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Consequences of the oil palm boom

Image: Orientierungslust, Palm oil, Pixabay, Pixabay licence
Image: Orientierungslust, Palm oil, Pixabay, Pixabay licence

This paper reviews the environmental, economic and social consequences of the oil palm boom. It finds that palm oil has increased incomes, generated employment and reduced poverty at the same time as causing deforestation and biodiversity loss. It discusses policy options to reduce the tradeoffs between environmental protection and economic benefits.

Policy options discussed by the paper include:

  • Increasing palm oil yields per hectare, e.g. by breeding or by optimising fertiliser management.
  • Setting aside protected areas of forests and clearly defining property rights on agricultural land.
  • Mosaic landscapes, i.e. landscapes containing a mix of agriculture, forest and other landscape elements. 
  • Sustainability certification schemes.
  • Supporting smallholders.



Rising global demand for vegetable oil during the last few decades has led to a drastic increase in the land area under oil palm. Especially in Southeast Asia, the oil palm boom has contributed to economic growth, but it has also spurred criticism about negative environmental and social effects. Here, we discuss palm oil production and consumption trends and review environmental, economic, and social consequences in different parts of the world. The oil palm expansion has contributed to tropical deforestation and associated losses in biodiversity and ecosystem functions. Simultaneously, it has increased incomes, generated employment, and reduced poverty among farm and nonfarm households. Around 50% of the worldwide oil palm land is managed by smallholders. Sustainability trade-offs between preserving global public environmental goods and private economic benefits need to be reduced. We discuss policy implications related to productivity growth, rainforest protection, mosaic landscapes, land property rights, sustainability certification, and smallholder inclusion, among others.



Qaim, M., Subhatu, K. T., Siregar, H. and Grass, I. (2020). Environmental, Economic, and Social Consequences of the Oil Palm Boom. Annual Review of Resource Economics, 12, Review in Advance posted online 19 May 2020.

Read more here or here (PDF link). See also the Foodsource building block What is land use and land use change?

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