We estimate and map the impacts that alternative national and subnational economic incentive structures for reducing emissions from deforestation (REDD+) in Indonesia would have had on greenhouse gas emissions and national and local revenue if they had been in place from 2000 to 2005. The impact of carbon payments on deforestation is calibrated econometrically from the pattern of observed deforestation and spatial variation in the benefits and costs of converting land to agriculture over that time period. We estimate that at an international carbon price of $10/ tCO 2 e, a "mandatory incentive structure," such as a cap-and-trade or symmetric tax-and-subsidy program, would have reduced emissions by 163-247 MtCO 2 e/y (20-31% below the without-REDD+ reference scenario), while generating a programmatic budget surplus. In contrast, a "basic voluntary incentive structure" modeled after a standard payment-for-environmental-services program would have reduced emissions nationally by only 45-76 MtCO 2 e/y (6-9%), while generating a programmatic budget shortfall. By making four policy improvements-paying for net emission reductions at the scale of an entire district rather than site-by-site; paying for reductions relative to reference levels that match business-as-usual levels; sharing a portion of district-level revenues with the national government; and sharing a portion of the national government's responsibility for costs with districts-an "improved voluntary incentive structure" would have been nearly as effective as a mandatory incentive structure, reducing emissions by 136-207 MtCO 2 e/y (17-26%) and generating a programmatic budget surplus.climate change | climate policy | land-use change | reducing emissions from deforestation and forest degradation A n emerging international climate policy mechanism called REDD+ would offer payments to developing countries that voluntarily reduce greenhouse gas emissions from deforestation below internationally agreed reference levels (1). Individual forested countries would decide upon the specific set of policies and measures to implement to achieve nationwide emission reductions. Accounting for these net emission reductions would ultimately take place at the national level, making national governments responsible for any internal geographical shifts of emissions (leakage), and providing incentives for systemic policy actions. However, although governments would receive payments under REDD+, it is actors at the regional, provincial, local, or household (subnational) scales who are directly responsible for many land-use change decisions. Thus, the effectiveness of REDD+ in reducing emissions and generating revenue will depend upon how national governments structure economic incentives so that subnational actors will be encouraged to reduce emissions and discouraged from increasing emissions.Emission-reduction policy in the energy and industrial sectors of developed countries has commonly been approached through mandatory, market-based incentive structures, such as cap-andtrade...

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In this article, we consider the recent increase in inequality in Indonesia. We make new, consistent estimates of expenditure inequality for 1993-2013, using several measures that draw on household expenditure data from the National Socioeconomic Survey (Susenas) for 1993-2013. In doing so, we note that the central statistics agency, Badan Pusat Statistik (BPS), used grouped data for its estimatesof inequality until 2009 and that this underestimated inequality up to then. Thus the rise in inequality reported since 2009 actually has a longer history. We argue that Indonesia experienced divergence and convergence at the same time: the magnitude of the rise in inequality was significant (divergence), but the rise was greatest in provinces or districts with low initial levels of inequality (convergence). We consider the literature on drivers of changes in inequality and identify a set of hypotheses, with an empirical basis, which we introduce as potential Indonesian-specific drivers of rising inequality for future exploration.

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Spikes in international food prices in 2007-2008 worsened poverty incidence in Indonesia, both rural and urban, but only by small amounts. The paper reaches this conclusion using a multisectoral and multihousehold general equilibrium model of the Indonesian economy. The negative effect on poor consumers, operating through their living costs, outweighed the positive effect on poor farmers, operating through their incomes. Indonesia's post-2004 rice import restrictions shielded its internal rice market from the temporary world price increases, muting the increase in poverty. But it did this only by imposing large and permanent increases in both domestic rice prices and poverty incidence. Poverty incidence increased more among rural than urban people, even though higher agricultural prices mean higher incomes for many of the rural poor. Gains to poor farmers were outweighed by the losses incurred by the large number of rural poor who are net buyers of food, and the fact that food represents a large share of their total budgets, even larger on average than for the urban poor. The main beneficiaries of higher food prices are not the rural poor, but the owners of agricultural land and capital, many of whom are urban based.