The economic impact of High Conservation Value Areas (HCVA) management on palm oil estate (Case study: PT Inti Indosawit Subur Kebun Buatan, Riau Province).

Abstract

The global demand for palm oil was growing rapidly. Palm oil was consumed world wide and constituted the vegetable oil with the highest level of market penetration. Indonesia was the largest producer of palm oil in the world while Malaysia was the leading exporter of palm oil, accounting for 46% of global exports. The production of palm oil was associated with many sustainability issues, including deforestation, erosion of biodiversity and violation of social rights. The Roundtable on Sustainable Palm Oil (RSPO) as the concern these issues of European driven initiative of the World Wide Fund for Nature (WWF). The palm oil estate was rarely focused on the cost and benefit analysis in calculating the economic valuation and financial projection on High Concervation Value Area (HCVA) as the prerequirement of RSPO certification. This research was done to analyze the economic impact of HCVA management in palm oil estate. The research spent for three month in PT IIS (Riau). The method was used; The Total Economic Value (TEV) analysis, the cost benefit analysis, the financial and economic analysis, and the stakeholder analysis on managing HCVA. Based on this calculation, the amount of TEV showed Rp 1.321.847.970,00 per year for PT IIS Kebun Buatan. There were three scenarios used; with HCVA, (NPV: Rp 655.616.430.602,00), with HCVA+0.35% (NPV: Rp 664.005.845.480,00) and without HCVA (NPV : Rp 667.346.030.004,00). Premium price for 0.35% was not feasible for the palm oil Industry. The stakeholder analysis showed the palm oil industry, GAPKI and Sawit Watch as the key players for the HCVA management.