Living Under Ecosystem Degradation:Evidence from the Mangrove–Fishery Linkage in Indonesia

This paper examines how ecosystem degradation affects social welfare, focusing on the mangrove-fishery linkage in Indonesia. Mangrove ecosystems boost fishery outputs by providing nursery habitat for a range of marine species. Using nationally representative household data and satellite information on mangrove loss, I find that fishery households experienced a decline in income of approximately 5% in response to a 1% increase in mangrove loss in the region. Under the income shock, fishery households increased their labor input and decreased their nonfood consumption but stayed in the fishery industry. I further estimate the potential economic value of mangrove conservation in terms of fishery production at US$14,589/hectare/year, making conservation substantially more cost-effective than alternative land uses such as aquaculture and oil palm plantations. The important policy implications are that (1) the loss of ecosystem services threatens the livelihoods of households engaging in the primary industry in developing countries and (2) mangrove forest conservation should be a policy priority for achieving sustainable development and ecosystem conservation. JEL classification: Q22, Q51, Q57, O13, J22.