Economic Crisis, Small Farmer Well-Being, and Forest Cover Change in Indonesia

Abstract

Field research was conducted on 1,050 Indonesian households to understand the effects of the Asian economic crisis on the well-being of small farmers outside of Java and on their forest-clearing practices. The main findings are: (a) most farmers perceived themselves as worse off during the crisis than before, challenging the claim that farmers with export income would be better off and (b) forest clearing by farmers increased significantly during the crisis to expand rubber holdings and other tree crops, with the aim of increasing future income security. Among the policy lessons are that crop diversification and targeted aid can minimize impoverishment and avert increased forest clearing following macroeconomic destabilization.