How giving cash to poor families may also save trees in Indonesia

Last year marked the third year in a row of when Indonesia’s bleak rate of deforestation has slowed in pace. One reason for the turnaround may be the country’s antipoverty program. That initiative is associated with a 30 percent reduction in tree cover loss in villages, researchers report June 12 in Science Advances.

In 2007, Indonesia started phasing in a program that gives money to its poorest residents under certain conditions, such as requiring people to keep kids in school or get regular medical care. Called conditional cash transfers or CCTs, these social assistance programs are designed to reduce inequality and break the cycle of poverty. They’re already used in dozens of countries worldwide. In Indonesia, the program has provided enough food and medicine to substantially reduce severe growth problems among children.

But CCT programs don’t generally consider effects on the environment. In fact, poverty alleviation and environmental protection are often viewed as conflicting goals, says Paul Ferraro, an economist and behavioral scientist at Johns Hopkins University.

That’s because economic growth can be correlated with environmental degradation, while protecting the environment is sometimes correlated with greater poverty. However, those correlations don’t prove cause and effect. The only previous study analyzing causality, based on an area in Mexico that had instituted CCTs, supported the traditional view. There, as people got more money, some of them may have more cleared land for cattle to raise for meat, Ferraro says.

Such programs do not have to negatively affect the environment, though. Ferraro and Rhita Simorangkir, an applied microeconomist at the National University of Singapore, wanted to see if Indonesia’s poverty-alleviation program was affecting deforestation. Indonesia has the third-largest area of tropical forest in the world and one of the highest deforestation rates, especially of primary forests — undisturbed, mature tropical forests that are important for biodiversity and carbon storage, among other benefits (SN: 6/9/20; SN: 7/17/19).  

Ferraro and Simorangkir analyzed satellite data showing annual forest loss from 2008 to 2012 — including during Indonesia’s phase-in of the antipoverty program — in 7,468 forested villages across 15 provinces and multiple islands. The duo separated the effects of the CCT program on forest loss from other factors, like weather and macroeconomic changes, which were also affecting forest loss. With that, “we see that the program is associated with a 30 percent reduction in deforestation,” Ferraro says. “And half or more [of that reduction] is coming from primary forests.”      

If improving a family’s or a village’s lot in life also means protecting the environment, it would be a “great win-win — you can solve two problems at once,” says Jonah Busch, an environmental economist at the Earth Innovation Institute in San Francisco, who was not involved in the new study. Ferraro and Simorangkir present “good evidence” that, at least in rural villages in Indonesia, giving people a helping hand helps them cut down fewer trees, Busch says.

That’s likely because the rural poor are using the money as makeshift insurance policies against inclement weather, Ferraro says. Typically, if rains are delayed, people may clear land to plant more rice to supplement their harvests, he says. With the CCTs, individuals instead can use the money to supplement their harvests instead.    

Whether this research translates elsewhere is anybody’s guess. “This is much closer to the first word than the last word on the topic,” Busch says. “I hope we’ll see more of this type of research.” Unlike the Mexico study that found increased deforestation with wealth, this one shows less, he says, and “it’s totally possible that’s the case in both places.” Unfortunately, neither suggests what might happen in the Congo or elsewhere, he says, because there are just too many local factors.

Ferraro and Simorangkir suggest their results may transfer to other parts of Asia, due to commonalities such as the importance of growing rice and market access. And regardless of transferability, the study shows that what’s good for people may also be good for the environment, Ferraro says. Even if this program didn’t reduce poverty, he says, “the value of the avoided deforestation just for carbon dioxide emissions alone is more than the program costs.”

People often think of environmental protection as a moral objective, rather than an economic objective, Ferraro says. “But just on economics, this intervention would make sense.”