Jakarta, 15 December 2025 – Aksi Ekologi dan Emansipasi Rakyat (AEER) held a public discussion entitled ‘Funding Disaster Management in the Era of Climate Crisis: The Urgency of Wealth Tax as a Responsibility of Climate Justice’, in response to the major hydrometeorological disaster that struck Sumatra at the end of November 2025. This discussion highlighted the increase in the frequency and intensity of hydrometeorological disasters in Indonesia as a direct result of the climate crisis, exacerbated by environmental damage and poor natural resource management. The Intergovernmental Panel on Climate Change (IPCC) report shows that global temperatures have risen by around 1.6°C compared to the pre-industrial era, resulting in increased extreme rainfall, unpredictable weather, and tropical cyclones in regions that were previously rarely affected.

Extreme Weather due to Climate Change and Deforestation Increases the Risk of Hydrometeorological Disasters

Armi Susandi, Lecturer in Meteorology at the Faculty of Earth Sciences and Technology, ITB, explained that global warming will increase the water vapour content in the atmosphere, causing extreme rainfall to become more frequent and intense.

“Climate change has altered the atmospheric and oceanic systems, increasing the frequency and intensity of extreme weather events in Indonesia. This condition makes extreme rainfall, strong winds, and tropical cyclones increasingly risky, especially in areas with high environmental vulnerability,” said Armi.

Armi also explained that flooding due to extreme weather will be more likely to occur when there is massive deforestation and land conversion from forests to mining and plantations.

‘Extreme rainfall is the trigger. However, deforestation, degradation of river basins, and poor spatial management turn extreme rainfall into floods and landslides,’ explained Armi.

He emphasised that in the last decade, Sumatra has lost nearly 1.2 million hectares of forest cover, especially in the upper reaches of river basins, resulting in a drastic decline in soil absorption and a sharp increase in water runoff.

The Disparity between Disaster Risk and Public Funding Capacity

According to Jaya Darmawan, an environmental economist at CELIOS, the magnitude of losses caused by disasters is not commensurate with the government’s fiscal capacity to respond to and recover from the impact of disasters.

‘CELIOS modelling shows that flooding in Sumatra caused material economic losses of Rp68.67 trillion nationally, while in Aceh alone there was a regional economic contraction of around 0.88 per cent, equivalent to Rp2.04 trillion. On the other hand, the government’s fiscal space for disaster mitigation and management is very limited and is not proportional to the scale of the losses incurred,’ said Jaya.

The fiscal constraints in Indonesia confirm that the issue of disaster funding in Indonesia is not merely a matter of the magnitude of losses, but also concerns a financing structure that has not been able to link risk sources with funding sources.

Furthermore, Shofie Azzahrah, Green Economy Researcher at AEER, said that the increasing risk of disasters due to the climate crisis in Indonesia is not matched by an adequate and sustainable funding system.

“Disaster funding in Indonesia is still heavily dependent on the state budget and regional budgets, which have relatively limited fiscal space. The BNPB (National Agency for Disaster Countermeasure) budget for 2025 is only around Rp806.97 billion, while the World Bank estimates that economic losses due to disasters reach USD 2-3 billion per year. In this situation, the social and ecological costs of high-risk economic activities, including the fossil fuel industry that contributes to climate change and hydrometeorological disasters, are actually borne more by the communities in the most affected locations,” he emphasised.

‘We consider it necessary to have a funding mechanism based on the polluter pays principle and progressive fiscal instruments so that disaster financing is borne by those responsible and not continuously borne by the community,’ continued Shofie.

Can Wealth Tax be an Option for Disaster Funding?

In this context, disaster funding can no longer rely solely on the existing budget structure. Fiscal constraints and increasing disaster risks demand new sources of funding that are more stable and equitable, including through progressive fiscal instruments that can strengthen the state’s capacity without burdening the wider community.

Ema Kurnia Aminnisa, The PRAKARSA, emphasised that the increasing frequency of disasters is inversely proportional to the state’s fiscal capacity to finance disaster mitigation and management.

Disaster funding in the state budget is still far from adequate and reflects the government’s low commitment to disaster mitigation and management. This is evident from the decline in budget allocations to key institutions such as the BNPB, which in the last two years (2024 and 2025) has been lower than in 2015. Amid increasing disaster risks and frequency, this budget policy demonstrates a low level of commitment to disaster prevention and management. As an alternative, the implementation of a wealth tax is a strategic solution to strengthen the country’s fiscal capacity, with a potential revenue of around Rp78 trillion, while upholding fiscal justice through the redistribution of income from the richest 1% (high net worth individuals) in Indonesia,” said Ema.

The disparity between disaster risk sources and funding sources has created a disproportionate burden on communities in affected areas.

Therefore, strengthening fair and sustainable disaster funding is an urgent need, including through progressive fiscal instruments that place the responsibility for funding on those who benefit most from high-risk economic activities, while ensuring stronger protection for vulnerable communities amid the worsening climate crisis.

Media Contact:
Michael Raditya Setiawan
+62 822-4976-1486
michael.rs@aeer.or.id