Foreword

Summary

The Southeast Asian transboundary haze has resulted in severe environmental, health, political and economic impacts in the region since the 1970s, and has resurfaced time and again in the past decades. During the episodes of 1997, 2013 and 2015, forest fires and haze brought damage on the scale of tens of billions of dollars to the affected countries—Singapore, Malaysia, Brunei, the Philippines, Thailand, Indonesia itself, and even to the rest of the world—through carbon emissions and climate change. Mainly the result of agricultural slash-and-burn practices on peatland in Indonesia, the pollution problem remains largely intractable and complex despite repeated efforts to mitigate it. Resolving this cross-border issue is critical, and yet is more insurmountable than it appears.

It fundamentally is a classic problem of public good and common property, where everyone owns the commons that is the atmosphere and yet no one is compelled to be fully responsible for it. Standard economic tools such as Pigouvian taxes or a simple Coasian solution cannot be applied. Indonesia can be pressured but not forced to reduce this pollution. The problem is complex to address, primarily because of its transboundary nature, which has made it difficult to assert extraterritorial jurisdiction without infringing on the sovereignty of the culprit nation. For Indonesia, the processes of enacting land use statutes, changing regulatory institutions and enforcing laws are complex and tedious. Plantation owners often deny using fire to clear land and blame shifting cultivators for starting fires in their smallholdings that later spread to plantations. Proof of negligence must be shown, which is susceptible to delays and transaction costs. Moreover, related to the enforcement problems is the complicated nature of Indonesia's decentralized governance system. The coordination of responsibilities for forest fires and haze is spread unevenly across many central and local agencies, with many overlaps.

It is important for all affected countries to undertake the valuation of negative impact costs of the haze such that a form similar to international aid can be offered to Indonesia and assistance provided to targeted sectors hurt by the haze. One approach could be to spend a sum not exceeding the costs of the haze to enhance the ability of Indonesian authorities to detect, locate and respond to the fires, as well as strengthen their ability to prosecute those responsible.