Assessing The Economic Impacts Of Climate Change Mitigation Strategies On Natural Resource-Dependent Economies.

Abstract

The dynamics of climate change mitigation policies in Indonesia between 2019 and 2024 experienced a significant escalation, marked by the strengthening of national carbon emission reduction targets and the launch of carbon economic value instruments. However, these green transition regulations could cause economic shocks in regions whose structures remain heavily dependent on the extractive-commodity sector. This study aims to analyze the impact of implementing national climate change mitigation strategies on the stability of natural resource-based regional economies. The research method used is descriptive qualitative with an exploratory policy study approach based on literature review and analysis of relevant regulatory documents. The results show a clear pattern of fiscal vulnerability in fossil fuel and plantation-producing regions, driven by the contraction of local revenues from revenue-sharing funds and restrictions on the expansion of conventional commodity land. As a solution to this transition dilemma, the study recommends strengthening green compensation instruments by establishing Green Revenue-Sharing Funds (DBH) and accelerating the integration of carbon markets at the regional level. These steps are crucial for maintaining the fiscal resilience of affected regions while ensuring the sustainability of the national decarbonization agenda.