Opinion

How green is palm oil?



Rhett A. Butler, San Francisco

Environmentalists and palm-oil producers are increasingly at odds. Greens groups say palm oil is driving the conversion of tens of thousands of hectares of peatlands and lowland forest in Indonesia, putting wildlife at risk, increasing the vulnerability of forests to fires, and triggering large emissions of greenhouse gases.

Palm-oil producers say their industry plays a crucial role in Indonesia's economic growth and provides employment to tens of thousands of Indonesians. Going further, some plantation owners suggest that campaigners are merely trying to hurt the industry, while others accuse the West of hypocrisy for criticizing palm-oil production while overlooking environmental harm caused by biofuels in other parts of the world, including the Amazon (soy biodiesel and sugar-cane ethanol), Europe (rapeseed), and the United States (corn ethanol).

Nevertheless, pressure from environmentalists is beginning to weigh on the industry, with European policymakers now reconsidering Indonesian palm oil as a source for biodiesel.

Now a new paper calls for a truce, proposing that conservationists work with palm-oil producers to protect particularly important areas of biodiversity. Writing in the scientific journal Nature, Lian Pin Koh and David S. Wilcove from Princeton University, argue that the high yield and high prices that make palm oil so attractive ""could be turned to a biodiversity advantage.""

They suggest that green groups could buy small tracts of existing oil-palm plantations and use the revenue they generate to acquire land to establish a network of privately-owned nature reserves for biodiversity conservation.

Koh and Wilcove analyzed the profitability of oil-palm plantations in Sabah, Malaysia, and found that at current prices, each hectare of oil palm could provide funds to acquire 0.36 ha of land for conservation annually. Assuming oil-palm plantations break even after five or six years, this suggests that over the 25-year lifetime of an oil-palm plantation, a conservation group could generate enough cash to conserve seven hectares of forest for each hectare of oil palm.

Should carbon credits for avoided deforestation eventually be factored into the scheme, the area conserved could be even greater. In fact, the concept could be a way to cover the initial costs of starting up and certifying a carbon-offset project.

While some producers and environmental groups may think the proposal sounds crazy, Koh and Wilcove believe collaboration between the adversaries would be a ""win-win partnership,"" because NGOs would be able to protect forests while palm-oil companies ""would be able to enhance their corporate image to satisfy environmentally-conscious consumers.""

Koh and Wilcove suggest that the relationship could lead both to innovation that reduces the environmental impact of oil-palm plantations and to the emergence of a premium market for sustainably produced palm oil which would provide financial incentives for palm-oil producers to adopt sustainable practices.

While it is possible that a premium market for eco-friendly palm oil could emerge on its own, the West could speed the process by offering producers a guaranteed market for palm biodiesel that is independently certified as having been produced in an environmentally sound and socially equitable way.

Instead of subsidizing grossly inefficient biofuel production at home, Europe and the United States could help drive the development of ""greener"" biofuels as well as the rehabilitation and conservation of forest lands.

Indonesians as well as the global environment would benefit from closer collaboration rather than escalation of conflict.

The writer is a U.S.-based entrepreneur with a background in economics. He can be reached at mongabay@gmail.com.

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