Economics & Development

Indonesia, the world’s largest archipelagic nation, is home to over 17,000 islands, 54,000 kilometers of coastline, and some of the richest marine biodiversity in the world. Its coral reefs host 67 percent of global coral species, which, along with extensive mangrove forests and seagrass beds, sustain diverse marine ecosystems. These marine ecosystems are critical to Indonesia’s economy and livelihoods, contributing over 25 percent of the country’s GDP through sectors such as fisheries, aquaculture, and coastal tourism. However, these resources face significant challenges, including climate change, pollution, overfishing, and habitat degradation. The World Bank has supported Indonesia’s marine conservation efforts for 25 years through the Coral Reef Rehabilitation and Management Program (COREMAP). This three-phase program aimed to protect and rehabilitate coral reefs while enhancing the welfare of coastal communities. COREMAP I (1998–2005) piloted management frameworks, COREMAP II (2004–12) focused on decentralized reef comanagement, and COREMAP–Coral Triangle Initiative (CTI; 2012–22) aimed to institutionalize MPA management and enhance community livelihoods. The program was significantly affected by political shifts in 2017, which led to restructuring, scaling back objectives, and emphasizing ecosystem monitoring over community-based management. This assessment offers the following lessons: (i) Indonesia’s institutional complexity and sociocultural diversity demand tailored and learning-based project design. (ii) World Bank project policy contributions in the marine and coastal space can be more impactful if they align with countries’ blue economy frameworks. (iii) A stronger focus on evidence-based design can help substantiate ecosystem recovery claims. (iv) Broader community outreach is essential for sustaining conservation efforts.

The climate change crisis makes Paris Alignment of the transport sector one of the most pressing development challenges. Transport emissions are rising at a higher rate in low- and middle-income countries (LMICs) than in high-income countries. However, the current climate finance landscape for developing economies may be insufficient to support the challenge. While more climate finance can play an important role in reducing the investment gap, the transport sector has some limitation to generate revenues from users and thus, on the capacity to mobilize finance First, transport as a sector encompasses multiple infrastructure and transportation services for passengers and freight. Second, even when some pricing is possible, often, it is not done correctly to include externalities and thus, it could lead to over investment (i.e., private cars running on poor roads) and under investment (i.e., sidewalks, bike lines, public transport) - the use of carbon taxes to correct for climate externalities is limited in developed economies. Third, transport services (and their infrastructure) can complement when they provide multimodality, or they can be substitutes when there is competition in the market or redundancy for resilience. Governments need to address the fundamental bankability issues in projects, which are reinforced even more in green transport projects. In conclusion, a paradigm shift is required in the way transport services and the built environment interact to align with the Paris Agreement.