More than 85% of Indonesians depend on nature. A restorative economy is thus not simply an environmental choice—it is a livelihood strategy.
Indonesia holds vast natural wealth—from forests and seas to plantation landscapes. Yet the country faces a mounting test: how to balance conservation with economic use as pressure on ecosystems intensifies. Policymakers have advanced green, blue, circular, and bioeconomy models, but greenhouse gas emissions remain elevated. According to the Emissions Database for Global Atmospheric Research (EDGAR) in 2024, emissions totaled 150 MtCO₂e during 2019–2023 and are projected to rise significantly to 2.86 GtCO₂e by 2030 under a business-as-usual (BAU) scenario. The imperative is clear: Indonesia needs an economic model that safeguards ecosystems while supporting livelihoods.
RELEVANT SUSTAINABLE GOALS
What “restorative economy” means—and why it matters now
Unlike conventional, extractive approaches, a restorative economy puts ecological recovery and community well-being at the heart of economic activity. It aims to manage Indonesia’s natural assets sustainably—marrying resource use with ecosystem repair and social resilience—so growth does not come at the expense of future prosperity.
Indonesia has already deployed restoration-led practices—agroforestry among them—to stabilize slopes, revive soils, boost local food sovereignty, and raise land productivity. The approach is generating tangible value. In October 2024, Social Forestry (Perhutanan Sosial) and land-rehabilitation programs exported nine tons of agroforestry products—petai, jengkol, chili, jackfruit, and papaya leaves—to Japan through the Sukobubuk Rejo Social Forestry group in Pati, Central Java, with an economic transaction value of Rp 989 million.
The economics of restoration: jobs, revenues, and lower emissions
New analysis indicates restoration can outperform BAU on development metrics. A 2025 study by Cendekia Iklimprojects that rehabilitating 352 hectares/year of critical land via agroforestry with a budget of ~Rp 5.2 billion/yearcould:
- Lift regional income to ~Rp 406.5 billion/year;
- Create ~830 jobs/year versus BAU;
- Reduce AFOLU emissions by ~3,400 tCO₂e.
The findings reinforce a central premise: when restoration drives the model, economic gains and climate benefits can move in step.
The funding gap: dispersed budgets and the case for fiscal reform
Despite promising results, restorative initiatives face suboptimal access to green finance. A 2024 CELIOS report(“Paradigma Baru Ekonomi: Dukungan Fiskal untuk Ekonomi Restoratif”) finds no dedicated state budget line for the restorative economy. Instead, funding is scattered across environmental programs—peat and mangrove restoration, waste management, and others.
CELIOS Executive Director Bhima Yudhistira argues for fiscal reorientation, including progressive taxation and earmarking revenues to scale restorative initiatives.
CELIOS Executive Director Bhima Yudhistira argues for fiscal reorientation, including progressive taxation and earmarking revenues to scale restorative initiatives.
Policy architecture remains incomplete. According to CELIOS, about 80% of relevant policies are not fully or effectively implemented, and of 43 restorative-economy policies, ~70% are in force with varying conditions and impacts. “We found multiple gaps—from overlaps and non-integrated regulations to missing umbrella policies for implementation,” Bhima said in an interview. The takeaway is blunt: execution must catch up if restoration is to move from pilots to nationwide practice.
The national dividend: thousands of villages, trillions in potential
A 2025 CELIOS assessment identifies ~23,470 villages with high restorative potential. Over 25 years, a restorative pathway could yield Rp 177.5 trillion in economic growth under BAU, and up to Rp 2,208 trillion under a progressivescenario. Bhima notes that focusing on ecosystem recovery and community empowerment can raise GDP exponentiallyand spread growth more equitably: restore nature and social systems, and local economies function better because gains reach people on the ground.
More than 85% of Indonesians depend on nature. A restorative economy is thus not simply an environmental choice—it is a livelihood strategy. By prioritizing sustainable resource management, Indonesia can stabilize emissions, strengthen food security, create jobs, and protect the ecosystems that underpin national prosperity.
What success requires next
- Dedicated fiscal support: establish a specific budget line for restorative initiatives; direct progressive taxrevenues to scale programs.
- Policy integration and enforcement: close gaps, streamline overlapping rules, and provide an umbrella framework to translate policy into practice.
- Scaled community-led restoration: expand agroforestry and critical-land rehabilitation where the data already show job, revenue, and emissions benefits.
- Measurable targets: align restoration outcomes with national climate and development goals to track progress beyond BAU.
Indonesia’s restorative economy offers a credible alternative to extractive development: it rebuilds natural capital, supports communities, and positions growth within ecological limits. With clearer fiscal backing, integrated policy, and disciplined execution, the country can turn today’s pilots into a national engine for resilient, inclusive, and sustainable prosperity.
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