Webinar Summary: A Spatial Environmental Assessment of Select Belt and Road Initiative Projects in Indonesia

By Yudong (Nathan) Liu

As part of the Spring 2022 Global China Research Colloquium, the Boston University Global Development Policy (GDP) Center hosted a virtual discussion with University of Indonesia researchers Albertus Hadi Pramono, Masita Dwi Mandini Manessa, Mochamad Indrawan and Dwi Amalia Sari on conducting a spatial environmental assessment of select Belt and Road Initiative (BRI) projects in Indonesia. During the webinar moderated by Rebecca Ray, Senior Academic Researcher for the GDP Center, Masita Manessa presented findings from an ongoing research collaboration between the Research Center for Climate Change at the University of Indonesia (RCCC-UI) and the GDP Center assessing the social and environmental risks of 14 BRI projects in Indonesia.

To date, the research collaboration has led to a journal article published in Discover Sustainability focused on Indonesia, where convoluted governance of some of the largest Chinese foreign direct investment projects may reduce accountability and where a recent job creation law risks the rapid spread of unsustainable development practices across Indonesia’s biodiversity hotspots.

For the last decade, Indonesia-China relations have intensified, particularly through trade, finance and investment. With a lack of infrastructure impeding Indonesia’s global economic competitiveness, the ongoing wave of BRI projects are expected to significantly contribute to Indonesia’s national development goals. China’s two major policy banks have financed $14.5 billion worth of development projects in Indonesia’s power and transportation sectors since 2008. Overall, from 2011 to 2020, Indonesia received $35 billion in direct investment from China. In particular, since 2016, China has been an important trading partner with Indonesia for both exports and imports. In 2020, 29 percent of all inbound investment in Indonesia came from China. As a country facing the “middle-income trap,” Indonesia needs leverage to improve its GDP and economic growth, which the BRI scheme is expected to do. However, large infrastructure projects can carry significant risks to biodiversity and Indigenous lands.

To conduct the spatial assessment, the researchers sorted 14 BRI projects into four subcategories by sector: (a) roads and railways, (b) coal-fired power plants, (c) hydropower plants and (d) industrial complexes. They then examined the environmental impacts of each project across five parameters: (1) vegetation loss, (2) distance to primary forest, (3) nitrous oxide air pollution, (4) presence of nearby threatened species and (5) risks to Indigenous communities. Manessa presented in two sections: going through notable findings of the assessed projects first by parameter type, and secondly by project sector type. Manessa wrapped up the presentation with a summary of major conclusions.

The first parameter discussed was vegetation loss. Satellite imagery provided researchers with vegetation data to compile a Normalized Different Vegetation Index (NDVI), which indicated changes in vegetation density in the areas of the projects since 2010. The lack of any vegetation loss in two project areas confirmed that those projects were yet to be physically implemented. The hydropower plants were associated with the lowest vegetation loss, whereas (1) the roads and railway and (2) industrial complex project types were associated with high levels of vegetation loss. The Obi Industrial Area, an industrial complex, is an example of a BRI project with a high NDVI value, which has dropped from more than 0.6 to around 0.1 since 2010, indicating massive vegetation cover loss.

Additionally, atmospheric satellite data provided information on nitrogen dioxide (NO2) levels likely emitted by BRI projects. The researchers charted the levels of NO2 at the project sites to areas 20 kilometers away, on the basis that dramatic changes in NO2 levels based on distance from the project would reveal a likelihood of high NO2 emissions emanating from it. Hydropower plants showed small changes, suggesting a lower likelihood of high NO2 emissions. Coal-fired power plants and industrial complexes showed the most dramatic changes, represented respectively by the Paiton coal power plant and the Morowali Industrial Park. The NO2 levels for the two projects were overlaid on satellite imagery, which also showed a lack of any other likely nearby sources of NO2 emissions that might have confounded the data, strengthening the likelihood that they were the primary causes of any nearby elevation of NO2 levels.

In terms of biodiversity, the research team was confronted by the difficulty of choosing among different biodiversity databases, some of which included too many species to represent. This was solved by creating a key species list, which formed the basis for a Threatened Species Density Index (TSDI). As there were more collection points for key species in larger areas like Jakarta, but less data for remote but likely highly biodiverse areas like West Papua, Manessa noted the results may have been skewed. To show risks to forest areas, the TSDI was shown alongside the mean distance to primary forests. Most projects were within short distances, below 10 km of primary forests, which Manessa noted as cause for concern.

To assess risks to Indigenous communities, the researchers first checked whether there were any nearby Indigenous communities for each project. For 11 of the 14 projects that were near Indigenous communities, one or a combination of air, water or deforestation risks were present. Some projects were singled out for unique impacts. Two dam projects (Mbay/Lambo Dam and Kayan River Dam) threatened nearby communities with inundation and possible forced resettlement. Women from the Bahomotefe communities around Morowali Industrial Park have also complained of skin problems. In general, the communities that lived around areas with mining concessions were the most affected.

Next, Manessa presented findings by type of infrastructure project. Beginning with roads and railways, she noted the Jakarta-Bandung railway project, while a domestic media darling, has also come under much public criticism for lack of transparency. Also, because the Indonesian government was forced to intervene when investors pulled out of the project due to constraints caused by the COVID-19 pandemic, it has assumed the loss and project failure risks originally borne by the investors. Manessa pointed to the Samarinda-Balikpapan Road to highlight how future impacts of a BRI project may overshadow the initial impacts of construction and implementation: despite registering low levels of impact according to the five parameters, the road was built to reach a previously inaccessible area and may nevertheless facilitate access to illegal logging and poaching.

Moving on to coal-fired power plants, Manessa highlighted the Paiton Power Station as the highest polluting power plant in Indonesia, with NO2 emissions levels likely higher than that of the entire city of Bandung. The Celukan Bawang power plant was also mentioned as being responsible for coral bleaching nearby. Manessa noted the mapping of the mines associated with these coal-fired power plants was out of the scope of the research, but that they should be kept in mind as an independent source of significant environmental impacts.

In terms of hydropower plants, Manessa commented that while hydropower is viewed positively by many Indonesians, it carries many risks, mostly related to flooding that could displace local communities and disrupt biodiversity. Specifically, the Batang Toru Dam was built in an area that may inundate orangutan habitats. It is also in an area with an existing electricity surplus, suggesting that the project may be unnecessary.

Adding commentary on industrial complexes, Manessa focused on the Morowali industrial park, a notable producer of lithium essential to the production of electric vehicles. The park’s activities, such as nickel mining, are an example of the hidden yet substantial impacts of the transition to electric cars widely seen as positive in Indonesian society. Another significant finding was that the Tanang Kuning industrial park caused the relocation of at least three communities that had lived on over 10,000 hectares of land.

Manessa concluded the presentation by highlighting the four key findings of the project. First, she noted that because of its high levels of biodiversity and cultural diversity, Indonesia faces uniquely complex social and environmental governance challenges regarding BRI projects. Secondly, there are likely projects in which remediation and loss of livelihood may outweigh the benefits from investment. Thirdly, renewable related projects should not be assumed as inherently clean, as they can create pollution and social disruption in their own way. Finally, she noted the urgent need for an overhaul and alignment of national and regional environmental regulations.

During the Q&A portion, the researchers fielded questions from attendees. Pramono noted that the appropriate policy response to the impacts of these projects would be a reform of the “omnibus” job creation law passed two years ago, which relaxed environmental regulations in the name of facilitating investment. Indrawan commented that the impact of China’s moratorium on financing overseas coal projects would likely lead local business interests to push for continued exploitation of the identified domestic coal supply. Amalia noted that the likely lack of consideration by some government ministries of the environmental and social remediation costs of certain projects points to a need for better Indonesian cross-ministry coordination and communication to ensure policy coherence.

Yudong (Nathan) Liu is a Research Assistant with the Global China Initiative and a second-year law student at Boston University School of Law.   

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