Optimal Climate Adaptation Policies Under Uncertainty and Irreversibility for Reducing The Risk of Flooding in Jakarta, Indonesia

Flooding is a crucial problem for Jakarta, the capital city of Indonesia, because it brings big economic losses. During the past decades, the city has been attacked by big floods almost every 5 years. The flood in 2007 was the most serious one with a loss of 56 billion US $, which the Indonesia government regarded as a national disaster.

Since then, the government has planned to spend a lot of budgets to provide different infrastructures through  flood adaptation programs in order to reduce the flooding risks in the future. However, investment on the flood adaptation programs so far are based on different opinions without clear economic considerations. Therefore, there is a need to study the efficient allocation of funding for the adaptation programs. This can only be done if the costs and benefits of the different options are clearly determined.

There is a lack of assessment studies in literature, which can specifically evaluate adaptation programs and identify the best one. This study focuses on the economic analysis for various adaptation options for reducing flooding risk under climate change in  Jakarta. Furthermore, such an analysis is complicated due to uncertainties in future climate change, such as precipitation and sea level rise, future economic growth, and irreversibility in investment costs. This study tries to include these aspects in the analysis including the cost effectiveness of some specific adaptation programs.

The main objectives of this study are (1) to study how water systems can be efficiently adapted to future climate change for reducing the risk of flooding in Jakarta, and (2) to advance the economic theory by dealing with uncertainties related to climate change. The results of this study will  contribute to the Jakarta Climate Adaptation Tools Program, which is a research program of the Delta Alliance. Meantime, this study also aims to provide some policy recommendations for the Jakarta Government.

This project is funded by Kennis voor Klimaat