Poverty (Firdausy/Tisdell, 1992)

Rural Poverty and its measurement: A comparative study of villages in Nusa Penida, Bali

Below article is based on a study published online (please, refer to source at the bottom) on the poverty in three villages in Nusa Penida: Jungut Batu (Lembongan), Ped (Nusa Gede's north coast) and the highland village of Batumadeg by Carunia Firdausy & Clem Tisdell (1992).

The authors conclude that compared to the coastal towns of Jungut Batu and Ped, Batumadeg is poorer. This is ascribed to different economies and ways of making a living. Seaweed-mariculture is a much more secure means of sustenance, compared to cassava-corn production in the hills around Batumadeg. However, there are problems as well, given rising conflicts between land use for either seaweed-farming or tourism in the coastal regions.


seaweed suanabatumadeg family

Images above: seaweed-farming near Suana, Penida's northeast coast (G.Dijkman, 2009); a farmer's family at Batumadeg (Wisnu Taran Ningrat, 2009)

This paper compares the incidence of poverty in three neighbouring rural villages in Bali, two of which have experienced the innovation of seaweed-growing and have become market dependent, while the third remains a traditional cassava-corn dependent village. Several alternative measures are used to compare the incidence of poverty in the villages, and these measures are discussed critically. All of them rate the incidence of poverty in the cassava-com village to be very high, and much greater than in the seaweed-dependent villages. Aggregative or macroeconomic studies of poverty, even at the regional level, are liable to conceal or overlook such differences. An innovation, at least in the Indonesian context, is the application of subjective or respondent-dependent methods of assessing poverty. These, it is argued, can make a valuable contribution to poverty assessment and in this case their results accord most closely with those of an average per capita expenditure method based on rural Bali, the World Bank and the KFM objective methods. Economic development and growth such as has occurred in the seaweed villages has not increased the incidence of poverty; instead it appears to have reduced it, contrary to what might have been expected if Kuznets' theory or the Neo-Marxian theory were to apply.


While two decades of sustained economic growth in Indonesia have reduced aggregate poverty (Asra 1988; Van der Gaag 1991), the effect has been uneven between sectors and regions (Islam and Khan 1986; Firdausy and Tisdell 1989b). Even now, there are signs of increasing incidence of absolute poverty in some rural areas, especially in certain eastern Indonesian provinces (Booth 1989; Hill 1988: Anon 1990).

seaweed mosaic redwhiteseaweed mosaic green

Images above: seaweed mosaics of red, white & green, Kutampi (G.Dijkman, 2009)

Most discussions of poverty in Indonesia are descriptive and based on macro-level data published by the Central Bureau of Statistics (BPS). There has been little discussion of poverty using micro-level data. To help fill that gap, this paper uses data obtained from a survey of farming households in three villages in Bali and examines the incidence of poverty in these villages. But first let us describe data sources, define concepts and discuss some methodological issues involved in poverty measurement.
Firdausy & Tisdell wish to thank two anonymous referees for valuable comments. Financial support from the Australian Centre for International Agricultural Research (ACIAR Research Project No. 8823) and the Australian International Development Assistance Bureau (AIDAB) is gracefully acknowledged. The authors are, of course, solely responsible for any errors.

Data sources and definitions

Data for this study were collected by direct interviews with household heads in three villages in kecamatan Nusa Penida, Bali. The sample was obtained by a multi-stage random sampling procedure, and 20% of total households in each village were surveyed. The total number of responding households in the three villages was 282.
The villages surveyed were Jungut Batu, Ped and Batumadeg. In the first two villages households depend for their income on seaweed-farming, a relatively new industry in Indonesia, and one for which people on low incomes have access to the means of production. In the third village the sole source of income is agriculture and livestock; household members do not engage in any other type of occupation. The first two villages are located on the seashore, but Batumadeg is in a hilly area eight kilometres inland. Bali was chosen for the survey partly because seaweed-farming is better established there than elsewhere in the country (Firdausy and Tisdell 1989a; 1991).

Concluding comments

All measures of poverty used in this study indicate that the incidence of poverty is less in the seaweed villages surveyed than in the traditional cassava-corn village of Batumadeg. Most poverty measures show the incidence of poverty to be very much lower in the seaweed villages, and the weight of evidence supports this point of view.
Seaweed mariculture has been an innovation for Indonesia and provides new economic opportunities for the villagers of Jungut Batu and Ped (Firdausy and Tisdell 1991). As a result these villagers are now almost entirely cash-based and market-reliant. In contrast, Batumadeg is an inland village about 8 kilometres from the coast and villagers are still tied to a traditional semi-subsistence cassava-corn economy. At least in this case, judging from the cross-sectional evidence, technological change appears to have been a factor in reducing the incidence of poverty.

Poverty is less marked in the seaweed villages than in the traditional village. Also, as judged by Gini coefficients, income inequality in the seaweed villages is less than in Batumadeg and in Indonesia generally. Thus in this case there is no evidence that innovation and economic change have led to greater inequality of income, as the hypothesis of Kuznets (1963) might suggest. Nor have they resulted in any increase in the incidence of poverty, contrary to the prediction of the Neo-Marxian hypothesis.
These results, however, contrast with those from a survey of coastal villagers in the Maldives. In that case, mechanisation of tuna fishing boats was found to be a source of increased income inequality and poverty (Sathiendrakumar and Tisdell 1990). How might the difference be explained?

seaweed oldfarmer boy kutampijpg-copyseaweed oldman kutampi

Images above: seaweed-farmers at Kutampi (G.Dijkman, 2009)

In the Indonesian case all villagers in the seaweed villages have access to the fundamental means of production
areas. Seaweed-growing is relatively labour-intensive and capital requirements are few. Seaweed buyers appear to be willing to advance finance to families requiring capital for seaweed-farming. So it may be that the structure and nature of the industry and institutional arrangements help to explain the difference between this and the case of tuna fishing mechanisation. In the latter case, poorer fishermen without access to a mechanised boat were unable to obtain sufficient income to survive independently after mechanisation because they had no direct access to capital. They therefore became dependent on a separate boat-owning class for their employment.

The above results should at least caution us about trying to generalise to the microeconomic level macroeconomic theories about the impact of economic growth and development on the distribution of income and poverty. Furthermore, one can conclude from this survey that large differences in the incidence of poverty in Indonesia occur within short distances. Batumadeg is only eight kilometres from Ped. Such disparities in income are concealed by aggregative or macroeconomic data even when these are compiled on a regional basis.

Seaweed-farming appears to have led to both an increased level of income and a reduction in the incidence of poverty. However, because it is associated with product specialisation and dependence on markets, it has also brought with it many risks. The welfare of the seaweed-reliant villagers is dependent upon the market price for seaweed being maintained. While there are good prospects for this, the price of seaweed is variable. There are also limits to expanding the amount of seacoast used for seaweed production. These limits are far from being reached in Indonesia as a whole, but in parts of Bali the extension of seaweed cultivation is already coming into conflict with tourism for land use in the coastal zone.


  • firdausy coverFirdausy, Carunia & Clam Tisdell - Rural Poverty and its measurement: A comparative study of villages in Nusa Penida, Bali, in: 'Bulletin of Indonesian Economic Studies', Vol.28 No.2, p.75-93, Indonesian Institute of Sciences (LIPI), University of Queensland, August 1992
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