implying that natural resources were being depleted to finance current consumption expenditures.

Such an evaluation should flash an unmistakable warning signal to economic policy makers that they are on an unsustainable course. An economic accounting system that does not generate and highlight such evaluations is deficient as a tool for analysis and policy in resource-based economies.

The same holds true for the evaluation of performance in particular economic sectors, such as agriculture. Almost three-quarters of the Indonesian population lives on the fertile but overcrowded inner islands of Java, Bali, and Madura, where lowland irrigated rice paddies are intensively farmed. In the highlands, population pressures have brought steep hillsides into use for cultivation of maize, cassava, and other annual crops. As hillsides have been cleared of trees, erosion has increased, to the point where it now averages over 60 tons per hectare per year, by WRI estimates.

Erosion's economic consequences include loss of nutrients and soil fertility as well as increased downstream sedimentation in reservoirs, harbors, and irrigation systems. Increased silt concentrations affect fisheries and downstream water users. Although crop yields have improved in the hills because farmers have used better seed and more fertilizers, estimates indicate that the annual depreciation of soil fertility (calculated as the value of lost farm income) is about 4 per-

TABLE 2 Comparison of Gross Domestic Investment and Net Domestic Investment in 1973 Rupiah (billions)

Year

GDIa

Resource

Depletionb

NDI

1971

876

1,126

2,002

1972

1,139

-100

1,039

1973

1,208

-279

929

1974

1,224

2,605

3,829

1975

1,552

-1,121

431

1976

1,690

-684

1,006

1977

1,785

-1,711

74

1978

1,965

-1,607

358

1979

2,128

-2,219

-91

1980

2,331

-2,663

-332

1981

2,704

-2,215

489

1982

2,783

-1,764

1,019

1983

3,776

-2,870

906

1984

3,551

-2,334

1,217

a From the Indonesian Central Bureau of Statistics.

b Includes depletion of forests, petroleum, and the cost of erosion on the island of Java.

SOURCE: Repetto et al. (1989).



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