Agriculture and Environment: Palm Oil

Better Management Practices: Economic Case that Supports Conservation

Conservationists need to make the case that supporting wildlife and protecting the environment also make economic sense, and they need to address producer concerns in any conservation effort.

The elimination of wildlife corridors has a number of direct costs, only some of which are environmental.

Estimating costs of biodiversity loss
The environmental costs in terms of biodiversity loss, loss of ecosystem functions, and degradation of downstream environments are quite high but hard to quantify. What is clear, however, is that plantation managers are increasing their own costs by not taking such factors into account. There are a number of examples, including the following:

• How much does it cost to build and maintain long stretches of five-wire electric fences, or to dig and maintain long stretches of trenches up to 2 meters deep to keep elephants out of oil palm plantations?
• How much does it cost (in lost production time and money) to replant areas after elephants have come in and eaten the trees because there is no other food in the area?
• How much does it cost to replant areas along streams where the oil palm trees were killed because of flooding caused by stripping the native vegetation that once protected watersheds and stream banks?
• Given the current low prices for palm oil, is it cost-effective to tend, harvest, and care for plantings on steep slopes where production is poor, erosion is severe, fertiliser requirements are high, and roads are constantly washed out?
  

Adding up the losses
In some areas, these costs are incurred on a regular basis. They have literally become a cost of doing business. Most producers do not separate out the costs of farming different parts of their plantations. They aggregate their data. As a consequence, they do not know when it is cheaper to leave native vegetation in riparian areas than to plant them over and over.

They do not know at what degree of slope it stops making sense to farm, because the overall expenses are included in gross figures but are nonetheless dragging down the profitability of the entire operation.