Paper ID: 76
DOES RSPO CERTIFICATION AFFECT THE SIZE OF FOREST AND LAND COVER IN INDONESIA?
Yahya Shafiyuddin Hilmi1,*and Arini Wahyu Utami1
1Department of Agricultural Socioeconomics, Faculty of Agriculture, Universitas Gadjah Mada, Indonesia
As the biggest Crude Palm Oil (CPO) producer, Indonesia is now facing some issues in regard to the environmental aspects. The expansion of palm oil industries has affected the environmental aspects of Indonesia, one of them is reduced forest area. In 2004, a non-profit organization named Roundtable Sustainable Palm Oil (RSPO) was founded, aimed at reducing the negative effect created by the palm oil industries. This study will examine the effect of RSPO certification in the Indonesian palm oil industries on the forest cover of Indonesia. This study used time series data from 1992 to 2015, collected from Food and Agriculture Organization (FAO), World Bank and UnComtrade. Structural Partial Least Square Analysis, with the forest area and land cover of Indonesia as the dependent variables, was run against Indonesia’s CPO export, Indonesia’s CPO price, Indonesia’s real Gross Domestic Product (GDP) and RSPO. RSPO was a voluntary certification of Indonesia’s palm oil starting in 2008, and was included as a dummy variable. Results showed that the relationship between Indonesia’s CPO export, Indonesia’s CPO price, Indonesia’s real Gross Domestic Product (GDP) as the variation of independent variables and the forest and land cover area of Indonesia is negatively associated. While the RSPO is positively associated to the Indonesia’s CPO export, Indonesia’s CPO price, Indonesia’s real Gross Domestic Product (GDP). Nonetheless, RSPO is no association with the forest and land cover area of Indonesia.