Speculation and land banking by the palm oil industry is a major contributor to Indonesia’s massive historical deforestation rates, according to a study published this week.

The article, published in the Proceedings of National Academy of Sciences journal, used time-series satellite data to track degradation and clearing events in intact and degraded natural forests from 1991 to 2020.

Indonesia is second only to Brazil in historical deforestation rates, with the study estimating a total of 28.4 million hectares had been cleared over the 30-year period, an area some 50 times larger than the island of Bali.

It found that while 7.8 mln ha of forest cleared over the period had been converted to palm oil plantations by 2020, another 8.8 mln ha remained unused for five years or longer.

Of the deforested area, more than half was either initially left idle or experienced crop failure before land use could be detected, and 44% remained unused for five years or longer.

Over half (54%) of these areas were cleared mechanically, and in the cases where land was converted, oil palm plantations were by far the most common outcome, the study said.

“The apparent deliberate creation of idle deforested land in Indonesia and subsequent conversion of idle areas to oil palm plantations indicates that speculation and land banking for palm oil substantially contribute to forest loss,” it said.

Indonesia contains extensive non-forest areas not planted with commodity crops, referred to as “degraded” or “underutilised”.

Academics and environmental advocates have suggested that oil plan expansion in these landscapes would help improve the sustainability of the industry, rather than in primary forests, the study said.

It also highlighted that the Indonesian government sees rehabilitating these degraded areas as a way for the forestry and other land use sectors to become a net carbon sink by 2030 – part of its Nationally Determined Contribution – despite continued clearing of primary land.

However, little attention has been paid to how these degraded areas came to be in the first place, many of which it said were previously forested.

“The extent to which Indonesia primary forests are being actively cleared then left idle has not been well documented,” the study said.

While this land is on the surface unproductive, the authors said it could still be used in indirect ways, such as a source of income through land sales, a way to attract investors, or part of a company’s land bank.

“Land banking and land speculation are common in Indonesia, and plantations can remain undeveloped for years or even decades after concessions are issued,” it said.

However, it noted that the extent to which industrial land idle creation is intentional or the result of unforeseen circumstances cannot be determined through satellite imagery alone, and that both situations likely occur.

Other reasons land could be left idle are numerous, including development not going forward due to financial set-backs or conflicts with local communities, as well as plantations potentially failing before they were picked up by satellite imagery.

However, the study did note that most deforestation it recorded occurred in relatively flat areas, well suited for palm oil plantations.

IMPLICATIONS

While the paper said Indonesia’s deforestation rates fallen to historic lows in recent years, it raised several policy implications its findings could have both domestically and abroad.

It said that most companies that produce and use palm oil have increasingly adopted “no deforestation, no peat, no exploitation” commitments, and the EU has also adopted increasingly strict policies regarding deforestation-linked commodities.

However, it said delayed oil palm planting in deforested areas make it difficult to assess the commodity type’s true impact in primary forests, or to accurately determine whether supply chains are deforestation free.

The study estimates around 30% of Indonesia’s cleared primary forest area was unproductive in 2020, including 4 mln ha cleared mechanically.

Domestically, the government plans to reforest degraded areas to meet its 2030 and 2050 goals may be challenging if this goal conflicts with existing plans by landholders to develop plantations in the future.

It also noted Indonesia’s emissions reductions strategy would still allow some 6.8-14.6 mln ha of government-sanctioned deforestation to occur by 2050.

The authors – scientists from US and Indonesian research institutions, including University of Maryland and the Indonesian Ministry of Environment and Forestry – suggested the country restrict commodity production to areas deforested before 2020.

They said that not only would there be extensive land available for palm oil and other export crops, if this restriction was applied, but it would help ensure commodities produced in Indonesia complied with EU requirements and private-sector policies.

Last month, the Indonesian government formed a partnership with the Bezos Earth Fund to safeguard some 15 mln ha of rainforest by expanding the legal recognition of customary forests and establishing new national parks in key biodiversity areas.

By Mark Tilly – mark@carbon-pulse.com