ANALYSIS OF FARMERS' INCOME AND WILLINGNESS TO PAY FOR UPSTREAM WATERSHED IMPROVEMENT IN KRUENG KLUET ACEH INDONESIA

Krueng Kluet Aceh Watershed is one of the largest watersheds in the Aceh Province of Indonesia. Over the past three years, forest destruction in the upper part of the Krueng Kluet Aceh Watershed has resulted in the loss of 424.15 hectares of forest. This destruction has led to flooding during the rainy season, adversely affecting paddy fields. Farmers have incurred significant losses due to reduced production levels caused by flooding. The gap in this research lies in the analysis of farmers' income during flood events compared to non-flood situations, serving as a basis for assessing the extent of farmers' willingness to pay for environmental improvements—an approach that has not been undertaken previously. This research aims to compare farmers' income during the period of flooding versus period without flooding, as well as to assess farmers' willingness to pay for environmental improvement services in the upper Krueng Kluet Aceh Watershed. The findings of this study indicate that the average income of farmers during flooding periods is IDR 5,529,000 per hectare per planting season, equivalent to USD 354. In contrast, when flooding does not occur, farmers' income rises to IDR 26,027,000 per hectare per planting season, or USD 1,668. This means that farmers experience an income loss of IDR 21,020,000, which is USD 1,347, during flooding events. Notably, 71% of farmers expressed their willingness to pay for environmental improvements in the upper Krueng Kluet Aceh Watershed, with a total willingness to pay valued at IDR 1,078,500 per growing season, leading to an average of IDR 9,297 per farmer per growing season. The study also found that income variables, formal education, and land area positively influence farmers' willingness to pay for environmental improvements in the upstream areas of the Krueng Kluet Aceh Watershed. Furthermore, the formal education variable and the number of family dependents significantly affect farmers’ willingness to pay for these environmental improvements.