Environmental Cost and Biological Asset Management under Carbon Tax: AHP Study of Agribusiness MSMEs in East Java, Indonesia

The implementation of carbon taxation in Indonesia under Law No. 7 of 2021 poses both regulatory compliance challenges and operational opportunities for Micro, Small, and Medium Enterprises (MSMEs) in the agribusiness sector. Although agribusiness activities generate environmental waste, they also involve managing biological assets, including living plants and animals, which may contribute to carbon sequestration. However, agribusiness MSMEs struggle to prioritize environmental cost allocations and to account for biological assets in accordance with applicable financial reporting standards, particularly SAK EMKM and PSAK 69. This study aims to establish a priority hierarchy for managing environmental costs and biological assets to strengthen MSMEs' preparedness for carbon taxation. A quantitative-evaluative approach was employed using the Analytic Hierarchy Process (AHP). Empirical data were collected from eight experts, including academic researchers, agribusiness owners, tax practitioners, and environmental officials. The findings indicate that Tax Regulatory Compliance (41.2%) is the highest-priority decision criterion, followed by Financial Cost Efficiency (28.5%). At the strategic alternative level, Optimizing Biological Asset Accounting and Valuation ranks first, with a global priority weight of 40.15%, followed by Green Technology Transformation (28.27%), Tax Compliance Partnerships (17.96%), and Eco-Label Certification (13.62%). The overall Consistency Ratio (CR = 0.0263) indicates an acceptable level of consistency in the aggregated expert judgments. These findings provide an empirically informed decision hierarchy to support agribusiness MSMEs in integrating environmental cost management, biological asset accounting, and regulatory compliance into their carbon-tax preparedness strategies.