This working paper examines how coal dependence shapes economic diversification and poverty vulnerability at the village level in East Kalimantan, Indonesia. Focusing on Berau and Kutai Kartanegara, the study develops a Localized Coal Transition Vulnerability Index (L-CTVI) to assess community-level vulnerability across three dimensions: exposure, sensitivity, and adaptive capacity.
Combining socioeconomic and geospatial data with spatial econometric modelling, the study finds that coal dependence creates uneven patterns of vulnerability across villages. Communities with limited economic diversification and high reliance on mining-related activities face greater vulnerability as coal production declines, while more diversified local economies demonstrate stronger adaptive capacity. The paper also identifies three potential pathways for local economic diversification: agriculture-based diversification, local service-economy development, and small-scale manufacturing and household enterprises.
