man made capital would be combined with labor and natural resources, thus increasing the 

value of natural resources to the economy. 

Expanding macro economic policies to include sustainable resources management conditions is 

not a new concept (Young 1992).  The prime macro economic concern is creating an alignment 

between the optimum scale for both the economy and the natural resources capital base.  For a 

developing country, the appropriate scale is difficult to achieve when the design of existing 

institutional arrangements aims to support economic growth.  The rapidly increasing population 

and work force means there is also a strong political constituency supportive of unconstrained 

economic growth to improve living standards.  

A major concern is the ability of institutions, created for the purpose of economic growth, to 

serve the needs of natural resources management and the environment.  The option of using 

markets is not trusted because of increasing population levels and the number of unexpected 

ecological events resulting from human activity, some of which are irreversible.  Markets serve 

self interests and, as such, may not necessarily serve wider community interests.  Markets are 

unlikely to provide for future generations or ensure equitable distribution of benefits and costs.  

Alternative processes and tools will be necessary to avoid the continuance of an economy 

exceeding the capacity of underlying ecological support systems. 

New tools are needed to assist policy makers and other citizens identify the impacts from 

increasing the scale of the economy while decreasing the scale of the natural environment.  

Central to these tools is the establishment of appropriate indicators or targets.  For economic 

scale indicators, the United Nations, for example, have recommended the use of adjusted GDP 

data.  The potential importance of using such adjustments can be seen with GDP declining from 

7.1 percent in an unadjusted form to approximately 4.0 percent when adjusted for environmental 

impacts such as soil erosion, forest clearance and petroleum stock depletion.  

The difficulty is knowing where to start and in what order to proceed for establishing a policy 

portfolio that aims to facilitate a sustainable development pathway.  The development of 

economic and resources management targets has often been viewed as the important first step 

(NRMP Report No. 55, Young 1992).  Long term targets need to be established as part of the 

twenty five year planning process and then broken down into five year and annual targets for 

each province. Establishing targets requires identification of safe minimum standards for 

relevant indicators. Within a safe minimum standards approach, the market influence is 

constrained to ensure adequate consideration of uncertainty, irreversibility, and the needs of 

future generations. Safe minimum standards are regulatory, such as the current forest utilization 

system based on the  Indonesian Selective Cutting and Planting System  (Tebang dan 

Penananam Terbatas Indonesia, TPTI).  In effect, TPTI provides a safe minimum standard to 

protect an uncertain ecological threshold.  Regulatory approaches have the added advantage of 

being simpler to introduce, especially when high levels of uncertainty exist.  

Through establishing an independent Policy Secretariat, NRMP designers envisaged a group of 

policy analysts working on key resources management issues, providing independent policy 

advice through completion of third party contracts and project funded initiatives.  The 

expectation was that the Secretariat would be staffed by Indonesian analysts from NRMP s local 

counterpart institutions, supported with technical assistance funded by NRMP.    

To institutionalize the Secretariat, NRMP proposed to develop and execute macro economic 

and sectoral policy studies on behalf of project counterpart agencies, thereby promoting policy 

reform.  Funding for the Secretariat s establishment was provided by NRMP, with additional 

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