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The orangutan–oil palm conflict: economic constraints and opportunities for conservation

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Abstract

The future of the orangutan (Pongo spp.) is far from secure despite the species’ high profile and media attention. The traditional threat to the orangutan has been widespread logging, but the continuing conversion of remaining habitat for oil palm (Elaeis guineensis) cultivation is hastening its extinction in the wild. This situation is driven by a robust global market for palm oil as a vegetable oil and biofuel. In tackling this conservation problem, therefore, economic factors cannot be overlooked. This article analyses these factors and how they curtail effective orangutan conservation. Of significance are the high opportunity costs of orangutan conservation and market failures associated with the public-goods nature of the orangutan’s forest habitat. Conservationists should consider these constraints when formulating remedial action. This article assesses strategies that reduce the opportunity cost of conserving habitat (via supply-side approaches that divert oil palm cultivation away from forests) and enhance the realisable value of orangutan habitat (by capitalising on the demand for non-market values such as carbon storage). It is concluded that the former group of strategies are likely to have limited effect on curtailing deforestation, but with the right institutional policies in place they can act as stopgaps while strategies involving carbon financing and payments for biodiversity develop sufficiently to render habitat retention financially competitive.

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Notes

  1. This estimate is obtained assuming palm oil expansion will result in 55–100% deforestation and that the proportion of this forest loss involving orangutan habitat is approximately 25%. The “25%” value is the average fractional share of orangutan habitat area out of the total extent of lowland forests in Borneo. This is calculated using (1) Langner et al.’s (2007, p. 2335) estimate of 92,286 km2 of peat swamp forests and 235,536 km2 of lowland forests (>40% crown cover) in Borneo (2005 figures), and (2) Wich et al.’s (2008, p. 333–334) areal estimate of remaining Bornean orangutan habitat (≈81,950 km2). This proportion is an average ballpark figure. It assumes that orangutan habitat is evenly distributed across Borneo’s lowland forests. In general, though, the orangutan is unevenly distributed in “clumps” of varying density depending on the degree of habitat suitability. An alternate figure, suggested by Rijksen and Meijaard (1999, p. 284), put the proportion of orangutan habitat between 45 and 78% of the forest cover of Kalimantan and Sumatra’s state forest estate prior to the 1997 forest fires.

  2. Depending on the habitat type (floodplains or uplands), the carrying capacity of orangutans for Borneo may vary, on average, between 0.2 and 3.4 individuals/km2 (Soehartono et al. 2007, p. 8).

  3. “Concession” refers to the relatively large area of land that is allocated by a government for enterprises to grow oil palm. Within a concession, disparate oil palm “complexes” may be found that consist of clusters of oil palm estates (“estates” being individually managed plantations) (see, e.g., Koh 2008). As such, the estate/plantation can be considered here the basic unit of cultivated oil palm land, typically comprising of operational units (i.e., under one estate manager) of 1,000–3,000 ha. Though smallholders own even smaller plots of oil palm-planted lands, measuring from a few hectares up to a few hundred hectares, here we concentrate on the case of the large-scale planters. The latter have more highly capitalised companies and a greater impact on the natural landscape.

  4. These estimates were derived from a simple cost-revenue model built for a hypothetical, 25-year palm oil production project using production cost, oil palm yield and market price data. The lower-bound value for net profit applies if the 10-year (1998–2008) average crude palm oil price prevails for all future time periods of the model whereas the latter profit value applies if the 5-year (2003–2008) price is taken. An internal rate of return of 33 and 36% was obtained given the respective crude palm oil prices. The crude palm oil prices used are in current dollars normalised to 2005 average prices. Production costs and oil palm yield profiles are internal publications of the Malaysian Palm Oil Board obtained via e-mail correspondence. Tomich et al. (2002) calculated the opportunity cost for an Indonesian case to be US$617/ha, or US$1493/ha if timber sales are included (1997 figures). Koh and Wilcove (2007) calculated an annual net profit of US$2,078/ha based on data from an oil palm plantation in Sabah, but this is a static (single point-in-time) calculation.

  5. In Malaysia, where labour costs are higher than in Indonesia, field workers in private plantations are largely migrant workers.

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Acknowledgments

We thank Prof. David Hawksworth for his feedback on the manuscript. We benefited from correspondences with Drs. Lesley Potter and Lian Pin Koh. The usual caveat applies.

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  1. School of Economics, The University of Queensland, Brisbane, QLD, 4072, Australia

    Hemanath Swarna Nantha & Clem Tisdell

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  1. Hemanath Swarna Nantha
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Correspondence to Hemanath Swarna Nantha.

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Swarna Nantha, H., Tisdell, C. The orangutan–oil palm conflict: economic constraints and opportunities for conservation. Biodivers Conserv 18, 487–502 (2009). https://doi.org/10.1007/s10531-008-9512-3

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