- Agustira, Muhammad Akmal
- Rañola, Roberto F.
- Sajise, Asa Jose U.
- Florece, Leonardo M.
Oil palm smallholders on peatlands have contributed significantly to economic development in rural areas by augmenting income and reducing poverty. However, these plantations also cause adverse environmental impacts such as carbon emission, haze and peat fires, deforestation, water supply disruption and biodiversity loss. The objective of the study is to determine the economic impacts of developing smallholder oil palm plantations on peatlands in Siak District Riau Province, Indonesia. Cochran sampling technique was employed to select the respondents. Cost benefit analysis was used to determine the economic impacts of the smallholder oil palm plantations. Results reveal that the development of 94,726 ha oil palm smallholder plantation on peatlands in 2014 had generated an estimated 37,326 jobs and increased the average total income of smallholder households to US$ 4,556 per year with a multiplier effect estimated at 3.01 for the Siak economy. Total benefit from the 94,726 ha oil palm smallholder plantation was computed at US$ 2,152 million per year. However, the unsustainable oil palm cultural practices of smallholders have led to negative environmental effects. It was estimated that approximately US$ 1,116 million is lost per year due to the adverse environmental impacts such as carbon emission, deforestation, water supply disruption and biodiversity loss, among others. The results of the economic analysis show NPV, BCR and EIRR to be equal to US$ 1,036 million, 1.93 and 21.91%, respectively. These results indicate that smallholder oil plantations on peatland in Siak provide net economic benefits for Siak’s economy. Proposed policies include the encouragement of sustainable oil palm plantations characterized by a synergistic relationship among legal, social and financial aspects in order to provide optimal economic impacts to communities and minimize adverse effects on the environment.
Agustira, Muhammad Akmal & Rañola, Roberto F. & Sajise, Asa Jose U. & Florece, Leonardo M., 2015.
"Economic Impacts of Smallholder Oil Palm (Elaeis guineensis Jacq.) Plantations on Peatlands in Indonesia,"
Journal of Economics, Management & Agricultural Development, Journal of Economics, Management & Agricultural Development (JEMAD), vol. 1(2), December.
Download full text from publisher
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:ags:pjemad:309271. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/ceuplph.html .
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.
We have no bibliographic references for this item. You can help adding them by using 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: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/ceuplph.html .
Please note that corrections may take a couple of weeks to filter through
the various RePEc services.