United Nations Secretary-General António Guterres has called for an end to the destructive war on nature, emphasizing the need for game-changing climate action in 2023. In this context, Indonesia stands out as a country well-positioned to utilize nature-based solutions (NBS) for decarbonization. Research by McKinsey Nature Analytics reveals that Indonesia has the potential to offset a significant amount of CO2—around 1.4 billion metric tonnes annually, equivalent to 2.7 percent of global emissions—through NBS. Interestingly, Indonesia also ranks as the world’s eighth-largest polluter, but it is determined to shed this position.
At the Conference of Parties 27 (COP27) in November 2022, the Indonesian government emphasized the importance of addressing climate change and announced ambitious targets, aiming for a 23-percent reduction in greenhouse gas emissions by 2030 and net-zero emissions by 2060. To further demonstrate commitment, Indonesia pledged to unconditionally reduce its own emissions by 31.89 percent and seek international support to cut the remaining 43.2 percent.
Beyond environmental benefits, McKinsey estimates that decarbonization efforts could generate economic value worth $100 to $150 billion through new business opportunities. Indonesia possesses abundant natural resources, including forests, wetlands, mangroves, and coral reefs, amounting to 15 percent of the world’s potential for NBS. By protecting and expanding these resources, Indonesia can drive sustainable development and achieve its ambitious decarbonization targets.
With a fast-growing economy and an increasingly environmentally aware middle class, Indonesia provides an ideal environment to pilot NBS initiatives. Nielsen research indicates that over 60 percent of Indonesian consumers are interested in purchasing environmentally friendly products, even at a higher cost. Additionally, businesses can benefit from cost savings and efficiency gains resulting from better resource management, waste reduction, and long-term resilience strategies.
Investing in ecosystem restoration offers substantial economic returns, as the United Nations estimates that every dollar invested yields a value of $3 to $75. Effective utilization of natural resources and ecosystem services allows companies to optimize operations, reduce carbon footprints, and enhance long-term sustainability.
Indonesia’s potential in NBS is exemplified by McKinsey’s research on protecting fish and coral reefs, demonstrating how it can contribute to sustainable ecotourism, food security, and regional biodiversity. Expanding the marine protected area (MPA) system could increase reef-based tourism earnings by $3-6 billion, adding $8 billion annually to Indonesia’s GDP, with sufficient infrastructure investment. Furthermore, an expanded MPA system would safeguard 18 percent of the region’s oceanic biodiversity, compared to the current 2.9 percent, reducing over-fishing threats and enhancing food security.
However, Indonesian businesses currently face challenges in accessing NBS funding and navigating complex regional regulations. Building partnerships and alliances, addressing stakeholder persuasions, and improving coordination across stakeholders are crucial steps towards successful NBS implementation. Developing competencies in scientific expertise, ecological knowledge, business acumen, and public policy is essential and requires investments in training and capacity-building.
To support NBS initiatives, significant funding and investment from both public and private institutions are necessary. The returns on these investments will be substantial and lasting, benefiting Indonesia’s fight against climate change, preservation of biodiversity, and demonstrating the value of sustainable growth, including enhanced brand strength and customer loyalty. With its remarkable natural resources and a committed government, Indonesia has the potential to become a global leader in the NBS sector, contributing to a sustainable and resilient future.
