Universitas Gadjah Mada
Faculty of Economics and Business

On Thursday (7/7), the Microeconomics Dashboard of the Faculty of Economics and Business Universitas Gadjah Mada (FEB UGM) held a program titled Meet The Expert #2. Meet The Expert #2 examines the Green Economy polemic. This event invites Prof. Arief Anshory Yusuf, S.E, M.Sc., Ph.D, Professor of the Faculty of Economics and Business, University of Padjadjaran. Meet the Expert #2 moderated by Shima Dewi Mutiara Trisna, S.E., M.Sc. Meet The Expert #2 discusses the big question of whether this Green Economy is feasible for developing countries like Indonesia, as well as the opportunities and challenges that Indonesia will face if implementing a Green Economy.

Arief Anshory Yusuf started the event by explaining the concept of the Green Economy, namely as a green economic system, which is in accordance with economic principles, aiming to allocate resources optimally. Arief Anshory Yusuf explained that an economy based on market price algorithms often fails to assess environmental resources, such as clean air. Then, Arief Anshory Yusuf explained Wagner's Law which states that in general the richer a country is, marked by the higher the Gross Domestic Product (GDP), the more developed the country is, the healthier, smarter, and more sophisticated its collective politics will be. However, this contradicts the Easterlin Paradox which states that besides the increase in Japan's GDP in the period 1958 to 1990, surveys of Japanese people's life satisfaction tend to stagnate during the same period.

Arief also underlined the failure of the price algorithm to read economic and human losses in the 2015 Southeast Asia Haze Pollution incident which caused premature deaths of more than 100,000 people. This of course should be considered as an economic loss and injustice. Hence, summarizing the above cases as a whole, the market price system that adheres to a free unregulated system raises several problems including: neglecting justice, unable to perfect itself, unable to create its own market, and not working well in asymmetric information. Thus, there is an urgency in implementing a green economy which views that not all values ​​are sourced from market prices. Because the reality is that often the most valuable resources in the world, such as clean air, cannot be valued at market prices

.The green economy discourse actually does not offer a revolution to the capitalist economic system, said Arief. The green economy aims to 'give color' to the capitalist economy that is applied by the majority of countries in the world, so that they put attention to the sustainability of the environment and natural resources. Based on a case analysis, the green economy initially requires a large investment cost. In addition, the green economy is projected to generate less profit than the conventional economy. However, in the long term and considering the possibility of natural disasters and environmental damage, the green economy has a high margin of economic advantage compared to the conventional economy. In Indonesia, the green economy system also gets constitutional support because the green economy is written explicitly in the UUD 1945 article 33 verse 4.

At the end of the session, Arief explained that there are at least four challenges which must be faced in implementing a green economy. The first challenge is the conventional economic paradigm. Some other challenges are political economy, domestic policy space, and commitment. However, there are strategies that can overcome all four. The conventional paradigm can be overcome by the presence of the state when the economy is not functioning properly. Political economy challenges can be faced by planning, monitoring, and controlling the achievement of targets, as well as increasing public participation. Domestic policy space can be overcome by implementing an accurate and relevant fiscal policy. Finally, commitment can be instilled by progressively increasing budget allocations for environmental protection. The presentation on the challenges of the green economy became the conclusion of the webinar presentation session. Meet the Expert #2 was closed with a question and answer session.

Reportage: Hayfaza Nayottama