The trade-off between Poverty and Environmental Degradation: Evidence from Indonesia

Abstract Poverty and environmental issues are correlated. Many reports suggest that poverty contributes to environmental degradation. Therefore, it is believed that the improvement of the quality of the environment must be started by alleviating poverty. The objectives of this study are to find the impact of poverty to environmental degradation and vice versa. This study uses data panel from 33 provinces in Indonesia from 2012 to 2017. Contrary to the belief, the result shows that the effort to reduce poverty resulting in environmental degradation. On the other way, one of the findings shows that the efforts to improve the quality of environment resulting in a high level of poverty. This implies that there is a consequence of reducing poverty, i.e. low quality of the environment. The trade-off occurs because when the government tries to reduce the poverty rate, then the quality of the environment also reduces. If the government wants to improve the quality of the environment, then the level of poverty will increase. This study suggests that the government must carefully conduct the poverty alleviation programs that create less harm to the environment and the government also needs to make regulations to protect the environment without harm the poor.