The Impact of Sustainable Certification on Financial and Market Performance: Evidence from Indonesian Palm Oil Companies

The palm oil industry is a strategic sector that plays an important role for national economics. Although the palm oil industry's role and contribution are high, land clearing and operation are often associated with environmental and social issues. The sustainable certification was then developed to ensure that palm oil companies can continue to operate without involving environmental and social deprivation. The previous research related to the impact of a sustainable certification found several positive and negative impacts on palm oil companies' performance in general. Therefore, this study aimed to determine the impact of sustainable certification on Indonesia's palm oil companies' financial and market performance. This research focused on 14 palm oil companies in Indonesia that went public with an observation year between 2014 and 2019. Analysis through panel regression found that sustainable certification has no impact on Indonesia's palm oil companies' financial and market performance. The study could be a recommendation and justification for palm oil companies for consider to take a sustainable certification.

Modelling the disappearance of coarse woody debris, following a land clearing event

Background Land clearing generates coarse woody debris (CWD), much of which ultimately becomes atmospheric CO2. Schemes for greenhouse gas accounting must consider the contribution from land clearing, but the timing of the contribution will have large uncertainty, due to a paucity of knowledge about the rate of CWD disappearance. To better understand above-ground CWD disappearance following a land clearing event—through the actions of microorganisms, invertebrates, wildfire, or deliberate burning—we combined statistical modelling with an archive of semi-quantitative observations (units of CWD %), made within Queensland, Australia. Results Using a generalised additive mixed-effects model (median absolute error = 14.7%), we found that CWD disappearance was strongly influenced by the: (i) number of years elapsed since clearing; (ii) clearing method; (iii) bioregion (effectively a climate-by-tree species interaction); and (iv) the number of times burned. Years-since-clearing had a strongly non-linear effect on the rate of CWD disappearance. The data suggested that disappearance was reverse-sigmoidal, with little change in CWD apparent for the first three years after clearing. In typical conditions for Queensland, the model predicted that it will take 38 years for 95% of CWD to disappear, following a land clearing event; however, accounting for uncertainty in the data and model, this value could be as few as 5 years, or > 100 years. In contrast, due to an assumption about the propensity of land managers to burn CWD, the official method used to assess Australia’s greenhouse gas emissions predicted that 95% of CWD will disappear in < 1 year. Conclusions In Queensland, the CWD generated by land clearing typically takes 38 years to disappear. This ultimately implies that a key assumption of Australia’s official greenhouse gas reporting—i.e. that 98% of CWD is burned soon after a clearing event—does not adequately account for delayed CO2 emissions.

Beyond the myths about Indonesia’s deforestation: linking oil palm cultivation to forest degradation and sustainable development goals

Oil palm cultivation is under scrutiny by various stakeholders, arguing that it is the main cause for Indonesia’s deforestation. This paper highlights the decades of forest degradation before the first land clearing for oil palm within the context of Indonesia’s development policies. Using ‘direct photointerpretation’ of ‘Historical Imagery’, it assesses the forest degradation and deforestation caused by oil palm cultivation in Indonesia, particularly in light of the UN Sustainable Development Goals (SDGs). Forest degradation has direct trade-offs with most of the SDGs, with the most affected SDGs being Responsible Consumption and Production (SDG12) and Life on Land (SDG15). Historical satellite imagery indicates that the first land clearing for the 176 Kha of oil palm estates sampled palm occurred around 1994. In contrast, only half of this area contained (natural) forests in 1984- a decade before the first land clearing. None of the remaining forests were (near) intact natural forests; all were (heavily) degraded and their biodiversity was strongly compromised. This indicates that oil palm cultivation is not linked to the degradation of Indonesia’s natural forests. Regarding SDG12, we found significant positive impacts from both the direct and indirect land-use changes by oil palm. For SDG15, we observed major positive impacts from the direct land-use changes and minor positive impacts from the indirect land-use changes. Hence, we conclude that oil palm cultivation in the sampled estates has positive impacts on Indonesia’s SDGs and Indonesia’s development policies align with its SDGs.

Illegal land clearing and green economy campaign in Indonesia

Indonesia’s total area of forest and waters is around 130.68 million hectares, but it consistently decreases yearly. The illegal land clearing for agricultural activity is considered as the main cause of the forest reduction, as around 5.6 million hectares of land burned between 2015 and 201 and it costs of hundreds of trillions to the country. In order to lessen the negative impacts of land clearing, Indonesian government indeed has started to promote a green economy campaign, known as sustainable development with an environmental perspective. This study aims to examine the relationship between illegal land clearing and its effect on the Indonesian economy and its relationship with the green economy campaign initiated by the Indonesian government. We use the data from the Indonesian Ministry of Environment and Forestry, Central Bureau of Statistics, Greenpeace Indonesia, and World Bank to analyze this issue. We find that the governments’ poor regulation and monitoring have caused forest and land fires almost every year and it has huge economic and environmental costs that should be paid by the government. Therefore, a strong law enforcement is needed so that the green economy campaign in Indonesia can be executed properly.

Factors affecting communities in adopting sustainable peat cultivation techniques and strategies for implementation (a case study in Pulang Pisau, Central Kalimantan)

Peatlands have the primary source of livelihood for the surrounding communities, even though peatlands’ cultivation has several limiting factors. Drainage in peat cultivation has the potential to cause fires. Social and economic interests often conflict with ecological interests. The research was conducted in Pulang Pisau District using a semi-participatory approach through field observations, in-depth interviews with key informants, and focus group discussions. The study uses the descriptive qualitative method in the data analysis. The results showed that factors that influence the adoption of sustainable peat management techniques are: i) the introduced technique is following the community’s social and cultural characteristics, but most of the people belong to the early majority and late majority category; ii) the intrinsic nature of the innovation; iii) the absence of collective decision making to implement land clearing without burning and iv) lack of assistance. The study recommended five policy strategy: i) preparing peat-adaptive commodity market; ii) encouraging incentives for implementing non-burning land clearing; iii) coordination and synergy between institutions; iv) selection of superior rubber seed and Cajuput plantation as a substitute for galam, and v) development of participatory agrosilvofishery demonstration plots.

The intensification of industrial salt production using the salt production house concept

The current national salt demand in 2021 is 4.6 million tons, 84% of it: for manufacturing purposes. The volume of imported salt reaches 50.29 percent of the national saltavailability. This high import is caused by lack of the industrial salt. In the 2020-2024 RPJMN, the total national salt production target in 2021 is 3 million tons, not enough, due to the natural conditions of high rainfall. KKP and Kemenkomarves are targeting to increase production through intensification and extensification of salt pond land, which is planned to be carried out in Flores and Sumbawa. However, according to our rough calculation, to meet the amount of national salt need, if the choice is the extensification: this will need 20 thousand hectares of newponds. This is hard option to proceed, because there are obstacles: limited land, not all types of land can be used for salt farming, high costs, long land clearing time, and dependence on weather. Plus, the negative impact on the environment from the land conversion. What is the alternative solution?This study aims to figure the solution for improving the industrial salt production. Methods are the analytical descriptive study, collecting data with reference studies, then compiling data for the formulation of the model. Study results: the suitable option to do is the intensification of the salt production. More efforts are needed on the intensification, by increasing the quantity of salt production, parallel with improving its quality, and could continuously producing salt in a full year. To fulfill this, this study recommends a technological engineering approachment, by using a combination of the Japanese Method with the closed system called: the Salt Production House (SPH). The SPH is green and sustainable concept, because it consumes renewable energy, effective and require a small area. This method requires no new land clearing since it could be constructed on the existing salt ponds.

Impact of Bush Burning on Chemical Properties of Some Soil in Igboora, Oyo State, Nigeria

Soil is used in agriculture as an anchor and primary nutrient base for plants, and the types of soil and available moisture determine the species of plants that can be cultivated. Bush burning, whether as result of a wildfire or a controlled burning, affects not only the appearance of the landscape, but the quality of the soil. Bush burning method of land clearing is a traditional farming system used as a means of land clearing for crop production. This method of land clearing has both beneficial and detrimental effects on soil physical and chemical properties. Therefore, this study investigated the effects of bush burning on soil chemical properties at different soil depth of 0-30 cm and 30-60 cm respectively base on the rooting depth of crop planted. The experiment was carried out in six selected farms in Igboora, Ibarapa central Local Governmental, Oyo State. The soil sampled were collected from burnt and unburnt experimental soil and analyzed using USDA standard methods for soil analysis for the selected chemical characteristics (pH, Ca2+, Mg2+ Na+. TN and P). Two samples were taken from each burnt and un-burnt locations at depth of 0-30 and 30-60 cm. Paired t-test was used to compare means value of soil chemical properties determined from burnt and un-burnt soil. ANOVA was used for significance difference between soil from burnt and un-burnt soil. pH increased from moderately acidic to slightly acidic, phosphorus content of the soil increased greatly from un-burnt soil to burnt soil at 0-30 cm and 30-60 cm depths from 6.64 to 22.21 ppm and 3.53 to 24.95 ppm, respectively. Similarly, potassium increased from 0.27 to 0.40ppm at 0-30cm depth but decreased from 0.23 to 0.17 ppm at 30-60 cm depth. Nitrogen reduced at both depths from 0.80 to 0.76% and 0.72 to 0.68% respectively. Magnesium also increased from 1.3 cmol/kg to 2.00 cmol/kg and 1.65 to 1.75 cmol/kg at both 0-30 cm and 30-60 cm depth respectively. Whereas calcium showed a reduction from 3.17 to 2.85 cmol/kg and 1.65 to 1.45 cmol/kg at both depths. The variations observed between burnt and un-burnt soil for Ca, Mg, exchangeable acidity, pH, Nitrogen, potassium was significant at p<0.05 probability level. This indicates that bush burning has an impact on soil physical and chemical properties which may affect the suitability of the soil for crop production. Based on this, there is need for environmental education for farmers in the area in order to know the implications of bush burning on soil properties for soil sustainability which will boost food production.