The village of Bukit Lawang in Indonesia generated income from tourism by allowing visitors to observe orangutans. However, illegal logging upstream increased flood risks, which were passed onto the village. In 2003, a flash flood destroyed Bukit Lawang after heavy rains swept felled trees downstream. While some sought greater profits from illegal logging, it created risks for the village that relied on low-risk tourism. Effective law enforcement is needed to disperse risks from illegal activities to ordinary citizens.

1. Risk and Return
The case of Bukit Lawang

2. Risk and Return
In economic theory risk and return are highly correlated. As
risk increases a greater return is required. In some cases
however it is possible to receive high return by simply
passing the risk to others. Such was the case of Bukit
Lawang.

3. Bukit Lawang
Bukit Lawang is a small village in North Sumatra,
Indonesia. It is located on the edge of the Gunung Leuser
National Park, a UNESCO World Heritage Site.

4. Bukit Lawang
The village generates
most of its income from
tourism. Visitors come to
Bukit Lawang to have a
close up experience with
Orangutans and other
wildlife.

5. Opportunities
The village, built along a fast
flowing river provided
opportunities for locals to
create their own small
businesses and there were
many small restaurants and
guest house there when I
visited in September 2003.

6. Opportunities
One local entrepreneur
had also created a
business of renting
inflated inner tubes for
visitors to ride the
currents.

7. Risk
Another economic activity
upstream reaped higher
rewards but with greater
risks. But these risks
essentially rested upon the
residents and visitors of Bukit
Lawang. Within the world
heritage site illegal logging
was taking place.

8. Risk
Jungle trees play a
vital role in containing
water. When removed
en masse the risk of
flood increases,
particularly in tropical
zones such as North

9. The Realisation of Risk
Bukit Lawang was destroyed in
November 2003 by a flash
flood. Heavy rains not only filled
the river and increased its flow,
they also swept many of the
felled trees into the river. When
these logs and the fast flowing
water hit Bukit Lawang people
were swept away and buildings
and livelihoods were destroyed.

10. A Personal Viewpoint
When I revisited the site in March 2004 the devastation of
what had happened was still apparent. Wood and rubble
were everywhere and the place was unrecognizable. Only
one building was left standing intact and it was impossible
to pick out any of the landmarks of the village that I had
visited six months before. Aside from one family who were
staying in the one surviving guest house (which had been
built on higher ground), my friends and I were the only
people around.

11. Today and the Future
The people of Bukit Lawang
were never going to be
wealthy. But they did have
businesses and incomes
and a roof over their heads.
Their enterprise was low risk
and this was the return that
they were satisfied with.

12. Today and the Future
Others however sought greater
return but their activities
created risks that the people of
Bukit Lawang had no idea they
would have to bear. It took a
number of years for the village
and economic life to return to
the state it was in prior to the
flood of November 2003.

13. Conclusion
In summary, well written laws which
are effectively enforced help
disperse risk for citizens of all
nations, developed and developing
alike. When laws are ignored and
corruption is rife, it is typically the
ordinary citizen with little or no
means who bears much of the risk of
the illegal activity. Such was the
case of Bukit Lawang.

14. Purpose
This slide show has been produced for the
Coursera class ‘Risk and Opportunity:
Managing Risk for Development’ offered by the
World Bank

15. Image Credits
Slide:
2. http://www.investopedia.com/university/concepts/concepts1.asp
3. http://www.sumatraecotourism.com/bukitlawang/accommodation.html
4. http://theworldandback.com/2013/10/10/bukit-lawang-orangutans/
5. http://kiwikurt.wordpress.com/2010/01/11/bukit-lawang/
6 .http://theworldandback.com/2013/10/10/bukit-lawang-orangutans/
7. http://www.worldwildlife.org/photos/illegal-logging-riau-sumatra
8. http://www.earthtimes.org/green-blogs/green-living/sumatran-elephant-extinction-looms-large-on-horizon-23-Jan-12/
9. http://www.bonanipasogit.com/page.php?id=170
11. http://ikimasho.net/2014/01/16/gibbons-gambling-in-bukit-lawang-sumatra/
12. http://dimasnugrahaa.blogspot.hk/2012/12/bukit-lawang-sumatra-highlights-gunung.html
13. http://www.nation.com.pk/lahore/04-Jul-2013/criminal-justice-system