Air Pollution: Case of Indonesia’s Forest Burning

As the dry season reaches its peak in Southeast Asian region, Indonesia is having its annual environmental problem that is the forest fires. Although the forest fires to some extent are part of traditional agriculture method, yet 81.1% of the forest burning is happening in industrial forest [1]. There are around 40000 hot-spots in Indonesia annually with around 15600 hot spots in Sumatra and another 30000 Kalimantan [2]. Sumatra’s close neighboring countries are Thailand, Malaysia and Singapore, while Kalimantan’s are Malaysia and Brunei Darussalam. Those are the countries that directly affected by the forest fires.

The impacts of the forest fires are environmental loss such as the haze production, loss of biodiversity, increased particulate matter, CO₂ emission, and climate change; and economic loss such as airport closure, decreased economic activities (trade, production, and service), and health costs. Of its impacts, the haze production is most protested by neighboring countries such as Malaysia and Singapore as haze is a direct transboundary pollution.

Transboundary pollution needs a transboundary solution such as CAFE programme in European Union[3]. Historically, the ASEAN[4] countries have started the transboundary pollution prevention and abatement practices since 1990, whereas the problems of forest fires and haze are specifically addressed in 1995.[5] In 2002 the ASEAN countries signed the ASEAN agreement on Transboundary Haze Pollution. The agreement along with Regional Haze Action Plan provides ASEAN countries schemes to prevent and to manage forest fires and haze.

Unfortunately, those agreement and action plan remain as on-paper only and not yet implemented, at least up to the moment. Indonesia, for example, in 2006 is dealing the forest fires and haze alone.[6] To some extent, it may appear unfair to Indonesia as it has to cover the negative externalities while it does not receive any compensation for positive externalities of the forest. Moreover, Singapore and Malaysia to some extent are seen as only partially care with Indonesia’s forest, for example Singapore and Malaysia are not wholeheartedly willing to help Indonesia in combating illegal logging. The problem of illegal logging is deepened as timbers are being laundered in Singapore or Malaysia and then exported as legal timber to Europe, USA, Japan, and China [7].

Furthermore, the difficult factors of solving forest fires can be summarized into these categories that are the lack of expertise (information, knowledge, and human resources), ill-defined property rights, conflicting roles and responsibilities of institution concerned with forest, and weak institution.[8] The problems are intertwined with economic interest too.

The forest is being burned in order to cheaply convert it into commercial uses such as plantation and agriculture. The idea of good environmental activities support company’s competitiveness[9] is highly debatable in this context. Competitiveness may be influenced by product price, although not always necessary. However, as the product price is dependent to production function, then an increase in production efficiency caused by technology development will increase company’s competitiveness. And thus, it can be proved that good environmental activities do support competitiveness. To achieve this, research on environmental-friendly technology to increase production efficiency is highly needed. Taking into account the concept of path dependency, such type of research should be encouraged.

Recalling Ricardo’s theorem that is trade is driven by comparative advantage – due to cheaper price – between countries [10]. Price is cheaper since it is believed that exporting countries – mostly developing countries or the-so-called south countries – are natural resource-abundant. However, Chichilnisky argues that the price-led comparative advantage of environmentally intensive products of south countries is deceiving [11]. The well-defined property rights countries have fully internalized the externalities in product price. It also means that north countries products are supplied at higher price compare to south countries at any given price level. Therefore at any price the quantity supplied by south countries exceeds that of north countries, thus creating the fictitious condition of resources-abundant for the south countries.

Ill-defined property rights can be caused by weak institutions and low human resource. Therefore, one recommends that the transboundary pollution prevention scheme also aims on correcting the property rights of the forest. Strengthening law infrastructures, combating corruption, and improving human resource capacity can be part of solutions.

The other way around of intervening the forest fire is through the market-based approach that is environmental protection initiated by business actors. Government approach sometimes is sluggish especially in the developing countries where corruption and nepotism is eminent. Some of market-based initiatives are labelling/certification and corporate social responsibility (known also as corporate citizenship). Corporate Social Responsibility should be seen as an ex-ante approach (before problems) not as an ex-post approach (after the problem).

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[1] WALHI (Friends of Earth – Indonesia), Pembakaran Hutan: Cenderung Menyalahkan Petani Tradisional (translation: Forest burning: a tendency to blame traditional farmer), Press Release 29 August 2006, http://www.walhi.or.id/kampanye/bencana/bakarhutan/060829_kbkrnhtnpetani_sp/.

[2] The observation was run by WALHI on 01-28 August 2006. Ibid.

[3] Commission of the European Communities, Impact Assessment of the Thematic Strategy on Air Pollution and the Directive on “Ambient Air Quality and Cleaner Air for Europe”, Summary, Commission Staff Working Paper, Brussels, 21 September 2005, SEC (2005) 1133.

[4] Association of Southeast Asian Nations (ASEAN).

[5] ASEAN agreement on Transboundary Haze Pollution.

[6] WALHI, Walau ASEAN Janji Bantu, Indonesia Sendirian Tangani Asap (translation: Although ASEAN promises to help, Indonesia is combating the haze alone), 16 October 2006, http://www.walhi.or.id/kampanye/bencana/bakarhutan/061016_kabutasap_cu/.

[7] Currey, Dave, Doherty, Faith, Lawson, Sam, Newman, Julian, and Ruwindrijarto, A.. Timber Traficking: Illegal Logging in Indonesia, South East Asia and International Consumption of Illegally Sourced Timber, September 2001, Environmental Investigation Agency and Telapak Indonesia.

[8] Qadri, S. Tahir, Fire, Smoke, and Haze: The ASEAN Response Strategy, 2001, Phillipines, Asian Development Bank.

[9] Network f Heads of European Environment Protection Agencies, The Contribution of Good Environmental Regulation to Competitiveness, November 2005.

[10] Ricardo, David, The Principles of Political Economy and Taxation. As cited in many books and websites, one of the websites is Wikipedia, http://en.wikipedia.org/wiki/Comparative_advantage

[11] Chichilnisky, Graciela, North-South Trade and the Global Environment, The American Economic Review, Vol. 84, No. 4., September 1994, pp. 851-874.