A recent study has put the Indonesian government’s claims about the economic benefits of oil palm cultivation in Papua under scrutiny, reports Hans Nicholas Jong. Papua is the Indonesia-controlled portion of the island of New Guinea
The Pusaka Bentala Rakyat Foundation’s analysis reveals that the environmental and social costs tied to the palm oil industry in the region far outweigh any financial returns. The data shows that while palm oil has generated approximately 17.64 trillion rupiah ($1.15 billion) in revenue and tax benefits for Papua, environmental and social damage incurred by deforestation and habitat destruction amounts to a 96.63 trillion rupiah ($6.3 billion).
“This translates to a cost-benefit ratio of 5.48, meaning that [palm oil] investment [in Papua] doesn’t bring benefit as much as damage,” remarked Wiko Saputra, the economist leading the study. “We can conclude that this is a bogus investment.”
Papua, which holds Asia’s largest remaining tract of intact rainforest, has become a new target for oil palm plantations as growers face land shortages in Sumatra and Borneo. Over the past two decades, the region has lost 663,443 hectares of natural forest, largely driven by palm oil expansion. South Papua province has suffered the most, with an estimated environmental cost of 37.7 trillion rupiah ($2.5 billion).
For the Indigenous communities of Papua, the consequences have been severe. Rivers, once vital for sustenance, have become polluted by plantation activities. In Southwest Papua, the Klawari River, once a clear source of fish, is now murky.
“The water is dark brown and if we use it for bathing, we will be itchy,” noted Eliezer Kutumun, a local chief.
Similar deforestation patterns have threatened food security, with local staple crops like sago increasingly scarce, contributing to widespread malnutrition and stunted growth among children.
While the palm oil industry has brought some job opportunities, they are limited and largely exclude Indigenous Papuans, reports the study. One plantation reported only 28.6% of its workforce as being Papuan, relegating locals to low-wage, temporary positions.
As deforestation continues and the palm oil industry expands, the ecological and social balance in Papua remains precarious. The question now is whether economic gain justifies the irreversible costs to one of the world’s largest remaining rainforests.
The story: Cost-benefit analysis exposes ‘bogus’ promises of palm oil riches for Papuans