The Local Impacts of Oil Palm Expansion in Malaysia
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WORKING PAPER The local impacts of oil palm expansion in Malaysia An assessment based on a case study in Sabah State Awang Ali Bema Dayang Norwana Rejani Kunjappan Melissa Chin George Schoneveld Lesley Potter Rubeta Andriani Working Paper 78 The local impacts of oil palm expansion in Malaysia An assessment based on a case study in Sabah State Awang Ali Bema Dayang Norwana World Wide Fund for Nature (WWF-Malaysia) Rejani Kunjappan World Wide Fund for Nature (WWF-Malaysia) Melissa Chin World Wide Fund for Nature (WWF-Malaysia) George Schoneveld University Utrecht Lesley Potter Australian National University (ANU) Rubeta Andriani Center for International Forestry Research (CIFOR) Working Paper 78 © 2011 Center for International Forestry Research All rights reserved Dayang Norwana, A.A.B., Kunjappan, R., Chin, M., Schoneveld, G., Potter, L. and Andriani, R. 2011 The local impacts of oil palm expansion in Malaysia: An assessment based on a case study in Sabah State. Working Paper 78. CIFOR, Bogor, Indonesia. Cover photo by Craig Morey Palm oil fruit harvest, Malaysia This report has been produced with the financial assistance of the European Union, under a project entitled, ‘Bioenergy, sustainability and trade-offs: Can we avoid deforestation while promoting bioenergy?’ The objective of the project is to contribute to sustainable bioenergy development that benefits local people in developing countries, minimises negative impacts on local environments and rural livelihoods, and contributes to global climate change mitigation. The project aims to achieve this by producing and communicating policy relevant analyses that can inform government, corporate and civil society decision-making related to bioenergy development and its effects on forests and livelihoods. The project is managed by CIFOR and implemented in collaboration with the Council on Scientific and Industrial Research (South Africa), Joanneum Research (Austria), the Universidad Nacional Autónoma de México and the Stockholm Environment Institute. The views expressed herein can in no way be taken to reflect the official opinion of the European Union. CIFOR Jl. CIFOR, Situ Gede Bogor Barat 16115 Indonesia T +62 (251) 8622-622 F +62 (251) 8622-100 E [email protected] www.cifor.org Any views expressed in this publication are those of the authors. They do not necessarily represent the views of CIFOR, the authors’ institutions or the financial sponsors of this publication. Table of contents 1 Introduction 1 2 Social and environmental impacts of oil palm plantations in Malaysia 1 3 Background to the case study 3 4 Methodology 6 5 Findings 7 5.1 Environmental impacts 7 5.2 Socio-economic impacts 8 6 Discussion 14 7 Conclusion 14 8 References 15 List of tables and figures Tables 1 Land cover change (in hectares) 8 2 Perceived environmental impacts of oil palm plantations among local stakeholders 9 3 Reasons for perceived livelihood impacts among employees 11 4 Types of income stream among independent growers 11 5 Most common factors impacting on livelihoods of respondent affected neighbours 13 Figures 1 Land use map of the study area and its surroundings in 2007 4 2 Map of the study site at PPB OP Berhad 5 3 Land cover analysis using Landsat prior to oil palm plantation development (a), near the mid-point (b), and in the most recently available image (c) 7 1. Introduction is attributable to the country’s large timber industry and the growing oil palm plantation sector. An This study is part of a broader research process analysis by Koh and Wilcove (2008) suggests that assessing the local economic, social and during the period 1990–2005, close to 60% of the environmental impacts from feedstock expansion oil palm expansion in Malaysia was at the expense for the growing biofuel sector (see German et al. of forest conversion, with the remainder coming 2011). Nonetheless, in the Malaysian context, from existing cropland (e.g., rubber, cacao). Toh biofuel production volumes are negligible despite and Grace (2006) argue that the substantial loss of government interest in promoting sector expansion. forests in Sabah was due primarily to over-harvesting, Since Malaysia is the second largest palm oil poor logging practices, short logging cycles and producer in the world, palm oil is slated to become the absence of rehabilitation following harvesting. the primary feedstock for biofuel production in the These activities resulted in a massive reduction of country. Since palm oil consistently outperforms primary forest cover between 1975 and 1995, from all other substitute vegetable oils on price, it is also 2.8 million ha to 300 000 ha, and a corresponding becoming an important feedstock globally. While a increase in degraded forest, which reached rapidly growing global biofuel sector could develop 2.5 million ha (Mannan and Yahya 1997, cited in into an important new market outlet for Malaysia, Toh and Grace 2006). it does carry a number of risks. This paper aims to reflect on these risks by exploring the local social Sabah then transitioned towards the development and land-use impacts of oil palm in the Beluran of a cash-crop estate economy, in which powerful District of Sabah State. This is based on household state associations (Yayasan Sabah) were granted surveys to discover the perception of impacts among powers to allocate the land and control the trade in relevant local stakeholder groups, and remote-sensing key products such as timber and palm oil. Forests analysis. While the impacts of oil palm in the study on state lands not identified as forest reserves were site cannot be attributed to the biodiesel industry unprotected. The state had the right to alienate1 per se, lessons learnt will be directly applicable to such lands for development; and they were usually the biodiesel sector in Malaysia, and relevant for the logged and cleared for agriculture (Toh and Grace whole Southeast Asia region. 2006). In the 1980s, huge areas of degraded forests in Sabah were degazetted and cleared for oil palm The following section offers a general survey of the cultivation (Jomo et al. 2004). From 1973 to 1992, social and environmental impacts associated with Sabah’s forest cover outside protected areas declined oil palm development, with emphasis on the state of from 51% to 15% (Tanner and Kirk 2008). By 2003, Sabah. This is followed by a brief overview of the case some 87% of the total land cultivated in Sabah was study site and the research methodology adopted for under oil palm (Toh and Grace 2006). By the end of data collection. The next section presents findings the first decade of the 2000s, oil palm covered about from the field research. The paper concludes with a 1.36 million ha in Sabah (Wahid 2010). The state is reflection on the findings and implications for the the biggest palm oil producer in Malaysia, accounting governance of oil palm development n Malaysia. for approximately 31% of the total national output (POIC 2010). 2. Social and environmental Deforestation followed by plantation establishment has a significant effect on carbon stocks and impacts of oil palm greenhouse gas emissions. Henson (2005) estimated plantations in Malaysia that the expansion of agricultural plantations from 1981 to 2000 led to an overall decline in biomass The production of palm oil has long been associated carbon stocks in forests and tree crops in Malaysia. with reports of tropical deforestation, biodiversity loss, water pollution, and violation of customary land rights (Anon. 2004, 2009; Koh and Wilcove 2008; Then 2009). In the past, Malaysia was among 14 1 According to the Sabah Land Ordinance ‘alienate’ means ‘to lease, or otherwise dispose of State land on behalf of the countries with annual deforestation rates in excess Government in consideration of the payment of such rent and of of 250 000 ha per year (Wood 1990). Most of this such premium, if any, as may be required’. 2 A.A.B. Dayang Norwana, R. Kunjappan, M. Chin, G. Schoneveld, L. Potter and R. Andriani The emissions from land-use change associated with from 1970 to 1997 (from 68.3% to 11.8%), while plantation expansion may be significant. Using the incidence of poverty among oil palm smallholders land with low carbon stocks, such as grassland, was the lowest of all agricultural sub-sectors. This for oil palm plantations, would result in a carbon was attributed to the higher returns from oil palm gain, whereas the use of areas such as forests with compared to other agricultural products, and higher carbon stocks would result in net emissions aggressive government land-expansion schemes (such (Henson 2005). A new oil palm plantation may as Federal Land Development Agency (FELDA)) for register higher growth rates and therefore sequester organised oil palm smallholders, mainly in Peninsular carbon at a faster annual rate compared to a naturally Malaysia (Arif and Tengku Mohd Ariff 2001; regenerating forest, but in the end the oil palm Dompok 2010). plantation will store 50–90% less carbon (estimated over 20 years) than the original forest cover (Ch’ng However, independent smallholders, who represented et al. 2009). about 13% of the area under oil palm in 2010 (confined largely to the states of Johor, Perak, Sabah The situation is further complicated by the and Selangor), are perceived to be inefficient and prevalence of extensive peatlands in Indonesia and unproductive (Rahman et al. 2008; MPOB 2010), Malaysia that contain globally significant levels of ‘producing barely half the national average’ yield carbon below ground. Through tree growth and (Dompok 2010). Nonetheless, fieldwork in the peat accumulation, a natural peatswamp forest acts middle Kinabatangan in November 2005 discovered as a carbon sink, absorbing at least 2.6 tonnes of very different outcomes for smallholders in the main CO2 per hectare per year (Mongabay.com 2007; town of Bukit Garam, where several households with Science Daily 2007).