Researchers warn against palm oil ban due to ‘large economic losses’ and risk of ‘even bigger environmental problems’

Deforestation associated with palm oil production may be less significant in certain regions than what is widely believed, and biodiversity effects on par with other monoculture crops in tropical areas.

These are the findings from a new review out of Goettingen University in Germany and Bogor Agricultural University in Indonesia.

By examining existing literature on oil palm cultivation, a team of tropical biologists and agricultural specialists have concluded that completely outlawing palm oil would not only result in ‘large economic losses’ but could actually lead to ‘even bigger environmental problems’.

Deforestation less significant in Africa and Latin America​

Palm oil cultivation has been associated with tropical deforestation since the 1970s, with numerous studies identifying oil palm as a driver of deforestation, land-use change, and associated losses in biodiversity.

Over the past 40 years, oil palm has accounted for 47% and 16% of total deforestation in Malaysia and Indonesia respectively. On the island of Borneo, the effect of palm oil production is particularly stark – with about half of the deforestation between 2005 and 2015 ‘directly linked’ to industrial oil palm plantations, the researchers noted in the review​.

In Africa and Latin America, however, deforestation rates associated with palm oil production are significantly lower. These findings coincide with the lower economic importance of the crop.

“Only about 3% of forest lost in Nigeria between 2005 and 2015 was attributed to oil palm development. Also in Latin America, oil palm has not been the main contributor to deforestation,”​ they wrote.

“While overall deforestation rates have been high in many Latin ​American countries, around 80% of the regional oil palm expansion occurred not at the expense of forests but on abandoned pastures and other land-use systems.”​

On a global scale, about half of the current oil palm area was developed at the expense of forests, while the other half replaced pastures, shrubland, and other land uses.

What is particularly interesting here, is that the ‘vast majority’ of the replaced land uses had been previously converted from natural land – including ‘biodiversity hotspots’ such as the Brazilian Cerrado savannah and the Amazon rainforest.

Biodiversity loss: palm oil, rubber, and soy​

The researchers also collated reviews on biodiversity loss associated with the production of palm oil.

Palm oil plantations, compared to the forests they replace, are monocultures. Not only do they have a single canopy layer, they lack the rich vegetation of highly biodiverse tropical forests. And as the researchers point out, plantations are almost devoid of the leaf litter and woody debris that encourage biodiverse environments.

Further, palm oil plantations use pesticides and chemical fertilizers which, alongside frequent human disturbance, can make them ‘unhospitable’ for the great majority of forest species, the researchers continued.

To date, the evaluations of biodiversity effects have largely compared oil palm plantations to forest. However, the researchers suggest oil palm should also be compared to alternative land uses.

Rubber, for example, is another major monoculture plantation crop in Southeast Asia. According to the review, studies in Indonesia and Thailand found similarly low levels of bird diversity in oil palm and rubber monocultures.

Biodiversity loss is also associated with soybean production, and has been since the 1960s. ​“In the two years preceding Brazil’s soy moratorium in 2006, nearly 30% of soybean expansion occurred through deforesting the Amazon,” ​the researchers found.

“In the world’s most biodiverse savannah ecosystem, the Brazilian Cerrado, the moratorium does not apply, and soybean expansion remains sizeable. Despite soybean’s economic and environmental importance, apparently no studies on how this crop affects biodiversity exist. Hence, direct comparisons with oil palm are difficult.” ​

Finance and land management​

It is easy to forget – given palm oil’s impact on deforestation, biodiversity loss, and contribution to CO₂ emissions – that from an economic standpoint, local communities in producing countries have ‘benefited significantly’ from the oil palm boom.

As the majority of oil palm land is managed by smallholder farmers, the commodity has ‘contributed considerably’ to rural income growth and reduced poverty among farmers and workers, particularly in Southeast Asia, recognised the researchers.

By reviewing the literature on environmental, economic, and social consequences of oil palm cultivation, the researchers were also able to document the existing ‘trade-offs’ between ‘global public environmental goods’ and ‘private socioeconomic benefits’.

“These trade-offs need to be eased through appropriate policies,” ​the researchers concluded. Banning palm oil, they say, is not the answer.

This is because, the researchers explained, palm oil would have to be replaced by other vegetable oils, which require higher requirements per unit of output.

 “Therefore, other types of policies are required,” ​they continued. These could include policies designed to promote productivity growth and boost yields, as well as encouraging clear property rights, economic incentives, and sanction mechanisms to protect rainforests.​

“Certification and the design of mosaic landscapes with a mixture of agricultural and agroforestry plots, forest patches, and other natural landscape elements can also help to reconcile economic, social, and environmental objectives in many situations.”​

Source:​ Annual Review of Resource Economics​
‘Environmental, Economic, and Social Consequences of the Oil Palm Boom’
Published online 4 May 2020
DOI: https://doi.org/10.1146/annurev-resource-110119-024922 ​ 
Authors: Matin Qaim, Kibrom T. Sibhatu, Hermanto Siregar, and Ingo Grass