SOAS Research Online

Abstract

Indonesia has been the largest supplier of palm oil since 2007 and now makes around 56% of the global market. While the existing literature paid major attention to the diverse impacts of oil palm plantation on socioeconomic factors and the environment, less is known on the joint role of biophysical and socioeconomic factors in shaping the temporal and spatial dynamics of oil palm expansion. This research investigates how the benefits and costs of converting other land use/cover (LULC) types to oil palm plantation affects the expansion patterns. It employs spatial panel modeling approach to assess the contributions of biophysical and socioeconomic driving factors. The modeling effort focuses on Sumatra and Kalimantan, two islands which have accounted for more than 90% of oil palm expansion in Indonesia since 1990, with Sumatra holding the majority of the country’s plantations and Kalimantan having the highest growth rate since 2000. The results showed that the expansion in Kalimantan was strongly stimulated by export value of palm oil products, took place in areas with better biophysical suitability and infrastructure accessibility, followed the pecking order sequence that the more productive areas had already been taken by the existing agriculture and plantations, and avoided areas with high environmental values or socioeconomic costs. As demand for palm oil continues to grow and land resources becomes more limited, the expansion in Kalimantan will tend to approach the dynamics in Sumatra, with plantation expanding into remote and fertile area with high conversion cost or legal barriers. Bare ground seems to have served as a clearing-up tactic to meet the procedural requirements of oil palm plantation for sustainable development. The research facilitates the improved projection of areas prone to future expansion and the development of strategies to manage the leading drivers of LULC in Indonesia.