Abstract for: On Palm Oil and Deforestation in Borneo: A Step-Wise Model-Based Policy Analysis

Deforestation due to the increasing palm oil demand has been a major environmental issue in Indonesia, especially in Kalimantan on Borneo Island, where the growth of oil palm plantation is the highest. As the potential for oil palm plantations in Sumatra Island has been reached, expansion has moved to Kalimantan where forest coverage is still relatively high. Besides logging trees, land is cleared by burning the forest without proper procedures and neglecting the environmental surroundings of the forest. Consequently, the fire spreads and affects surrounding areas. This study attempts to explore the long-term dynamics of the forest coverage in Kalimantan and to design policies to reduce the damage caused by this expansion. Using a model-based adaptive robust design approach, we show that it is possible to reduce the percentage of simulation runs which forest coverage in 2100 is smaller than 15 million hectares from more than 80% to less than 15%. Ultimately, the percentage of simulation runs which forest coverage is less than 10 million hectares is even smaller than 2% after the final policies are executed.