Does deforestation-free palm oil trade deliver value to local people? Evidence from Indonesia

The growing demand for palm oil has driven oil palm plantation expansion and the associated environmental, economic and social impacts at the landscape level in the tropics. This research describes how a high-risk forested landscape in Central Kalimantan, Indonesia, reacts to the deforestation-free palm oil trade policies implemented by the United Kingdom, the European Union and other countries using value chain and system dynamics methods. Our modelling shows that global green initiatives and palm oil certification have a detrimental relationship with local economic reduction but a beneficial relationship with environmental outcomes achieving zero deforestation. Although green deals impose costs, compensation methods such as carbon trading, ecological fiscal transfers, and payments for environmental services, exist. Premium prices for palm oil are critical to offset losses. These insights inform Indonesian deforestation reduction efforts and serve as benchmarks for agricultural commodities in differing contexts.