Indonesia's Moratorium on Palm Oil Expansion from Natural Forests: Economy-Wide Impacts and the Role of International Transfers

Arief Yusuf, Elizabeth Roos and Mark Horridge

Asian Development Review, 2018, vol. 35, issue 2, 85-112

Abstract: Indonesia has introduced a moratorium on the conversion of natural forests to land used for palm oil production. Using a dynamic, bottom-up, interregional computable general equilibrium model of the Indonesian economy, we assess several scenarios of the moratorium and discuss its impacts on the domestic economy as well as on regional economies within Indonesia. We find the moratorium reduces Indonesian economic growth and other macroeconomic indicators, but international transfers can more than compensate the welfare losses. The impacts also vary across regions. Sumatra, which is highly dependent on palm oil and is home to forests that no longer have a high carbon stock, receives fewer transfers and suffers the greatest economic loss. Kalimantan, which is relatively less dependent on palm oil and has forests with a relatively high carbon stock, receives more transfers and gets greater benefit. This implies that additional policy measures anticipating the unbalanced impacts of the moratorium are required if the trade-off between conservation and reducing interregional economic disparity is to be reconciled.

Keywords: carbon emissions; computable general equilibrium; Indonesia; palm oil (search for similar items in EconPapers)
JEL-codes: R10 R11 R13 (search for similar items in EconPapers)
Date: 2018
References: Add references at CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://www.mitpressjournals.org/doi/pdf/10.1162/adev_a_00115 (application/pdf)

Related works:
Working Paper: Indonesia's moratorium on palm oil expansion from natural forest: Economy-wide impact and the role of international transfers (2017)
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:tpr:adbadr:v:35:y:2018:i:2:p:85-112

Access Statistics for this article

Asian Development Review is currently edited by Yasuyuki Sawada and Naoyuki Yoshino

More articles in Asian Development Review from MIT Press
Bibliographic data for series maintained by The MIT Press ().