IDEAS home Printed from https://ideas.repec.org/a/spr/endesu/v16y2014i6p1177-1196.html
   My bibliography  Save this article

Oil palm plantation investments in Indonesia’s forest frontiers: limited economic multipliers and uncertain benefits for local communities

Author

Listed:
  • Krystof Obidzinski
  • Ahmad Dermawan
  • Adi Hadianto

Abstract

This paper examines the implications of oil palm estate development in Indonesia’s frontier province of Papua. Government planners believe that oil palm investment will develop the local economy, create jobs and reduce poverty. Using the input–output approach, we find that, in aggregate terms, oil palm investments boost the economic output in the province, generate jobs and increase worker salaries. However, the oil palm subsector operates in isolation and has limited economic multipliers. The number of jobs is potentially large, but those best positioned to benefit from them are mostly skilled migrants, not local poor. The government should reduce the size of plantation investments and plan their implementation as part of a broader development package to allow greater economic integration and skill acquisition by local communities. The priority areas for plantation development should be degraded, non-forest land. Copyright Springer Science+Business Media Dordrecht 2014

Suggested Citation

  • Krystof Obidzinski & Ahmad Dermawan & Adi Hadianto, 2014. "Oil palm plantation investments in Indonesia’s forest frontiers: limited economic multipliers and uncertain benefits for local communities," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 16(6), pages 1177-1196, December.
    • Handle: RePEc:spr:endesu:v:16:y:2014:i:6:p:1177-1196
    DOI: 10.1007/s10668-014-9519-8
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s10668-014-9519-8
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s10668-014-9519-8?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. McCann, Philip, 2001. "Urban and Regional Economics," OUP Catalogue, Oxford University Press, number 9780198776451.
    2. Cella, Guido, 1984. "The Input-Output Measurement of Interindustry Linkages," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 46(1), pages 73-84, February.
    3. Edward B. Barbier, 2003. "The Role of Natural Resources in Economic Development," Australian Economic Papers, Wiley Blackwell, vol. 42(2), pages 253-272, June.
    4. Harish Mani & G. Bhalachandran & V. N. Pandit, 2011. "Public Investment In Agricultural And Gdp Growth-- Another Look At The Inter Sectoral Linkages And Policy Implications," Working papers 201, Centre for Development Economics, Delhi School of Economics.
    5. Edward Barbier, 2007. "Frontiers and sustainable economic development," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 37(1), pages 271-295, May.
    6. World Bank, 2011. "Indonesia," World Bank Publications - Reports 22421, The World Bank Group.
    7. World Bank, 2005. "Agricultural Growth for the Poor : An Agenda for Development," World Bank Publications - Books, The World Bank Group, number 7247.
    8. V N Pandit & Harish Mani & G Balachandran, 2011. "Public Investment in Agricultural and GDP Growth: Another Look at the Inter Sectoral Linkages and Policy Implications," Working Papers id:4385, eSocialSciences.
    9. Peter Berck & Sandra Hoffmann, 2002. "Assessing the Employment Impacts of Environmental and Natural Resource Policy," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 22(1), pages 133-156, June.
    10. Henry Willebald, 2014. "Land-abundance, frontier expansion and the hypothesis of appropriability revisited from an historical perspective: settler economies during the First Globalization," Documentos de Trabajo (working papers) 14-14, Instituto de Economía - IECON.
    11. Edward B. Barbier, 2004. "Explaining Agricultural Land Expansion and Deforestation in Developing Countries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(5), pages 1347-1353.
    12. Edward B. Barbier, 2005. "Frontier Expansion and Economic Development," Contemporary Economic Policy, Western Economic Association International, vol. 23(2), pages 286-303, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Santika, Truly & Wilson, Kerrie A. & Meijaard, Erik & Budiharta, Sugeng & Law, Elizabeth E. & Sabri, Meindra & Struebig, Matthew & Ancrenaz, Marc & Poh, Tun-Min, 2019. "Changing landscapes, livelihoods and village welfare in the context of oil palm development," Land Use Policy, Elsevier, vol. 87(C).
    2. Slamet Haryono & Rizabuana Ismail & Zulkifli Lubis & Sismudjito & Muryanto Amin, 2020. "The origin of oil palm social conflict in Laman Satong, Ketapang, Kalimantan Barat, Indonesia," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 9(1), pages 39-45, January.
    3. Purnomo, Herry & Okarda, Beni & Dermawan, Ahmad & Ilham, Qori Pebrial & Pacheco, Pablo & Nurfatriani, Fitri & Suhendang, Endang, 2020. "Reconciling oil palm economic development and environmental conservation in Indonesia: A value chain dynamic approach," Forest Policy and Economics, Elsevier, vol. 111(C).
    4. Ruml, Anette & Chrisendo, Daniel & Osabuohien, Evans & Karakara, Alhassan & Iddrisu, Abdul Malik & Lay, Jann, 2021. "Smallholders in Agro-Industrial Production: Lessons from Rural Development at New Frontiers from a Comparative Analysis of Ghana’s and Indonesia’s Oil Palm Sectors," 2021 Conference, August 17-31, 2021, Virtual 315162, International Association of Agricultural Economists.
    5. Santika, Truly & Wilson, Kerrie A. & Budiharta, Sugeng & Law, Elizabeth A. & Poh, Tun Min & Ancrenaz, Marc & Struebig, Matthew J. & Meijaard, Erik, 2019. "Does oil palm agriculture help alleviate poverty? A multidimensional counterfactual assessment of oil palm development in Indonesia," World Development, Elsevier, vol. 120(C), pages 105-117.
    6. Ruml, Anette & Chrisendo, Daniel & Iddrisu, Abdul Malik & Karakara, Alhassan A. & Nuryartono, Nunung & Osabuohien, Evans & Lay, Jann, 2022. "Smallholders in agro-industrial production: Lessons for rural development from a comparative analysis of Ghana’s and Indonesia’s oil palm sectors," Land Use Policy, Elsevier, vol. 119(C).
    7. Ryan Edwards, 2015. "Is plantation agriculture good for the poor? Evidence from Indonesia's palm oil expansion," Departmental Working Papers 2015-12, The Australian National University, Arndt-Corden Department of Economics.
    8. Krishna, Vijesh V. & Kubitza, Christoph, 2021. "Impact of oil palm expansion on the provision of private and community goods in rural Indonesia," Ecological Economics, Elsevier, vol. 179(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Barbier,Edward B., 2007. "Natural Resources and Economic Development," Cambridge Books, Cambridge University Press, number 9780521706513.
    2. Gopakumar K.U. & V. Pandit, 2014. "Production, Procurement and Inflation: A Market Model for Foodgrains," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 8(4), pages 431-456, November.
    3. Debasis Panda & Ankita Sahu, 2023. "Links between Public Expenditure and the Performance of Agriculture in India," Journal of Studies in Dynamics and Change (JSDC), ISSN: 2348-7038, Voices of Inclusive Change and Expressions- (VOICE) Trust, Dehradun, Uttarakhand, vol. 10(2), pages 1-10, April-Jun.
    4. N. R. Bhanumurthy & Sukanya Bose & Parma Chakravartti, 2018. "Targeting Debt and Deficits in India: A Structural Macroeconometric Approach," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 16(1), pages 87-119, December.
    5. Gopakumar K.U. & V. Pandit, 2014. "Production, Procurement And Inflation-A Market Model For Food Grains," Working papers 238, Centre for Development Economics, Delhi School of Economics.
    6. Jeffrey Frankel, 2012. "The Natural Resource Curse: A Survey of Diagnoses and Some Prescriptions," Growth Lab Working Papers 36, Harvard's Growth Lab.
    7. Gopakumar K.U. & V. Pandit, 2014. "Price Movements For Rice And Wheat - A Structuralist Policy Perspective," Working papers 240, Centre for Development Economics, Delhi School of Economics.
    8. Sali, Guido, 2012. "Agricultural Land Consumption in Developed Countries," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126431, International Association of Agricultural Economists.
    9. Barbier, Edward B., 2020. "Long run agricultural land expansion, booms and busts," Land Use Policy, Elsevier, vol. 93(C).
    10. Edward Barbier, 2007. "Frontiers and sustainable economic development," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 37(1), pages 271-295, May.
    11. Asharani Samal & Mallesh Ummalla & Phanindra Goyari, 2022. "The impact of macroeconomic factors on food price inflation: an evidence from India," Future Business Journal, Springer, vol. 8(1), pages 1-14, December.
    12. Edward B. Barbier, 2008. "Trade, Natural Resources and Developing Countries," Chapters, in: Kevin P. Gallagher (ed.), Handbook on Trade and the Environment, chapter 5, Edward Elgar Publishing.
    13. Guilhoto, J. J. M. & Sesso Filho, U. A., 2005. "Estimação da Matriz Insumo-Produto a Partir De Dados Preliminares das Contas Nacionais [Estimation of input-output matrix using preliminary data from national accounts]," MPRA Paper 38212, University Library of Munich, Germany.
    14. Araujo, Claudio & Bonjean, Catherine Araujo & Combes, Jean-Louis & Combes Motel, Pascale & Reis, Eustaquio J., 2009. "Property rights and deforestation in the Brazilian Amazon," Ecological Economics, Elsevier, vol. 68(8-9), pages 2461-2468, June.
    15. Hagos, Fitsum & Makombe, Godswill & Namara, Regassa & Awulachew, Seleshi Bekele, 2008. "Importance of irrigated agriculture to the Ethiopian economy: capturing the direct net benefits of irrigation," IWMI Conference Proceedings 246409, International Water Management Institute.
    16. Kaplan, Jonathan D. & Johansson, Robert C., 2003. "When The !%$? Hits The Land: Implications For Us Agriculture And Environment When Land Application Of Manure Is Constrained," 2003 Annual meeting, July 27-30, Montreal, Canada 22002, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    17. Jason P. Brown & Raymond J.G.M. Florax & Kevin T. McNamara, 2009. "Determinants Of Investme??T Flows In U.S. Manufacturing," Working Papers 09-10, Purdue University, College of Agriculture, Department of Agricultural Economics.
    18. Sébastien Marchand, 2011. "Technical Efficiency, Farm Size and Tropical Deforestation in the Brazilian Amazonian Forest," Working Papers halshs-00552981, HAL.
    19. John B. Loomis, 2013. "Incorporating distributional issues into benefit–cost analysis: why, how, and two empirical examples using non-market valuation," Chapters, in: Scott O. Farrow & Richard Zerbe, Jr. (ed.), Principles and Standards for Benefit–Cost Analysis, chapter 9, pages 294-316, Edward Elgar Publishing.
    20. Marcus Adolphson, 2010. "Kernel Densities and Mixed Functionality in a Multicentred Urban Region," Environment and Planning B, , vol. 37(3), pages 550-566, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:endesu:v:16:y:2014:i:6:p:1177-1196. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.