Regional economic activity has proven to significantly drive up deforestation rates across 16 major forest-frontier provinces in Sumatra, Kalimantan, and Papua throughout the 2023–2025 period. Research conducted by Andi Wahyu Ramadhan alongside a team from the Development Economics Study Program, Faculty of Economics and Business, Universitas Muhammadiyah Mamuju, reveals that regional economic growth remains extractive in nature and is not yet fully aligned with environmental preservation principles.
The urgency of this research is underscored by an alarming 66 percent surge in national deforestation, which climbed from 261,575 hectares in 2024 to 433,751 hectares in 2025. This unprecedented expansion of forest cover loss concentrates heavily in resource-rich areas due to plantation expansion, coal mining concessions, and Strategic National Project (PSN) infrastructure development. These conditions reflect the initial phase of the Environmental Kuznets Curve, where economic output expansion continues to dominate land resource exploitation.
This study adopts a short-panel econometric framework, testing Pooled OLS, Fixed Effects, and Random Effects models across 48 total observations. Based on formal specification diagnostics via the Chow and Hausman tests, the Fixed Effects model was identified as the most consistent estimator to accommodate unique regional characteristics. Evaluated variables include Gross Regional Domestic Product (GRDP), regional electricity consumption, and the fossil energy structure against the extent of forest cover loss.
The analysis results and primary research findings indicate:
- GRDP elasticity with respect to deforestation was positive and statistically significant under the Pooled OLS model at 1.1790, meaning a 1 percent increase in regional economic activity drives a 1.18 percent rise in the deforestation rate.
- Simultaneous significance tests confirm that economic scale, electricity demand, and fossil energy structures exert a joint, highly significant impact on land-use change in forest frontier zones.
- Kalimantan recorded the highest absolute deforestation volume due to coal mining concessions and plantations, while Sumatra experienced severe spikes triggering flash floods, and Papua was impacted by megaprojects and strategic infrastructure development.
These findings imply that regional economic growth across forest-rich regions remains heavily dependent on massive land conversion. Consequently, the researchers recommend that the government tighten enforcement of Regional Spatial Plans (RTRW), rigorously evaluate the environmental impacts of Strategic National Projects (PSN), and accelerate regional clean energy transitions to break the economy's reliance on fossil fuels.
Author Profiles
- Full Name: Andi Wahyu Ramadhan, S.E., M.Si. (alongside research team members Tri Frida Suryati, Hamzar, Muh Ilhamuddin Dahri, and Ridwan Hayadin)
- University Affiliation: Development Economics Study Program, Faculty of Economics and Business, Universitas Muhammadiyah Mamuju, Mamuju, Indonesia
- Fields of Expertise: Development Economics, Econometrics, and Environmental Economics
Research Sources
- Journal Article Title: The Impact of Economic Activity on Deforestation in Indonesia
- Journal Name: International Journal of Integrated Science and Technology (IJIST)
- Publication Year: 2026
- DOI:
https://doi.org/10.59890/ijist.v4i9.55 - Official URL:
https://ntlmultitechpublisher.my.id/index.php/ijist
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