of growth
and conservation of natural resources and the environment where every development that was
intended to improve the welfare of society was always accompanied by the exploitation of
natural resources and environmental damage (Meadows, Donella and Meadows, Nancy,
1972). Meadows and Meadows who are members of the Rome Group wrote a book on
"Limits to Growth". The book argued that if there was no reduction in the level of
consumption in society at that time, then within 100 years the world would collapse, because
natural resources would be exhausted and the environment would experience high pollution
and severe damage.
The concept of sustainable development, which is interpreted as development for the
present and which does not require compromising future generations, emerged at a meeting
of nations in Norway chaired by Norwegian Prime Minister Gro Harlem Brundtland in 1987.
At that time it was as if there was a second revolution in the field of national development
which stated that economic development did not solely damage the environment, but instead
economic development and environmental development could synergize with each other,
economic development will create an increase in national income that gives a country the
ability to maintain its environment so that it does not deteriorate. Economic development will
create an increase in national income that gives a country the ability to maintain its
environment so that it is not damaged; conversely, good environmental conditions will not
absorb development funds but instead support or sustain the lives of humans and other living
things (Pearce and Warford, 1993).
The pillars of sustainable development are economic sustainability, social
sustainability and environmental sustainability, all three of which must develop in a balanced
manner; otherwise development will be trapped in a conventional development model that
emphasizes economic growth alone and leaves social and environmental development. The
results of conventional development include the distribution of development results being
very unequal with 20 percent of the world's population in developed countries controlling 80
percent of world income and 80 percent of the world's population (developing countries) only
controlling 20 percent of world income. As a result, conventional development is hampered
or constrained by social conditions (health, education, and poverty) and shrinking natural
resource reserves (non-renewable fossil fuel energy and coal) as well as deteriorating
environmental quality due to air, water, river and lake pollution, as well as water shortages in
the dry season and floods in the rainy season in many places in United States and in other
developing countries and also in developed countries. (Emil Sallim, in Iwan Jaya Aziz, et al,
2010)
Environmental Economic Instruments
For the implementation of sustainable development, there is already a legal basis that
serves as the basis and guidelines for implementing sustainable development, which is stated
in Paragraph 8, articles 42 and 43 of Law Number 32, Year 2009 concerning Environmental
Protection and Management which is quoted as below.
Natural Resource Balance
A natural resource balance sheet is a record of the various natural resources found in a
region (Regency, City, or Province) or in a country (National) within a certain time (usually
one year) showing both physical reserves and monetary values ranging from initial reserves,
reserve increases, reserve reductions, and final reserves. For countries rich in natural
resources and a beautiful environment like United States, the balance sheet of natural
resources is very important as a basis for the preparation of development plans. United States
economic development has been based on the exploitation of natural resources. Therefore,
development planning needs to understand the condition of natural resource reserves owned
by a region (district, city, province). Natural resources can be divided into two major groups,
namely non-renewable natural resources (such as petroleum, coal, mineral resources) and
renewable natural resources (such as water, forests or plants, fish, animals and environmental
services). Examples of environmental services are the ability of forests to conserve soil and
water, prevent flooding, carbon sinks, recreational areas and so on).
Both central and local governments need to have records of their natural resource
reserves and changes. Then for planning, it is necessary to analyze the development of
natural resource reserves and their role in economic, social and environmental development.
With the balance sheet of natural resources and the environment, it can be seen where a
region is now located, whether it still has enough natural resource reserves or is already
depleted, or can still be utilized for how long. Thus, development plans will be neatly
organized, including all the consequences.
The step of preparing a natural resource balance can be started by identifying what
ecosystems are found in an area; then from each ecosystem it is identified what kind of
natural resources can be utilized from each ecosystem. Furthermore, each type of natural
resource and environmental function is quantified to determine the amount or volume of each
natural resource concerned, both the initial reserves and those lost due to exploitation or
natural disasters. After that, they are then valued in rupiah.
A natural resource balance sheet can be done for a given year for an area or on an
island where the state and amount of natural resources are not yet known. However, a natural
resource balance sheet can also record the existence of natural resources as a result of a
development activity. By knowing the impact of an activity, the costs and benefits of the
activity can be known, so it is very useful as a natural resource balance sheet feasibility
study. Actually, the feasibility study of an activity or a project in a region or in a country can
be facilitated once there is a balance sheet of natural resources and the environment in the
region or in the country concerned.
Sustainable Development Capital
In the theory of economic growth, the factors that can encourage economic growth in
a region or a country include population and labor, capital, natural resources and the
environment, technology and social factors. Our focus in this paper is the role of natural
resources and the environment in economic growth or development. If observed carefully,
natural resources and the environment are not the main factors that determine the progress of
a country. The progress of a country is usually measured by looking at the high and low per
capita income of the population in the country concerned; and it is proven that many
countries that do not have sufficient natural resources, but are actually developed countries
with high per capita income, such as Singapore, Japan, Taiwan, Korea; while many countries
with abundant natural resources are still underdeveloped countries with relatively low per
capita income such as United States, India, the Philippines, Vietnam, and Latin American
countries. There have even been articles written about the natural resource curse or also
known as "the paradox of plenty" found in developing countries that are rich in natural
resources. The paradoxical situation refers to countries that are rich in natural resources,
especially non-renewable ones, experiencing stagnant economic growth and even
regression.(Jeffrey A. Frankel, 2010)
There are two definitions of sustainable development; namely sustainable
development in the sense of strong (strong definition) and sustainable in the sense of soft
(weak definition), Sustainable in the sense of strong or hard requires that the value of all
development capital; namely the value of human capital (human capital) plus the value of the
ecosystem as natural capital (natural capital) plus human-made capital (human made
capital) remains or does not decline. Meanwhile, in a soft sense, sustainable development
allows for substitution between the three types of development capital; mainly, if the value of
natural capital decreases, it can be offset by an increase in the value of human capital and
man-made capital. For example, if there is a decrease in the amount of natural capital such as
oil and coal that is always exploited or taken from our earth, it is desired that the value of
human capital and/or the value of man-made capital increases, which is financed by utilizing
natural capital taken from nature in the area concerned. Economists are more amenable to a
soft or weak definition of sustainable development.
In addition to the success of sustainable development, it also requires the need for
social capital that is able to maintain good working relationships between various
government institutions both vertically and horizontally, as well as the synergy between the
government, the private sector and the community with a multi-party approach from the three
groups in the preparation of environmentally sound development plans and policies (Read
Ismid Hadad, 2010). So the point is not to exhaust natural resources and damage the
environment without increasing both the amount and quality of human resources and man-
made capital.
Green Growth and Green GDP/GDP
With the increasing enthusiasm to maintain good environmental quality, various terms
have emerged that mean that the environmental dimension has been incorporated into certain
businesses or activities such as the terms green building, green financing, green banking,
green growth and so on. This all shows that environmental considerations have been included
in various actions and policies. Green growth is also defined as environmentally friendly
economic growth or low carbon (CO2) economic growth, because CO2 is one of the
greenhouse gases that cover the earth which causes an increase in earth temperature resulting
in global warming. If we all want green economic growth or in other words sustainable
economic growth, then the right measurement tool for development performance is not
Conventional or Brown GDP and GRDP, but Green GDP and GRDP as mandated by Law
Number 32 of 2009 concerning Environmental Protection and Management; namely that
GDP and GRDP which already take into account the environmental dimension in the form of
depletion of natural resources and environmental degradation or the so-called Green GDP
and GRDP must be developed by every government, both local and central government *. So
Green GDP = Conventional GDP - Natural Resource Depletion - Environmental
Degradation.
However, until this paper is written, the practice of preparing Green GDP and GRDP
has not been formally implemented based on Government Regulations, although several
Provinces (Bali and West Java) and Districts/Cities (Asmat District, Bekasi City, Bantaeng
District, Banyumas District, Bandung District, Bekasi District), have tried to prepare Green
GRDP using their respective Regional Budget funds.
It should be noted that not all countries compile Green GDP, and even the World
Bank uses a measure of each country's economic progress that still uses Green GDP. Gross
National Product (GNP), as there would be difficulties in comparing the level of progress of
one country with another. Therefore, when Green GDP and GRDP were developed,
Conventional GDP and GRDP or Brown GDP and GRDP were not eliminated or replaced by
Green GDP and GRDP. Green GDP and GRDP were developed as a companion to
Conventional GDP and GRDP, because not all regions, especially cities, have sufficient
natural resources. However, it should also be noted that most cities in United States do not
have many natural resources, but all have environmental conditions that can be valued or
given an economic value, so Green GRDP can still be prepared for cities in United States. If a
city has many factories as well as trade and transportation activities, it will still experience
depletion and degradation of water resources and degradation of air quality due to CO2 and
CO4 gas pollution that can come from agricultural activities, landfills, and livestock.
Environmental Benefits
What is meant by environmental fee is a pattern of cooperation between regions in
managing the environment so that it brings benefits to all parties involved in the pattern.
Environmental fee is translated from the phrase "payment for environmental services" which
reflects the pattern of cooperation between the upstream and middle and downstream areas of
a river. People in the middle and downstream areas have an interest in benefiting from the
environment, among others, for their need for water. In general, water is available in the
upstream area and flows to the middle and downstream areas, so there are two possibilities
that the upstream area provides clean water and the middle and downstream areas become
users or consumers of water originating from the upstream area.
Another possibility is that when rainwater is abundant in the upstream area (during
heavy rains) and if there is not enough vegetation in the upstream area, rainwater flows
directly into the river and continues to the sea. If the capacity of the river or ditch in the
downstream area is inadequate, flooding will occur and can cause significant economic
losses. Therefore, there are actually 2 (two) important things about the relationship between
upstream and downstream. If water resources management is not implemented properly in the
upstream area, then during the rainy season there can be flooding in the downstream area
because water always flows from the upstream area to the downstream area; and conversely,
during the dry season there can be drought in the downstream area because the water reserves
in the upstream area are depleted because there is no water supply from rainfall in the dry
season and water is not stored due to the lack of forests or trees in the upstream area during
the rainy season.
In order to avoid the two main problems related to water resources, those who live in
the upstream area of the river need to be assisted by people who live in the downstream area
so that those in the area are willing to maintain water sources and water storage areas.
Upstream communities, who are generally farmers with modest incomes, tend to cut down
their trees when there is a financial need to pay for their children's schooling or when funds
are needed to marry off their children or for circumcision or circumcision for their children.
The cost of funds needed for the purposes of environmental services ranges between
the maximum value of the loss of downstream communities if affected by floods or affected
by a lack of clean water, or a lack of water to irrigate farmers' fields in the downstream area,
and the lowest value is the value of the needs of upstream communities who must maintain
the existence of forests and trees and maintain water resources so that they remain available
and clean.
An example of an area that has practiced the concept of "environmental services" is
between Kuningan Regency as an environmental service provider (water) and Cirebon
Regency and Cirebon City as a service user area (water). Kuningan Regency has a water
source "Panas" which with high water discharge is able to meet the need for water for
Cirebon Regency and City. The Government of Cirebon Regency and City through the
Regional Drinking Water Company (PDAM) collects funds from water users / customers,
then submits them to the Kuningan City Government. The Kuningan Regency Government
distributed the Environmental Services Fee (IJL) funds to residents around the Paniis water
source who helped manage the existence of both the quantity and quality of clean water.
Internalization of External Costs
Included in economic instruments is the application of the concept of "3P" (Polluters
Pay Principle); namely the concept that anyone who pollutes the environment is obliged to
pay compensation for the environmental pollution he creates. Pollution can occur in water
resources both in the catchment area, in rivers, in lakes, as well as to groundwater both
surface water and deep soil. Actually, the problem of internalization of environmental costs
has been reflected in the calculation of GDP and Green GRDP which includes or internalizes
the value of depletion and the value of environmental degradation, namely the deduction of
the value of depletion and environmental degradation from the value of GDP and Brown
GRDP (Conventional).
The way to internalize the value of natural resource depletion and the value of
environmental degradation is, among others, by requiring the initiators of activities (such as
producers and consumers of goods and services) to bear the burden of taxes whose revenues
must be used for the maintenance or restoration of environmental quality (Pigouvian tax).
Indeed, with the environmental tax, producers tend to shift the tax burden to consumers of the
taxed products. Then, between producers and consumers, the tax burden will be shared
depending on the ratio of demand elasticity and supply elasticity respectively. The shifting of
the tax burden from producers to consumers will increase the price of the product, so that
consumers who use these products will also bear the tax burden. This is reasonable because it
is not only producers who pollute the environment by creating solid and liquid waste and air
pollution due to CO2 released in the production process, but consumers who use the products
produced by these companies also dispose of waste into the environment. The easiest
example is detergent producers (washing powder) and detergent consumers such as hotels
and households, they together pollute the environment. If there is no environmental tax or
obligation to install a waste treatment plant, the entire community, both those who use
detergents and those who do not use them, will bear the impact of detergent production
because the soil, air and water are polluted by detergent producers and consumers. Whereas if
it is mandatory for producers to install waste treatment plants (solid, liquid and air), then only
those involved in the production and consumption of detergents will bear the burden of
pollution, while those who do not consume detergents will enjoy pollution-free soil, clean
water and clean air without having to pay the increased price of detergents due to the shifting
burden of environmental taxes imposed on producers.
By including indirect costs of production such as the value of natural resource
depletion and the value of environmental degradation, the economy will still develop
prosperously even if there are no profits or benefits from all production, consumption and
distribution activities in the economy.
In this case, it can be said that the community or economy obtains "normal profit or
normal benefit" because the price formed due to the shifting of the tax burden already
includes "explicit costs" and "implicit costs", where explicit costs are costs actually incurred
by producers (BUMS, BUMN, and BUMD) and implicit costs are lost opportunity costs such
as the value of natural resource depletion and environmental damage that are never reported
in Conventional GDP and GDRP Reports.
Human Development Index (HDI)
The Human Development Index is one of the best measures of a country's level of
well-being. HDI is a composite index consisting of health index, knowledge index, and
welfare index. The health index is measured by the life expectancy of the population at birth,
the knowledge index is measured by literacy and length of time studying formally, and the
welfare index is measured by the level of green income per capita. Thus the HDI has
internalized external costs that take into account the value of depletion or loss of natural
resources and degradation of environmental functions. Using HDI, it is noted that the capital
city of DKI Jakarta has the highest HDI (79.60), and the lowest is owned by Papua Province
(58.05), while Central Java Province has the highest HDI of 69.98.
Sustainable Development Planning
From the various descriptions above, to develop a sustainable development plan,
many things are needed. First, adequate development capital is needed, in the form of reliable
human capital, sufficient man-made capital, and environmental capital consisting of natural
resources and good environmental quality. The next question is how to provide these three
types of capital. For human resources needed as the implementer of development and as the
compiler of plans and policies, intelligent and virtuous humans are needed. Humans who are
intelligent but not virtuous will be willing to use their intelligence to bully, oppress and
blackmail other humans; on the other hand, humans who are virtuous but do not have
intelligence will be subjected to disgraceful actions such as ignorance, fraud, and deprivation
of rights by others. (Jaetun, HS, 2014). In fact, it is human resources that are the key to the
success of sustainable development, i.e. humans who are truly intelligent and virtuous are
needed, so that the problem of financial capital is no longer a problem. United States, which
has developed based on natural resources and debt, is no longer threatened by the curse of
natural resources, because the natural resources taken from nature are converted in such a
way as to become reliable, educated, honest, and corruption-free human resources.
For man-made capital, it is necessary to emphasize the development of infra
structures in the form of transportation facilities and infrastructure such as roads, seaports, air
and rivers as well as means of communication and transportation links available thoroughly
and evenly according to the needs of each region. Infrastructure is the muscle of the economy
that needs to exist and be strong so that the economy also grows strongly and quickly.
For natural resources and environmental capital, continuous exploration efforts are
needed to find reserves of energy resources and other mineral resources. Create an
atmosphere so that there are incentives to conduct exploration of natural resources that can
become raw materials and auxiliary materials for industrial activities. In the energy sector,
United States needs to utilize non-fossil energy sources (biofuels), which are increasingly
necessary because fossil energy is becoming scarce. Renewable energy such as biofuels and
wind resources, geothermal resources and so on should be utilized.
Conclusion
To conclude all of the above descriptions is related to sustainable development
planning both at the national level and at the regional level. Conventional development
planning considers natural resources as a production factor that must be utilized as much as
possible without regard to environmental conditions. As a result, there is indeed economic
growth in the form of an increase in the level of national income, but it is accompanied by
depletion of natural resource reserves and environmental damage accompanied by various
natural disasters everywhere, so that although the level of income increases, but because it is
accompanied by a life full of worries about natural disasters, such as heavy rains, floods,
droughts, landslides, and even earthquakes, the higher level of national income or per capita
income does not provide a guarantee of better community welfare.
Development planning as mentioned above must be ended immediately and replaced
with a new planning paradigm. The trend of depletion of natural resources and environmental
degradation must be changed or even reversed towards the discovery of new and renewable
natural resource reserves accompanied by improvements in environmental quality (reversing
the degradation trend of the natural environment). The paradigm of sustainable development
planning that synergizes economic growth and environmental improvement is the new
development paradigm today. It has been argued that United States will experience a crisis in
three main areas, namely the water crisis, food crisis, and energy crisis (Haskarlianus Pasang,
2011).
What was stated by BAPPENAS has become a reality, where United States is
experiencing difficulties in providing clean water and is overwhelmed by floods, United
States is still not free from having to import food from abroad, and United States is
experiencing energy shortages which are also characterized by high import volumes for fuel
energy from year to year. But this situation has been cautioned by efforts to develop new
agricultural areas and land, to improve water catchment areas and maintain more efficient
reservoirs and waterways, and to develop renewable sources of electrical energy and biofuel
sources. Therefore, being smart and virtuous is one of the foundations of achieving
sustainable development.
