Indonesian Forest Fires Cost $5.2 Billion in Economic Losses, World Bank Says

Ahmad Syamsudin
191211-ID-fires-620.jpg Indonesian firefighters spray water on the embers of a forest fire in Riau province, Sept. 18, 2019.

Fires that ravaged large swathes of Indonesian forest this year cost the country U.S. $5.2 billion in damage and economic losses, the World Bank said Wednesday, underscoring that respiratory illnesses linked to poor air quality from the blazes could have long-term impacts on health and education.

The fires burned more than 620,000 hectares of forest – an area nine times the size of the capital Jakarta – between January and September in eight provinces, mainly on Sumatra and Borneo islands, the bank said in its quarterly report for Indonesia.

“The forest and land fires, as well as the resulting haze, led to significant negative economic impacts, estimated at $157 million in direct damage to assets and $5 billion in losses from affected economic activities,” the report said.

The estimated loss did not include the effects of exposure to haze, such as illnesses and reduced quality of education due to health impacts on teachers and students, the report said, which also emphasized the possible strain on the palm oil sector that could potentially affect at least 16.2 million people working in the industry.

Haze from the blazes caused more than 900,000 people to suffer from respiratory health diseases, halted airport operations and temporarily closed hundreds of schools in Indonesia, Malaysia and Singapore, officials said.

“Recurring fires and haze also further exacerbate the negative global perception toward Indonesia’s palm oil production that had led to declining demand from European countries, as well as the European Union’s (EU) plan to phase out palm-oil based biofuel by 2030,” the World Bank report said.

“This year’s spike in fire activities are unlikely to help Indonesia’s bilateral negotiations with the EU through the World Trade Organization,” it said.

This year’s economic loss is equivalent to 0.5 percent of Indonesia’s gross domestic product and could slash growth by 0.09 and 0.05 percentage points this year and in 2020, respectively, according to the World Bank, which provides loans and grants to the governments of poorer countries.

Fires are considered the cheapest option among all methods to prepare lands for cultivation, or to claim lands in areas with disputes, where landownership is uncertain and where enforcement is weak, the Washington, D.C.-based financial institution said.

It said about 44 percent of the areas burned this year were located in peatlands, where fires are harder to suppress once started and release thick haze and carbon emissions into the atmosphere.

The carbon emissions from the Indonesian forest fires this year are estimated to be almost double the emissions from this year’s wildfires in the Brazilian Amazon, the report said.

Smog from Indonesia’s forest fires this year also choked neighboring Malaysia, where authorities distributed two million face masks to students in affected areas in September, according to state news agency Bernama.

The bank urged the Indonesian government to introduce a strong fire-prevention policy by enforcing the current moratorium on primary forests and peatland conversions and preventing conflict through land-tenure settlement policies.

Forest fires costly to extinguish, authorities say

Experts have said poor law enforcement, corruption and scant government funding contributed to recurrent forest fires in Indonesia.

The National Disaster Management Agency (BNPB) said the government spent a record $240 million on operations to extinguish the fires this year, which were the worst since similar fires in 2015 when 2.6 million hectares were destroyed.

“This was the first time that forest fires had cost that much money,” a BNPB deputy for rehabilitation and reconstruction, Rifai, was quoted by news portal as telling a seminar on Wednesday.

Using fires to clear land is illegal and punishable by up to 10 years under Indonesia’s 1999 law on the environment, but analysts said local leaders often turned a blind eye to the practice because they fear losing votes, especially during election seasons.

In September, the government blamed the country’s timber and plantation industries for the recurring forest fires, saying that only about 22 percent, or 2,179 companies with forestry permits, had submitted mandatory reports on fire control.

The environmental advocacy group Greenpeace said in a new report released last week that some of the world’s best-known brands are fueling climate change by sourcing palm oil and wood pulp linked to Indonesian forest fires.

Greenpeace said peatland fires and ongoing deforestation mostly to produce cheap commodities, such as palm oil, contributed to Indonesia’s status as the world’s fourth-largest emitter of greenhouse gases.

It urged Jakarta to be more transparent and make concession data public so that ongoing deforestation and fires can clearly be linked to the companies responsible for those lands.


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