Relationship between Economy and Environment of the Natural Rubber Plantation in Major Producers

Abstract

Thailand, Indonesia, Viet Nam, and India are the major natural rubber producers to date. Natural rubber has become one of the largest export commodities in these countries. It creates job opportunities for the smallholders as well as contributes to the national economy growth. However, a large-scale of natural rubber plantation results in environmental issues such as the nitrous oxide (N2O) emission which is obtained from the use of synthetic fertilizer during the cultivation process. The postulate of Environmental Kuznets Curve (EKC) was employed to examine the relationship between economy and environment from the natural rubber plantation in major producers using secondary data ranging from 2005 to 2018. Therefore, the N2O emission in which represents environmental degradation was regressed with the value of natural rubber production as the proxy for the economy growth using a fixed effect model on the panel data regression analysis. Results show that there is an inverted U-shape curve from the relationship between the N2O emissions and the value of natural rubber production. Hence, this study supports the postulate of EKC’s hypothesis. In addition, results found that the average value of natural rubber production from major producers was not yet reached the turning point of EKC. Some suggestions were made in order to increase the productivity while maintaining yet reducing the emission obtained from the use of synthetic fertilizer during cultivation process.