IDEAS home Printed from https://ideas.repec.org/p/cop/wpaper/g-276.html
   My bibliography  Save this paper

Indonesia's moratorium on palm oil expansion from natural forest: Economy-wide impact and the role of international transfers

Author

Listed:
  • A.A. Yusuf
  • E.L. Roos
  • J.M. Horridge

Abstract

Palm oil has become increasingly important in Indonesian export. Indonesian economic growth, particularly in forest-rich regions of the country depends on the expansion of palm oil production. On the other hand, the Indonesian government is committed to reduce carbon emissions from land use change to which the conversion from natural forest to palm oil has greatly contributed. Indonesia introduced a moratorium of conversion from natural forest to palm oil land. Using a dynamic, bottom-up inter-regional computable general equilibrium of the Indonesian economy, we assess several scenarios of the moratorium and discuss its impact on the national as well as regional economy. The results suggest that the moratorium reduces Indonesian economic growth, and other macroeconomic indicators, but international transfers ($10/tCO2 emissions avoided) can more than compensate the welfare loss. However, the impact varies across regions. Sumatera which is highly-dependent on oil palm; of which its economy is less broad-based and its carbon stock of its forest is no longer high, receives fewer transfers and suffer a great economic loss. In the meantime, Kalimantan which is relatively less dependent on oil palm than Sumatera and its forest carbon stock is still high, receives more transfers and get greater benefit. This result suggest that additional policy measures anticipating the unbalanced impact of the transfers is required if the trade-off between conservation and reducing inter-regional economic disparity needs to be reconciled.

Suggested Citation

  • A.A. Yusuf & E.L. Roos & J.M. Horridge, 2017. "Indonesia's moratorium on palm oil expansion from natural forest: Economy-wide impact and the role of international transfers," Centre of Policy Studies/IMPACT Centre Working Papers g-276, Victoria University, Centre of Policy Studies/IMPACT Centre.
  • Handle: RePEc:cop:wpaper:g-276
    as

    Download full text from publisher

    File URL: http://www.copsmodels.com/ftp/workpapr/g-276.pdf
    File Function: Initial version, 2017-09
    Download Restriction: no

    File URL: http://www.copsmodels.com/elecpapr/g-276.htm
    File Function: Local abstract: may link to additional material.
    Download Restriction: no

    References listed on IDEAS

    as
    1. Bellassen, Valentin & Gitz, Vincent, 2008. "Reducing Emissions from Deforestation and Degradation in Cameroon -- Assessing costs and benefits," Ecological Economics, Elsevier, vol. 68(1-2), pages 336-344, December.
    2. Richard Dutu, 2015. "Making the Most of Natural Resources in Indonesia," OECD Economics Department Working Papers 1236, OECD Publishing.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    palm oil; carbon emissions; computable general equilibrium; Indonesia;

    JEL classification:

    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    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:cop:wpaper:g-276. 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: (Mark Horridge). General contact details of provider: http://edirc.repec.org/data/cpmonau.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.

    If CitEc recognized a 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.