Palm oil and the politics of deforestation in Indonesia

Elías Cisneros, Krisztina Kis-Katos and Nunung Nuryartono ()

No 31, EFForTS Discussion Paper Series from University of Goettingen, Collaborative Research Centre 990 "EFForTS, Ecological and Socioeconomic Functions of Tropical Lowland Rainforest Transformation Systems (Sumatra, Indonesia)"

Abstract: This paper studies the interactions between political and economic incentives to foster forest conversion in Indonesian districts. Using a district-level panel data set from 2001 to 2016, we analyze variation in remotely sensed forest loss and forest fires as well as measures of land use licensing. We link these outcomes to economic incentives to expand oil palm cultivation areas as well as political incentives arising before idiosyncratically-timed local mayoral elections. Empirical results document substantial increases in deforestation and forest fires in the year prior to local elections. Additionally, oil palm plays a crucial role in driving deforestation dynamics. Variations in global market prices of palm oil are closely linked to deforestation in areas which are geo-climatically best suited for growing oil palm and they amplify the importance of the political cycle. We thus find clear evidence for economic and political incentives reinforcing each other as drivers of forest loss and land conversion for oil palm cultivation.

Keywords: democratization; decentralization; elections; deforestation; forest conservation; demand shocks; palm oil; concessions; Indonesia; Price Transmission Analysis; VECM; Tripartite Rubber Council; Indonesia; Thailand; Malaysia; Policy Interventions (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-agr, nep-dev, nep-env, nep-pol and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Palm oil and the politics of deforestation in Indonesia (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:crc990:31

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