Forest degradation and its economic and employment consequences: Evidence from Indonesia

• This study aims to analyse the current development of the Forestry Sector regarding the impact of forest degradation in Indonesia on Gross Domestic Product (GDP), income, and employment, and also the consequences on the relationship between employment status and the welfare of forestry sector workers. The main findings show that forest degradation at around IDR 683 billion leads to an estimated loss of IDR 882 billion in GDP, reduction of IDR 261 billion in income, and the loss of approximately 4735 workforce in 2022. On the micro level, the study finds that informal workers are less likely to have access to financial services and are more likely to experience food insecurity, but it is not show a statistically significant access to healthcare. The contribution of this study lies in its integrated approach, which combines macroeconomic modelling with employment welfare analysis, thereby expanding the existing literature that has primarily focused on forest governance and investment. The findings highlight the urgency of strengthening social protection for forestry sector workers and emphasise the need to integrate environmental and employment policies in an inclusive manner. This study aims to analyse the current development of the Forestry Sector regarding the impact of forest degradation in Indonesia on Gross Domestic Product (GDP), income, and employment, and also the consequences on the relationship between employment status and the welfare of forestry sector workers. The main findings show that forest degradation at around IDR 683 billion leads to an estimated loss of IDR 882 billion in GDP, reduction of IDR 261 billion in income, and the loss of approximately 4735 workforce in 2022. On the micro level, the study finds that informal workers are less likely to have access to financial services and are more likely to experience food insecurity, but it is not show a statistically significant access to healthcare.