Introduction
From 1998 until late 2008, the international demand for palm oil regularly increased,
leading to a rise in the Crude Palm Oil (CPO) price, partially due to speculation on the future
demand for CPO both as vegetable oil and biofuel (FAO 2008). Oil palm has become a
highly profitable source of income in all ecologically suitable areas. In Indonesia it also
provides considerable income to the national and regional governments and, as a
consequence, huge forested areas have been earmarked for oil palm development, especially
in Sumatra, Kalimantan (Casson 2000) and more recently in the province of Papua (Sheil et
al. 2009). Various oil palm development schemes can be found in Indonesia, from the largescale
estates of 50,000 ha owned by international companies, to 2 ha smallholdings owned by
independent farmers. Despite the October 2008 price slump, world demand for edible oils is
expected to further increase during the next 20 years (Levang et al. 2008; Sheil et al. 2009).
Since the end of 2008 CPO prices have been recovering (Barrientos 2009) and oil palm
plantations continue to expand (Sheil et al. 2009). However, the environmental consequences
of oil palm development are often disastrous and numerous NGOs keep alerting the
international community about both the negative environmental impact and the social
unfairness of the crop’s development in Indonesia (Wakker 2000; Marti 2008). Processing
mills are a source of air and water pollution, plantations are a major cause of deforestation,
2
the role of biofuel production in carbon storage is still unclear, and the impact of large estates
on water regulation is still under debate (Sargeant 2001; WWF 2002; Lamade and Bouillet
2005; Simorangkir 2007; Germer and Sauerborn 2008; Danielsen et al. 2009).