23/10/2007 (Mongabay) - While it is often argued that the economic benefits of oil palm plantations outweigh the environmental costs of converting biodiverse ecosystems to monocultures, new analysis suggests that the role of plantations in reducing rural poverty may be overstated.

Examining poverty rates and oil palm expansion in the Malaysian states of Sarawak and Sabah on the island of Borneo, researcher Marc D. Bowden found that despite substantially lower coverage of oil palm plantations, Sarawak saw a greater reduction in poverty rates over the past three decades than neighboring Sabah. In Sarawak, where oil palm plantation cover expanded from 0.12 percent of the land area in 1976 to 4.08 percent in 2004, the proportion of the population living below the poverty line fell 85 percent from 51.7 percent to 7.5 percent in the same period. Meanwhile in Sabah, where oil palm plantation cover grew from 0.95 percent in 1976 to 15.81 percent in 2004, poverty rates dropped 55 percent from 51.2 percent to 23 percent.

"Proponents of palm oil development claim that their crop is a significant driver of development. But if this was true, one would expect a far greater reduced rate of poverty in Sabah than has occurred in Sarawak," writes Bowden. "It would be unwise to assume that the palm oil industry has had no positive impact on reducing poverty in Sabah, but it is clear that any causal relationship is not as strong as is broadly assumed."

Bowden says that rural populations in Sabah have failed to benefit from oil palm expansion partly because plantation owners primarily employ workers from the Philippines and Indonesia. He further notes that in 2005 only 6.3 percent of Sabah’s total palm oil estate was controlled by small landholders.

"It is often heard that if palm oil had not been established across eastern Sabah, an alternative crop would have. But would an alternative crop have monopolised as much land, had such a low impact on reducing poverty, or had such an adverse impact on rare and endangered species?" he asks, while noting that oil palm expansion has put Sabah's most charismatic species at risk of extinction.

"Rapid palm oil development has also significantly impacted Sabah’s natural heritage as exemplified by its mammalian megafauna. Large, wide-ranging mammal species with low reproductive rates have been severely impacted by the unplanned development of palm oil in the state’s east. The ranges and habitat of three species in particular--the Bornean rhino (Dicerorhinus sumatrensis harrissoni), Bornean pygmy elephant (Elephas maximus borneensis), and the Orang-utan (Pongo pygmaeus mori)--have significantly contracted and/or been fragmented and/or been degraded over the past thirty years."

Given the apparent failure of the palm oil industry to reduce poverty in Sabah relative to Sarawak, Bowden recommends several steps for future development, including improving oil yields per hectare from the present estate; clamping down on illegal immigration; providing universal primary and secondary education; reducing illiteracy rates among children and adults; encouraging greater government transparency by dealing severely with corruption involving government officials and employees; and improving rural infrastructure, including roads, water, sanitation, and electricity.

"Although the decline in both [Sabah and Sarawak] was concurrent with expansion of their respective palm oil estates, Sarawak converted less than half the area of land converted to palm oil in Sabah (493,000 ha as opposed to 1,095,000 ha), and in doing so monopolised less than a third of the proportion of total land area utilised in Sabah (4% as opposed to 15%)," writes Bowden. "Sabah’s progress toward poverty reduction is... significantly lagging behind every other Malaysian state."

CITATION: Bowden, M. (2007). PALM OIL, POVERTY AND CONSERVATION IN SABAH. Unpublished.