Share this
Rising export demand for palm oil may lead to pronounced increases in agricultural land demand for oil palm expansion in Malaysia and Indonesia-two main palm oil producing and exporting countries. However, it is expected that the environmental effects of agricultural land augmentation will depend much on existing governance affecting environmental and forestry management in the two countries. Given the relatively more prevalent policy and institutional failures in Indonesia, it is anticipated that deforestation consequences and open burnings in the country will be stronger, inevitably giving rise to recurring haze externalities in the region. This paper examines environment-trade linkages affecting the oil palm sub-sector in Malaysia and Indonesia. Shifts in export demand for palm oil were simulated and effects on land use in Malaysia and Indonesia were observed under varying assumptions of environmental and forestry policy regimes in the two countries. Inferences on haze effects are provided. © 2006 by Nova Science Publishers, Inc. All rights reserved.
