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The report argues that existing village development indices in Indonesia fail to adequately measure or reward environmental performance. To address this, the Climate Policy Initiative (CPI) proposes the Indeks Desa Membangun Plus (IDM+), which adds 10 ecological indicators to the existing Indeks Desa Membangun (IDM). The report suggests using IDM+ as a basis for Ecological Fiscal Transfers (EFT), specifically through a mixed fiscal instrument approach in Berau Regency, East Kalimantan. This approach combines performance-based incentives via the Alokasi Dana Desa (ADD) with affirmative action funding for low-performing villages, potentially utilizing untapped reforestation funds (DBH DR).

The report argues that existing village-level evaluation tools in Indonesia, such as the Village Development Index (IDM), are inadequate for measuring and rewarding environmental sustainability. To address this, the Climate Policy Initiative (CPI) proposes the 'IDM+', which adds 10 ecological indicators covering land-use, natural resource management, and climate actions. Using Berau Regency in East Kalimantan as a case study, the report demonstrates how this index can underpin Ecological Fiscal Transfers (EFTs) to reward high-performing villages. It recommends a mixed fiscal approach—combining reformulated Village Fund Allocations (ADD) with targeted financial assistance—to incentivize green growth while supporting low-performing villages.