Poverty and climate nexus needs special attention. Climate and disaster risk poses a serious threat to the socioeconomic development of Indonesia and undermines the country’s hard-earned development gains. The risks are expected to increase in the future with climate change, with its widespread impacts on four sectors—agriculture, water, marine and coastal, and health—as prioritized in the Climate Resilience Development Policy (Kebijakan Pembangunan Berketahanan Iklim, or PBI) 2020–2045. The major brunt of climate risk will be faced by 26.42 million Indonesians who live below the poverty line and have limited resources and capacity. The climate shocks and stresses will also force the near-poor population hovering marginally above the national poverty line to fall into poverty. Thus, a closer link needs to be established between efforts to reduce poverty and strengthen climate resilience if achievements in both spheres are to be sustained. Poverty reduction interventions, including those aimed at reducing burden, addressing spatial isolation, and improving economic capacity, need to be designed and delivered with current and future climate risk considerations. Climate actions need to be carefully designed so that they explicitly benefit the poor and near poor and do not inadvertently increase vulnerability and inequality. Such a vision is closely aligned with the development agenda of the National Medium-Term Development Plan (Rencana Pembangunan Jangka Menengah Nasional, or RPJMN) 2020–2024.

Explicit focus on building resilience of the poor and near poor in urban areas can ensure that urbanization benefits all equally. Urban areas, comprising nearly 55% of the Indonesian population, are hot spots of climate and disaster risk, with often high exposure and vulnerability to natural hazards.

The risks are expected to increase with large numbers of coastal cities facing sea level rise and with high-density built environments resulting in urban heat island effects. Roughly 7% of the urban population are poor, and almost the same proportion just above the poverty line. Often living in slums and informal settlements, in overcrowded housing and with poor quality of basic services, the poor and near poor have to deal with climate shocks and stresses that impact their assets, livelihoods, and limited savings, forcing them to adopt negative coping strategies. In the absence of pro-poor climate resilience actions, such impacts will further increase poverty and inequality. The coronavirus disease (COVID-19) crisis has further exposed the underlying vulnerabilities of the urban poor and near poor and highlighted the urgency to build resilience, especially of the ones most at risk.