The Impact of Forestry Sector Investments on Household Income and Carbon Emission: Case Study of Berbak National Park, Jambi Province, Indonesia

Abstract

This study focused on Jambi Province (Sumatera) which experienced a massive forest fire in 2015. It had destroyed 19,528 ha of land in including Berbak National Park. These fires directly lead to economic losses of the households near National Park and neighboring provinces. This study used a Social Accounting Matrix framework (simple version of a general equilibrium model) to simulate two scenarios if the government invest on reforestation and rehabilitation of forest and how it affected the household incomes for agriculture and non-agriculture groups in Jambi Province. The investment is estimated from the budget allocated for activities in the Berbak Region. From the simulation, the result showed rural and urban areas are positively affected under both scenarios due to the forestry investment. The positive impacts on the rural and urban households are relatively small in the first simulation, but more positively affected in the second simulation, however, it seems to intensify the income gap for workers and employers. The simulation results also indicated the absorption capacity of CO 2 increases between 111 percent and 284 percent due to the investment in Berbak National Park.