04/10/2007 (Checkbiotech.org) - The growing popularity of palm oil has been condemned by some conservationists from the West who see rainforest being given over to palms in Malaysia and Indonesia, with an appreciable loss in biodiversity. The push to plant more trees is easy to explain: palm oil is by far the most productive oil and energy crop and brings nearly instant profits to millions of small farmers and estates alike. Palm oil is one of the few sectors that bring social and economic development to poor communities in a straightforward way.

Palm oil producers for their part are fighting the conservationists, accusing the West of hypocrisy for criticizing their production while overlooking the fact that Europe and the US chopped down their own forests and destroyed biodiversity ages ago, a practise that allowed them to develop and modernise in the first place. Conservationists dictate poor countries how not to develop, but don't offer any credible alternative.

Attempts to create a compromise between the two camps have largely failed because of hard economics. The idea that 'avoided deforestation' or 'compensated reduction' could prevent new plantations from emerging is idealistic, because these schemes are 'top down' bureaucratic instruments. Palm oil brings cash to farmers directly, 'bottom up'. With rapidly growing demand from China and India, rising oil prices, the prospect of 'Peak Oil', and the advent of second-generation biofuel technologies, the crop is set to become even more attractive. With new technologies, palm oil not only delivers feedstock for biodiesel, but for cellulosic ethanol, biogas and solid biofuels . Add new breeding and plant improvement initiatives that promise even larger yields, and the crop becomes virtually unavoidable.

Now a new paper in Nature thinks it has found a way to arrive at a truce. Lian Pin Koh and David Wilcove suggest the very high yield and high prices that make this crop so untameable could be turned to a biodiversity advantage. They propose that conservationists from the West buy small tracts of existing oil palm plantations, and use the revenue they generate to establish a network of privately owned nature reserves. Then at least they understand the economics of the sector and could push others towards more sustainable production.

According to the authors, a typical mature oil-palm plantation in Sabah, Malaysia, generates an annual net profit of roughly $2,000 per hectare. Based on the current price of $12,500 per hectare for existing oil palm-cultivated land, the capital investment could be recovered in just 6 years. After this initial period, a 5,000-hectare oil palm plantation could generate annual profits amounting to some $10 million, which could be used to acquire 1,800 hectares of forested land annually to be set aside as private nature reserves. New and more sustainable palm plantations can then be established on degraded land, which is feasible, but currently not preferred.

Koh and Wilcove say the scheme would require collaboration between "large conservation donor groups to fund the initial investments and with local oil-palm companies for their expertise in running the plantations," but that the relationship could be a "win-win partnership... because NGOs would be able to protect forests using the oil palm revenue and the companies would be able to enhance their corporate image to satisfy environmentally-conscious consumers."

The authors think conservationist NGOs can participate in such joint ventures without losing their integrity if they go into it with the appropriate level of caution. Koh told Mongabay that there have been many examples of successful collaborations between environmental groups and industry leaders in the USA and elsewhere:

However, he stressed that some green groups should remain well outside the partnership, serving as much-needed critical voices to pressure governments and oil palm companies to avoid further losses of pristine habitats.

Koh and Wilcove believe that the development of a premium market could help entice producers into working with conservationists.

"Because such oil-palm plantations would be motivated mainly by conservation objectives, they could provide the industry with leadership for the sustainable production of palm oil through environmentally-friendly management practices," they write. "This could also drive the development of a premium market for sustainable oil-palm products and thereby generate economic incentives for more palm-oil producers to adopt sustainable practices."

Koh and Wilcove appear to be optimistic that this price premium, as well as the "green" marketing benefits, can overcome the inherent conflict of interest between the two groups. After all, why would producers want to help set up direct competitors and fund opposition to oil palm expansion unless they were sure to get something tangible in return?