ABSTRACT. This paper reviews the development of oil palm with linkages to biofuel in Indonesia and analyzes the associated environmental and socioeconomic impacts. We selected three plantation study sites in West Papua (Manokwari), West Kalimantan (Kubu Raya), and Papua (Boven Digoel) to assess the impacts. Research findings indicate that the development of oil palm in all three sites has caused deforestation, resulting in significant secondary external impacts such as water pollution, soil erosion, and air pollution. In terms of social impacts, many stakeholder groups, i.e., employees, out-growers, and investing households, report significant gains. However, we found these benefits were not evenly distributed. Other stakeholders, particularly traditional landowners, experienced restrictions on traditional land use rights and land losses. We observed increasing land scarcity, rising land prices, and conflicts over land in all sites. Three major trade-offs are associated with the development of oil palm plantations, including those related to biofuels: unevenly distributed economic benefits are generated at the cost of significant environmental losses; there are some winners but also many losers; and economic gains accrue at the expense of weak rule of law. To reduce the negative impacts and trade-offs of oil palm plantations and maximize their economic potential, government decision makers need to restrict the use of forested land for plantation development, enforce existing regulations on concession allocation and environmental management, improve monitoring of labor practices, recognize traditional land use rights, and make land transfer agreements involving customary land more transparent and legally binding.
The paper distinguishes between collusive and non-collusive corruption in the forestry sector and analyses their interaction with the political/institutional environment. While non-collusive corruption increases costs for the private sector, collusive corruption reduces costs for the bribee, therefore it is more persistent. Data from confidential interviews in Indonesia show that illegal logging, supported by collusive corruption, became widespread after the fall of President Suharto. While economic liberalisation and competition among government officials may lower non-collusive corruption, they exacerbate collusive corruption. During political transitions, countries are particularly vulnerable to collusive corruption because governments are often weak and fragmented, with underdeveloped institutions. Sustained wider reform and institutional strengthening to speed up the transition to a true democracy is needed to fight collusive corruption. For Indonesia greater accountability of government, legal and judicial reform and encouragement of public oversight could be useful corner stones for combating illegal logging and corruption.
The expansion of large-scale oil palm plantations in Indonesia has taken a heavy toll on forests, biodiversity, and carbon stocks but little is known about the environmental impacts from the smallholder sector. Here, we compare the magnitude of forest and carbon loss attributable to smallholdings, private enterprises, and state-owned oil palm plantations in Sumatra. During 2000-2010, oil palm development accounted for the loss of 4,744 ha of mangrove, 383,518 ha of peat swamp forest, 289, 406 ha of lowland forest, and 1,000 ha of lower montane forest. Much of this deforestation was driven by private enterprises (88.3%) followed by smallholdings (10.7%) and state-owned plantations (0.9%). Oil palm-driven deforestation in Sumatra resulted in 756-1,043 Mt of total gross carbon dioxide emissions, of which ∼90% and ∼9% can be attributed to private enterprises and smallholdings, respectively. While private enterprises are responsible for the bulk of environmental impacts, the smallholder oil palm sector exhibits higher annual rates of expansion (11%) compared to private enterprises (5%). Both sectors will need careful monitoring and engagement to develop successful strategies for mitigating future environmental impacts of oil palm expansion.
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Deforestation and forest degradation in the tropics is a major source of global greenhouse gas (GHG) emissions. The tropics also harbour more than half the world's threatened species, raising the possibility that reducing GHG emissions by curtailing tropical deforestation could provide substantial co-benefits for biodiversity conservation. Here we explore the potential for such co-benefits in Indonesia, a leading source of GHG emissions from land cover and land use change, and among the most species-rich countries in the world. We show that focal ecosystems for interventions to reduce emissions from deforestation and forest degradation in Indonesia do not coincide with areas supporting the most species-rich communities or highest concentration of threatened species. We argue that inherent trade-offs among ecosystems in emission reduction potential, opportunity cost of foregone development and biodiversity values will require a regulatory framework to balance emission reduction interventions with biodiversity co-benefit targets. We discuss how such a regulatory framework might function, and caution that pursuing emission reduction strategies without such a framework may undermine, not enhance, long-term prospects for biodiversity conservation in the tropics.
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