Effects of demand-side restrictions on high-deforestation palm oil in Europe on deforestation and emissions in Indonesia

Modeling study
Journal article

Published 5th January 2022 by IOP Publishing. Authored by Busch, J., Amarjargal, O., Taheripour, F., Austin, K., Koenig, K., Hertel, T. and Siregar, R.

Summary

Demand-side restrictions on high-deforestation commodities are expanding as a climate policy, but their impact on reducing tropical deforestation and emissions has yet to be quantified. Here we model the effects of demand-side restrictions on high-deforestation palm oil in Europe on deforestation and emissions in Indonesia. We do so by integrating a model of global trade with a spatially explicit model of land-use change in Indonesia. We estimate a European ban on high-deforestation palm oil from 2000 to 2015 would have led to a 8.9% global price premium on low-deforestation palm oil, resulting in 21 374 ha yr−1 (1.60%) less deforestation and 21.1 million tCO2 yr−1 (1.91%) less emissions from deforestation in Indonesia relative to what occurred. A hypothetical Indonesia-wide carbon price would have achieved equivalent emission reductions at $0.81/tCO2. Impacts of a ban are small because: 52% of Europe's imports of high-deforestation palm oil would have shifted to non-participating countries; the price elasticity of supply of high-deforestation oil palm cropland is small (0.13); and conversion to oil palm was responsible for only 32% of deforestation in Indonesia. If demand-side restrictions succeed in substantially reducing deforestation, it is likely to be through non-price pathways.

Research detail

Effects of demand-side restrictions on high-deforestation palm oil in Europe on deforestation and emissions in Indonesia

Modeling study
Journal article

Published 5th January 2022 by IOP Publishing. Authored by Busch, J., Amarjargal, O., Taheripour, F., Austin, K., Koenig, K., Hertel, T. and Siregar, R.

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