INTRODUCTION

Indonesia, comprising over 17,000 islands, is the world's largest archipelago and is blessed with a rich diversity of resource endowments, ecology and population. It extends about 6,000 km along the equator between the Indian and Pacific oceans, linking the continents of Asia and Australia. This fourth most populous nation in the world (about 260 million in 2016) is the largest member state of the Association of Southeast Asian Nations (ASEAN), accounting for nearly 40 per cent of its population and approximately 36 per cent of its gross national product in 2016 (CEIC Database). Considering these diverse characteristics, Indonesia certainly presents a challenging natural resource and environmental policy environment (Resosudarmo 2012; Hill 2014).

For a long time, particularly since the mid-1960s, Indonesia has been able to utilize its natural resources — gas, forest, coal and various types of ore, among others — to push for economic and human development in the country. Since the mid-1990s, the debate over whether the rate of natural resource extraction in Indonesia has been too fast and consequently over-exploitative, began to emerge as a top national issue. At the same time, the growth of economic activities, particularly in urban areas, has resulted in several alarming environmental issues, such as a high level of air pollution and a deterioration in river quality (Resosudarmo 2005; ADB 2013).

By the mid-2000s, the evidence of natural resource over-exploitation and environmental challenges in Indonesia attracted global attention. Among these issues were: the rate of Indonesia's deforestation was among the highest in the world (Resosudarmo et al. 2012b; Margono et al. 2014); several megacities in the country were experiencing alarmingly bad air quality; river water pollution was reaching levels that could seriously affect the health of the general public (Resosudarmo and Napitupulu 2004; Cochrane 2015); Indonesia being one of the top exporters of coal — despite its coal reserve being smaller than several other countries (Burke and Resosudarmo 2012; PwC 2012) and; over-fishing occurring everywhere in the nation's sea water areas (Resosudarmo, Napitupulu and Campbell 2009; Muawanah, Pomeroy and Marlessy 2012). The concern that shocked many Indonesians and people worldwide, however, was that Indonesia is one of the top three carbon dioxide (CO2) emitters in the world, just after China and the United States, due to its deforestation activities (PEACE 2007; Jotzo 2012).