| Abstract |
This study aims to analyze the challenges of the palm oil biodiesel program to meet the goals of sustainable development and to provide recommendations toward a sustainable palm oil biodiesel program using quantitative analysis of potential policy options based on set of sustain ability criteria. The criteria to which the development is assessed being sustainable or not are adopted from the practical definition for sustainability suggested in Dasgupta (2001) and Arrow et a!. (2012) as "non-declining inclusive wealth over time." The benchmark of the inclusive wealth is defined as economy's productive base which can be classified as Natural Capital (Cn), Manufactured Capital (Cm), Human Capital (Ch), Social Capital (Cs), and Knowledge Capital (Ck). In this study we explore several policy options to solve the problem. The options are (i) Business as Usual, (ii) Stringent Regulation, (iii) Smallholder Empowerment. The evaluation is conducted by agent-based model simulation. Selected sustainability indicators, such as soil carbon stock, forest cover, plantation cover, biodiesel production, employment, customary land ownership, and adoption of best management practice, are employed to represent the five types of the productive based capital stocks change are evaluated over time. The result of the simulation indicates that Business as Usual scenario produces growing rate on Cm, Ch and Ck and declining rate on Cn and Cs over time. Applying the "Stringent Regulation" scenario would shift the declining rates of Cn and Cs into a steady state and amplifying the rate of Ck with slightly reduce in Cm and Ch. Applying the " Smallholders Empowerment" scenario would further improve this situation causing increase in Cm and Ch without sacrificing Cn, Cs and Ck. |