Impact evaluation of cooperative membership on welfare: Evidence from captured fishery households in Indonesia

Abstract

Two challenges faced by fishers are access to loans and markets. They typically seek loans to fulfill their daily needs and invest in fishing equipment to mitigate their income instability. However, their access to credit from formal institutions is often constrained by limited or unavailability of collateral. In terms of market access, some fishers cannot be physically present in the market because their fishing schedule does not align with the operational schedule of the fish market. Furthermore, they tend to live far from the markets, so they often find it difficult to sell their catch in the markets directly. Many fishers worldwide join cooperatives to mitigate uncertainty and boost income. Cooperatives are designed to provide stable fish markets, fair prices, credit, fishing tools, and market information. This study aims to evaluate the impact of cooperative membership on households' income in Indonesia's capture fisheries sector. The analysis employs a quasi-experimental method with a cross-sectional design using survey data on household income in the agricultural sector collected by Statistics Indonesia (BPS) in 2013. The dataset comprises 28,727 capture fisheries households spread across 33 provinces. The Propensity Score Matching (PSM) method was used to construct a control group by identifying similarities in observed characteristics. The results affirm that cooperative membership has a positive and significant impact on the household income of the capture fisheries sector in Indonesia. Being a cooperative member increases households’ income, thereby improving their living standards. These findings underscore the significance of policymaking that supports cooperative associations as they help improve fishers’ livelihoods and sustainability.