FOREST CHANGE AND OIL PALM EXPANSION IN INDONESIA: BIOPHYSICAL AND SOCIOECONOMIC ANALYSIS

Abstract

Palm oil is the world's most widely used edible oil, and Indonesia has been the largest producer since 2007 and now makes up around 58% of the global market. The oil palm production has benefited the economic growth and lifted the living standards of local people in Indonesia, but this gain is often at the cost of replacing tropical forest, destructing peatland, inducing greenhouse gas (GHG) emissions, and reducing biodiversity. The expansion of oil palm plantation in Indonesia is bound to increase as the global demands continue to grow. The challenge of meeting the increased demand for oil palm products while effectively protecting tropical forest and its ecosystem services is an important tradeoff issue for both scientists and policymakers. However, little is known on the expansion patterns of oil palm in Indonesia, especially the underlying drivers with temporal and spatial details. To effectively address the knowledge gaps and deal with the challenges, this dissertation aims to first characterize the historical patterns driven by the variations in the benefits and costs of oil palm expansion across space and over time. It then projects the possible future spatial patterns and estimates the potential loss of land with high environmental values in order to meet the future global demand for oil palm products. This dissertation consists of three principle essays. The first essay identifies the major land sources of oil palm expansion in Indonesia with temporal details, and reveals the joint role of biophysical and socioeconomic drivers in shaping the spatial patterns of oil palm expansion by employing spatial panel models at the regency level. The second essay focuses on the temporal dynamics of the biophysical and socioeconomic drivers and the timing of estate crop (mainly oil palm) expansion by using Cox proportional hazard models (CPHMs) and their extensions with time-variant effects at the 1km × 1km grid level. It also explores the role of land use and land cover change (LCLUC) trajectory hopping in estate crop expansion into natural forest by introducing multi-state survival analysis to land-use science. The third essay projects the export demand for oil palm products from Indonesia by 2050 under different global trade scenarios with generalized geo-economic gravity models, and quantifies the possible tradeoffs between oil palm expansion and environmental conservation by allocating the projected demand to 1km × 1km grids across Indonesia applying parametric survival analysis. This study indicates that oil palm expansion in Indonesia has been strongly stimulated by the export value of oil palm products and prefers land with good biophysical suitability and infrastructure accessibility. As land resources become more limited, the effects of socioeconomic factors decrease following the ‘pecking order’ sequence, and the plantation expands into remote but fertile areas with high conversion costs or legal barriers. The degraded land surpassed natural forest and became the major direct land source of oil palm expansion in recent years, but degraded land had increasingly served as a land banking mechanism and a clearing-up tactic. This LCLUC trajectory hopping mechanism has made the protected area (PA) designations and sustainable development requirements become less and less effective in protecting tropical natural forest. Lowland secondary forest and peatland are the high-environmental-value (HEV) areas with the highest risks of conversion to oil palm plantation. To cope with the LCLUC trajectory hopping mechanism, Indonesia needs to have well-designed and fully enforced policies which limit/ban expansion into protected areas, peatland conversion, and deforestation of both primary and secondary forest. The country also needs more effective economic compensation mechanisms to promote more environment-friendly oil palm plantation. In this way, it is possible for Indonesia to maintain its leading position in oil palm production and exportation, while enhancing its role in environmental protection, such as climate change mitigation and biodiversity conservation. This dissertation improves our understanding of oil palm expansion in Indonesia by integrating economic science theory, advanced econometric techniques, and the best available remote-sensing data. It adds to the existing literature on analyzing the impacts of human behaviors on LCLUC at various spatial and temporal scales, especially from a longitudinal perspective.