Cost-benefit analysis exposes ‘bogus’ promises of palm oil riches for Papuans

Photo courtesy of © Jurnasyanto Sukarno / Greenpeace. Retrieved from news.mongabay.com

A study by an Indonesian NGO challenges government claims that oil palm cultivation is a driver of economic welfare and development, showing that the environmental and social damage from plantations in the country’s Papua region vastly outweigh any benefits.

Researchers at the Pusaka Bentala Rakyat Foundation carried out a cost-benefit analysis to determine economic impact of the palm oil industry in Papua, the latest frontier for Indonesia’s top commodity crop. They found that palm oil investments had brought 17.64 trillion rupiah ($1.15 billion) in economic benefits and tax revenues to the region. However, the social and environmental damage from the loss of ecosystem services due to extensive deforestation and habitat loss associated with these plantations amounted to 96.63 trillion rupiah ($6.30 billion).

“This translates to a cost-benefit ratio of 5.48, meaning that [palm oil] investment [in Papua] doesn’t bring benefit as much as damage,” said Wiko Saputra, an economist who led the study. “We can conclude that this is a bogus investment as proven by the cost-benefit ratio.”