Income Sources, Poverty, and Forest Encroachment: Implications for Rural Development Policies in Central Sulawesi, Indonesia

This paper analyses the determinants of income generating activities of rural households in the vicinity of the Lore-Lindu National Park in Central Sulawesi, Indonesia. The focus is on activities which threaten the integrity of the national park (perennial crop production and sale of forest products) and on non-agricultural activities (wage labour and self-employment) which are able to reduce poverty without threatening the national park. The analysis allows to identify factors which are essentially for the design of policies and programmes aiming to promote rural development and to protect the national park. Perennial crop production and activities outside the agricultural sector are particularly important for the less-poor households, whereas the selling of forest products is especially important for the poorest households. The econometric analysis shows that the possession of irrigated land, the access to social capital, and the participation in formal credit markets positively influences perennial crop production, which is a major source of deforestation. The possession of irrigated land, education, and the access to road infrastructure have a negative influence on the sale of forest products which are mainly collected inside the national park. A key factor influencing income from non-agricultural wage labour is the level of education. Policy conclusions with respect to poverty alleviation and protection of the national park are drawn.