December 4, 2025 | 03:07 pm
TEMPO.CO, Jakarta - The Center of Economics and Law Studies (Celios) is urging the government to immediately impose a moratorium on mining permits and palm oil plantation expansion following floods that hit three provinces in Sumatra. Celios's economists view the Sumatra floods as an ecological disaster caused by deforestation for palm oil production and mining.
The results of Celios' modeling, titled "Economic Loss Impact of the Sumatra Flood Disaster", released on December 1, 2025, estimated the economic losses from the Sumatra disaster at Rp68.67 trillion. Nailul Huda, an economist at Celios, explained that their study found that opening palm oil plantations reduces forest productivity. "As a result, the forest area decreases, and the economic activities provided by the forest to the community also decline," he told Tempo on December 3, 2025.
Furthermore, Huda stated that in the long run, the opening of palm oil plantations harms both the regional and national economies. "Regarding mining, we have also studied that villages dependent on mining have a higher risk of flooding disasters," he said.
In Celios' publication, it is mentioned that the proportion of forests in Indonesia has decreased significantly compared to the total land area. The percentage of forest cover declined from 53.94 percent in 2000 to 48.04 percent in 2022. This economic research institution also calculated the percentage of forest rent and its contribution to the economy, or Gross Domestic Product. The results showed that forest land conversion's contribution to the economy is declining.
The forest rent as a percentage of GDP decreased from 0.81 percent in 2000 to 0.42 percent in 2021. "This reflects the declining contribution of forests to the economy due to land conversion, which increases the risk of losing the ecological functions of forests (carbon sink & biodiversity), even though economic growth is still supported by other sectors," as quoted from Celios' publication.
Furthermore, the results of the 2025 study by Celios and Greenpeace Indonesia, which used PODES data and a logit model in villages across Indonesia, were also presented. The results showed that villages whose main source of income comes from the mining sector experienced floods that were potentially 2.25 times higher than those in villages where mining is not the main sector.
Ecological disasters, such as floods, impact not only the regional economy but also the national economy. Thus, Celios recommends transitioning to a restorative, sustainable economy. They claim that without a change in the economic structure, ecological disasters will recur, causing much greater economic losses.
Read: West Sumatra Clarifies Floating Log Origin After Fatal Floods
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