Keywords

9.1 Introduction

Peatlands in Riau play an important role in the provision of ecosystem services, such as carbon storage, climate regulation, biodiversity, and water supply. However, forest fires that take place every year in the Riau peatlands have transformed them from carbon sequesters to carbon emitters, which has led to serious environmental and social problems. The aquatic ecosystem of Riau also provides vital services, yet oil palm plantations and human settlement are challenging the health of the province’s rivers, streams, and oxbow lakes. The village of Rantau Baru, located on the Kampar River, is unique in that these two ecosystems are equally dominant. While the village is rich in biodiversity and it remains an important carbon-stock area, ongoing environmental degradation poses a serious threat. How can environmental conservation be achieved, and who will pay for it?

This chapter assesses the factors influencing community members’ willingness to pay (or WTP) for environmental conservation in Rantau Baru. These factors include: (1) household expenditures, (2) wealth, (3) education level, and (4) perceptions of the two distinct ecosystems. Willingness to pay (WTP) is mainly defined as the “sum of money the individual would be willing to pay rather than to do without an increase in some good such as an environmental amenity” (Freeman III et al. 2014, p. 9). Because such willingness is context-specific, numerous studies have analyzed WTP to determine significant influencing factors. Among these factors, income level is often considered critical (Vincent et al. 2014).

According to survey results from the 152 households in Rantau Baru, villagers primarily depend on the freshwater ecosystem for their livelihood, as most of their income-earning activities are related to fishing in the Kampar River, its tributaries, and local oxbow lakes (Nakagawa, Chap. 4; Nofrizal et al., Chap. 5). Indeed, nearly 70% of villagers are small-scale fishermen/fisherwomen who have a range of skills related to living in the freshwater environment,Footnote 1 and fish diversity is high (Elvyra et al. 2010). This environment is facing serious challenges, however, not only due to human activity, but also to rainy season floods. Approximately 50% of community members have a plot of land in the peatlands, but livelihood activity on this land is limited (Osawa, Chap. 6).Footnote 2

In Riau, peatlands are complex socio-ecological landscapes characterized by various interests, conflicting types of resource usage, and overlapping land tenure claims (Mizuno et al. 2016). Exploitation of the peatlands began in the 1980s with the establishment of oil palm plantations in Riau. This precipitated a range of direct and indirect impacts on Rantau Baru, chief among which is the annual forest fires and resulting air pollution that remain an unresolved problem today. Both the peatland and freshwater ecosystems of Rantau Baru can be considered common resources (see Miller et al. 2020; Cosens 2018) and the environmental challenges to these common resources have directly affected the livelihood of the community members.

Rantau Baru is not only facing environmental degradation; it is also a community with limited cash income and low educational attainment. The majority of villagers can be categorized as living in poverty. Average expenditures per household per month are approximately Rp2,112,651 (US$150).Footnote 3 Considering an average household has four members,Footnote 4 per capita expenditure is Rp528,163 (US$37) per month. This is less than the per capita poverty line in Riau in 2020, which was about Rp546,090 (US$39) per month. Therefore on average the members of this community are living below the poverty line. More than half of all heads of household (54%) have only a primary level education.Footnote 5

Those living in Rantau Baru have interacted with the two distinct ecosystems of their homeland for generations, learning and adapting to environmental conditions to create specific opportunities and benefits from each. Perceptions of each ecosystem vary accordingly.

This chapter presents results of study based on a survey on the WTP for the conservation of peatlands and fishing areas in Rantau Baru. The study uses a contingent valuation method (CVM) to measure how villagers value each ecosystem and an ordinary least square (OLS) method to measure the significance of factors influencing WTP. The policy implications of the findings are then discussed in the context of conserving both peatland and aquatic ecosystems. This research deepens our understanding of context-specific factors that impact WTP and can inform the formulation of strategies for environmental conservation in cash-poor communities.

9.2 WTP and Poverty

The concept of WTP is derived from economics and employed in the economic valuation of environmental goods and services. The sum of money an individual is willing to pay for environmental conservation instead of retaining it to spend on other things is critical to WTP. Therefore, income either at an individual or household level can constrain WTP.

Scholarship is divided on the relationship between WTP and income level. While some argue that the relationship is not very clear, others assert that there is a strong connection between WTP and economic conditions, both in general and at a personal level. A group of studies using surveys to understand WTP for biodiversity conservation of domestic populations of specific countries have been largely unsuccessful in detecting a significant income effect (see Jacobsen and Hanley 2009; Lindhjem and Tuan 2012). In a similar vein, a few cross-country studies have considered the effect of national income on the creation of protected areas (Bimonte 2002; Dietz and Adger 2003), but findings on the significance of the effect have been mixed.

Holden and Shiferaw (2002, p. 91), however, find that poverty, as an indicator of low income, undermines conservation investment on land even when the community members are fully aware of the need for conservation. Other scholars have demonstrated that demand for nature conservation increases as income increases (Baumol and Oates 1979; Kahn and Matsusaka 1997; Diekmann and Franzen 1999; Franzen and Meyer 2010). Other studies suggest that public support for environmental protection tends to increase when the economy is doing well and tends to weaken during economic recessions (Scruggs and Benegal 2012; Bechtel and Scheve 2013; Kachi et al. 2015). A case study from Malaysia evaluates the relationship between rising household income to increased household WTP and forest protection actions by the government, thereby presenting explanations for the under-provision of forest protection relative to household income (Vincent et al. 2014). Several studies also find that despite a relatively strong connection between WTP and income, there may be diminishing marginal utility for environmental protection (McConnell 1997; Israel and Levinson 2004).

While this chapter confirms a connection between WTP and the income of community members, it argues that perceptions of ecosystems, which people rely on in their daily lives, also impact WTP. In this sense, WTP in a village that depends upon two different ecosystems is likely to be different compared to that of a village with only one environmental condition.

9.3 Methodology and Data

The WTP analyses for this study adopt the contingent valuation method (CVM), which is frequently used to estimate WTP (Cho et al. 2008). Conceived in the field of economics, CVM is used to value goods that are not traded in the market. The CVM was first employed by Davis (1963) to estimate the value that hunters and tourists place on wilderness area(s). The CVM’s advantage is that it allows researchers to estimate values that are not directly linked to pragmatic use; for example, the wish of community members to conserve natural environments for future generations (Kopp 2005). CVM uses surveys “to obtain consumer responses to a hypothetical situation,” with questions aiming to elicit preferences for public goods and paying attention to what respondents would be willing to pay for specified improvements to such goods (Mitchell and Carson 2005, p. 2).

Data for this study was collected by carrying out surveys of all 152 households in Rantau Baru village. The survey was conducted face-to-face with the heads of households. Two questions were asked about WTP:

  1. 1.

    Jika ada program pengelolaan dan pelestarian lahan gambut di Rantau Baru yang dilaksanakan masyarakat agar hasilnya dinikmati Ibu/Bapak dan biayanya ditanggung bersama, maka seberapa besar Ibu/Bapak bersedia membayar iuran program tersebut per bulan? (If there is a program for conservation of peatland in Rantau Baru which is carried out by the community for your benefit, and the cost will be shared, how much do you want to pay for the program monthly?)

  2. 2.

    Jika ada program pelestarian sungai dan danau di Rantau Baru yang dilaksanakan masyarakat untuk keberlangsungan hasil tangkapan ikan agar hasilnya dinikmati Ibu/Bapak dan biayanya ditanggung bersama, maka seberapa besar Ibu/Bapak bersedia membayar iuran untuk program tersebut per bulan? (If there is a program for river and small lakes conservation in Rantau Baru carried out by the community for your benefit, and the cost will be shared, how much do you want to pay for the program monthly?)

To determine WTP, an open-ended question was initially employed. Upon failing to collect clear information from this method, the study adopted ordinal categories to assign a specific value to payments. These ranged from less than Rp9,999 (less than US$1) to more than Rp50,000 (about US$5). A mean of the results was calculated and transformed into a natural log. Other than these ranges in terms of money, the choice for WTP was: want to pay/do not want to pay. The estimation of WTP then excluded community members who do not want to pay at all.

The WTP model used in this study follows Seller et al. (1985) and Ndebele and Forgie (2017) as:

$$ \textrm{WTP}=f\ \left(Y,Z\right) $$

where Y is the expenditure variable and Z represents explanatory variables. Explanatory variables include socio-economic background, such as education level, boat ownership, and house ownership (see Zhongmin et al. 2003; Amirnejad et al. 2006; Lienhoop and Macmillan 2007; Kopnina 2012; Forlin and Chambers 2011), and perceptions of ecosystem conditions (Liu et al. 2021). The study adopted an ordinary least squares (OLS) estimation as follows:

$$ \textrm{WTP}={\upbeta}_0+{\beta}_1\ \textrm{expenditure}+{\beta}_2\ \textrm{education}+{\beta}_3\ \textrm{boat}\ \textrm{ownership}+{B}_4\ \textrm{house}\ \textrm{ownership}+{\beta}_5\textrm{perception}+\varepsilon $$

9.3.1 Dependent and Independent Variables

Table 9.1 depicts the variables of this study and the descriptive statistics are explained in Table 9.2. WTP is the dependent variable. The independent variables are: household expenditures, boat ownership, house ownership, education level, perception of peatland conditions, and perception of fishing area conditions. These independent variables were adopted to gain more information about the individual characteristics of the community members. Expenditure (Decancq and Lugo 2012), instead of income, was used to measure wellbeing, because community members can more easily remember their spending. Information on spending therefore provides a more accurate representation of reality as compared to income. Information on incomes is difficult to collect because community members may have more than one source of income and may be hesitant to disclose income. The study measured wealth with the use of two indicators: boat and house ownership. As boats are critical to the main livelihood of fishing, boat ownership, as opposed to rental, is a key indicator of wealth and well-being. House ownership is also a strong indicator of the economic situation of a household.

Table 9.1 Variables
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Table 9.2 Descriptive statistics
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To better understand attitudes and their link to behavior, the study also measured (1) educational level and (2) perceptions of the current condition of each ecosystem. The latter relies on the hypothesis that if respondents consider that a particular ecosystem is damaged, the probability of them participating in its conservation will be higher.

This study also uses supplementary information about perceptions of peatland conditions. This information was collected by asking the following two questions:

  1. 1.

    Apa penilaian Ibu/Bapak mengenai keadaan gambut dan lingkunganya di Rantau Baru. Apakah baik, mulai mengalami kerusakan atau rusak? (What is your evaluation of the condition of peatlands and their surrounding environment in Rantau Baru, are they in good condition, beginning to be damaged, or heavily damaged?)

  2. 2.

    Sebutkan alasan mengapa Ibu/Bapak memilih jawaban di atas (State the reason why you have given the answer above).

The answers were then categorized and the results are presented in Tables 9.5 and 9.6.

9.4 Findings and Discussion

9.4.1 Valuing Ecosystems in Rantau Baru

Both the fishing areas and the peatlands of Rantau Baru hold economic value. To calculate this total value, we added the estimated direct use value and indirect use value of three main areas, those used for fishing, recreation, and carbon sequestration. The results are depicted in Table 9.3.Footnote 6 Information about the value of each ecosystem in Rantau Baru is additionally applied to estimate ecosystem services. This information highlights that Rantau Baru is an important area for carbon storage and is therefore necessary to protect. The continuing expansion of oil palm cultivation would put this area of carbon stock in jeopardy, especially as it encroaches on the secondary forests.

Table 9.3 Estimated economic value of Rantau Baru’s environment
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The main service provided by the environment of Rantau Baru is carbon sequestration, which accounts for more than 77% of the environment’s total estimated economic value. Direct-use value from fishing and recreational areas accounted for just under 23% of the total value, although fishing activity certainly has relevant economic value. Rantau Baru has a rich aquatic ecosystem, with waterways covering 460 hectares. Environmental services are primarily provided by secondary forests, industrial forests, peatlands, and plantations. These peatland and aquatic ecosystems form Rantau Baru’s environment.

9.4.2 Significance of the Factors Influencing WTP for Conservation of Peatland and Fishing Areas

Table 9.4 presents the correlation between five independent variables and villagers’ WTP for conservation of peatland and fishing areas. We see from Column 2 of Table 9.4 that the WTP for peatland conservation is positively associated with education levels, with a significance level of 0.1%. A coefficient of 0.08 indicates that education level is associated with a 0.08-point increase in WTP for peatland conservation. This finding on the education variable and its association to WTP was expected. We can preliminarily conclude that formal education serves as a foundation for community members to understand and accept information provided by the government on peatland, mainly on peatland fires. While the survey finds that only 8% of community members attended specific socialization or training activities on peatland conservation, they gain knowledge and information from being exposed to fire or haze. Formal education attainment can be viewed as supplementary to this experience. Members of the community with higher education levels may therefore have more enhanced understanding of the value of conservation. Following the rise in fires in Riau 2015, the central government, followed by the provincial and district-level governments, adopted dramatic measures to reduce the incidents of fire. Perhaps the program related most closely to the understanding of the peatland problem in Riau is that of the volunteer firefighters. The relevance of this volunteer activity is not only to fight peatland fires, but, importantly, to provide general knowledge about protecting this environment.

Table 9.4 WTP for conservation of peatland and fishing areas in Rantau Baru according to influencing factorsa
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The WTP for peatland conservation also correlates to household expenditure and perceptions of peatland conditions, and these variables are both significant at 10%. Household expenditure correlates positively to WTP for peatland protection, with a coefficient of 0.26. The significance level for household expenditure is at 10%, and there is a weak association between WTP and household expenditure. A coefficient of 0.26 for the variable indicates that household expenditure is associated with a 0.26-point increase in WTP for protecting peatland. Perception of peatland conditions also correlates positively to WTP, although the association is not as strong as education level. It was expected that if peatland is perceived to be in a bad condition, WTP would increase. We found that WTP is weakly negatively associated with attitudes toward peatland protection. This result is not in line with the expectation. The effect of this variable is statistically significant at 10%. This finding indicates that WTP decreases with the perception that peatland conditions are bad. This result may be explained by the feeling among most community members that peatland conservation is beyond their capability, despite 70% of villagers assessing that the peatlands are damaged (see Table 9.5). According to the survey results in Table 9.6, peatland damage is mostly caused by floods or fires. Community members have seen fires and floods on peatlands in their surrounding areas, which are owned by corporations, and report the cause of fires as stray cigarette butts of outsiders.

Table 9.5 Assessment of Peatland Conditions by Rantau Baru Villagers
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Table 9.6 Reasons for Peatland Damage as Reported by Rantau Baru Villagers
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The WTP for conservation of fishing areas positively correlates with household expenditure. The effect of this variable is statistically significant at 0.1%. A coefficient of 0.40 indicates that household expenditure is associated with a 0.40-point increase in WTP for protecting fishing areas. Other variables, such as education, also have a positive correlation, but they are not significant in explaining WTP for fishing areas in the village.

As clearly seen in Table 9.4, WTP for conservation differs for peatland and fishing areas. Only one variable consistently explains WTP, and that is household expenditure. Despite this consistency, its significance level varies considerably, with a much higher significance level demonstrated in WTP for preservation of fishing areas compared to peatland. In other words, the association of WTP and household expenditure is weaker for peatland conservation compared to that of fishing area conservation. Two variables in particular can explain this difference; these are education level and perceptions of the two environments.

What do the findings mean? Why do the community members have different stances regarding WTP for peatland and fishing areas? What can we learn from these differences when considering natural resource conservation in the context of Indonesia as a whole? These questions are relevant to deepening understanding of the behavior of community members regarding WTP for conservation of natural resources.

As long as the community members strongly depend on the natural resources of the surrounding areas, WTP for conservation correlates to household expenditure. Survey data discussed in other chapters of this book demonstrate that Rantau Baru villagers depend on the surrounding environment for their livelihoods, and their basic survival as a community is strongly influenced by the capacity to benefit from the natural resources available to them. Fishermen and women adapt fishing technology by using material from nature as well as manufactured goods (such as nylon nets, hooks, and other fishing gear). One should also remember that Rantau Baru is relatively difficult to access, if not isolated. In the rainy season, the main road is flooded with water, and therefore cannot be used as a means of transportation. This geographical location limits the community members’ access with outside world during the rainy season.

Yet despite this dependency on natural resources, WTP differs for peatland and fishing areas not only according to household expenditure, but also to education level. This difference can be explained by the environmental conditions and the daily life of small-scale fishermen/women in Rantau Baru. The household expenditure variable can be considered a proxy for the welfare of community members because, according to the finding of this study, WTP, to a varying degree, depends upon the level of welfare that people enjoy from the natural resources available to them—if their welfare increases, they are willing to give more money for environmental conservation. This applies to WTP for fishing areas, as the villagers to date have been able to gain more livelihood benefits from fishing areas than peatlands.

On the other hand, WTP for peatland conservation correlates highly to education level, while it does not explain WTP for fishing areas. In this study, the education variable represents the level of formal schooling attained by community members. The positive correlation of education to WTP for both peatland and fishing areas could indicate that the findings are in line with the expectation that education, to a varying degree, is related to WTP. However, the significance of education level varies for WTP for peatland and fishing areas. Education correlates to WTP for peatland at a relatively high degree of significance, while it is not significant enough to explain WTP for fishing areas.

The difference in the significance of education as an independent variable to explain WTP for peatland and fishing areas might also be related to the different use of and policies applied to these ecosystems. It is important here to mention that peatlands have received much more attention from the government in comparison to fishing areas, because the peatland fires cause air pollution. The dramatic forest fires of 2015 burned for weeks; it caused economic losses of more than US$16 billion (World Bank 2016) and led to the initial establishment of the Peatland Restoration Agency (Badan Restorasi Gambut, BRG) in 2015. In this regard, any information related to peatlands that is conveyed by the government likely facilitates community members’ understanding of this environment, or in other words, higher education levels lead to increased knowledge of these environments. This may explain why the significance of the education variable differs for different environments. We may tentatively conclude that if the government gives more attention to the conservation of fishing areas, education as an independent variable to explain WTP of fishing areas may increase. However, this study did not collect information on education efforts or policies related to peatland and fishing areas.

The significance of household expenditure to WTP also differs according to ecosystem. Most villagers’ main livelihood depends on fishing activities, while to some extent they can gain income from peatland by cultivating some agricultural commodities. Nofrizal et al. (Chap. 5) note that (1) the rivers and peat swamps of the village provide habitat for 44 fish species that have market value, (2) Rantau Baru village is a freshwater fish production site in Pangkalan Kerinci, and (3) fish products from the village are sold in markets in the capital city of Riau, Pekanbaru. According to data collected from the survey, approximately 70% of Rantau Baru villagers are fishermen/women, while only 3% work in the agricultural sector. We can therefore conclude that local livelihood very much depends on fishing areas, even though the village is also surrounded by peatland. The different connections that community members have to fishing areas and peatland furthermore forms the basis upon which they frame and understand their relationship to nature.

Community members catch fish in the Kampar River and its tributaries. The Kampar River also serves as a main transportation route for the fishermen/women to reach peat swamps, oxbow lakes, and smaller rivers. While villagers are very dependent on the rivers, peat swamps, and oxbow lakes in the surrounding areas, they have almost no control over the aquatic environments and during the rainy season, the village is prone to flooding.

We see from the findings in Column 3 of Table 9.4 that perceptions of fishing areas do not explain WTP for the fishing areas. The positive correlation is in line with the expected result, but it is not significant. This result therefore reveals that WTP for fishing areas cannot be solely explained by perceptions about the condition of fishing areas.

Therefore, it is indicated that the community members of the village are very much dependent upon the fishing areas, mainly the Kampar River and its tributaries. They can benefit from these environments with very limited intervention, if any. Villagers catch fish directly from the natural environment without farming. Nofrizal et al. (Chap. 5) explain that the availability of fish relies on existing natural conditions, with almost no conservation intervention. Villagers seem willing to accept the existing balance of threats and benefits that they receive from fishing areas. Various reasons explain this passive approach, including a lack of knowledge on how to control floods, and a lack of money, time, and energy. Government intervention to control flooding has resulted in the construction of a dam upstream of the village in Koto Panjang and when rain intensity is very high, the water is released, which in turn creates floods in Rantau Baru.

To further understand the community members’ relationship to their aquatic environment, it is relevant here to compare this to their connection to peatland. WTP for peatland is associated with the community members’ perception of peatland conditions, although the significance level is not high. Perception of peatland conditions is negative and indicates an inverse correlation. This most important finding is that WTP for peatland is closely related to the perception of peatland conditions.

Having mentioned that household expenditure could explain WTP for conservation of peatlands and fishing areas, this should be interpreted carefully in terms of possible environmental degradation. As this study finds, most community members work as fishermen/women on a small scale, which means that their livelihood is very much dependent upon nature. Improving expenditure by further exploiting the aquatic ecosystem would cause serious damage to the environment. This makes it nearly impossible to improve the expenditure of community members through increased exploitation of the aquatic ecosystem, as it has limited resources and can only support the livelihood of the community members at its current level. Other strategies for increasing income, such as recreational fishing (Nofrizal et al., Chap. 5), should be considered. In a similar line of argument, further exploiting the peatlands is also not likely. The plots of peatland owned by community members are relatively not very big, and the level of knowledge and capital they possess are relatively low. Ultimately, income that community members gain from nature is used for survival, which leaves little money to pay for conservation.

9.5 Conclusion and Policy Implications

The aim of this study is to understand the factors that determine Willingness to Pay (WTP) for conservation of both peatlands and fishing areas in an area experiencing peatland degradation. A household survey was conducted in a floodplain village that is surrounded by peatlands. A contingent valuation method, or CVM, was employed to measure how local villagers value the two ecosystems.

The findings reveal that community members’ WTP for conservation of peatland areas differs from their WTP for conservation of fishing areas. WTP for peatland conservation correlates to education level, and, to a degree, household expenditure and perception of peatland conditions. WTP for conservation of fishing areas correlates almost exclusively to household expenditure. From these findings, it is safe to conclude that WTP is very much associated with household expenditures, with a differing degree of significance depending on the area to be conserved. These results are in line with other studies on the WTP of cash-poor people, which find that personal economic conditions correlate highly to WTP (Tilahun et al. 2011).

The contribution of this study, however, lies in its discussion of WTP for the conservation of two very different ecosystems in a community where all other factors are equal. It thus enables us to identify which specific factors influence WTP for conserving peatlands versus fishing areas. First, the study found that the correlation between household expenditure and WTP is higher for fishing areas than for peatland. Differences in WTP for the two distinct ecosystems are a result of community members’ direct, long-term interaction with them. While most villagers depend on the aquatic environment for their livelihood, they have less control over it. In the rainy season, they may catch more fish, which directly improves their expenditures, but at the same time their village may be hit by a flood. The peatlands are less important to livelihood of the community members because their holdings are small and they have less knowledge, technology and capital to exploit peatlands.

Second, education level can explain WTP for peatland, while it does not explain WTP for fishing areas.

Third, this study finds that WTP is weakly negatively associated with perceptions of peatland conditions, or in other words, that WTP decreases with the perception that peatland conditions are bad. This result may be explained by a feeling among most community members that peatland conservation is beyond their capability, and some of the peatlands are too damaged to be restored. These findings are not in line with the expectation; they could indicate that policymakers have a steep barrier to overcome in convincing community members to participate in peatland conservation efforts and therefore have serious implications for conservation policies. Perceptions of fishing areas do not explain WTP for conservation of fishing areas. Conservation of peatlands and fishing areas seems to be beyond the reach of the community members, especially if they have to participate in terms of cash money.

While this study confirms that household economic conditions are relevant for the conservation of nature, this finding should be read cautiously when formulating policy, as most members of this community are cash poor. Relying on conservation directly from their income is difficult because they must allocate this income for daily spending. Improving income and expenditure levels is challenged by skill and natural resource limitations as well as climate fluctuations. In addition, the potential for agriculture on peatland holdings and participation in palm oil plantation activity is minimal, limiting the amount of income that can be gained from peatlands.

Given these conditions, government assistance for conservation is crucial. It is very clear that conservation cannot solely be the responsibility of the members of the community. While education level does correlate to WTP for peatland, WTP for fishing areas is not currently impacted by education level. These findings reveal that government efforts to address forest fires on peatland through socialization could have improved awareness of peatland conservation among community members. Therefore, similar education efforts for conserving fishing areas may increase awareness and WTP for fishing areas as well.

This study provides insights into WTP for conservation in a cash-poor community that has two dominant ecosystems. As a case study of one village, it contributes to our understanding of context-specific factors that impact WTP and can inform the formulation of strategies for environmental conservation in such communities. However, further research is needed across Riau Province to create a fuller picture of WTP for environmental conservation.