Journal of System Dynamics Volume 1  Number 1  August 2020  pp. 18-25 18 MODEL OF ECONOMIC AND ENVIRONMENTAL SERVICES VALUE AROUND INDUSTRIAL ZONE Tatan Sukwika 1,* Hermansyah Putra 2 1 Sahid University Jakarta, Faculty of Engineering, Department of Environmental Engineering 2 IPB University, Natural Resources and Environmental Management Study Program Corresponding author: Sahid University Jakarta Jurusan Teknik Lingkungan, Fakultas Teknik Jl. Prof.Dr. Soepomo 84, Jakarta Selatan 12870 phone: (021) 83785303 *e-mail: tatan.swk@gmail.com ABSTRACT This study is focused on efforts to find environmental problems and determine the priority of environmental programs with a systems approach. Data collection was obtained from secondary and primary data including observations and interviews. FGDs (focus group discussions) are conducted with stakeholders concerned and related to various types of environmental services. Resolution techniques for complex problems have used the concept of a dynamic system model. The model simulation approach is carried out in this method. The results of the study noted that the conversion of paddy fields, ponds and agriculture to industrial estates contributes to the loss of environmental services. Priority environmental service in an industrial area, namely the function and living space, maintenance of clean water and air quality, regulation of water flow and flooding. Prediction results of the simulation up to 2031 show that the economic value obtained after conversion maybe even smaller than the value of long-term benefits. The implication of this conclusion, especially the management of water and air quality in the industrial area, the policymakers need to conduct environmental monitoring regularly, given the simulation results show there will be an increase in land demand each year in line with the growth of the industrial sector. KEYWORDS Environmental services, stakeholders, dynamic system, simulation, loss of economic value Introduction The increase of population has implications for the availability of existing land resources. Land capacity becomes increasingly limited due to the increasing amount of land needed by humans. In addition, the decreasing quality and condition of the land has negative implications for environmental quality degradation, such as the inappropriate land use which is indicated by among others, the amount of critical land, the decreasing quality of surface water and groundwater. The increasing population has an impact to increasing rate of development in various sectors due to meet the needs of living things. One of them is for the fulfillment of raw materials as an impact of the industrial zones emergence. Kendal Regency’s economy is growing rapidly in line with efforts to target infrastructure development to reduce regional inequality [1]. This can be seen from the development of infrastructure that prioritizes the construction of roads and bridges to support various industrial and domestic activities, especially the Kendal industrial allotment area, which consists of 60 companies [2]. On one hand, this situation certainly has positive impact so that it can increase the absorption of labor, both directly and indirectly contribute to the income of Kendal Regency as locally-generated revenue (Pendapatan Asli Daerah / PAD) [3]. On the other hand, this also affects the environmental condition which has decreased with the increasing water, air and soil pollution produced by various industrial activities. The decrease in environmental quality is due to the inappropriate land use which causes a lot of critical land and a decrease in both water quality and quantity [4] [5]. Hence, it takes optimal effort for water resource management to guarantee their availability and quality.