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4.2 Environmental degradation

Poverty and environmental degradation

Development can cause environmental degradation; in turn, environmental degradation can undermine development. This can be expressed more simply by saying that poverty is both cause and an effect of environmental degradation. The example in 4.2.1 illustrates this circular relationship between development and environmental degradation.

4.2.1 The impacts of palm oil production

Palm oil and biofuels

Palm oil is currently used in many food products including margarine, chocolate, cream cheese and oven chips. It is also used in cosmetics and, increasingly, to produce biodiesel. The use of palm oil to produce biodiesel is being driven by commitments by various governments to increase the amount of biofuels being sold - because biofuels are regarded by some people as a quick solution to the problem of greenhouse gas emissions, which are causing climate change. Currently, more than 70% of the palm oil produced is used in food items. However, because the biofuels industry is expanding rapidly, the demand for palm oil is also growing dramatically. Compared to levels in 2000, demand for palm oil is expected to more than double by 2030 and to triple by 2050. In Indonesia, 6 million hectares are already used for palm oil plantations; by 2015, another 4 million hectares will be dedicated to biofuel production alone. In the EU, by 2020, 10% of the fuel sold is expected to be biofuel. China is aiming for 15% of its fuel to be biofuel, and India is planning for biodiesel to make up 20% of diesel sales by 2012.

Impacts of palm oil production

At first glance, palm oil production seems to have several benefits: it generates economic growth and it creates employment in a rapidly expanding industry. The use of biofuels could be useful in climate change mitigation, as it avoids the carbon dioxide emissions that are released when fossil fuels are burned. So it might seem as though palm oil production is both good for the environment (by reducing greenhouse gas emissions) and good for economic development (by generating income and employment). However, the situation is not quite so straightforward. In fact, palm oil production is associated with devastating environmental impacts - including impacts on global climate. To meet the growing demand for palm oil, tropical rainforests and peatlands in Southeast Asia are being destroyed to create land for palm oil plantations. Ironically, the clearance of rainforests and the draining and burning of peatlands make climate change worse, because those activities release more carbon dioxide than simply burning fossil fuel. The problem is particularly acute in Indonesia, which was recently the country with the highest rate of deforestation in the world. Indonesia is also the third largest emitter of greenhouse gas, mainly as a result of deforestation. Similar problems are also occurring in other parts of Southeast Asia. Palm oil production also has other environmental and social impacts, including the loss of biodiversity (as rainforests are destroyed) and effects on local communities as traditional ways of life are disrupted and people are displaced from their land. Furthermore, the growth of crops for biofuels may increase food prices and reduce global food reserves, thereby reducing food security and increasing vulnerability.

An ongoing issue

The environmental impacts of palm oil production could - in principle - be prevented. A moratorium on converting forest and peatlands into oil palm plantations could be introduced until long-term solutions are found. Restoring deforested and degraded peatlands could provide a relatively cheap, cost-effective way to make dramatic reductions in greenhouse gas emissions in Indonesia. Governments around the world could provide funds to help countries with tropical forests to protect their resources, as well as reducing their own carbon dioxide emissions, so as to mitigate the impacts of climate change. Yet, in practice, curtailing the expansion of palm oil production is likely to be extremely difficult, since it requires national governments and multinational corporations to forgo economic growth, political support and substantial profits. From the perspective of local workers who are dependent upon the palm oil industry for their employment, any restrictions of the growth of the industry could jeopardise their livelihoods. In the absence of effective international agreements and legislation to prevent deforestation or greenhouse gas emissions, it is likely that palm oil production will continue to result in the destruction of rainforest and peatlands for as long as it is economically viable to do so.

Source: adapted from Greenpeace (2009)