Indonesia’s forest management progress: empirical analysis of environmental Kuznets curve

Keywords: agroforestry, Environmental Kuznets Curve (EKC), Error Correction Model (ECM), forest management, Indonesia.


Purpose. High dependence on land resources is often the main cause of large-scale land conversion and deforestation in Indonesia. However, as a country vulnerable to climate change, Indonesia continues to increase its efforts to improve forest management and reduce deforestation. This is also in line with Indonesia’s commitment to reduce emission levels to achieve Net-Zero Emissions by 2060, where the forestry sector will be the base of this achievement. This study aims to measure Indonesia’s progress during 1970–2018, especially in reducing deforestation. With this study, we can see trends in forest management in developing countries, especially Indonesia. In addition, based on available data, we can see which factors are most closely related to Indonesia’s deforestation rate.

Methodology / approach. This study uses a time-series data analysis with Error Correction Method (ECM). This ECM is used to detect the existence of the Environmental Kuznets Curve (EKC), which describes the relationship between environmental degradation and economic variables. In this study, EKC is used to assess further relationship pattern between the Gross Domestic Product (GDP) per capita and deforestation. The relation pattern between this GDP and deforestation is tested using quadratic and cubic models.

Results. Under the quadratic model, a classic inverted U-shape EKC is detected in this study. It means that with economic growth and technological improvement, deforestation can be reduced. In other words, Indonesia has improved its forest management. However, as the N-shape relation was also detected in further cubic model simulation, it is also an indication that, at some point, Indonesia is also prone to increase its deforestation again. Another finding from the model is that the palm oil plantation area strongly relates to the deforested area. At the same time, the simulation detects a negative relationship between the horticulture cropland and the deforested area. The result may capture an insight into the forest transition period in Indonesia. In this transition, the government has started to slow down the speed at which forests are exploited in various ways.

Originality / scientific novelty. Although the forestry sector is an important economic sector for Indonesia, there is still limited research on this topic, especially at the national level. This study uses more updated statistical information to better describe the Indonesian forestry condition. Moreover, the analysis is aligned with the Indonesian land policy by introducing additional variables from palm oil and crop areas. Moreover, the previous EKC assessments in Indonesia usually only use the quadratic model, which has some limitations in detecting other turning points and seeing the existence of N-shaped or inverted N-shaped EKC. This study also tries to add a bit on cubic model assessment to detect this N-shaped EKC in Indonesia.

Practical value / implications. This study gives broader information based on the available data and statistics on the country’s deforestation situation and how the economic situation affects it. Policymakers can use the materials from this study to develop an effective forest management system throughout Indonesia.


Adedoyin, F. F., Gumede, M. I., Bekun, F. V., Etokakpan, M. U., & Balsalobre-Lorente, D. (2020). Modelling coal rent, economic growth and CO2 emissions: does regulatory quality matter in BRICS economies? Science of the Total Environment, 710, 136284.

Ahmad, N., Du, L., Lu, J., Wang, J., Li, H. Z., & Hashmi, M. Z. (2017). Modelling the CO2 emissions and economic growth in Croatia: is there any environmental Kuznets curve? Energy, 123, 164–172.

Ahmed, K., Shahbaz, M., Qasim, A., & Long, W. (2015). The linkages between deforestation, energy and growth for environmental degradation in Pakistan. Ecological Indicators, 49, 95–103.

Alam, M. M., Murad, M. W., Noman, A. H. M., & Ozturk, I. (2016). Relationships among carbon emissions, economic growth, energy consumption and population growth: testing environmental Kuznets curve hypothesis for Brazil, China, India and Indonesia. Ecological Indicators, 70, 466–479.

Allard, A., Takman, J., Uddin, G. S., & Ahmed, A. (2018). The N-shaped environmental Kuznets curve: an empirical evaluation using a panel quantile regression approach. Environmental Science and Pollution Research, 25(6), 5848–5861.

Austin, K. G., Schwantes, A., Gu, Y., & Kasibhatla, P. S. (2018). What causes deforestation in Indonesia? Environmental Research Letters, 14(2), 024007.

Barbier, E. B., Burgess, J. C., & Grainger, A. (2010). The forest transition: towards a more comprehensive theoretical framework. Land Use Policy, 27(2), 98–107.

Barreto, H., & Howland, F. M. (2005). Introductory econometrics: using Monte Carlo simulation with Microsoft Excel®. In Introductory Econometrics: Using Monte Carlo Simulation with Microsoft Excel. Cambridge, Cambridge University Press.

Bekhet, H. A., Othman, N. S., & Yasmin, T. (2020). Interaction between environmental Kuznet curve and urban environment transition hypotheses in Malaysia. International Journal of Energy Economics and Policy, 10(1), 384–402.

Belloumi, M. (2014). The relationship between trade, FDI and economic growth in Tunisia: an application of the autoregressive distributed lag model. Economic Systems, 38(2), 269–287.

Bhattarai, M., & Hammig, M. (2001). Institutions and the environmental Kuznets curve for deforestation: a crosscountry analysis for Latin America, Africa and Asia. World Development, 29(6), 995–1010.

Boer, R., Siagian, U. W. R., Dewi, R. G., Ginting, G. E., Hendrawan, I., & Yuwono, B. B. (2016). Pathways to deep decarbonizing agriculture, forest and other land uses sector in Indonesia. Deep Decarbonization Pathways Project. Available at:

Brown, R. L., Durbin, J., & Evans, J. M. (1975). Techniques for testing the constancy of regression relationships over time. Journal of the Royal Statistical Society. Series B (Methodological), 37(2), 149–163.

Brown, S., & Lugo, A. E. (1994). Rehabilitation of tropical lands: a key to sustaining development. Restoration Ecology, 2(2), 97–111.

Budhi, G. S. (2016). Dilema Kebijakan dan Tantangan Pengembangan Diversivikasi Usaha Tani Tanaman Pangan. Analisis Kebijakan Pertanian, 8(3), 241.

Caravaggio, N. (2020). Economic growth and the forest development path: a theoretical re-assessment of the environmental Kuznets curve for deforestation. Forest Policy and Economics, 118, 102259.

Chandio, A. A., Jiang, Y., & Rehman, A. (2019). Using the ARDL-ECM approach to investigate the nexus between support price and wheat production: an empirical evidence from Pakistan. Journal of Asian Business and Economic Studies, 26(1), 139–152.

Choumert, J., Combes Motel, P., & Dakpo, H. K. (2013). Is the Environmental Kuznets curve for deforestation a threatened theory? A meta-analysis of the literature. Ecological Economics, 90, 19–28.

Cropper, M., & Griffith, C. (1994). The interaction of population growth and environmental quality. The American Economic Review, 84(2), 250–254. Available at:

Culas, R. J. (2007). Deforestation and the environmental Kuznets curve: an institutional perspective. Ecological Economics, 61(2–3), 429–437.

Damarraya, A., Anisah, L. N., Ratnasari, M., & Rhama, D. F. P. (2018). Deforestasi Indonesia tahun 2016–2017.

Dinda, S. (2004). Environmental Kuznets curve hypothesis: a survey. Ecological Economics, 49, 431–455.

Durán, S. M., & Gianoli, E. (2013). Carbon stocks in tropical forests decrease with liana density. Biology Letters, 9(4). 20130301.

Ehrhardt-Martinez, K., Crenshaw, E. M., & Jenkins, J. C. (2002). Deforestation and the environmental Kuznets curve: a cross-national investigation of intervening mechanisms. Social Science Quarterly, 83(1), 226–243.

EVIEWS (2019). Estimating a Cointegrating Regression. Available at:

FAO (2020). Forest Land. Available at:

Hamilton, J. D. (1994). Time-Series Analysis, 1st ed. Princeton University Press.

Hanck, C., Arnold, M., Gerber, A., & Schmelzer, M. (2022). Introduction to Econometrics with R. In Introduction to Econometrics with R. Department of Business Administration and Economics, University of Duisburg. Available at:

Hasanov, F. J., Hunt, L. C., & Mikayilov, J. I. (2021). Estimating different order polynomial logarithmic environmental Kuznets curves. Environmental Science and Pollution Research, 28(31), 41965–41987.

Husnain (2020). Pengembangan Intensifikasi Extraordinary melalui Optimalisasi Lahan Rawa pada Kondisi MK 1 dan 2 Tahun 2020 [Development of extraordinary intensification through optimization of swamp land in MK 1 and 2 conditions in 2020]. Webinar 2 Perhimpunan Meteorologi Pertanian Indonesia.

Inagaki, K. (2010). Income inequality and the suicide rate in Japan: evidence from cointegration and LA-VAR. Journal of Applied Economics, 13(1), 113–133.

Jalil, A., & Rao, N. H. (2019). Time series analysis (stationarity, cointegration, and causality). In B. Özcan, I. Öztürk (Eds.), Environmental Kuznets Curve (EKC): A Manual. Academic Press, Elsevier.

Joyosemito, I. S., Tokai, A., & Nakakubo, T. (2014). System dynamics model development for evaluation of the moratorium policy on new forest and peatland concessions under bilateral cooperation in Indonesia: palm oil industry sector case study. Journal of Sustainable Energy & Environment, 5(1), 1–12. Available at:

Ke, S., Qiao, D., Yuan, W., & He, Y. (2020). Broadening the scope of forest transition inquiry: what does China’s experience suggest? Forest Policy and Economics, 118, 102240.

Ministry of Agriculture of Indonesia (2019). Arah, Kebijakan, Strategi Dan Program Pembangunan Pertanian 2020–2024 [Directions, policies, strategies and programs for agricultural development 2020–2024]. Available at:

Ministry of Agriculture of Indonesia (2020a). Luas Panen Tanaman Pangan. Basis Data Statistik Pertanian [Food crop harvest area. Agricultural statistics database]. Available at:

Ministry of Agriculture of Indonesia (2020b). Rancangan Kegiatan Strategis Hortikultura 2020 [Horticulture strategic activity plan 2020]. Available at:

Khan, A., Safdar, S., & Nadeem, H. (2022). Decomposing the effect of trade on environment: a case study of Pakistan. Environmental Science and Pollution Research, 30, 3817–3834.

Kilinc-Ata, N., & Likhachev, V. L. (2022). Validation of the environmental Kuznets curve hypothesis and role of carbon emission policies in the case of Russian Federation. Environmental Science and Pollution Research, 29(42), 63407–63422.

Ministry of Environment and Forestry Geospatial (2014). Deforestasi Indonesia Tahun 2012–2013 [Indonesian Deforestation 2012–2013].

Ministry of Environment and Forestry Geospatial (2015). Deforestasi Indonesia Tahun 2013–2014 [Indonesian Deforestation 2013–2014].

Ministry of Environment and Forestry Geospatial (2017). Deforestasi Indonesia Tahun 2015–2016 [Indonesian Deforestation 2015–2016].

Ministry of Environment and Forestry Geospatial (2020). Statistik 2020 Kementerian Lingkungan Hidup dan Kehutanan [2020 Statistics Ministry of Environment and Forestry].

Koilo, V. (2019). Evidence of the environmental Kuznets curve: unleashing the opportunity of industry 4.0 in emerging economies. Journal of Risk and Financial Management, 12(3), 122.

Lebo, M. J., & Kraft, P. W. (2017). The general error correction model in practice. Research and Politics, 4(2).

Liu, W. (2020). EKC test study on the relationship between carbon dioxide emission and regional economic growth. Carbon Management, 11(4), 415–425.

Liu, X., Zhang, S., & Bae, J. (2017). The impact of renewable energy and agriculture on carbon dioxide emissions: investigating the environmental Kuznets curve in four selected ASEAN countries. Journal of Cleaner Production, 164, 1239–1247.

Lobato, I. N., & Velasco, C. (2004). A simple test of normality for time series. Econometric Theory, 20(4), 671–689.

Malahayati, M. (2018). The role of the forest-related sector to the Indonesian Economy: SAM Multiplier Analysis 1985–2008. Open Agriculture, 3(1), 171–179.

Maxton-Lee, B. (2018). Material realities: why Indonesian deforestation persists and conservation fails. Journal of Contemporary Asia, 48(3), 419–444.

Miah, M. D., Masum, M. F. H., Koike, M., & Akther, S. (2011). A review of the environmental Kuznets curve hypothesis for deforestation policy in Bangladesh iForest – Biogeosciences and Forestry, 4(1), 16–24.

Minlah, M. K., Zhang, X., Ganyoh, P. N., & Bibi, A. (2021a). Does the environmental Kuznets curve for deforestation exist for Ghana? Evidence from the bootstrap rolling window Granger causality test approach. Forestry Economics Review, 3(1), 38–52.

Mushtaq, R. (2012). Augmented Dickey Fuller Test.

Novika, S. (2020). Jokowi Guyur Rp 753 M untuk Peremajaan Sawit. Available at:

Nurhadi, M. (2020). Jokowi Mau Buka Lahan Baru. Available at:

Nurrochmat, D. R., Boer, R., Ardiansyah, M., Immanuel, G. & Purwawangsa, H. (2020). Policy forum: Reconciling palm oil targets and reduced deforestation: Landswap and agrarian reform in Indonesia. Forest Policy and Economics, 119, 102291.

Nurrochmat, D. R., Massijaya, M. Y., Jaya, I. N. S., Abdulah, L., Ekayani, M., Astuti, E. W., & Erbaugh, J. T. (2019). Promoting community forestry to reduce deforestation surrounding Gunung Rinjani National Park in Central Lombok, Indonesia. IOP Conference Series: Earth and Environmental Science, vol. 285 (4–7 October 2016), Bogor.

Pablo-Romero, M. P., Sánchez-Braza, A., & Gil-Pérez, J. (2023). Is deforestation needed for growth? Testing the EKC hypothesis for Latin America. Forest Policy and Economics, 148, 102915.

Paembonan, S. A., Millang, S., Dassir, M., & Ridwan, M. (2017). Species variation in home garden agroforestry system in South Sulawesi, Indonesia and its contribution to farmers’ income. IOP Conference Series: Earth and Environmental Science, vol. 157 (24–25 October 2017). Sulawesi Selatan.

Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289–326.

Potapov, P., Hansen, M. C., Pickens, A., Hernandez-Serna, A., Tyukavina, A., Turubanova, S., Zalles, V., … & Kommareddy, A. (2022). The global 2000–2020 land cover and land use change dataset derived from the Landsat archive: first results. Frontiers in Remote Sensing, 3, 856903.

Prabowo, D., & Alexander, H. B. (2018). Tol Trans-Jawa Terwujud dalam Masa Kepemimpinan 6 Presiden. Available at:

Prins, J. (2012). Process or product monitoring and control. In C. Croarkin, P. Tobias (Eds.), NIST/SEMATECH e-Handbook of Statistical Methods. National Institute of Standards and Technology.

Putra, R. K., Susanti, A. A., & Akbar. (2019). Buku Outlook Komoditas Perkebunan Kelapa Sawit [Outlook book of plantation commodity: palm oil]. Centre of Data and Information, Ministry of Agriculture of Indonesia.

Ramdani, F., & Hino, M. (2013). Land use changes and GHG emissions from tropical forest conversion by oil palm plantations in Riau Province, Indonesia. PLoS ONE, 8(7), e70323.

Ministry of Environment and Forestry (2015). Indonesia First Biennial Update Report. Available at:

Rosana, F. C., & Widyastuti, R. A. Y. (Eds.) (2020). Pembukaan Lahan Pertanian Baru, Sri Mulyani: Kami Amankan [Opening of new agricultural land, Sri Mulyani: we secure it]. Available at:

Safitri, K. (2021). Moratorium Sawit Berakhir Hari Ini, Sejumlah Pihak Minta Diperpanjang [Palm oil moratorium ends today, a number of parties ask to be extended]. Available at:

Samsuri, S., Jaya, I. N. S., Kusmana, C., & Murtilaksono, K. (2014). Analysis of tropical forest landscape fragmentation in Batang Toru Watershed, North Sumatra. Journal of Tropical Forest Management, 20(2), 78–87.

Sinha, A., Shahbaz, M., & Balsalobre, D. (2019). Data selection and environmental Kuznets curve models – environmental Kuznets curve models, data choice, data sources, missing data, balanced and unbalanced panels. In B. Özcan & I. Öztürk (Eds.), Environmental Kuznets curve (EKC): a manual. Academic Press, Elsevier.

Siregar, B. P. (2019). Industri Kelapa Sawit Penggerak Ekonomi Sulawesi Barat [The palm oil industry is driving the economy of West Sulawesi]. Warta Ekonomi. Available at:

Sterpu, M., Soava, G., & Mehedintu, A. (2018). Impact of economic growth and energy consumption on greenhouse gas emissions: testing environmental curves hypotheses on EU countries. Sustainability, 10(9), 3327.

Sumarga, E., & Hein, L. (2016). Benefits and costs of oil palm expansion in Central Kalimantan, Indonesia, under different policy scenarios. Regional Environmental Change, 16(4), 1011–1021.

Susanti, A., & Maryudi, A. (2016). Development narratives, notions of forest crisis, and boom of oil palm plantations in Indonesia. Forest Policy and Economics, 73, 130–139.

Tamburini, G., Bommarco, R., Wanger, T. C., Kremen, C., van der Heijden, M. Liebman, M., & Hallin, S. (2020). Agricultural diversification promotes multiple ecosystem services without compromising yield. Science Advances, 6(45), eaba1715.

The World Bank (2020). GDP (constant LCU) – Indonesia. Available at:

Tsujino, R., Yumoto, T., Kitamura, S., Djamaluddin, I., & Darnaedi, D. (2016). History of forest loss and degradation in Indonesia. Land Use Policy, 57, 335–347.

Ulucak, R., & Bilgili, F. (2018). A reinvestigation of EKC model by ecological footprint measurement for high, middle and low income countries. Journal of Cleaner Production, 188, 144–157.

Uyanık, G. K., & Güler, N. (2013). A study on multiple linear regression analysis. Procedia – Social and Behavioral Sciences, 106, 234–240.

Wade, C. M., Austin, K. G., Cajka, J., Lapidus, D., Everett, K. H., Galperin, D., Maynard, R., & Sobel, A. (2020). What is threatening forests in protected areas? A global assessment of deforestation in protected areas, 2001–2018. Forests, 11(5), 539.

Waluyo, E. A., & Terawaki, T. (2016). Environmental Kuznets curve for deforestation in Indonesia: an ARDL bounds testing approach. Journal of Economic Cooperation and Development, 37(3), 87–108. Available at:

Widiatmaka, Ambarwulan, W., Santoso, P. B. K., Sabiham, S., Machfud & Hikmat, M. (2016). Remote sensing and land suitability analysis to establish local specific inputs for paddy fields in Subang, West Java. Procedia Environmental Sciences, 33, 94–107.

Wijaya, A., Samadhi, T. N., & Juliane, R. (2019). Indonesia is reducing deforestation, but problem areas remain. Available at:

Williams, R. (2015). Serial Correlation (Very Brief Overview). Available at:

Wirono, W., Puteri, V. N. U., & Senoaji, G. (2016). The diversity of plant species, the types of plant uses and the estimate of carbon stock in agroforestry system in Harapan Makmur Village, Bengkulu, Indonesia. Biodiversitas Journal of Biological Diversity, 17(1), 249–255.

Wooldridge, J. M. (2013). Introductory econometrics: a modern approach. In Tolerance Analysis of Electronic Circuits Using MATHCAD, 5th ed. South-Western, Cengage Learning ALL.

Zafeiriou, E., Kyriakopoulos, G. L., Andrea, V., & Arabatzis, G. (2023). Environmental Kuznets curve for deforestation in Eastern Europe: a panel cointegration analysis. Environment, Development and Sustainability, 25, 9267–9287.

Zhao, T., & Yang, Z. (2017). Towards green growth and management: relative efficiency and gaps of Chinese cities. Renewable and Sustainable Energy Reviews, 80, 481–494.

Zivot, E., & Wang, J. (2006). Unit Root Tests. In Modeling Financial Time Series with S-PLUS®, (pp. 111–139). New York, Springer.

How to Cite
Malahayati, M. (2023). Indonesia’s forest management progress: empirical analysis of environmental Kuznets curve. Agricultural and Resource Economics: International Scientific E-Journal, 9(3), 216-249.