Abstract
<p>Indonesian biodiversity is threatened by massive deforestation. In this research paper, claims that deforestation in Indonesia is caused by corruption and supported by crude palm oil production is verified using time series analysis. Using Engel Granger cointegration test, three time series of data, specifically corruption perception index, rate of deforestation and price of crude palm oil are inspected for a long-run relationship. Test statistics suggests that there is no long-run relationship among these variables. Authors provide several explanations for this result. For example, corruption in Indonesia, as measured by CPI is still very high. This may mean that forest cover loss is possible even though there is a positive change in corruption level. According to the results, crude palm oil price has also no effect upon forest cover loss. This is likely due to very low shut-down price of crude palm oil for which production is still economical.</p>
Highlights
Claims that deforestation in Indonesia is caused by corruption and supported by crude palm oil production is verified using time series analysis
Using Engel Granger cointegration test, three time series of data, corruption perception index, rate of deforestation and price of crude palm oil are inspected for a long-run relationship
It is estimated that that corruption in the forestry sector reached over Rp 273 trillion in 2011 in Indonesia. (Jakarta Globe 2013) Corruption by government officials linked to natural resource extraction is leading to billions of dollars in state losses annually in Indonesia (Jakarta Globe 2013)
Summary
It is estimated that that corruption in the forestry sector reached over Rp 273 trillion in 2011 in Indonesia. (Jakarta Globe 2013) Corruption by government officials linked to natural resource extraction is leading to billions of dollars in state losses annually in Indonesia (Jakarta Globe 2013). It is estimated that that corruption in the forestry sector reached over Rp 273 trillion in 2011 in Indonesia. (Jakarta Globe 2013) Corruption by government officials linked to natural resource extraction is leading to billions of dollars in state losses annually in Indonesia (Jakarta Globe 2013). One of the most pressing environmental issues possibly related to corruption in Indonesia is deforestation. Deforested land is transformed usually to palm tree plantations. It is necessary to examine a relationship between deforestation and palm trees plantation, respectively corruption
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