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Research Report

The Effect of Indonesiao’s Economic Crisis on Small Farmers and Natural Forest Cover in the Outer Islands

William D. Sunderlin
Ida Aju Pradnja Resosudarmo
Edy Rianto
Arild Angelsen
Copyright Date: May. 1, 2000
Pages: 42
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Table of Contents

  1. (pp. 1-3)

    This paper reports research findings on the effect of Indonesia’s economic crisis on the wellbeing of people living in or near the country’s natural forests, on their agricultural systems, and on the forests that they manage. An appropriate point of departure is to review basic facts concerning the crisis and the role of agriculture in the midst of the crisis.

    Beginning in mid-1997 Asian countries succumbed to a regional economic crisis caused by the depreciation of their currencies against the U.S. dollar. Among all Asian countries, Indonesia suffered the most. According to one analyst, “Indonesia’s economic collapse is the most...

  2. (pp. 3-5)

    The dramatic two-thirds depreciation in the value of the rupiah against the U.S. dollar is the central event of the economic crisis. It led directly to massive business failures, lay-offs and unemployment, bank and loan defaults, scarcity of credit, withdrawal of foreign investment, and the stagnation and decline of most of Indonesia’s economic sectors. However, as alluded to above, the consequences of the depreciation are not uniformly bad for all people and enterprises. The consequences of the depreciation diverge fundamentally with respect to degree of access to export income. Those who sell to the export market can get a large...

  3. (pp. 5-8)

    This section presents information on the methodology used for researching the effect of the crisis on small farmers and the condition of natural forests in the outer islands. The five parts of this section are on: (1) the sample frame and field research locations; (2) the preliminary census of households; (3) the selection of survey respondents, the questions posed in the quantitative survey, and the approaches used in obtaining data; (4) the qualitative survey; and (5) the survey on migration.

    A representative random sample survey of small farmer households in natural forest areas was judged to be the most appropriate...

  4. (pp. 8-28)

    The research findings are presented in five parts on: (1) general information on study household characteristics; (2) the effects of the crisis on the economic wellbeing of small farmers; (3) the effects of the crisis on forest clearing practices; (4) summary of the major findings; and (5) unresolved questions.

    Information on crops produced and on degree of export crop dependence of study households is presented first to serve as background for findings discussed in the subsequent sections.

    By far the dominant crop, measured as the largest cash income-producing crop within a household in period 3, is rubber, accounting for 276...

  5. (pp. 28-28)

    These research findings add to a growing body of recent literature showing that macroeconomic change can lead to unexpected and in some cases undesirable consequences for people living in forested areas and for the protection and management of remaining natural forests. These changes may be planned and intentional in the form of structural adjustment programs (Kaimowitz et al. 1998) or currency devaluations (Eba’a Atyi 1998), or unplanned and spontaneous in the form of economic crises and currency and commodity price changes (Mertens et al. forthcoming; Ndoye and Kaimowitz forthcoming; Sunderlin et al. 1999).

    The case of Cameroon is particularly instructive....