Effects of Demand-Side Restrictions on High-Deforestation Palm Oil in Europe on Deforestation and Emissions in Indonesia

13-C-AJFF-PU-29, 36This is an open access article under the terms of the Creative Commons Attribution 4.0 International (CC BY 4.0) license https://creativecommons.org/licenses/by/4.0/. Please cite this article as:Jonah Busch et al 2022 Environ. Res. Lett. 17 014035. https://doi.org/10.1088/1748-9326/ac435eDemand-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 121 (1.60%) less deforestation and 21.1 million tCO2 yr 121 (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\u2019s 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

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

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 tCO(2) 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/tCO(2). 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

A global review of ecological fiscal transfers

Ecological fiscal transfers (EFT) transfer public revenue between governments within a country based on ecological indicators. EFT can compensate subnational governments for the costs of conserving ecosystems and in principle can incentivize greater ecological conservation. We review established EFT in Brazil, Portugal, France, China and India, and emerging or proposed EFT in ten more countries. We analyse common themes related to EFT emergence, design and effects. EFT have grown rapidly from US$0.35 billion yr−1 in 2007 to US$23 billion yr−1 in 2020. We discuss the scope of opportunity to expand EFT to other countries by ‘greening’ intergovernmental fiscal transfers