The Impact of National Park Establishment on Economic Activities of Rural Households in Indonesia

Notwithstanding the widespread effort to conserve the nature, there is still a long debate as to whether conservation areas, such as National Parks, have an impact on rural livelihood. This paper aims to fill this gap by estimating the impact of National Park (NP) establishment on economic activities of rural households in Indonesia. Two NPs which are Gunung Ciremai NP (GCNP) and Gunung Merapi NP (GMNP) have been selected since both shared com-parable characteristics. Those two NPs are located in Java Island and are established in 2004. The estimation approach to examine the impact of NPs to rural economic activities adopted a pre-post treatment-control analysis design. This analysis utilized two periods cross-section data, the first was collected in 2000, four years prior to the NPs establishment, and the second was followed-up data collected in 2007, three years after the NP establishment, both for treatment and control groups. I compare the use of OLS regression and propensity score matching methods, and incorporate the role of “common support.” These predictions provide an estimation of the impact of NPs establishment on rural economics. A combination of Difference-in-Difference (DD) analysis and matching estimator shows that NPs establishment does not significantly affect expenditures of local households, both for food and non-food spending. Proximity to the NPs has insignificant impact on local farming activities. Lower total house-hold’s expenditure in post-establishment period was probably caused by other factors such as higher spending on farming input through inflation, but still the changing was not considerably different. The risk for reduced households expenditures due to lose access to natural resources after the NPs establishment was inversely correlated with the household revenue from non-farm activities and human development. Human development was simply indicated by aver-age hours of school attendance and a binary variable whether children are working during schooling period or not. In general, we conclude that the current economic activities of local people at the edge of NPss are not significantly affected by NP establishment. Even though NPs establishment introduce strict rule to prohibit local people to enter and utilize resources in NPs, the NPs authorities do not have sufficient personnel and fund to implement the legislation. Furthermore, NPs play an important role to maintain biodiversity and landscape that are beneficial to ecotourism activities that in turn may improve the rural income from non-farming activities. This paper also suggests that further research is needed to examine the long term impact of NPs on adjacent household.