Poverty and Environment Nexus: Evidence from Indonesia

Poverty and environment problems are often threated separately as an individual problem. However, there is huge of facts that the poor collectively could not be apart from the environment. Thus, several channels have been employed in this paper in order to investigate in which poverty and environment are associated. Those are livelihood, health and vulnerability links. Using a panel data set of 32 provinces ranged from 2001 to 2010, this study provides evidences on poverty and environment nexus by employing various methods. The findings verify: (a) high correlation on rural poverty rate and forest coverage; (b) weak correlation on rural poverty density and forest coverage. This paper also confirms on causality testing that results in non-bidirectional causalities. Rather, evidently it is causal relationship from rural poverty to forest. In order to find the nexus in each province, poverty-environment indices were constructed and result in various degree of poverty-environment vulnerability. Specifically, performance for each province across time also has been examined and results also in various poverty-environment vulnerability reductions. Finally, additional result on poverty-environment vulnerability and HDI relationship has given a meaningful insight that higher HDI constitute lower poverty- environment vulnerability.