Opinion & Analysis

Indonesia Suffered $5.2bn Economic Loss Due to Man-made Forest Fires: World Bank

A World Bank report says that forest fires in Indonesia caused an economic loss of $5.2bn, which equals 0.5% of Indonesia’s GDP.

Farmers in Indonesia burn the agricultural land in the dry season to prepare it for cultivation. The smoke from these fires affects other people and even other countries.

The World Bank assessed the impact of the fires in the eight affected districts between June and October 2019. Officials said that the losses might be even greater as the fires had raged through November.

The report says,

The forest and land fires, as well as the resulting haze, led to significant negative economic impacts, estimated at $157mn indirect damage to assets and $ 5.0bn from affected economic activities.

Over 900,000 people suffered respiratory diseases and 12 national airports and hundreds of schools had to be closed in Indonesia, Malaysia, and Singapore due to the smoke from the fires. Indonesian officials are blaming El-Nino weather patterns for amplifying the health effects of the forest fires this year.

Over 942,000 hectares of forest and agricultural land were burned in Indonesia this year. Additionally, 44% of the land burned were peatlands; thus, carbon emissions from the fires were double that from fires in the Amazon jungle earlier this year.

Thus, El-Nino and the burning of a large peatland area have caused a perfect storm that has engulfed not only Indonesia but its neighboring countries as well.

The report explicitly states that the fires are human-made and this problem has existed since 1997, hinting that successive Indonesian governments have dragged their feet on the matter, which has led to the current crisis.

About 720 megatonnes of carbon dioxide were released into the atmosphere due to the forest fires in Indonesia between January and November this year, according to the European Centre for Medium-Range Weather Forecast.

As a result of the fires, the World Bank has cut Indonesia’s growth estimates by 0.09% in 2019 and 0.05% in 2020.

The World Bank report warns that the health effects from the fires could harm the global image of palm oil, the main commodity exported by Indonesia.

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