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

Essays on Regional Responses to Globalization

This dissertation explores various regional responses to globalization. The first chapter studies how booming regions spread local windfall from a commodity boom in the world market to other regions. The second chapter explores price divergence in the rice markets as an impact of a binding import ban, a policy imposed to support farmers from facing import competition. Lastly, the third chapter shows how the proliferation of electronic media, an aspect of globalization, facilitates improvement in marketing technology in advertising tobacco products. I show that such improvement in reaching consumers and potential consumers increases the smoking participation of young adults.Chapter 1 studies how regions respond to price shocks in the presence of internal migration. This paper examines Indonesia in the 2000s as it faced a commodity boom for palm oil, which became one of its main export commodities. I exploit the variation in the land shares and crop suitability to compute the potential contribution of main crops across district economies as a measure of local exposure to shocks. I find that the commodity boom increased the purchasing power of palm oil-producing districts. These districts also received more migration, providing evidence that palm oil price shocks were no longer localized. Indeed, internal migration spread the windfall. I also find spillover to neighboring districts. However, these relatively higher levels of purchasing power did not last after the commodity boom ended in 2014. I show that the palm-oil sector grew through extensification as a response to the price shocks, with no indication of growth through intensification. I estimate the overall welfare gains in Indonesia between 2005 and 2010 and find substantial gains from migration.Chapter 2 explores and documents the price divergence that occurs due to a large and ongoing import ban on rice imposed by Indonesia. I find that despite the increase in the retail price of rice, rice-producing districts do not enjoy higher purchasing power. The trade protection did not spur growth in the rice sector either. I find that the import ban causes price divergence in two dimensions. First, it causes regional price divergence, implying the lack of arbitrage across rice markets. Second, I find evidence of incomplete pass-through as the wedge between the retail prices and farm-gate prices widens. These findings provide guidance for further research and trade policy evaluation to consider aspects such as imperfect competition and domestic trade frictions in determining the distributional impact of the import ban.Chapter 3 is motivated by the fact that the tobacco epidemic kills more than 8 million people every year. Despite a global decline in smoking rates, smoking prevalence is rising in many developing countries. This paper exploits the temporal and regional variation in the proliferation of television reception across Indonesia in the 2000s to examine the impact of advertising in electronic media on smoking participation by young adults. Applying the marketing theory drawn from international trade, I find evidence of a new-consumer margin in tobacco consumption due to improvement in marketing technology. Living in a subdistrict with one standard deviation higher television exposure increases male young adults smoking participation by 4-6%. This impact is especially significant for those of 17 to 19 years old but not older persons

Essays on Regional Responses to Globalization

This dissertation explores various regional responses to globalization. The first chapter studies how booming regions spread local windfall from a commodity boom in the world market to other regions. The second chapter explores price divergence in the rice markets as an impact of a binding import ban, a policy imposed to support farmers from facing import competition. Lastly, the third chapter shows how the proliferation of electronic media, an aspect of globalization, facilitates improvement in marketing technology in advertising tobacco products. I show that such improvement in reaching consumers and potential consumers increases the smoking participation of young adults.Chapter 1 studies how regions respond to price shocks in the presence of internal migration. This paper examines Indonesia in the 2000s as it faced a commodity boom for palm oil, which became one of its main export commodities. I exploit the variation in the land shares and crop suitability to compute the potential contribution of main crops across district economies as a measure of local exposure to shocks. I find that the commodity boom increased the purchasing power of palm oil-producing districts. These districts also received more migration, providing evidence that palm oil price shocks were no longer localized. Indeed, internal migration spread the windfall. I also find spillover to neighboring districts. However, these relatively higher levels of purchasing power did not last after the commodity boom ended in 2014. I show that the palm-oil sector grew through extensification as a response to the price shocks, with no indication of growth through intensification. I estimate the overall welfare gains in Indonesia between 2005 and 2010 and find substantial gains from migration.Chapter 2 explores and documents the price divergence that occurs due to a large and ongoing import ban on rice imposed by Indonesia. I find that despite the increase in the retail price of rice, rice-producing districts do not enjoy higher purchasing power. The trade protection did not spur growth in the rice sector either. I find that the import ban causes price divergence in two dimensions. First, it causes regional price divergence, implying the lack of arbitrage across rice markets. Second, I find evidence of incomplete pass-through as the wedge between the retail prices and farm-gate prices widens. These findings provide guidance for further research and trade policy evaluation to consider aspects such as imperfect competition and domestic trade frictions in determining the distributional impact of the import ban.Chapter 3 is motivated by the fact that the tobacco epidemic kills more than 8 million people every year. Despite a global decline in smoking rates, smoking prevalence is rising in many developing countries. This paper exploits the temporal and regional variation in the proliferation of television reception across Indonesia in the 2000s to examine the impact of advertising in electronic media on smoking participation by young adults. Applying the marketing theory drawn from international trade, I find evidence of a new-consumer margin in tobacco consumption due to improvement in marketing technology. Living in a subdistrict with one standard deviation higher television exposure increases male young adults smoking participation by 4-6%. This impact is especially significant for those of 17 to 19 years old but not older persons

What You Don’t Know About the Codex Can Hurt You: How Trade Policy Trumps Global Health Governance in Infant and Young Child Nutrition

BackgroundInternational food standards set by the Codex Alimentarius Commission (CAC), have become more prominent in international trade politics, since being referenced by various World Trade Organization (WTO) agreements. We examine how this impacts implementation of the World Health Organization (WHO) International Code of Marketing of Breast-milk Substitutes.MethodsUsing trade in commercial milk formulas (CMFs) as a case study, we collected detailed data on interventions across various WTO bodies between 1995 and 2019. We used language from these interventions to guide data collection on member state and observer positions during the CAC review of the Codex Standard for Follow-up Formula (CSFUF), and during CAC discussions on the relevance of WHO policies and guidelines.ResultsExporting member states made 245 interventions regarding CMFs at the WTO, many citing deviations from standards set by the CAC. These did not occur in formal disputes, but in WTO Committee and Accession processes, toward many countries. In Thailand, complaints are linked to weakened regulation. Exporters also sought to narrow the CSFUF at the CAC in a way that is at odds with recommendations in the International Code. Tensions are growing more broadly within the CAC regarding relevance of WHO recommendations. Countries coordinated during WTO committee processes to advocate for reapportioning core WHO funding to the CAC and in order to further influence standard-setting.ConclusionThe commercial interests of the baby food industry are magnifying inconsistencies between health guidelines set by the WHO, standard-setting at the CAC, and functions of the WTO. This poses serious concerns for countries' abilities to regulate in the interests of public health, in this case to protect breastfeeding and its benefits for the health of infants, children and mothers

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