Differential Influence of Relative Poverty on Preferences for Ecosystem Services: Evidence from Rural Indonesia

Ecosystem services generate benefits that enter human consumption either directly or indirectly via their contribution to human production activities. In this contribution, we provide evidence that (i) the demand of peasants for ecosystem services in rural Indonesia depends on relative poverty; and that (ii) the type of reaction to poverty depends on the specific relation of the ecosystem services to peasant production and consumption. In early 2005 a representative choice experiment study was conducted in the Lore Lindu area in Central Sulawesi, Indonesia, to quantify regional economic preferences (marginal willingessto- pay: MWTP) for four different ecosystem services (n=249; rattan and water availability, shading in cacao agroforestry, population size of the endemic forest dwelling dwarf buffalo "anoa"). Relative poverty was calculated with the 2005 data using a 0,1-normally distributed relative poverty index developed from a socio-demographic household survey administered to the same sample in 2004. For shading in cocoa, a linearly decreasing trend is observed indicating a stronger preference for "sun-grown" cocoa in the less poor farmers indicating a constant poverty elasticity of WTP. The empirical poverty elasticity for anoa supports its luxury good characteristic only in part. For rattan and water, we find an inverted U-shape relation between MWTP for ecosystem services and relative poverty - probably due to serious restrictions in the ability to pay in the poorest households and a smaller resource dependency in the less poor households. In sum, the relationship between relative poverty and MWTP for ecosystem services appears more complex than classical micro-economic theory admits.