CHAPTER 3 . Strategic Planning for Sustainable Development in Coastal Zone Regions
63
3.4
Results of Scenario Analysis
Under the moderate (5%) GDP growth scenarios, total GDP increases more than 5 times
between 1985 and 2020 (Table 3.3). Since population grows more slowly than GDP over
the period (less than 2% a year), per capita income increases substantially from
611 000 rupiahs per capita in 1985 to 2065000 rupiahs in 2020 (in constant 1985 prices),
which will contribute to a significant reduction in the incidence of poverty in Indonesia. Investment as a share of total GDP does not change much between 1985 and 2020,
suggesting that investment may not be a serious constraint to development. Labor demand more than doubles and slightly surpasses the expected labor supply in 2020 even
with significant projected gains in labor productivity, especially in agriculture, the
majoI', source of livelihood for Indonesians in 1985. The sectoral distribution of employment is projected to change as fewer people are employed in agriculture (26% in
2020 compared to 53% in 1985) and more find work in manufacturing and service sectors. While moderate economic growth is projected to provide full employment, high
growth (sustained 7% annual GDP growth) requires labor far in excess of the projected
supply and, for this reason, is not considered feasible; the scenarios associated with
high GDP growth are not discussed further in this paper.
The impact of the alternative development scenarios on the natural resource base
is indicated by the projected NRA (Tables 3-4,3.5, and 3.6). In some instances, conflicts
between economic growth and sustainable use of resources can be reconciled through
the use of appropriate technology. In other instances, development objectives will need
to be modified or reconsidered. In addition, substantial changes in existing policies
may be required to create incentives to bring about the changes in behaviour necessary for implementing many of these changes. For example, future food self sufficiency
appears technically feasible only for rice, but not for other food crops. Detailed results
include:
• Rice self sufficiency is feasible only with vast improvements in the efficiency of irrigation and the introduction of incentives for farmers to conserve water, such as appropriate water pricing. Land required in 2020 under Sl is only 2% more than supply and under S2 it is considerably less than supply (Table 3.6). In 2020, rice still uses
most of the water in the economy, but much less than the amount used in 1985 and
1990. In addition, much of the land for rice production in the future will be located
on Irian Jaya replacing rice production on Java where land is steadily being lost to
urban encroachment posing a major settlement policy challenge. In the absence of
such changes, the required land and water inputs will far outstrip supply, cutting into
land and water needed for other activities or requiring a reconsideration of the policy
of rice self sufficiency.
• Even under optimistic assumptions about potential increases in yields, the production of other food crops faces tight land constraints because of the rapid growth of
demand associated with rising incomes and an increased meat consumption. Land
requirements exceed supply under both scenarios. Under the more realistic scenario,
S2, in which soil conservation measures necessary to maintain improvements in
yields are undertaken, land requirements are 18% higher than supply in 2020. Land
63
3.4
Results of Scenario Analysis
Under the moderate (5%) GDP growth scenarios, total GDP increases more than 5 times
between 1985 and 2020 (Table 3.3). Since population grows more slowly than GDP over
the period (less than 2% a year), per capita income increases substantially from
611 000 rupiahs per capita in 1985 to 2065000 rupiahs in 2020 (in constant 1985 prices),
which will contribute to a significant reduction in the incidence of poverty in Indonesia. Investment as a share of total GDP does not change much between 1985 and 2020,
suggesting that investment may not be a serious constraint to development. Labor demand more than doubles and slightly surpasses the expected labor supply in 2020 even
with significant projected gains in labor productivity, especially in agriculture, the
majoI', source of livelihood for Indonesians in 1985. The sectoral distribution of employment is projected to change as fewer people are employed in agriculture (26% in
2020 compared to 53% in 1985) and more find work in manufacturing and service sectors. While moderate economic growth is projected to provide full employment, high
growth (sustained 7% annual GDP growth) requires labor far in excess of the projected
supply and, for this reason, is not considered feasible; the scenarios associated with
high GDP growth are not discussed further in this paper.
The impact of the alternative development scenarios on the natural resource base
is indicated by the projected NRA (Tables 3-4,3.5, and 3.6). In some instances, conflicts
between economic growth and sustainable use of resources can be reconciled through
the use of appropriate technology. In other instances, development objectives will need
to be modified or reconsidered. In addition, substantial changes in existing policies
may be required to create incentives to bring about the changes in behaviour necessary for implementing many of these changes. For example, future food self sufficiency
appears technically feasible only for rice, but not for other food crops. Detailed results
include:
• Rice self sufficiency is feasible only with vast improvements in the efficiency of irrigation and the introduction of incentives for farmers to conserve water, such as appropriate water pricing. Land required in 2020 under Sl is only 2% more than supply and under S2 it is considerably less than supply (Table 3.6). In 2020, rice still uses
most of the water in the economy, but much less than the amount used in 1985 and
1990. In addition, much of the land for rice production in the future will be located
on Irian Jaya replacing rice production on Java where land is steadily being lost to
urban encroachment posing a major settlement policy challenge. In the absence of
such changes, the required land and water inputs will far outstrip supply, cutting into
land and water needed for other activities or requiring a reconsideration of the policy
of rice self sufficiency.
• Even under optimistic assumptions about potential increases in yields, the production of other food crops faces tight land constraints because of the rapid growth of
demand associated with rising incomes and an increased meat consumption. Land
requirements exceed supply under both scenarios. Under the more realistic scenario,
S2, in which soil conservation measures necessary to maintain improvements in
yields are undertaken, land requirements are 18% higher than supply in 2020. Land