Valuation Study

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Impact of an Integrated Pest Management Program on a National Economy


Medium: Health and/or Human Capital

Country: Indonesia

Analytical Framework(s): Other

Study Date: 2000

Publication Date: 2001

Major Result(s)

Study Note: This research uses a Computable General Equilibrium (CGE) model to analyze the overall impact, including the multiplier impact, of the Indonesian integrated food crop pest management program on the national economy and household incomes for various socioeconomic groups. A CGE model is a system of equations that represent all agents' behaviors and the market-clearing conditions in a national economy.

Study Details

Reference: Budy P. Resosudarmo. 2001. Impact of the Integrated Pest Management Program on the Indonesian Economy. EEPSEA Research Report, No. 2001-RR11.

Summary: The excessive use of pesticides in Indonesia during the 1970s and 1980s caused serious environmental problems, such as acute and chronic human pesticide poisoning, animal poisoning, the contamination of agricultural products, the destruction of both beneficial natural parasites and pest predators, and pesticide resistance in pests. To overcome these environmental problems, the Indonesian government implemented an integrated pest management (IPM) program from 1991 to 1999. During that time, the program was able to help farmers reduce the use of pesticides by approximately 56% and increase yields by approximately 10%. However, economic literature that analyzes the impact of the IPM program on household incomes and national economic performance is very limited. The general objective of this research is to analyze the impact of the IPM program in food crops on the Indonesian economy and household incomes for different socioeconomic groups.

Site Characteristics: The chronic food shortage during the first two decades of Indonesian independence (1945-1965) prompted the Indonesian government to establish a comprehensive food intensification program as a national priority. Achieving and maintaining self-sufficiency in food, increasing farmers' income, and providing strong support for the rapidly expanding industrial and service sectors were the main goals of this program (Oka, 1995). The food intensification program consisted of the widespread use of high-yielding modern seed varieties, the development of irrigation systems, the expansion of food crop producing areas, the increased use of chemical fertilizers and pesticides, the expansion of agricultural extension services, the establishment of farmer cooperatives and input subsidies, and the stabilization of national food crop prices. During the 1970s and 1980s, the program caused food crop production to grow at an annual rate of approximately 3.74% (CBS, 1973-1991). Something close to a miracle occurred in rice production. Pushing the average annual growth rate of rice production to approximately 4.67%, the rice intensification program transformed Indonesia from the world's largest importer of rice, importing approximately two million tons per year at the end of the 1970s, to self-sufficiency in rice by 1983.

Comments: The author noted that it is in the interest of the Indonesian government to determine the overall effect of the IPM program on the national economy. If the program is proven to be significantly beneficial for the country's national economic performance, it will be recognized as a national priority.