Conference Agenda

Deforestation in Indonesia has been a major problem for many decades, with rates of logging still high for one of the most important ecosystems on Earth. The rise of deforestation in Indonesia has been attributed to a variety of causes, with some pointing to the 20th-century voluntary mass resettlement - called Transmigration Program - of Javanese and Balinese individuals to the ”Outer Islands” of the country, until then sparsely populated by indigenous groups. Using the Transmigration Census of 1998 together with Census data and a novel index of ecosystem integrity, this paper estimates the environmental externalities of the Indonesian ransmigration Program on Indonesian forests since the decentralization process in 2000. Results show that transmigrant villages are significantly more destructive to their surrounding ecosystem, especially when the share of indigenous people in the village is lower. Moreover, there is evidence that villages turned to more damaging palm oil plantations to cope with the low rice productivity of randomly assigned soil quality, rather than high suitability for palm oil. Ethnic fractionalization is consistently correlated with better ecosystem integrity, an unexpected result that does not, however, impact the conclusions of the analysis. This research suggests that economically vulnerable communities with little knowledge about their resources have a detrimental effect on the ecosystem, and integrating migrants with the local population in a new environment is crucial to ensure the sharing of information and the sustainability of the surrounding ecosystem.