Biophysical and socioeconomic drivers of oil palm expansion in Indonesia

Indonesia has been the largest supplier of palm oil since 2007, and now supplies around 56% of the global market. While the existing literature has paid serious attention to the diverse impacts of oil palm plantation on socioeconomic factors and the environment, less is known about the joint role of biophysical and socioeconomic factors in shaping the temporal and spatial dynamics of oil palm expansion. This research investigates how the benefits and costs of converting other land use/ land cover (LULC) types to oil palm plantation affects these expansion patterns. We employ a spatial panel modeling approach to assess the contributions of biophysical and socioeconomic driving factors. Our modeling focuses on Sumatra and Kalimantan, two islands which have accounted for more than 90% of oil palm expansion in Indonesia since 1990, with Sumatra holding the majority of the country's plantations, and Kalimantan having the highest growth rate since 2000. The results show that the expansion in Kalimantan, which has been strongly stimulated by the export value of palm oil products, has occurred in areas with better biophysical suitability and infrastructure accessibility, following the 'pecking order' sequence, whereby more productive areas are already occupied by existing agriculture and plantations, and avoiding areas with high environmental values or socioeconomic costs. As demand for palm oil continues to grow, and land resources become more limited, the expansion in Kalimantan will tend towards the dynamics observed in Sumatra, with plantation expanding into remote and fertile areas with high conversion costs or legal barriers. Bare ground seems to have served as a clearing-up tactic to meet the procedural requirements of oil palm plantation for sustainable development. This research facilitates the improved projection of potential areas liable to future expansion, and the development of strategies to manage the leading drivers of LULC in Indonesia.