Contested Values of Eco-Developments: Leveraging Private Finance to Integrate Biodiversity into Nusantara’s City Development Framework

Abstract

Rapid expansion of urban populations has spurred the construction of new cities, contrasted with the heightened urgency to adopt climate risk mitigation and disaster resilience strategies. Along with the global need for Nature-based Solutions (NbS), new eco- developments which are planned within biodiversity hotspots should adopt resilient climate adaptation strategies for long term benefits. However, these projects are often not financially justified or positioned to sustain long investments and holding periods. This thesis examines development of Ibu Kota Nusantara (IKN) in Indonesia as an evolving eco-development case study on how biodiversity could be repositioned as a key aspect in investment frameworks. Developing new cities and eco-developments tend to rely on external investments, as internal structures are navigate the challenges of rapid growth while seeking a self-sustainable equilibrium. For IKN, private investors hesitate to invest in a project that is situated in an unstable political landscape, while low government expenditure and poor governance structures has marred development progress. Based on the inherent need to build to support a growing urban population, this multidisciplinary thesis explores three components that are needed to design an eco-development project - namely consistent way to value biodiversity in comparison to development values, proper environmental governance, and sustainable financial instruments to support the initial and operational expenditures of a project. Measurement approaches such as GBS-FI and S&P NBS are able to streamline corporation’s dependency value of biodiversity, based on valorization models developed by SEEA-EA and the United Nation’s Integrated National Financing Framework. A mixed-methods approach of qualitative case study analysis and in-depth review of existing and potential financial instruments is used to understand the demand and supply side of eco-developments. A Contingent Valuation Method of assessing buyers’ Willingness-To-Pay in addition to qualitative questionnaire on perceived values of biodiversity provides insights on local understanding and WTP of premiums in support of elevated costs of eco-developments. The intention of this research is to explore how biodiversity could be recentered as a foundational element to sustainable development of cities. More broadly, this research seeks to synthesize the interdisciplinary discussions around development, environmental policy and ecological planning, while evaluating the feasibility of innovative financial mechanisms to mobilize capital for large-scale eco-development projects.