CLIMATE-RELATED DISASTERS AND PROVINCIAL CONTINGENCY BUDGET ADAPTATION IN INDONESIA

Abstract

This study examines whether Indonesian regional contingency budgets adapt to realised climate-related disaster experience, treating budget responsiveness as one dimension of fiscal resilience. A balanced province-year panel covering 32 provinces is estimated using fixed effects with standard errors clustered by province. The dependent variable is the budgeted share of contingency expenditure (Belanja Tidak Terduga/BTT) in total regional expenditure. The model relates the current BTT share to its one-year lag and to lagged frequencies of landslides, floods, droughts, forest fires, extreme-weather events, and coastal abrasion per 100,000 population. The results indicate that the model is statistically significant and explains a meaningful share of within-province variation in contingency budgeting. The lagged BTT share is positive and significant, showing that provincial allocations are strongly influenced by previous-year budgets. Flood and landslide frequencies also significantly increase the following year’s contingency-budget share, while drought, forest fire, extreme weather, and coastal abrasion are not statistically significant. These findings suggest that provincial contingency budgeting is both incremental and selectively responsive to recurrent and visible hazards. However, event counts do not fully reflect hazard duration, affected area, casualties, infrastructure damage, or economic losses, and the dynamic fixed-effects estimates should therefore be interpreted as associations. Risk-informed BTT guidelines should combine prior allocations with hazard-specific severity indicators and systematic post-event fiscal evaluation.