Environmental Damage and Liability in Indonesia: Fancy World Under Conventional Wisdom

In recent years, the Ministry of the Environment has issued several regula-tions regarding economic valuation of environmental damage that can be used in a civil law-suit. This article attempts to answer the questions of how economic valuation is implemented in various rulings. In particular, this paper analyzes whether an objective damage valuation can be achieved through economic valuation methods. In doing so, before discussing some theoretical foundations of economic valuation methods, this paper will first explore the con-cept of environmental damage under Indonesian environmental law. In addition, the paper is also interested in comparing the implementation of environmental damage assessment in the US, Europe, and Indonesia particularly based on the Indonesian Supreme Court ruling on Menteri KLH v. PT. Kalista Alam. This paper observes that attempts to provide objective valuation for environmental damage in Indonesia have failed, as indicated by the failure to make a clear distinction between real environmental damage and remedial costs. This paper shows that the government has failed to refer to and apply valuation methods endorsed in various Ministerial Regulations. Surprisingly, the government claimed remedial costs as the basis for calculating environmental damage, although they never took any remedial action and in fact they asked the defendant to conduct the remedial action. To ensure that remedial action is fully implemented, the paper argues that the availability of remedial funds is in order.