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Building Resilience of the Urban Poor in Indonesia - Indonesia - Energy And Water Development Corp

Building Resilience of the Urban Poor in Indonesia – Indonesia

Executive Summary

Poverty and climate nexus needs special attention. Climate and disaster risk poses a serious threat to the socioeconomic development of Indonesia and undermines the country’s hard-earned development gains. The risks are expected to increase in the future with climate change, with its widespread impacts on four sectors—agriculture, water, marine and coastal, and health—as prioritized in the Climate Resilience Development Policy (Kebijakan Pembangunan Berketahanan Iklim, or PBI) 2020–2045. The major brunt of climate risk will be faced by 26.42 million Indonesians who live below the poverty line and have limited resources and capacity. The climate shocks and stresses will also force the near-poor population hovering marginally above the national poverty line to fall into poverty. Thus, a closer link needs to be established between efforts to reduce poverty and strengthen climate resilience if achievements in both spheres are to be sustained. Poverty reduction interventions, including those aimed at reducing burden, addressing spatial isolation, and improving economic capacity, need to be designed and delivered with current and future climate risk considerations. Climate actions need to be carefully designed so that they explicitly benefit the poor and near poor and do not inadvertently increase vulnerability and inequality. Such a vision is closely aligned with the development agenda of the National Medium-Term Development Plan (Rencana Pembangunan Jangka Menengah Nasional, or RPJMN) 2020–2024.

Explicit focus on building resilience of the poor and near poor in urban areas can ensure that urbanization benefits all equally. Urban areas, comprising nearly 55% of the Indonesian population, are hot spots of climate and disaster risk, with often high exposure and vulnerability to natural hazards. The risks are expected to increase with large numbers of coastal cities facing sea level rise and with high-density built environments resulting in urban heat island effects. Roughly 7% of the urban population are poor, and almost the same proportion just above the poverty line. Often living in slums and informal settlements, in overcrowded housing and with poor quality of basic services, the poor and near poor have to deal with climate shocks and stresses that impact their assets, livelihoods, and limited savings, forcing them to adopt negative coping strategies. In the absence of pro-poor climate resilience actions, such impacts will further increase poverty and inequality. The coronavirus disease (COVID-19) crisis has further exposed the underlying vulnerabilities of the urban poor and near poor and highlighted the urgency to build resilience, especially of the ones most at risk.

Strengthening resilience of the poor in urban areas will require a combination of interventions that collectively promote coping, incremental, and transformational strategies. Climate risk can only be managed by considering the full stream of possible future impacts and adopting a combination of strategies at the appropriate spatial and temporal scale. The strategies should include (i) coping mechanisms, (ii) incremental adaptation to accommodate changes in climate, and (iii) transformational solutions that bring fundamental systemic changes to reduce the root causes of vulnerability to climate change in the long run. These strategies should be targeted at different scales—household, community, cities, subnational, and national—with actions at any scale being complemented by activities and interventions at other scales. Recognizing that the local context often shapes vulnerabilities, decisions to implement such interventions should be based on the principle of subsidiarity; that is, resilience-building decisions are made at the lowest competent level.

Pro-poor national policies and programs provide opportunities to strengthen resilience at scale. Indonesia has robust national policies and programs spread across different sectors and targeted at the poor, including those in urban areas. The country has also identified priority sectors for climate adaptation: water, marine and coastal, agriculture, and health—each of which directly impacts the lives, livelihoods, and well-being of the urban poor. Thus, the design and delivery of pro-poor urban policies and programs can be improved to address current climate risks, especially in the priority sectors, while consciously introducing solutions that capacitate the urban poor households and communities to adapt and transform in the context of future climate risks. This approach not only goes beyond merely reducing harm but also seeks to (i) demonstrate how interventions to build resilience can address the underlying systemic factors in response to climate and its effects; and (ii) improve existing capacity, including acquiring new skills, to prosper in the context of increasing climate and disaster risk.

Five key pro-poor policy areas accompanied with a set of enabling factors provide a framework for advancing climate resilience of the urban poor. Interventions across five priority policy areas—social protection, public health system, livelihoods, housing, and community infrastructure—are critical for securing and sustaining the resilience of the urban poor in Indonesia. Success in each of these areas will be determined by a set of enabling factors: governance, data, and finance. It will also require clarity of the scale and scale-appropriate interventions, ensuring that (i) the objectives, inputs, and activities are aligned with the appropriate scale of impact from households upward; (ii) the principle of subsidiarity (where higher tiers of government share power with governance structures at the local level) is integrated; and (iii) interventions are designed to be scalable and have impact at scale given the size of Indonesia’s urban population (Figure 5).

Adaptive and shock-responsive social protection. Social assistance and labor market programs provide important coping mechanisms to poor households in times of shock, including climate-related shocks, and ensure greater human development goals are not compromised. More importantly, such programs also provide the scope to advance transformational adaptation by establishing linkage with building skills, livelihood, and financial inclusion programs that are responsive to climate shocks and stresses. The role of social protection in resilience-building is recognized in the RPJMN 2020–2024, and the Government of Indonesia has initiated a process to develop their Adaptive Social Protection Roadmap. In order to deliver adaptation strategies that benefit the urban poor, social protection systems need both to adapt and remain adaptive to effectively respond to changing climate risks. Actions that can support such objectives include (i) recognizing social protection as an adaptation strategy in national and local climate adaptation policies and plans; (ii) integrating natural hazard, exposure and vulnerability-related data and information in a social protection database; (iii) strengthening the institutional architecture of social assistance programs to allow horizontal and vertical expansion after a disaster and to improve the involvement of local governments in delivery; (iv) exploring the potential of introducing labor market programs that directly support public works in priority sectors of PBI 2020–2045 such as construction of water storage buildings, improvement of residential environmental health, development of nature-based coastal protection, area management and housing, and settlement relocation; (v) aligning financing for social protection programs with the National Disaster Risk Financing and Insurance Strategy and introducing innovative financing modalities such as forecast-based financing; and (vi) raising the awareness of social protection program facilitators on climate and disaster risk.

Sustainable livelihoods. Climate change impacts on assets and capital (natural, physical, financial, and human) on which the livelihoods of the urban poor are based, thus requiring a combination of measures to strengthen resilience, including savings and safety nets; income stability and diversity; education, skills, and mindset; and social network and mobility. Actions critical for promoting resilient livelihoods for the urban poor include (i) introducing targeted policies that allow livelihood programs to reach the poor in the informal sector, including the climate-induced migrants, and capacitating them with new skills that would help them find economic opportunities in urban areas; (ii) exploring the possibility of implementing resilient livelihood programs for the urban poor through local governments and using the Kelurahan Fund; (iii) implementing initiatives dedicated to strengthen resilience of the micro, small and medium-sized enterprises by building capacity for business continuity planning and improving access to disaster insurance; and (iv) introducing disaster-resilient microfinance programs, including the establishment of a calamity fund for microfinance organizations to better respond to their urban clients during climate shocks. These actions are in line with the RPJMN 2020–2024, which provides a strong policy impetus for livelihood development in the context of poverty alleviation.

Effective public health systems. Climate change is likely to impact the health of the urban poor in Indonesia in many ways. These include heat stress-related morbidity and mortality, and higher incidence of vector-borne and waterborne diseases. There are also potential indirect impacts, such as those that may arise from lack of adequate nutrition due to escalating food prices arising from the impact of climate change on agriculture. Thus, building resilience of the urban poor to the health impacts of climate change is critical. It will require a range of interventions including (i) formulating climate adaptation and health policies and plans that recognize the full spectrum of plausible health impacts of climate change, including heat stress especially in urban areas, and their linkage with other sectors such as food security, and water and sanitation; (ii) increasing the use of climate risk information to inform the design and delivery of health, housing, basic services, and settlement programs, thereby addressing the underlying drivers of vulnerability; (iii) strengthening early warning and surveillance systems that better predict health impacts of climate events and can inform preparedness actions on the ground; (iv) introducing new heat stress-related programs that deliver direct support for urban outdoor workers to address key occupational health and safety issues; and (v) strengthening community awareness through family development sessions included in social assistance programs and new curricula on climate change and health in early education.

Safe housing. Disasters triggered by natural hazards, including extreme weather impacts, can damage the housing of poor households in urban areas due to high exposure to hazards, weak construction, and use of substandard materials. Extreme heat can impact their indoor living condition with their houses not designed to withstand high temperatures. Sea level rise resulting in coastal inundation can reduce the structural integrity of their housing. Thus, strengthening resilience of housing becomes critical and requires a package of measures, including (i) strengthening pro-poor policy on risk-informed upgrading, rehabilitation, and relocation; (ii) instituting climate and disaster risk assessment processes to inform site selection, design of housing, choice of housing material, and the maintenance regime of public housing programs; (iii) strengthening coordination of efforts related to urban land use planning, community- and city-scale infrastructure provision, and housing development; and (iv) promoting housing microfinance to support poor households in constructing resilient new housing, retrofitting existing housing, and conducting repair and reconstruction of housing damaged by disasters. Policies and programs need to recognize that housing and settlements are a social process, with communities at the center. Thus, they need to adopt new models and pproaches such as community-led resettlement, land purchase initiatives, and in situ participatory redevelopment for resilient housing, to ensure that the views and priorities of poor households are taken on board.

Robust community infrastructure. Extreme weather events and disasters triggered by geophysical hazards can damage community-level infrastructure such as water supply, sanitation, drainage, waste management, roads, electricity, and community space. Thus, there is a need to ensure robustness of individual infrastructure as part of the wider infrastructure system. It is also essential that such infrastructure promote sustainability, especially source sustainability. In the case of water supply, the source should be sustainable to ensure long-term availability in the face of changing climate. Accordingly, PBI 2020–2045 identifies water as one of four priority sectors as well as the need to develop water storage infrastructures, rehabilitate water catchment areas, apply water recycling and reclamation technology, reinforce regulations on water resource management, and capacitate communities on optimal use of water resources in order to prevent water shortage.
Implementing resilient community infrastructure requires moving away from “business as usual” planning and implementation to include measures such as (i) adopting climate-resilient water management approaches such as rainwater harvesting and biofiltration of water, and watershed-level planning at interregional scale; (ii) integrating climate risk considerations in design and implementation of community-based water supply and sanitation programs to encourage behavior change within communities which promotes sustainable and climate risk-informed practices on water management, sanitation, and hygiene; and (iii) promoting green infrastructure as part of programs supporting community basic services. Such actions will support the implementation of RPJMN 2020–2024, which targets the provision of 10 million connections to achieve 100% clean water coverage and 90% sanitation access.

Enabling environment. Enabling resilience actions in specific policy areas requires risk-informed and inclusive governance; climate, disaster, and poverty data; and securing of finance. These factors provide the enabling environment (Figure 5) for securing and sustaining resilience, and they are also critical for facilitating innovation and partnerships needed for scaling up resilience.

  • Inclusive and risk-informed governance. Governance influences tenure security, access and operation of basic infrastructure and services, delivery of social protection, and livelihood support—all of which have a critical bearing on risk and resilience. The existing framework of decentralized governance in Indonesia provides a solid basis for local action that highlights local needs.
    However, enhanced coordination is needed at all levels, across agencies and programs, with an explicit focus on resilience, especially since natural hazards have impacts that can cross administrative boundaries, and exposure to hazards may be a result of actions taken beyond a particular administrative boundary. It is also critical to increase the capacity of sub-national, provincial and district/city governments to mainstream climate resilience development as well as to use and apply climate and disaster risk information in preparing their regional development plans and informing decisions for policies and investments. Bottom-up participatory planning processes such as the Musrenbang provide a platform to understand the resilience needs and priorities of communities and to strengthen partnerships with civil society organizations.

  • Appropriate and reliable data. It is imperative that the multidimensional nature of poverty, as well as the range of current and future hazards and their likely direct and indirect impacts are considered when planning, designing, and implementing poverty reduction programs to build resilience.
    Particularly important is analysis to gain an understanding of the spatial and temporal distribution of hazards, exposure, and vulnerabilities, across a range of scales. This requires climate and disaster risk data produced both by poor urban communities (which capture the local context) and by modern technologies such as earth observation. The use of climate and disaster risk databases such as SIDIK and InaRISK for poverty reduction-related decision-making needs to be strengthened. It is also important to share across administrative boundaries and strengthen compatibility between data systems.

  • Additional and refocused financing. Financing for urban poor resilience needs to be identified, stimulated, secured, and sustained for impact both in individual interventions and across an ecosystem of urban financing related to resilience and poverty reduction. Such financing has to come from a combination of sources: (i) standard fiscal transfers made to local government, (ii) climate change-related domestic funding sources established by the government, (iii) external grants from bilateral agencies and civil society organizations, and (iv) global climate funds. It should be delivered by a range of appropriate institutions at optimal volume and scale taking into account the principle of subsidiarity. Fiscal transfers such as the Kelurahan Fund need to be strategically utilized to advance resilience in the context of local development. The scope of the Regional Incentive Funds can be expanded to explicitly incentivize climate adaptation. Domestic and international climate finance should be strategically utilized to unlock wider financing for building resilience of the urban poor. Securing and sustaining finances for resilience-building will require long-term technical support for local governments to integrate priorities identified in PBI 2020–2045 in local planning and budgeting.

Recommendations for climate investments in five key strategic areas.

Poverty reduction programs provide a good foundation for building resilience of the urban poor to climate-related shocks and stresses. Some of these programs, with certain degree of adjustment, can help the urban poor cope better with climate risks and, in some cases, even incrementally adapt to the changes in climate. For these programs to facilitate transformational adaptation given the scale of climate risk the country faces, additional investments in five key strategic areas are needed (Figure 9). These strategic areas are aligned with the priorities of the RPJMN 2020–2024 and PBI 2020–2045.

Strengthen awareness on future climate risk for urban poverty reduction.

This includes (i) strengthening awareness among decision-makers; technocrats; local government; utilities; private sector; micro, small, and medium-sized enterprises; financial institutions; and communities on long-term climate risks and their potential implication on the lives, livelihoods, and well-being of the urban poor; (ii) undertaking risk-informed decisions related to the design and delivery of poverty reduction programs, especially those that promote the use of natural resources; (iii) increasing understanding of climate risk at systems levels such as supply chains, to identify cross-sector and multiscale solutions; (iv) utilizing risk information to prioritize spending in specific geographical regions and/or urban areas; (v) integrating climate risk awareness-raising topics in formal education curricula and capacity-building programs for government staff at national and local levels, as well as for communities, especially women; and (vi) aligning various datasets used for poverty reduction programs with climate and disaster risk databases.

Recognize the underlying drivers of vulnerability in climate policies.

This includes (i) factoring climate-induced migration considerations in designing poverty reduction programs in urban areas, especially in the case of social protection, livelihood, and social housing programs; and (ii) adopting innovative approaches, including community-led approaches to address issues of land tenure, which is a key determinant of vulnerability among the urban poor. It is important that national climate policies and plans and priorities for climate finance recognize the importance of addressing the underlying drivers of vulnerability.

Scale up investment in “no regret” or “low regret” resilience solutions.

Such solutions for building resilience of the urban poor reduce the vulnerability to existing and future hazards and perform well across a range of climate change scenarios. Examples include (i) promoting green infrastructure for adaptation as part of urban poverty reduction programs related to basic services, livelihoods, and social protection; (ii) strengthening integrated end-to-end early warning systems; and (iii) promoting climate and disaster risk-informed spatial planning that can help steer growth in a resilient direction.

Invest in selected dedicated new resilience-building programs.

This includes (i) employing urban informal workers and climate-induced migrants during lean periods in resilience-building public works programs such as drainage construction, as well as green infrastructure such as protection of coastal mangroves and urban agriculture; (ii) undertaking an integrated program on health, livelihoods, and infrastructure with explicit support for outdoor workers by promoting hydration regimes and outdoor infrastructure to deal with heat stress; and (iii) promoting resilience-building for micro, small and medium-sized enterprises through improved risk information, business continuity planning, and incentive mechanisms.

Enhance financial systems and products to strengthen resilience.

This includes (i) strengthening public financial systems to enable appropriate and long-term financing (capital expenditure and operations and maintenance cost) for resilience-building in urban areas; (ii) strengthening systems, including the capacity of urban local governments to access climate finance for implementing priority climate resilience actions; (iii) developing innovative financial products to build resilience of the urban poor, such as through land-based fiscal tools and green bonds; and (iv) developing innovative approaches such as forecast- based financing that allows ex ante access to financing for post-disaster response.

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