Oil palm development and the challenges for sustainable and equitable growth and forest governance


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Oil palm development and the challenges for sustainable and equitable growth and forest governance

  1. 1. Oil palm development and the challenges for sustainable and equitable growth and forest governance<br />D. Andrew Wardell<br />CIFOR South-South Exchange, 21 September 2011<br />
  2. 2. Overview <br /><ul><li>Global and Indonesian contexts
  3. 3. Overview of production and investment trends
  4. 4. Governance systems for oil palm
  5. 5. Socio-economic impacts
  6. 6. Environmental impacts
  7. 7. Improving sector governance
  8. 8. Securing access to credible information
  9. 9. Policy options</li></li></ul><li>Global context <br /><ul><li>Population growth and per capita consumption. Requires an additional 28m tonnes of vegetable oil annually by 2020 (WBG, 2011).
  10. 10. Continued growth in global energy consumption. Energy (in)security and the high cost of fossil fuels
  11. 11. Apprehension associated with global warming and efforts to reduce GHG emissions
  12. 12. National/regional commitments to promote biofuels. </li></ul> 3 major players – USA, Brazil and European Union<br />
  13. 13. Biofuel production trends 2001-09<br />
  14. 14. A “crime against humanity”? <br /><ul><li>....by using 100 million tons of grain and corn to ethanol while almost a billion people are starving (Jean Ziegler, UN Special Rapporteur on the Right to Food, 26 October 2007)
  15. 15. Animal production uses 756 million tons of grain per year
  16. 16. 98% of the 225 million-ton global soy crop is fed to farmed animals </li></ul>Sources: Ferrett, G., 27 October 2007; World Bank, 26 August 2008; Singer, P. 2009 <br />all cited in Safran Froer, J. 2009.<br />
  17. 17. Indonesian context <br /><ul><li>2.0 GtCO2e (2005), projected to grow to 2.6 GtCO2e (2020) – BAU
  18. 18. 80% of GHG emissions – LULUCF, notably conversion of peatlands (total area - 22m ha)
  19. 19. Oil palm - 2m ha (2000) grew to 7m ha (2010), projected to grow to between 16.5 and 26m ha by 2020
  20. 20. 7 provinces account for 75% of LULUCF emissions</li></ul> e.g. East Kalimantan (86% of emissions but also 30% <br /> of GDP and 39% of jobs)<br />
  21. 21. Feedstock Investments <br /><ul><li>Total investments in past 10 years: US$ 25 -36 billion
  22. 22. Of which for biofuel: US$ 2.0 - 2.7 billion
  23. 23. Two-thirds in oil palm </li></li></ul><li>Biofuel Investments <br /><ul><li>Total investments: US$ 5.7 – 6.7 billion
  24. 24. Two-thirds in sugar-based ethanol
  25. 25. One-third in biodiesel from palm oil and soy</li></li></ul><li>Governance systems for biofuels <br /><ul><li>Role and effectiveness of government intervention in promoting domestic production capacity and uptake
  26. 26. Maintain supplies for domestic use (pricing, incentives, single-use feedstocks and progressive export tax)
  27. 27. Importance of government support both on the production and consumption side
  28. 28. Role and effectiveness of government intervention in maximizing benefits of large-scale investments and minimizing costs of sector development
  29. 29. Environmental protection
  30. 30. SEIA - weak compliance
  31. 31. Smallholder participation
  32. 32. Enhancing smallholder productivity and market access
  33. 33. Mechanisms for FPIC, avenues for legal recourse
  34. 34. Land tenure security
  35. 35. Stimulating investments in suitable and available land</li></li></ul><li>Deforestation from industrial plantations<br />Carbon cycle implications<br /><ul><li>Murdiyarso et al (2010) estimate total carbon loss of 1486 ± 183 MgCO2/ha
  36. 36. Fargione et al (2008) estimate 1294-3452 MgCO2/ha total carbon loss  420 to 840 years to recover the ‘carbon debt’ of peatland forest conversion to palm oil
  37. 37. Wicke et al (2008) estimate 8-16 years payback time from palm-oil based electricity production on logged-over forest</li></li></ul><li>Socio-economic impacts<br /><ul><li>Employees
  38. 38. Livelihood improvements observed in several sites due to increased incomes and improved access to social services
  39. 39. Mixed or negative impacts in others due to poor employment conditions, and not meeting promises or expectations
  40. 40. Gains from regularity of income rather than amounts
  41. 41. Majority of jobs on palm oil plantations go to ‘migrants’
  42. 42. Land losing households
  43. 43. Growing landlessness
  44. 44. Loss of agricultural and forest incomes from displacement of cropland and forest
  45. 45. Additional labour burden due to increased distance of forests and greater dependence on purchased foodstuffs
  46. 46. CSR practices and land compensation payments failed to benefit those most negatively affected</li></li></ul><li>Improving sector governance<br /><ul><li>Avoided Deforestation
  47. 47. Stronger regulation of large-scale producers (policy orientations, bank credit lines, monitoring)
  48. 48. Support to increase smallholder yields
  49. 49. Critical importance of full carbon accounting
  50. 50. Protection of Vulnerable Groups
  51. 51. Controlled expansion of outgrower schemes (legal literacy, contracts, proof of concept)
  52. 52. Protection of customary land users: legal protection of rights + negotiation process inc. detailed/written description of benefits and their distribution
  53. 53. Leveraging co-benefits
  54. 54. Preferential hiring/benefits flows to customary rights holders and land losing households
  55. 55. Overcoming barriers to market entry by poorer households</li></li></ul><li>Governing biofuel finance<br /><ul><li>Apply sustainability criteria (i.e. EU RED) to all forms of foreign public finance including investments by state-owned companies
  56. 56. Stimulate responsible investment among pension funds
  57. 57. Integrate sustainability issues in bank risk management
  58. 58. Make sustainability reporting mandatory
  59. 59. Stimulate financial sector to set up independent compliance and grievance mechanisms</li></li></ul><li>Access to credible information<br /><ul><li>Corporate lobbying (e.g.Alan Oxley, World Growth Institute (WGI) and International Trade Strategies Global (ITS Global) vs NGO advocacy (e.g. Greenpeace and Wahli-FOE-Indonesia)
  60. 60. Key misconception – “..two thirds of forest clearance is driven by low-income people in poor countries”
  61. 61. ‘An Open Letter about Scientific Credibility and the Conservation of Tropical Forests’ (Laurance et al, 25 October 2010) – “…significant distortions, misrepresentations, or misinterpretations of fact.”
  62. 62. WGI/ITS fails to comprehend or is failing to convey accurately the real and growing magnitude of industrial drivers as a threat to tropical forests.</li></ul>Laurance, W.F. et al, 2010. ‘An Open Letter about Scientific Credibility and the Conservation of Tropical Forests’. http://conservationbytes.com/2010/10/25/wolvesinsheep’sclothing:industriallobbyistsandthedestructionoftropicalforests/<br />Oxley, A., 2010. Reaction (to above) from Alan Oxley. Available at: http://conservationbytes.com/2010/10/29/wolves-masquerading-as-sheep/<br />
  63. 63. Policy options<br /><ul><li>Target palm oil investments on degraded land – requires improvements in spatial planning
  64. 64. Increase yields by using inorganic nitrogen fertilisers and/or POME as organic fertiliser – in Malaysia required new law prohibiting discharge into waterways
  65. 65. Collection of methane from POME treatment – CERs through CDM projects
  66. 66. Promote Palm Fatty Acid Distillate-based electricity production? (alternative uses include animal feed and soap industry)</li></ul>Sources: Wicke et al, 2008 and 2011<br />
  67. 67. Thank you<br />www.cifor.org<br />