Reconciling oil palm economic development and environmental conservation in Indonesia: A value chain dynamic approach

Herry Purnomo, Beni Okarda, Ahmad Dermawan, Qori Pebrial Ilham, Pablo Pacheco, Fitri Nurfatriani and Endang Suhendang

Forest Policy and Economics, 2020, vol. 111, issue C

Abstract: Palm oil makes a significant contribution to the economies of Indonesia and Malaysia through private corporations, state-owned companies and smallholders, with the two countries supplying 85% of the global palm oil. Indonesia has 14 million hectares (ha) of oil palm; its palm oil exports were valued at USD 23 billion in 2017 and USD 21 billion in 2018. Both domestic and international communities, particularly the European Union (EU), have raised concerns about its sustainability and impact on forest conservation. For example, the European Parliament in 2017 issued a resolution to restrict the ability of EU countries to count palm oil-based biodiesel imports toward their renewable 2030 energy targets. This paper describes palm oil value chains in Indonesia at the national level, using value chain analysis and system dynamics modeling. The model is used to understand how the moratorium, peatland conservation, agrarian reform, and the EU biodiesel ban affect plantation expansion and production, employment, CO2 emissions, smallholder incomes, the private sector, and government. The model provides scenarios to make Indonesian palm oil more sustainable through intensification, no-deforestation, and no-peat strategies, as well as through land swapping. There are trade-offs between economic development and environmental conservation, but win-win solutions are available. Scenarios that build synergies between Indonesian palm oil development and forest conservation can help guide the new frontiers of oil palm development in Asia, South America, and Africa.

Keywords: Sustainable development; Value chains; Smallholders; Biodiesel; European Union; Palm oil (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S138993411930022X
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:forpol:v:111:y:2020:i:c:s138993411930022x

DOI: 10.1016/j.forpol.2020.102089

Access Statistics for this article

Forest Policy and Economics is currently edited by M. Krott

More articles in Forest Policy and Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().