Spatial Effects of Economic Activity and Environmental Carrying Capacity on Air Quality in Java and Bali Islands

Abstract

The purpose of this research is to determine the direct effects and spillover effects of environmental carrying capacity, urbanization, and economic activities on air quality in the provinces of Java and Bali Islands. The research contributes academically and practically by providing a spatial-based model design and policy recommendations for improving air quality in the provinces of Java and Bali Islands. The research method used is quantitative, utilizing secondary data from seven provinces in Java and Bali Islands during 2013-2019, obtained from publications and official documents of the Indonesian Central Statistics Agency, Ministry of Environment and Forestry, and Ministry of Finance. The research variables include air quality, urbanization, per capita income, exports, imports, foreign direct investment, and environmental carrying capacity. The analysis technique employed is Spatial Econometrics. The results show that spillover effects occur due to economic activities and the environmental carrying capacity of each region. Policy synergies between regions oriented towards air quality improvement are necessary.