Discouraging Rainforest Transformation: An Ex‐ante Policy Impact Analysis

Abstract

AbstractDespite extensive efforts made by national and international certification agencies, Indonesian smallholder farmers’ participation in palm oil certification schemes adoption remains low. A fundamental obstacle is the smallholder practice of rainforest transformation into oil palm plantation which is forbidden by the agencies. In this context, we investigate three policies that could lead to a reduction in rainforest deforestation by smallholders: price premium on certified palm oil; the provision of environmental information; contributor recognition. In order to evaluate the influence of the policies ex‐ante, we conduct a social dilemma experiment involving rubber and oil palm smallholders in Jambi Province, Sumatra, Indonesia. The findings indicate that the price premium and provision of context‐specific environmental information could reduce rainforest transformation. However, a statistically significant effect of contributor recognition was not found.