Socio-economic impacts of palm oil and biodiesel: The case of Indonesia

Abstract

Indonesia is now the world's leading producer of palm oil. Expansion of palm oil production in the country is driving significant socio-economic change in many of the Indonesia's rural areas, bringing employment and income, while transforming rural communities and triggering social tensions. While palm oil is predominantly in demand for traditional food and some non-food uses, it is also used as a feedstock for biofuel, both domestically and for export. Debate about whether, and under what conditions, palm oil should be used as a feedstock for biodiesel has prompted renewed scrutiny of its impacts. While much discussion has centered on the environmental dimensions of palm oil production, particularly its role in forest and peat land conversion, the social and economic impacts must also be accounted for. This chapter presents some of the key findings from research conducted in Sumatra in 2011 by Greenlight Biofuels, Indonesia, in the framework of the Global-Bio-Pact project. The study focused on four local and one regional scale case studies, identifying and analyzing the socio-economic impacts of palm oil production and conversion. This chapter discusses a selection of these impacts, highlighting some of the complexities and variations in impacts found in the study.