Environmental Governance and Institutional Capacity in Decentralized Management of Oil Palm Plantations on Wetlands

Wetland-based oil palm plantations present significant environmental challenges due to hydrological sensitivity, peat oxidation risks, and biodiversity loss. Under Indonesia’s decentralized governance framework, local government capacity plays a central role in determining whether oil palm management supports or undermines environmental sustainability. This study analyzes the governance structure and institutional capacity of local authorities in Bengkalis District to support sustainable management of oil palm plantations in wetland areas. A MICMAC (Cross-Impact Matrix Multiplication Applied to Classification) approach was applied to identify key governance variables and assess their influence– dependency relationships. Data were collected through expert assessments, stakeholder consultations, and document analysis. Results indicate that regulatory enforcement, institutional capacity, and cross-sectoral coordination are the primary driving forces enabling effective environmental governance. Meanwhile, community participation and technological innovation depend heavily on these governing factors to be impactful. Strengthening institutional mechanisms—particularly environmental monitoring, capacity-building programs, and collaborative governance arrangements—is essential for reducing ecological risks while maintaining rural economic livelihoods. The study contributes to the literature on decentralized environmental governance by demonstrating how institutional resilience can support sustainable resource management in ecologically sensitive landscapes.