Impact of palm oil sustainability certification on village well-being and poverty in Indonesia

The Roundtable on Sustainable Palm Oil has emerged as the leading sustainability certification system to tackle socioenvironmental issues associated with the oil palm industry. However, the effectiveness of certification by the Roundtable on Sustainable Palm Oil in achieving its socioeconomic objectives remains uncertain. We evaluate the impact of certification on village-level well-being across Indonesia by applying counterfactual analysis to multidimensional government poverty data. We compare poverty across 36,311 villages between 2000 and 2018, tracking changes from before oil palm plantations were first established to several years after plantations were certified. Certification was associated with reduced poverty in villages with primarily market-based livelihoods, but not in those in which subsistence livelihoods were dominant before switching to oil palm. We highlight the importance of baseline village livelihood systems in shaping local impacts of agricultural certification and assert that oil palm certification in certain village contexts may require additional resources to ensure socioeconomic objectives are realized. A study of over 36,000 villages in Indonesia shows that palm oil eco-certification reduces poverty in market-oriented villages but increases it in subsistence villages.