The Use of the Input–Output Model for Economic Policy in Encouraging Reduced Greenhouse Gas Emissions in Jakarta

Jakarta is the capital city and the center of economic activity in Indonesia. In an area-based economic structure, Jakarta's GRDP contributes around 16% to Indonesia's GDP, putting Jakarta in the first place compared to other provinces. The rapid economic activities result in pressure on environmental issues, including air pollution. Recently, Jakarta became the city with the worst air quality in Indonesia, surpassing even some of the largest cities worldwide. This condition surely affected the quality of life of Jakarta residents and was detrimental to many parties. This study aims to define economic sectors that contribute to worsening air pollution in Jakarta, conducted using an extended input–output (I–O) model. The data used are the I–O table and greenhouse gas emission data, both publicized by the Indonesian Central Bureau of Statistics (BPS). In order to obtain the greenhouse gas emission multiplier data, the output multiplier from Table I–O is multiplied by the greenhouse gas emission coefficient matrix. The results of the multiplier for greenhouse gas emissions define the economic sectors that produce air pollution in Jakarta, sorted from the highest to the smallest. The outcome of this study can be utilized by the government to shape future economic policies and decide which economic sectors should be encouraged or limited to tackle air pollution problems in Jakarta. The results show that the largest emitting sectors in Jakarta are waste disposal, road and rail transportation, construction, and services.