Sustainability Prediction Model for Capital City Relocation in Indonesia Based on Inclusive Wealth and System Dynamics

Abstract

Based on inclusive wealth (IW), this paper evaluates the impact and sustainability of the Indonesian government’s decision to relocate the capital city from Jakarta to East Kalimantan in terms of economic, human, and environmental aspects. This paper develops an integrated prediction simulation model based on IW and system dynamics and sets three scenarios, depending on the expected population recovery in Jakarta and the increased immigration into the new capital city (NCC) from the nearby areas after the public sector relocates. The most reliable scenario projects benefit of USD 169 billion in IW in 2050, equivalent to 2.41% of the expected cumulative real gross domestic product (GDP) growth in Indonesia from 2021 to 2050. Regarding the sustainability of the relocation, the current investment plans are not sustainable, largely because of the negative impact on human capital, comprising the education and health capital caused by the income gap between Jakarta and the NCC, and due to depreciation of produced capital. This study makes a significant contribution to the integrated evaluation of capital city relocations for Indonesia and beyond, because no previous study of such relocations combines produced, human, and natural capital. This is the first policy evaluation to include the impact of migration on IW, which plays an important role in IW literature, because population is a key model factor.

Sustainability Assessment Model of the Buriganga River Restoration Project in Bangladesh: A System Dynamics and Inclusive Wealth Study

“…It had four sub-models: water quality, natural capital, human capital, and produced capital. The change in IW is calculated via Equation (1) as follows [25]:…”

“…; the natural capital represents the natural resources, which provide goods and ecosystem services; and the produced capital represents physical assets such as infrastructure, land, etc. [17,25].…”

“…Hence, SD is more suitable to assess impacts, considering the interdisciplinary dynamics of the system [24]. Combined SD-IWI modeling could help assess the sustainability of the project, given multiple feedback and interrelations among different system components [25].…”

“…Aly and Managi (2018) developed a hybrid model to analyze the impacts of an energy infrastructure project [16]. Shimamura and Mizunoya (2020) produced an SD-IWI model to predict the sustainability of the capital city relocation project in Indonesia [25]. However, they did not consider the water quality aspect and did not combine IW and Streeter-Phelps' water quality model based on an SD approach.…”

Path Dependency and Future Adaptation of Coastal Cities: Examples From the Asia-Pacific

“…Factoring into this, especially in poorer contexts (like Nadi and Manila), is the lack of sufficient funds to enable transformational rather than incremental adaptation. It is clearly much easier for local (and national) governments to fund the construction or repair of sea defenses than it is for them to relocate vulnerable communities, although clearly the point will be reached-as it has with Jakarta (Indonesia)-where wholesale relocation is acknowledged as unavoidable and plans are drawn up to enable this (Shimamura and Mizunoya, 2020;Van de Vuurst and Escobar, 2020).…”