10.2.1 Linking Biofuels and Ecosystem Services
The ecosystem services approach explicitly links ecosystem change to human well-being (MA 2005a, b). These are two key components of the biofuel debate that are evoked by proponents and critics of biofuels alike (Gasparatos et al. 2011). Studies have adapted the ecosystem services approach to synthesize knowledge about different biofuel value chains (e.g., Gasparatos et al. 2011) as well as assess specific impacts (e.g., Gissi et al. 2016; Romeu-Dalmau et al. 2017; Meyer et al. 2015).
Sections 10.2.2 and 10.2.3 collect and discuss the key environmental and socioeconomic impacts associated with palm oil biodiesel production/use in Malaysia and Indonesia employing the conceptual framework popularized by the Millennium Ecosystem Assessment (MA 2005a, b) as it has been adapted for biofuels by Gasparatos et al. (2011).
Recent studies have shown that biofuels can be major agents of ecosystem change due to land use and cover change (LUCC), pollution, climate change, introduction of alien invasive species, and overexploitation (Gasparatos et al. 2017). Following the MA vocabulary, we collectively refer to these factors as the direct drivers of biofuel-induced ecosystem change. Consequently the drivers of biofuel expansion itself (i.e., energy security, climate change mitigation, rural development) mentioned in Table 10.1 can be seen as the indirect drivers of biofuel-induced ecosystem change (Fig. 10.2).
It should be noted that in the case of ecosystem services, the way the evidence is reported in the academic literature coincides to an extent with the typology of ecosystem services used in the MA conceptual framework. However with the exception of “health,” the human well-being impacts of biofuels are not reported following the constituents of human well-being outlined in the MA framework (Gasparatos et al. 2011). Furthermore in the case of palm oil biodiesel, the constituents of human well-being seem to be interlinked. In order to overcome these challenges, we identify the main impacts of biofuels on human well-being as reported in the academic literature, i.e., rural development, energy security/access to energy, food security/access to food, and health and land tenure. We then proceed in each of these sections to discuss which of the MA constituents of human well-being are directlyFootnote 4 impacted and through which mechanisms.
Figure 10.3 below depicts the linkages between ecosystem services and human well-being in the context of biofuel production. For example, biofuel expansion may increase access to fuel but also reduce access to food, hence affecting both security and basic materials supporting livelihoods. Lastly, strategies and interventions such as land use planning can enhance the ecosystem and social benefits resulting from the linkages between the four squares of Fig. 10.1. Examples of such response measures are given in Sect. 10.6.
10.2.2 Impact on Ecosystem Services
10.2.2.1 Feedstock for Fuel (Provisioning Service)
Oil palm fruits are the main ecosystem service provided by areas converted for oil palm production (Dislich et al. 2017). The palm oil derived from processing these fruits can be used for the production of biodiesel through trans-esterification (Mekhilef et al. 2011). Oil palm agriculture can be highly productive, but at the same time it depends on the agricultural practices adopted (Sheil et al. 2009; Woittiez et al. 2017). Several studies have confirmed the large biodiesel potential from oil palm in Indonesia and Malaysia (e.g., Mukherjee and Sovacool 2014), but there is a need for more rational allocation of land resources to meet multiple objectives related to food, bioenergy, and biodiversity conservation (Harahap et al. 2017).
10.2.2.2 Food Crops and Woodland/Grassland Products (Provisioning Services)
As mentioned in Sect. 10.1, palm oil is the most widely produced vegetable oil globally, being a major component of the food industry. Biofuel feedstock production can sometimes entail the direct diversion of crops from food-related uses, potentially contributing to, among others, reduced local food availability and increases in food prices (Gasparatos et al. 2011; Schoneveld 2010) (Sect. 10.2.4.3). Mekhilef et al. (2011) report that close to 40% of Malaysian palm oil had been allocated for fuel production, putting pressure on remaining amount for vegetable oil demand.
The direct and indirect LUCC effects of oil palm expansion may affect local food production (particularly rice cultivation) either due to the direct loss of arable land or reduced water availability for agriculture (e.g., Oosterveer et al. 2014).
Furthermore, as a key driver of deforestation (Sect. 10.2.2.4 and 10.2.3), oil palm agriculture can affect the provision of other ecosystem services from grassland and woodland ecosystems such as timber, rubber, wild food, and non-timber forest products (NTFP) among others (Dislich et al. 2017). Studies have identified that these trade-offs can be particularly significant in communities that highly depend on forest for their livelihoods (Sheil et al. 2009). However it is interesting to note that various parts of oil palm trees and fruits have been used for the development of different types of medicine (Dislich et al. 2017).
10.2.2.3 Freshwater Services (Provisioning and Regulating Services)
Palm oil biodiesel production can affect freshwater ecosystem services through multiple mechanisms (De Fraiture and Berndes 2009; Dislich et al. 2017). When it comes to water consumption, water footprint analysis has shown that palm oil biodiesel from Malaysia and Indonesia has relatively lower water footprint (expressed in m3 of water consumed per GJ of energy produced) than most other first-generation biofuel practices (Gerbens-Leenes et al. 2009a, 2009b; Mellko 2008; Van Lienden et al. 2010). However, the actual effects of oil palm agriculture on freshwater ecosystem services can be much more complicated as the conversion of forested land to oil palm monocultures can affect a series of functions related to hydrological cycles (Dislich et al. 2017). A recent meta-analysis of the literature suggests mostly negative effects due to decreases in a series of functions such as water storage, infiltration rate, regularity of supply, regulation of peak flows, water quality, and flood and drought prevention (Dislich et al. 2017).
When it comes to water quality, oil palm plantations are very fertilizer intensive in both countries (FAO 2004; FIAM 2009; FAO 2005). Fertilizer and pesticide residues can enter water bodies and potentially disrupt ecosystem functioning and negatively affect human health (refer to Sect. 10.2.4). The palm oil industry has also been identified as a major source of water pollution in Malaysia (Muyibi et al. 2008). Palm oil mill effluent (POME) is characterized by high levels of BODFootnote 5 with approximately 2.5–3 tons of POME being produced for each ton of palm oil (Wu et al. 2010). However it has been suggested that POME can be used for oil palm but the environmental co-benefits of such practices are debatable.
10.2.2.4 Climate Regulation (Regulating Service)
Biofuels have been identified as potential climate mitigation options (e.g., IPCC 2007). Even though biofuel production/use can emit significant amounts of GHGs during their whole life cycle (Hess et al. 2009), several LCAs have shown that some biofuel practices can emit less GHG than fossil fuels during their whole life cycle. Palm oil biodiesel can provide significant carbon savings (up to 80%) when compared to conventional fossil fuels (Menichetti and Otto 2009). Smeets et al. (2008) calculate robust GHG reduction potential of up to 75%. RFA (2008) reports a 46% GHG savings for palm oil biodiesel in Malaysia.
However most new oil palm plantations have been established on previously forested areas and often on former peatland forests (Carlson et al. 2012). Such LUCC effects can result in high carbon debts (Carlson et al. 2012; Koh et al. 2011; Moore et al. 2013; Ramdani and Hino 2013; van Straaten et al. 2015; Dislich et al. 2017) that might take several decades or centuries to repay. Danielsen et al. (2009) calculated that depending on the forest clearing method used, it would take 75–93 years for an oil palm plantation to compensate the carbon lost during the conversion of the initial forest, 600 years if that happens on peatland, and approximately 10 years if that happens on grassland. Fargione et al. (2008) report that the time to repay the biodiesel carbon debt would be 86 years if palm oil is established on forested land and 423 years if that forest is located on peatland. RFA (2008) calculates carbon payback time of 0–11 years for biodiesel from oil palm grown on grassland and 18–38 years on forested land.
10.2.2.5 Air Quality Regulation (Regulating Service)
Palm trees, like all other plants, emit volatile organic compounds (VOCs) and isoprene in particular. Hewitt et al. (2009) and Fowler et al. (2011) have shown that indeed VOC and nitrogen oxides (NOx) emissions, which are tropospheric ozone precursors (O3), are greater from oil palm plantations than from primary rainforest. Sometimes the land that is used for oil palm production is cleared through the use of fire (e.g., Van der Werf et al. 2008). Biomass burning has been identified as major sources of atmospheric pollution and GHG emissions, affecting significantly atmospheric chemistry and biogeochemical cycles among other impacts (Crutzen and Andreae 1990
). Communities adjacent to oil palm plantations often report declining air quality due to activities within the plantations (Obidzinski et al. 2012).
10.2.2.6 Erosion Control (Regulating Service)
Mature oil palm plantations in Malaysia have a soil erosion rate of approximately 7.7–14 tons/ha/year with erosion rates being even larger during the early years of the plantation when a complete palm canopy has not yet been established (Stromberg et al. 2010; Lee et al. 2012). In order of decreasing soil erosion hazard,Footnote 6 de Vries et al. (2010) ranked the most commonly used feedstocks as follows: cassava, soybean, sugarcane, sorghum, corn, sugar beet, winter wheat, oil palm, and winter rapeseed.
However when compared to natural ecosystems, oil palm plantations have much lower erosion control potential (Dislich et al. 2017; Buschman et al. 2012). In some cases eroded soil can enter water bodies further deteriorating local water quality (Obidzinski et al. 2012) or can result in the loss of soil organic carbon further contributing to the loss of climate mitigation services (Guillaume et al. 2015).
10.2.2.7 Cultural Services
For local communities and indigenous people, cultural services frequently form an important element of their culture and can be threatened by land use change, e.g., through habitat destruction and the displacement of traditional crops (MA 2005a). It has been suggested that biofuel-induced deforestation can affect indigenous people disproportionately. For example, almost half of Indonesia’s population depends on ecosystem goods and services from forests with approximately 40 million of these people being indigenous and having been already affected (Tauli-Corpuz and Tamang 2007).
Cultural ecosystem services are a particularly understudied topic within the literature related to palm oil impacts. While these are some cultural benefits related to spiritual values in areas that oil palm grows naturally, the evidence suggests overwhelmingly negative impacts on cultural ecosystem services in areas that oil palm is grown intensively and has replaced forest (Dislich et al. 2017).
10.2.3 Impacts on Biodiversity
Biofuel production (particularly feedstock cultivation) can have multiple negative impacts to biodiversity (Gasparatos et al. 2017). Biodiversity is not an ecosystem service per se but “…the foundation of ecosystem services to which human well-being is intimately linked” (MA 2005: 18). According to the MA, there are six main direct drivers associated with biodiversity decline: habitat destruction, overexploitation, invasive species, disease, pollution, and climate change (MA 2005a). Palm oil biodiesel production/use can be strongly linked to at least three of these drivers, i.e., habitat destruction, pollution, and climate change with habitat destruction being considered as the most important. Overall several systematic reviews have highlighted the overall negative biodiversity outcomes of the conversion of natural habitats to oil palm plantations (Dislich et al. 2017; Savilaakso et al. 2014).
Oil palm cultivation in large-scale monocultures is by definition inhospitable to biodiversity. Oil palm plantations contain much fewer species than primary forests (e.g., Fitzherbert et al. 2008; Danielsen et al. 2009; Foster et al. 2011). Additionally several studies have found that the majority of the forest species was lost and replaced by smaller numbers of non-forest species with the subsequent animal communities being dominated by a few generalist species of low conservation value (Danielsen et al. 2009). Not surprisingly, plant diversity within oil palm plantations was impoverished compared to forests due to regular maintenance and replanting (every 25–30 years) of oil palm fields (Fitzherbert et al. 2008; Danielsen et al. 2009).
10.2.4 Impacts on Human Well-Being
10.2.4.1 Rural Development
Indonesia and Malaysia currently have a large and highly competitive palm oil production sectors that are very important to their respective national economies. The oil palm sector can provide substantial employment and income opportunities (Rist et al. 2010; Cahyadi and Waibel 2013). Winrock (2009) estimated that up to 57% of Riau’s population, and between 10–50% in 11 other Indonesian regions, were supported one way or another by the oil palm industry (including employees and family dependants in downstream processing and associated services).
Local communities in Indonesia often perceive oil palm cultivation as a promising livelihood activity (Rist et al. 2010). Oil palm production can have higher income returns to land and labor for smallholders, but the overall livelihood benefits can depend significantly within (and across) communities (Rist et al. 2010; McCarthy 2010) (see Box 10.1). For example, while income from oil palm production contributes significantly to the livelihoods of independent smallholder households (e.g., Lee et al. 2014; Budidarsono et al. 2012), it can vary depending on the agricultural practices adopted (Lee et al. 2014). In some cases the received income can be severely reduced after paying the initial loans that allow them to be involved in oil palm agriculture, but the repayment period can depend on multiple circumstances (Feintrenie et al. 2010).
According to legislation, wages for permanent plantation workers should be at least equal to the provincial minimum labor payments in Indonesia. While locals can complement their farm income through temporary work in plantations (Tata et al. 2010; McCarthy 2010), in some regions, plantation jobs are often monopolized by transmigrants (Obidzinski et al. 2012, 2014). It is also worth mentioning that working in oil palm plantations is often a strenuous activity, with, sometimes, low labor standards and substantial gender disparities (Li 2015).
Despite its potential to improve rural development, the oil palm sector operates in isolation in many Indonesian provinces and has limited economic multipliers (Obidzinski et al. 2014). Often this happens because employment benefits do not always reach the local communities, as permanent contract workers for agricultural labor and management in large plantations are usually transimmigrants (transmigrants) (Tata et al. 2010; Obidzinski et al. 2012; McCarthy 2010; Obidzinski et al. 2014).
It should be also noted that shifting to biofuel feedstock production can be a risky endeavor particularly for independent smallholders (Feintrenie et al. 2010). High market and production chain uncertainty as well as difficulty in complying with certain types of production standards can expose smallholders to the financial risk of not getting adequate returns on their investment or even being excluded altogether by the oil palm value chains (Jelsma et al. 2017; Cahyadi 2013). Price volatility in food commodities has been very prevalent since the 2000s, while adding the generally high volatile nature of energy markets in the equation, it can make decision regarding a shift toward biofuel feedstock production more difficult to handle particularly for smallholders (Woods 2006; Robles et al. 2009; DTE 2005).
Box 10.1: Local Income from Oil Palm Cultivation
Mulyoutami et al. (2010) studied oil palm adoption in Tripa (Aceh, Indonesia) as part of the 2004 tsunami rebuilding programs. They tracked government incentives, particularly smallholders, to switch from their previous economic activities to cultivate oil palm. They reported that smallholder plots in the Nagan Raya district had 120–150 oil palms per hectare and generated a gross production value of IDR 600,000–1,500,000 (approximately USD 67–168) per month per hectare. In 2010, the price of a fresh fruit bunch ranged between IDR 700,000 and 1,050,000 (approximately USD 80–110) per ton. A local survey in the Ladang Baru area showed that income for oil palm smallholders was higher than income from other local economic activities (e.g., 160,000–5,500,000 IDR/month compared with IDR 120,000–2,800,000 for oil palm plantation workers and IDR 115,000–750,000 for fishing). As mentioned above, wages for permanent plantation workers are regulated and should be at least the provincial minimum labor payments. In the case of Aceh province, this was IDR 1,000,000 per person per month in 2008. While such laborers tend to be immigrants, locals often take on sporadic day work to complement their farm income, earning a wage of IDR 25,000–40,000 (±USD 2.80–4.45) per day (Mulyoutami et al. 2010).
10.2.4.2 Energy Security and Access to Energy Resources
Several life cycle analyses (LCAs) have concluded that palm oil biodiesel production in Indonesia and Malaysia are net-energy providers, resulting in fossil energy savings of up to 80% (Zah, et al. 2008; Harsono et al. 2014; de Vries et al. 2010). A comparative LCA study ranked different biodiesel production chains according to their decreasing energy consumption, as follows: soybean (Argentina), soybean (Brazil), rapeseed (EU), rapeseed (Switzerland), palm oil (Malaysia), and soybeans (the USA) (Panichelli et al. 2009). Such findings suggest that palm oil biodiesel can be a feasible energy options in Malaysia and Indonesia, possibly enhancing national energy security.
In fact energy security has been identified as a major driver of biofuel production in Indonesia and Malaysia (Zhou and Thomson 2009). In spite of its significant domestic fossil fuel endowments, Indonesia is a net importer of crude oil and expects a strong increase in population. For these reasons there a strong need for alternative energy sources. The Presidential Decree No. 5 (2006) stated that biofuel would fulfill 5% of the total energy consumption by 2025 (APEC 2010). The Ministry of Energy and Mineral Resources stated that 520,000 tons of biodiesel were produced in 2007 in eight biodiesel plants, with another 15–17 planned for 2011, producing an additional 2 million kL of biodiesel (Zhou and Thomson 2009). The biofuel mixes B5 (Biosolar) and E5 (Biopertamax) have been available through the state-owned oil firm Pertamina. In January 2008, the rising international price of palm oil made Pertamina reduced the percentage of biofuels in its Biosolar and Biopertamax fuels from 5% to 2.5% (APEC 2010). Currently both countries have enacted relatively ambitious biodiesel mandates: B10 in Malaysia and B20 in Indonesia (REN21 2016). However the programs in both countries have been criticized about their effectiveness in boosting national energy security (Putrasari et al. 2016; Rahyla et al. 2017).
Oil palm waste such as empty fruit bunches can also be used as a feedstock for electricity generation and ethanol and/or biogas production having ripple positive effects on national and local energy security (e.g., Begum et al. 2013; Jinn et al. 2015). The Indonesian government committed to promote local energy security through the energy self-sufficient villages (ESSV) program. Bioenergy from oil palm was one of the energy sources considered, but to our best knowledge the program failed to produce good results, despite its vision to create the capability in thousands of villages to meet their own energy demand from locally available renewable resources such as biofuels, hydropower, and wind energy (IGES 2010).
10.2.4.3 Food Security and Access to Food
Biofuels can affect food security through multiple mechanisms related to the four pillars of food security proposed by the Food and Agricultural Organization (i.e., availability, access, utilization, and stability) (Wiggins et al. 2015). For example in Sect. 10.2.2.2, it was shown how feedstock production can divert food crop production, essentially reducing food availability through a trade-off between two provisioning ecosystem services (i.e., feedstock vs. food) (see also Sayer et al. 2012). At the same time, the income received from oil palm production and employment in plantations can be used to buy food, increasing thus household access to food and improving their nutrition (Euler et al. 2017). Furthermore smallholders can invest this income to buy agricultural inputs or have better access to inputs due to credit access as a result of their outgrower contracts functioning as collateral (Cramb and Sujang 2012; Cramb and McCarthy 2016). Environmental change may also affect local food production. For example, in areas of the Tripa province, the expansion of oil palm plantations led to water shortages in swamps, prohibiting the development of rice paddies (Mulyoutami et al. 2010).
Food security is a multidimensional concept, so effects such as those discussed above are not only difficult to be delineated at the local level but must be understood with respect to the national and international context. In Indonesia, the increased export demand for palm oil (Sect. 10.1) has possibly increased risks to palm oil shortages for Indonesian consumers. While palm oil prices can vary within year(s), they increased considerably in two very discrete spikes in the late 2007 (from USD 540/ton in early 2007 to USD 1440/ton in mid-2008) and mid-2010. This was possibly driven by demand for biofuel feedstock that also drove up the prices for sugar, grains, and vegetable oils (including palm oil), hence increasing households’ living expenditures (OECD 2008) (Sect. 10.1). Such concerns have in several occasions prompted the Indonesia government to impose export taxes on palm oil, as a way to secure sufficient supply for domestic users. For example, in January 2011, the Indonesian Trade Ministry announced an increase of the tax to 25 percent to a large extent to avoid escalating food prices (Bouët and Laborde Debucquet 2016). While subsistence farmers may not be directly affected by changes in international commodity prices, poor people in food-deficit developing nations are considered as particularly vulnerable considering that they use a very large fraction of their income on food (e.g., Runge and Senauer 2008).
10.2.4.4 Health
Gasparatos et al. (2011) report several cases around the world where individual and public health have been compromised due to biofuel expansion. Health threats can be due to labor conditions in plantations (e.g., due to strenuous work), agricultural practices employed (e.g., use of agrochemicals, land clearing through fire), and malnutrition as a result of rising food prices. Several publications have reviewed the health hazards of working and living in the vicinity of oil palm plantations (e.g., Ng et al. 2014; UNICEF 2016). Regarding malnutrition, while there is evidence to suggest lower malnutrition levels in villages involved in oil palm activities (e.g., Budidarsono et al. 2012; Euler et al. 2017), there have been recorded instances in Indonesia of mothers in poor families lowering their food intake in order to feed their children when food prices rose (partly due to biofuels), (Actionaid 2010). Furthermore the air pollution health effects that have resulted from forest fires, to an extent for land clearing for oil palm expansion, in Indonesia, have been thoroughly documented in the academic literature (Frankenberg et al. 2005).
10.2.4.5 Land Tenure, Displacement, and Social Conflicts
Land tenure conflicts related to oil palm expansion have been a much-debated topic (e.g., Nesadurai 2013; Dhiaulhaq et al. 2014). In Indonesia, land conflict related to oil palm plantations is a much-debated topic, with some authors reporting the concentration of land to powerful actors and the loss of land rights through coercion/lack of information (Cotula et al. 2008). There have also been allegations that logging companies and large plantations owners have displaced indigenous people when establishing new oil palm plantations (USAID 2009; Winrock 2009). In some cases oil palm plantations have been established without recognition of traditional land borders, rights, and interests (WWF 2006; Tata et al. 2010). Feintrenie et al. (2010) have also documented instances of social conflicts emerging in oil palm landscapes between local communities, transmigrants, and oil palm companies. Finally, the oil palm boom may have spurred speculative land acquisitions or even land grabs (McCarthy et al. 2012b) with the transfer of tenure from local communities to large companies occasionally affecting the land tenure rights of women (White and White 2012; Oosterveer et al. 2014).