Jakarta. The Indonesia Environmental Fund (BPDLH) reaffirmed its commitment to becoming a catalyst for Indonesia's goals of slashing emissions and strengthening the national resilience to disaster risks.

Indonesia aims to slash its emissions to 31.89 percent by its own means by 2030. However, the country is willing to raise the target to 43.20 percent if it receives international support. At the same time, the archipelagic country is trying to strengthen its national disaster management in line with the Sendai Framework for Disaster Risk Reduction.

BPDLH is tasked to collect, manage, and distribute funds through various financing and grant schemes. This fund comes from the state and local budgets, philanthropy, donors, business entities, and multilateral development banks (MDBs). This makes BPDLH a vital link between the fund providers and the program implementers.

"BPDLH plays a role in collecting and distributing funds through programs under the 10-Ministerial Steering Committee. We act as a facilitator, connecting fund providers, such as philanthropists, donors, and the business sector, with the parties that implement the program, such as the sub-national government," BPDLH's fund distribution director Damayanti Ratunanda said.

BPDLH focuses on five sectors: Agriculture, Forest, and Other Land Use (AFOLU) and Sustainable Ecosystem; Just and Affordable Clean Energy; Circular Economy and Zero Waste Emission; Health, Water, and Food Security; Climate and Disaster Resilience. According to Damayanti, BPDLH embraces a comprehensive risk management, while making sure that protection against environmental and social risks is a top priority in each program.

According to a 2021 Finance Minister Decree, BPDLH is in charge of managing the disaster pooling fund. This innovative financing mechanism adopts the principle of an endowment fund, pooling capital from various sources -- government, the private sector, and international institutions -- and developing it through diversified long and short-term investments to generate sustainable returns.

Unlike conventional endowment funds that only utilize investment returns, the disaster pooling fund is more flexible as it can use all primary funds in times of disasters, as instructed by the president. Such a scheme helps to make sure that Indonesia has enough financial resources to address the increasingly complex and unpredictable disasters.

The disaster pooling fund's investment returns become the backbone of financing. This covers the entire spectrum of disaster management, from pre-disaster and emergency to post-disaster rehabilitation. The fund also supports risk transfer mechanisms through disaster insurance, both conventional and innovative products, such as parametric insurance. This enables direct payments based on specific physical parameters specified in the policy.

Disaster insurance protection enables local governments to reduce fiscal burdens, increase awareness, and achieve more effective disaster preparedness and response. It allows sub-national governments to focus on development and public services without having to worry about the financial burden of disasters.

In 2025, BPDLH aims to distribute the funds to four ministries and institutions: the National Disaster Management Agency (BNPB), the Home Affairs Ministry, the Social Affairs Ministry, and the Health Ministry. This initial phase is designed to build a strong foundation before expanding access to local governments.

By 2027, local governments are expected to be able to access the disaster pooling funds. The fund disbursement will prioritize activities outlined in the regional disaster management plan and high-risk areas. The money will also go into post-disaster rehabilitation, and activities included in the minimum service standards for disaster management.

BPDLH plans to integrate the funds related to environmental protection, climate change, and disaster management, all within a single comprehensive ecosystem. This will strengthen the agency's role as a catalyst for the government's program to drive the country's resilience against disasters that are on the rise due to climate change.

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