Understanding the expansion of oil palm cultivation: A case-study in Papua

Abstract

The overall objective of this article is to understand the reasons underlying the expansion of oil palm plantations in forested land, as well as to define ways to improve business as usual practices in Indonesia. In order to do so, a case study is addressed in a recently established oil palm plantation in Papua, Indonesia. Based on field work and literature data a cost benefit analysis comparing the benefits of the original primary forest land use to those of the newly established oil palm plantation was conducted. It was shown that development is important to local population; oil palm plantations can bring wealth and improved living standards, but establishment on forested areas also takes a lot of value away due to the loss of ecosystem services. The benefits from primary forest ecosystem services were estimated at 3,795.44 USD ha−1 y−1 while the profits estimated for the new established oil plantation were 2,153.00 USD ha−1 y−1, therefore the land use change was not feasible. When running sensitivity analysis, it was revealed that prices of carbon emissions and commodities (Crude Palm Oil and Kernel Oil) have a large impact on the results. The beneficiaries are changing due to land use change, being the local population the biggest loser and the plantation company the biggest winner. Benefits are transferred from the local and global level to the national level. Case to case feasibility analysis including economic, environmental and social aspects should be required in advance to decide on the approval of an oil palm project.