Economic woes may speed Asian deforestation

Rising demand for palm oil could stymie a United Nations effort to protect forests in Malaysia.

KUALA LUMPUR/JAKARTA (Reuters) — Growing economic pain may increasingly force consumers to turn to palm oil, one of the cheapest cooking oils, a move that could scupper nascent plans to slow deforestation in Southeast Asia.

With rising output in Indonesia, the world’s biggest palm oil producer and home to the eighth largest expanse of forests, and tight land supplies in Malaysia, the world’s second largest supplier, conservation’s economics look even less appealing.

Under a United Nations scheme to slow deforestation, countries that preserve forests could be paid up to $2,077.50 per hectare, but that compares with the $4,826.11 per hectare that could be earned at current prices on a well-managed palm estate, Reuters calculations showed.

The UN plan, called the Reduced Emissions from Deforestation and Degradation (REDD), was supposed to allow investors to buy carbon credits and bring in $10 billion to $30 billion yearly to over 60 developing nations with forests.

“REDD has no chance. Malaysian palm oil yields are high and better estate management is key,” said an official with a listed Malaysian planter with holdings in Indonesia as well as Malaysia, who declined to be named due to the sensitivity of the issue.

Reuters