Aceh has once again been hit by massive floods, affecting thousands of residents and crippling local economic activities. Although heavy rains are often cited as the main cause, the reality is that floods in Aceh are closely linked to economic and land use decisions made over the past years.
After the armed conflict and the 2004 tsunami, Aceh has faced serious economic pressure. Poverty rates remain among the highest in Sumatra, while the economic structure still relies on the primary sector. The high-value-added manufacturing and services sectors have also grown slowly.
Based on annual data, Aceh's Gross Regional Domestic Product (GRDP) is estimated at around IDR 166 trillion, equivalent to around RM 50 billion per year. In comparison, DKI Jakarta's GRDP exceeds IDR 3,700 trillion or around RM 1.1 trillion per year, almost 20 times larger than Aceh's.
Palm Oil & Acacia Become the Choice
This economic scale gap explains why Aceh has chosen a commodity-based growth path. Palm oil has become the main choice because of its clear and quick returns.
On average, oil palm plantations can generate gross revenue of around RM 7,500 to 12,000 per hectare per year, depending on global prices. The initial investment to open a plantation is estimated at around RM 20,000 to 30,000 per hectare, with a payback period of around 5 to 7 years.
For the provincial government, the oil palm sector contributes taxes, licenses and job opportunities, thus increasing the contribution of the agricultural sector to Aceh's GRDP.
In addition to oil palm, acacia cultivation for the pulp and paper industry is expanding through the Industrial Plantation Forest (HTI) scheme. This crop attracts investors due to its low planting costs and short harvest cycle of around 6 to 7 years.
At the national level, the value of Indonesian pulp and paper exports reaches around RM 55–60 billion per year, making Indonesia one of the world's five largest exporters. In this context, Aceh is part of the global supply chain of raw materials for the industry.
However, this economic return comes with a large hidden cost. A report from Gadjah Mada University shows that Aceh lost hundreds of thousands of hectares of forest between 1990 and 2020, with natural forest areas decreasing by more than 700,000 hectares due to logging and land use changes, including for agriculture and commercial crops.
Changing Water Absorption Function
The conversion of natural forests to monoculture plantations reduces the soil's ability to absorb water. Each major flood episode causes direct losses to infrastructure, agriculture and small businesses.
Economists from the Center of Economic and Law Studies (Celios) estimate economic losses from floods in Aceh at around RM 620–670 million, including damage to homes, infrastructure, loss of income and agricultural products.
From a fiscal perspective, the cost of managing this disaster is increasing. The government has to allocate spending almost every year for emergency relief, evacuation of victims and basic repairs.
Indirectly, some of the economic revenue from palm oil and HTI is eventually reused to cover the damage caused by this development model.
In conclusion, floods in Aceh are not just a weather issue, but a reflection of economic decisions. Oil palm and acacia helped Aceh recover from economic pressures in the short term, but without more balanced land use management, the costs of flooding will continue to erode the economic benefits gained.
In economic terms, the return on investment may look positive on paper, but the net worth shrinks when the costs of the disaster are factored in. May our friends in Aceh continue to persevere through this test.
