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Socioeconomic and Environmental Effects of Oil Palm Expansion in Indonesia

Research project Structural change, agriculture, environment and food security

PSE Researchers: Jérémie Gignoux, François Libois, Akiko Suwa-Eisenmann

Plantation agriculture has been expanding rapidly during past decades in tropical forest regions. The expansion has been striking for oil palm in Indonesia, now the top producer in the world. While the country experiences high poverty levels and dependence of livelihoods on natural resources, the expansion comes at the expense of tropical forest of global importance for biodiversity conservation and climate change mitigation.

Previous studies on oil palm have mostly focused on industrial plantations. Less attention has been devoted to smallholders; the studies that did focus on smallholders considered specific provinces or districts. However, smallholders comprise 40% of oil palm area in Indonesia, and their environmental impacts are of particular interest. In particular, while they have expanded in many areas, they may be more diversified, rely on less intensive systems, and generate mosaics of agricultural-natural landscapes. Understanding better their behaviors and welfare outcomes, and their relations with environmental changes, is also important. These questions extend to other tropical regions and plantation crops in Africa and Latin America.

Focusing on smallholders, our project examines oil palm expansion in Indonesia and its joint socioeconomic and environmental effects. The scope of the project is large, covering the expansion of oil palm over the whole country since the early 1990s. The project in addition puts an emphasis on quantitative analysis based on micro-data at community and farm or individual level. This allows studying the formation of regional heterogeneities and assessing precisely the constraints and behaviors of households and farms, documenting their varying outcomes and grasping distributional issues.

First, we map the expansion of oil palm plantations from the 1990s onwards seeking to distinguish the ones of smallholders. Second, combining those maps with socio-economic and environmental micro-data, we study the heterogeneity, across regions and individuals, of the insertion of households in the value chain and the impacts of palm expansion on livelihoods. Third, we look at the environmental impacts of smallholders’ plantations and analyse potential trade-offs with economic outcomes. Fourth, in the light of these insights, we assess the current policy of the Indonesian government and other stakeholders, with attention to sustainability certification.

This project is funded by CNRS and INRAE for 2018-2020 and by the ANR (under Palmexamp denomination) for 2021-2024. Our team is multidisciplinary, including economists (development economists from PSE-INRAE, an environmental economist from The Ohio State University), agronomists from CIRAD, geographers and remote-sensing scientists from LETG-CNRS and CIRAD. We will also work with a remote sensing startup (Kermap) and  lecturers in agronomy at the two Indonesian universities of Jambi and North Sumatra.