- Import bans on palm oil produced through deforestation haven’t had as strong an effect in preventing forest loss as might be expected, according to a new study.
- The paper’s modeling looked at what impact restrictions in Europe on imports of high-deforestation palm oil from Indonesia would have had from 2000-2015.
- They found these restrictions would have reduced deforestation by just 1.6% per year, and emissions by 1.91% per year compared to what actually occurred.
- The study authors and other researchers say the findings underscore the point that demand-side restrictions are only one tool in addressing commodity-driven deforestation, and should be part of a wider suite of incentives and disincentives.
Climate protection policies restricting the import of goods produced through deforestation have increased in recent years, but there has been little research into whether these measures have had their intended impact, or are enough to reduce deforestation on their own.
A new paper takes a look at how effective restrictions by consumer countries are likely to be on influencing positive change in producer countries. The study models what impact a Europe-wide ban on high-deforestation palm oil between 2000-2015 would have had on the deforestation rate during that time in Indonesia, the heavily forested Southeast Asian nation that produces more than half the world’s palm oil.
The authors approach the problem by merging economic data from the comprehensive Global Trade Analysis Project with their own OSIRIS model of land-use change in Indonesia. They analyzed how trade patterns would have responded to a hypothetical 15-year ban on palm oil produced through deforestation, and how the resultant fluctuations in prices would have impacted land conversion in Indonesia.
They found that a European ban would result in a relatively low (-7.5%) price decrease in high-deforestation palm oil and an even smaller (0.7%) price increase in low-deforestation palm oil. This effect is due largely to the likely fact that much of the banned product would simply be redirected to other countries outside Europe without restrictions in effect.
At the same time, the market pressures from a Europe-wide ban would have resulted in only a 5.03% decrease in deforestation for palm oil in Indonesia. This is because palm oil prices during the study period were only minimally linked with forest conversion rates, with a 1% increase in palm oil price resulting in a 0.13% increase in forest-to-palm conversion. And while a 5.03% decrease would have saved 320,609 hectares (792,242 acres) of forest — an area just over half the size of Bali — that amount represents a mere 1.6% of the total deforestation that the authors calculate occurred in Indonesia between 2000 and 2015.
Recognizing that Europe acting alone would have minimal impact, the authors ran the models again with increased participation by other consumer countries. However, even if every country except Indonesia and Malaysia, the No. 2 producer, instituted a ban on palm oil produced through deforestation, the authors calculate that this would have reduced Indonesia’s forest conversion between 2000 and 2015 by only 3.77%.
“Bans will work best if all countries participate to avoid leakage, but you have to start somewhere,” said David Gaveau, a remote-sensing specialist and founder of TheTreeMap, a technology consultancy.
Gaveau was not involved with this study, but has conducted similar analysis on how palm oil prices drive deforestation. His work has found that price elasticity may be as much as eight times higher — with deforestation rates more readily impacted by price changes.
Part of the difference is how one defines a forest. Gaveau’s research is focused specifically on intact or selectively logged primary forests, as opposed to all tree-covered areas, as primary forests are the most important habitats for wildlife, contain greater species diversity, and have the highest conservation value. Under this definition of forest, they found less deforestation actually occurred during the same period, but conversion was more responsive to oil palm price changes. The take-home message, however, is the same.
“The point is that the coefficient is positive,” Gaveau told Mongabay. “Higher prices lead to more deforestation. There is no doubt about that.”
“I am not surprised by these findings,” said Erik Meijaard, a tropical ecologist and managing director of Borneo Futures who was not involved with the study. “This is what the IUCN Oil Crops Task Force has been saying for quite some time.”
Meijaard said the world needs edible fats as part of healthy diets and to feed a growing number of people. The economic reality is that as long as there are countries willing to consume palm oil produced through deforestation, bans will have little impact, or might even shift pressures to other commodities.
“What we expect is that resulting changes in price would shift production of vegetable oils from oil palm to other crops, such as soybean, rapeseed or sunflower, which have their own environmental concerns,” Meijaard told Mongabay. “The question is what else to do … Pushing for further improvement in production methods is one option.”
Meijaard said it will take a suite of other environmental and social pressures to clean up the supply chain.
Gavueau echoed this sentiment, noting that bans may help, especially as more countries follow suit, but they will not be enough on their own.
“That’s how we see things moving, not just through voluntary [actions] or payment schemes alone,” Gaveau said. “We need both: bans and payments. Sticks and carrots.”
The study authors agree, noting that bans are not the only way consumer countries can attempt to influence deforestation through price pathways. These metaphorical “sticks,” which provide negative consequences for deforestation, can be contrasted with financial “carrots,” which provide benefits for preventing deforestation.
As part of their analysis, the researchers looked at what level of supply-side economic incentives would have been needed to achieve similar results of the restrictions. They found that setting an Indonesia-wide price of $1.57 per ton of CO2 prevented from being emitted would have had the same reduction in land conversion as the modeled European ban. That would be a bargain, given that current carbon markets range from $9 to $50 per ton of CO2 throughout the world.
The “carrot” approach was most notably attempted with the recently dissolved 2010 agreement between Indonesia and Norway, in which the latter offered to pay $5 for every ton of CO2 Indonesia prevented from being released. Although the study authors weren’t looking specifically at this arrangement, they did note a potential correlation in price elasticity.
“We found that conversion of forest to oil palm from 2010-2015 (after the agreement and moratorium were in place) was about one-fifth as responsive to prices as it was from 2000-2005, and between one-half and one-third as responsive to prices as it was from 2005-2010,” study co-author Kemen Austin, an analyst for nonprofit research institute RTI International, told Mongabay.
A separate analysis of the Indonesia-Norway deal found that while it may likely have been responsible for some reduction in carbon emissions from deforestation, the decrease was relatively small compared to Indonesia’s own goals — which is less a critique of the program, and more a support of the concept that ending deforestation in Indonesia will require a multi-faceted approach.
On this note, Austin said that even if the “sticks” and “carrots” might have minimal direct impact, they may be an important part of raising consumer awareness and increasing pressure on companies involved in deforestation.
“Import restrictions could plausibly affect deforestation indirectly, either positively or negatively, through what we call ‘non-price pathways,’ which are beyond the scope of our economic analysis,” Austin said.
Along this same line, Gaveau said the recent spike in palm oil prices does not seem to have spurred a new wave of deforestation. He said he is cautiously optimistic that other factors have reduced the correlation between palm oil price and land conversion observed in his previous research.
“It is interesting to note that although the price of palm oil has doubled since the start of the COVID-19 pandemic, conversion to oil palm has not accelerated in 2021,” Gaveau said, “although let’s watch 2022 closely because there may just be a time lag.”
Read also: Have we reached peak palm oil? (commentary)
Meijaard said the current slowdown of deforestation may signal a shift.
“Hopefully the Wild West days of oil palm expansion that dominated up to ca. 2015 are over,” Meijaard said. “With oil palm expansion in Indonesia being at its lowest for two decades, this might be a good time to consolidate the improvements that have occurred in the palm oil industry — and the industry can focus on improving production and yields on the existing lands allocated to oil palm.”
Busch, J., Amarjargal, O., Taheripour, F., Austin, K. G., Siregar, R. N., Koenig, K., & Hertel, T. W. (2022). Effects of demand-side restrictions on high-deforestation palm oil in Europe on deforestation and emissions in Indonesia. Environmental Research Letters, 17(1), 014035. doi:10.1088/1748-9326/ac435e