Indonesian palm oil towards sustainability: a system dynamic approach

Abstract

The role of Indonesian palm oil in economic development and environmental degradation is a highly debated topic. Palm oil is essential to national development in Indonesia by providing a livelihood for millions of smallholder growers, plantations, and industries labor; it also contributes to national revenue from domestic and global trade. However, the growth of the palm oil industry also brings negative environmental impacts. The expansion of oil palm plantations is considered as one of major drivers for deforestation, peatland draining, and fire, leading to biodiversity decline, habitat loss, and greenhouse gas emissions. Here, we develop a system dynamic modelcalled SIPOS (Simulation of Indonesian Palm Oil Sustainability) to understand the current dynamic of the palm oil value chain to the economy and environment. We simulate the future condition of the palm oil sector with sustainability interventions such as intensification, implementation of No Deforestation, No Peat, and No Exploitation (NDPE), and trade. The model simulation result will include various indicators such as plantation extent, palm oil production, deforestation from the palm oil sector, Greenhouse Gas (GHG) emissions, and revenue from the palm oil trade. This study aims to show the use of a system dynamic model for sustainability scenario development, simulate multiple scenarios, measure the impact on the economy and environment, and then compare the benefits and disadvantages of each scenario.