10/02/2009 (Carbon Positive) - A new sustainable development model could allow palm oil producers to continue to expand without destroying valuable forests, its proponents, the World Resources Institute, claims. The US-based environmental research and advocacy group says its POTICO model could act as a circuit-breaker in an industry at the centre of one of the biggest  environmental problems of the current time.

A rapidly-expanding palm oil industry in tropical countries, especially South-East Asia, has been responsible for the clearing of many millions of hectares of forests and wetlands in recent years. This is adding significantly to global greenhouse emissions, destroying ecosystems and wildlife, and degrading freshwater supplies.

WRI says current arrangements create a perverse economic incentive to palm oil growers – they get more money by logging and clearing forest area to grow their crop than they do if they just grew it on already cleared and degraded land. That’s because logging virgin forest delivers an extra revenue up front. Setting up a logging operation first also lets developers get around land use laws applying to farm development, allowing them to claim a “prior use”.

The organisation’s POTICO model, for Palm Oil, Timber and Carbon Offsets, aims to overturn this incentive and create a positive inducement for sustainable palm oil production. It would do so by offering palm oil developers a combination of revenue streams from growing their crop on degraded land, rather than just the oil income.

First, the model sees palm oil developers establish their plantations on degraded land to generate their primary revenue, with activities certified by the Roundtable on Sustainable Palm Oil.  This would then allow any logging concessions held by developers over standing forest to be used to create sustainable timber operations to Forest Stewardship Council (FSC) guidelines – a second revenue stream.

Thirdly, avoided deforestation carbon credits under the emerging international REDD regime would be sought to generate yet further income.

The WRI has developed the model with Indonesia in mind, where virgin forest is being lost at a rapid rate even though 15 to 20 million hectares of degraded land exist that could potentially be used for crop development.

WRI is working with forest products company NewPage and Indonesian NGO Sekala to implement the model on the ground.