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Offsetting impacts from palm oil a costly opportunity

Industrial oil-palm plantations now cover vast tracts of the tropics...

The process of clearing forests to make way for these plantations has released huge amounts of carbon dioxide into the atmosphere and reduced the biological diversity in the areas that are now plantations.

Could these impacts be reversed or somehow compensated for a reasonable price?

Using industrial oil-palm developments in Kalimantan, Indonesia, as a case study, we measured the potential to restore degraded forest areas to offset the impacts of oil-palm plantations on carbon storage and biodiversity.

Until now, most offsetting studies have only focused on single impacts, mostly on biodiversity.

To conduct a comprehensive study, we developed a unique backcasting approach combined with a spatial conservation prioritisation framework to find key areas for restoration offsetting.

We calculated the past impacts of oil-palm development and prioritised the most cost-effective areas for restoration.

We found that offsetting carbon emissions from the existing 4.6 million hectares of industrial oil-palm plantations in Kalimantan is most cost-effectively achieved by restoring 0.4–1.6 million hectares of degraded peatlands, at a cost of US$0.7–2.9 billion.

This alone could reduce total emissions from land-use and land-cover change by up to 11% for all of Indonesia.

On the other hand, offsetting biodiversity losses would require at least 4.7 million hectares of degraded areas to be restored. This equals 8.7% of Kalimantan’s land area, at a cost of US$7.7 billion. Potential land for offsetting biodiversity loss overlaps poorly with land area for compensating carbon emissions, increasing cost further.

Oil-palm plantations are set to expand between 6.9–9.4 million hectares over the next five years in Kalimantan alone.

Our research shows that the cost of offsetting biodiversity loss is extremely high, making full compensation practically impossible. This high cost highlights the importance of conserving primary forest and peatlands in the tropics, and promoting an ‘avoid’ and minimise’ approach to further development.

Despite international concern, offsetting carbon impacts from oil-palm development is not yet popular in existing offsetting policies and practices. For example, current ‘Remediation and Compensation Procedures’ developed by the Roundtable on Sustainable Palm Oil do not explicitly state that carbon emissions must to be compensated.

If implemented, carbon offsetting via restoration of degraded peatlands can be integrated with emerging policy of community forestry facilitated by Peatland Restoration Agency (BRG) and Ministry of Environment and Forestry.

Obviously, there are tough choices that need to be made.

To which ecological impacts ought offsetting apply? Who will make these value judgements? If there are trade-offs among outcomes, will civil society accept the compromise?

...And who should pay?

Dr Sugeng Budiharta

For more information: Sugeng Budiharta, sugengbudiharta@uqconnect.edu.au.

Media: CEED Communications, Casey Fung, c.fung@uq.edu.au, +61 433 638 643

Photo: Marc Ancrenaz

Recent CEED research found sustainable certified palm oil is failing to achieve its goals - read more

Cover photo: Glenn Hurowitz - Mature palm oil plantation on former rainforest land Central Kalimantan, Borneo, Indonesia (2012)

Credits:

Created with images by khamkhor - "bornean orangutan monkey"

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