Effects of Poverty, Income Inequality and Economic Growth to Environmental Quality Index (EQI) in 33 Province in Indonesia 2014-2019

Abstract

Shifting from the agriculture sector to the service sector has made Indonesia's economy rapidly grow and therefore a degradation in environmental quality. The degradation of the Environmental Quality Index (EQI) in 2019 is mostly caused by an increasing water pollution level. Income inequality and poverty in Indonesia is a problem that also causing the EQI degradation. There are 2 purposes of this article which are (1) to find out the effect of income inequality, poverty, and economic growth toward EQI (2) to find if there is causality between economic growth and EQI. The approach used in this article is a quantitative approach with a type of data is secondary data. This article used panel regression with Random Effect Model (REM) by combining cross-section data from 33 provinces in Indonesia and time-series data from 2014 – 2019. The causality between economic growth and EQI is calculated by using Granger Causality. The result shows that (1) economic growth and income inequality have a negative significant relationship toward EQI, but poverty hasn’t affect to EQI (2) There is no causality between economic growth and EQI because EQI can not affect economic growth.

The impact of the provincial minimum wage on environmental quality in indonesia

“…The results of this study are in line with previous research by Prasetyanto & Sari (2021) and Hundie (2021). However, this study differs from the research of Pertiwi et al (2021) and Noormalitasari & Setyadharma (2021) that concluded that income inequality has a negative effect on the environmental quality index.…”

“…The results of this study are in line with previous research by . Meanwhile, this study is not in line with Pertiwi et al (2021) and Tasri et al (2022) which concluded that poverty does not have an effect on environmental quality index. However, this study differs from the research of Shanty et al (2018) ; Noormalitasari & Setyadharma (2021) ; Sumargo & Haida (2020) that concluded that poverty has a negative and significant effect on the environmental quality index.…”

“…According to Sumarni (2019), as a result of the unrestrained use of natural resources, Indonesia's rapid economic expansion may cause a decline in environmental quality. In line with this, according to Pertiwi et al (2021), as a result of economic activity, environmental quality suffers as a result of economic expansion. Therefore, Chen et al (2021), according to his research, improving the quality of life through economic expansion while also protecting the environment is a major challenge.…”

“…Development is seen successful if it emphasizes indicators of sustainable development, notably by paying close attention to social and environmental factors (Kartiasih & Pribadi, 2020). According to Pertiwi et al (2021), if development just seeks to improve social welfare and is improperly carried out, it will have a detrimental effect on the biological systems of all organisms. Some developing countries frequently encounter a variety of significant environmental concerns, such as climate change and risks to natural and biological resources (Masron & Subramaniam, 2018).…”