Why delaying climate action could cost Indonesia more

 Climate change is increasingly becoming an economic issue that can no longer be treated separately from investment, production, and competitiveness.

When drought disrupts output, extreme weather damages assets, and tighter emissions standards affect market access, climate risks begin to shape business costs and returns.

For Indonesia, the question is not only how much investment is needed to prepare for climate change, but also how much it will cost if such investment is delayed.

A recent report by the United Nations Environment Programme (UNEP) strengthens that case. Every US$1 invested in integrated action on climate change and air pollution could generate about US$15 in economic benefits, according to the report.

The estimate includes market and non-market benefits, such as lower health costs, higher productivity, and avoided climate-related losses.

Even when only market benefits are counted, every US$1 invested could generate about US$4 in economic benefits.

The UNEP report Hidden Assets: The Economic and Health Case for Climate and Clean Air Action examines 25 measures across six sectors: energy and fossil fuel systems, industry, transport, agriculture and food systems, household cooking and heating, and waste management.

The measures include renewable energy and energy efficiency, clean energy for cooking and heating, vehicle electrification, tighter vehicle emissions and efficiency standards, improved livestock and manure management, more efficient fertilizer use, alternatives to open burning of crop residues, and better solid waste and wastewater management.

The report also covers measures to reduce oil and gas leaks, eliminate routine gas venting and flaring, and reduce the use of hydrofluorocarbons (HFCs).

The economic benefits of these measures are estimated at 2.8 percent of global gross domestic product (GDP) in 2035, 4.5 percent in 2050, and 11.4 percent in 2100. Market benefits are projected to exceed implementation costs within 10 years.

The figures do not mean that every green investment will automatically be profitable. Rather, they show that climate action can generate economic returns through energy savings, higher productivity, health gains, and avoided losses, in addition to reducing emissions.

For Indonesia, the challenge is to incorporate those benefits and risks into investment decisions before climate exposure turns into economic losses.