AgricultureCentral AfricaIndonesiaPalm oil

The social and environmental impacts of the palm oil trade

TRADE Hub researchers Lacour Mody Ayompe (University of California, Irvine), Marije Schaafsma (University of Southampton) and Benis Egoh (University of California, Irvine) recently published a paper entitled ‘Towards sustainable palm oil production: the positive and negative impacts on ecosystem services and human wellbeing’. The main findings of this paper are summarized below (access the original publication)

Palm oil is the most widely traded vegetable oil, produced mainly in Indonesia and Malaysia but to a lesser extent in parts of Africa and South America. Palm oil is used throughout the world in the agri-food, body care and biofuels sectors.

Due to its use in multiple sectors (including aviation) and its growing demand, the area under oil palm cultivation worldwide has increased from about 3.6 million ha in 1961 to 21.4 million ha in 2017. This increase in oil palm cultivation and trade has led to a growing call for sustainable production of palm oil, mainly driven by concerns about the impacts of oil palm cultivation on deforestation and biodiversity loss.

Palm oil trade contributes to the achievement of several Sustainable Development Goals (SDG) including no poverty, zero hunger, and decent work and economic growth. The cultivation and trading in palm oil are primarily to generate income both for large corporate entities and smallholders.

This study reviewed 57 case studies from peer-review literature and the Environmental Justice Atlas (EJA) to identify positive and negative implications of oil palm cultivation and trade. The EJA is a global database containing more than 3,000 reported cases of environmental conflicts arising due to the exploitation of natural resources, generation of waste, and the degradation and commodification or privatization of environmental goods.

Our findings show that income generation and employment are the most readily identified benefits from palm oil trade (Figure 1). Additionally, most large corporate entities build roads for transportation of their produce, hospitals for their workers, and schools for children. These benefits were shown to be particularly important in least developed countries where oil palm is cultivated. These benefits, in most cases, are part of rural development that would otherwise not have happened.

Figure 1: Positive socio-economic impacts of palm oil trade on human wellbeing

Despite the positive contribution to livelihoods, palm oil trade continues to also have negative impacts on human wellbeing. Many negative impacts of palm oil trade are associated with the environment, such as its contribution to deforestation and biodiversity loss. This study found that there are often conflicts in locations where oil palm plantations are established, usually linked to land-related issues such as land-grabbing.

Although large corporate entities and some smallholders promote development in many rural areas, the houses they build are not necessarily of the best quality, and some of the jobs are temporary and do not provide job security.  Because of these prevailing negative impacts, many NGOs and individuals have placed reports in in the Environmental Justice Atlas (EJA). Land grabbing continues to be registered overwhelmingly as being prevalent in many parts of the world on the EJA.

Figure 2: Direct negative impacts on people both from scientific literature and Environmental Justice Atlas.

Apart from the things that affect people directly due to the cultivation and trading of palm oil, there is much erosion reported as a result of oil palm cultivation, leading to siltation and pollution in streams and rivers. Forest trees that store carbon are cut down and people can also no longer grow food crops in their land. These land use changes can also result in extreme events such as floods.

Figure 3: Indirect negative impact on people through ecosystem services

The importance of palm oil trade in poverty alleviation, provision of nutritional benefits and in supporting livelihoods and contributing to several SDGs suggests that increasing the sustainability of palm oil production and trade should be encouraged. Many certification initiatives exist, both at national and international levels, to address the negative impacts from palm oil production. These include the Roundtable on Sustainable Palm Oil (RSPO), Indonesian Sustainable Palm Oil (ISPO), and Malaysian Sustainable Palm Oil (MSPO) initiatives.

However, most of the certification initiatives focus on environmental impacts such as deforestation. Some progress has already been made with many palm oil production and trading companies committing to zero deforestation agreements, although their implementation remains to be seen. Findings from this study suggest that the certification principles aimed at social impacts may not be enough. The prevailing social impacts, even as of 2019, suggests that response mechanisms to counter the negative impacts of oil palm cultivation and trade on people is urgent.

Photo by Eva Blue on Unsplash

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