Valuing the hidden costs of production in the palm oil sector
A recently published report on palm oil demonstrates how natural and human capital accounting can be used to understand and reduce the environmental and human impact costs of palm oil production. Palm oil is the world’s most popular vegetable oil, widely used in the food, personal care, chemicals and energy sectors. Over 56 million tonnes of palm oil was consumed in 2013 and this is expected to double by 2050. Its popularity is due to palm oil’s high productivity, low market price, and versatility compared to other vegetable oils.
However, the rapid growth of palm oil production in some countries is having serious environmental and social impact costs due to carbon dioxide emissions and air pollution from using fire to clear rainforest and peatland for new plantations, water pollution and harm to health from applying fertilizers and pesticides to crops, methane released from palm oil mill effluent processing facilities, land property rights violations during land expansion and substandard wages and working conditions.
The report was commissioned by TEEB as part of a series of studies for its agriculture and food (TEEBAgriFood) project. True Price and Trucost worked together with TEEB on this report to improve business decision making.
* This post was published when Impact Institute operated under the name True Price, before 10-10-2018.