Journal of Environmental Science Studies; Vol. 6, No. 1, 2023 ISSN 2591-779X E-ISSN 2630-4821 Published by July Press 12 The Effects of Air Quality on Economic Activity in Indonesia Petrus Yudha Sasmita 1 , Akhmad Yani 2 & Restiatun Restiatun 3 1 Faculty of Economics and Business, Universitas Tanjungpura, Indonesia Correspondence: Petrus Yudha Sasmita, Faculty of Economics and Business, Universitas Tanjungpura, Indonesia. Tel: 62-82-3547-85549. E-mail: tovansyudha@gmail.com Received: February 2, 2023 Accepted: March 6, 2023 Online Published: June 11, 2023 doi:10.20849/jess.v6i1.1348 URL: https://doi.org/10.20849/jess.v6i1.1348 Abstract Air pollution may contribute to climate change in Indonesia, and it has the potential to undermine national economy over the long term due to the high expenses of dealing with environmental damage. The study's goal was to investigate and assess the impact of the industrial sector's GDRB, the mining sector's GDRB, the agricultural sector's GRDB, the level of education, the level of poverty, the quantity of trash generated, and the rate of deforestation on air quality in Indonesia. Secondary data types include time series and cross section (panel data) covering 34 provinces in Indonesia from 2016 to 2019. Descriptive statistical research approach using a step-by-step panel data regression model (fixed or random effect) with Chow test, Hausman test, and Lagrange multiplier method. Then, partly and concurrently, the classical assumption test and the statistical test (t-test and F-test). This research found that GRDB growth in the industrial sector has a positive significantly effect on air quality, GRDB growth in the mining sector has a negative significantly effect on air quality, GRDB growth in the agricultural sector has a negative significantly effect on air quality, and education level has a positive effect. Poverty level has no effect on air quality, waste generation has no effect positive on air quality, and deforestation rate has a negative significantly effect on air quality in Indonesia. Keywords: sectoral GRDB, air quality, deforestation, waste generation, air pollution 1. Introduction In emerging nations, environmental contamination is an issue that requires optimum resolution. Increased economic activities such as manufacturing, distribution, and consumption that disregard environmental considerations may lead to environmental contamination. This may have repercussions, including an increase in air pollution that has the potential to affect the country's Gross Domestic Product (GDP) over the long run and exacerbate climate change (Dellink et al., 2014). Each sector of national/regional economic development requires policies that promote environmental resilience in order to achieve environmentally friendly, sustainable economic growth (Adejumo, 2020). The rise in greenhouse gas emissions in Indonesia is due to forest and land fires. According to statistics from the Ministry of Environment and Forestry of Indonesia (MEFI), Indonesia's carbon emissions would reach 41.4 million tons of CO2 in 2020. The forest and land fires that occurred in Indonesia during 2019 increased carbon emissions by 2.7% compared to the previous year. In 2019, forest and land fires in Indonesia emitted as much as 40,2 million tons of carbon dioxide into the atmosphere (MEFI, 2020). In emerging nations, economic expansion continues to have a significant impact on environmental quality. The transition from the traditional agricultural sector to the industrial sector has an impact on the quality of the existing environment, waste, and smoke from industrial goods, which in turn affects economic growth and contributes to a reduction in environmental quality (Bella et al., 2021). According to a study from the United Nations (2015), environmental quality and quality of life have a direct link and correlation, therefore as environmental quality improves, so will quality of life. Concerning the environment, carbon dioxide emissions have climbed by fifty percent since 1990 and are anticipated to continue to rise annually (Wysokińska, 2017). Figure 1 demonstrates that the Environmental Quality Index from 2016 to 2019 has dropped compared to the national QEI in 2018 of 73.01 percent and the national QEI in 2019 of 66.83 percent.