Economic Growth, Welfare, Sectoral Contributions, and Deforestation in West Kalimantan, Indonesia

Abstract

Regional economic dynamics are important for understanding deforestation because their linkage with forest loss reveals whether local development trajectories intensify land-conversion pressure or move toward a more forest-compatible pathway. This study examines the effects of economic growth, per capita GRDP, poverty, and agricultural and mining sector contributions on deforestation across regencies/cities in West Kalimantan, Indonesia, during 2015–2024. Beyond testing relationships between economic factors and forest loss, it provides an empirical foundation for regional development governance strategies aligned with forest protection. Using balanced panel data for 13 regencies/cities and 130 observations, the analysis applies panel data regression to capture interregional and intertemporal variation. Model selection identifies the two-way fixed effects model as the most appropriate specification because it controls for spatial heterogeneity across regencies/cities and temporal heterogeneity across years. The results show that economic growth and agricultural sector contribution are positively and significantly associated with deforestation, indicating that regional expansion remains associated with land-extensive development. By contrast, per capita GRDP and poverty do not show significant effects after controlling for regency/city and year effects. The mining sector contribution has a negative coefficient and is only weakly significant; it should be interpreted cautiously because sectoral output shares do not necessarily represent the physical footprint of extraction. Overall, findings suggest deforestation in West Kalimantan is driven more by growth structure and composition than by welfare indicators alone. Forest-compatible regional development should prioritize agricultural intensification, stronger land-use governance, and stricter control of frontier expansion.