The Impact of Environmental Quality Index and Environmental Degradation on Poverty Risk: Evidence from 23 Districts/Cities in Aceh, Indonesia

Rollis Juliansyah; Noval Suhendra; Helmi Noviar; Mauliza; Hidayatul Fitri

doi:10.70716/ecoma.v4i3.700

Authors

Rollis Juliansyah Department of Development Economics, Faculty of Economics and Business, Teuku Umar University, Indonesia
Noval Suhendra Department of Development Economics, Faculty of Economics and Business, Teuku Umar University, Indonesia
Helmi Noviar Department of Development Economics, Faculty of Economics and Business, Teuku Umar University, Indonesia
Mauliza Department of Economics and Islamic Studies, State Islamic College (STAIN) Teungku Dirundeng Meulaboh, Indonesia
Hidayatul Fitri Department of Economics and Islamic Studies, State Islamic College (STAIN) Teungku Dirundeng Meulaboh, Indonesia

DOI:

https://doi.org/10.70716/ecoma.v4i3.700

Keywords:

environmental quality, environmental degradation, poverty, panel data, Aceh

Abstract

This study examines the effects of environmental quality and environmental degradation on poverty risk across 23 districts/cities in Aceh, Indonesia. Unlike most Indonesian poverty studies that primarily emphasize socioeconomic determinants, this study integrates environmental quality and environmental degradation simultaneously within a district-level panel data framework to broaden the analysis of regional poverty. Using district-level panel data for 2019-2023, the study applies a fixed-effects model with year controls, selected based on the Hausman test, to account for unobserved regional heterogeneity and time-specific shocks. The district poverty rate measures poverty risk. Environmental quality is represented by a composite Environmental Quality Index based on sanitation, safe drinking water, and land-cover quality. In contrast, environmental degradation is measured using a composite index of disaster exposure and land pressure. Data are obtained from Statistics Indonesia, the Ministry of Environment and Forestry, and the National Disaster Management Agency. The results show that environmental quality significantly reduces poverty risk, whereas environmental degradation significantly increases it, after controlling for regional income, unemployment, and education. A ten-point increase in environmental quality reduces the poverty rate by about 0.6 percentage points, whereas a ten-point increase in environmental degradation increases it by about 0.5 percentage points. These findings indicate that poverty reduction in Aceh requires not only economic growth and labor-market interventions but also stronger environmental governance, particularly in districts facing persistent ecological stress and weak environmental services.

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