Exploring the livelihood and environmental impacts of biofuels in the tropics

The economic and climate mitigation promises of biofuel expansion into tropical forests and woodlands are often elusive; in some cases land users struggle to reconstruct their livelihoods following displacement, while in others land use change may lead to the release of large amounts of carbon emissions that are difficult to reverse, says a set of CIFOR papers on biofuel impacts in a special issue of Ecology and Society

“Efforts are needed to understand the actual costs and benefits associated with different biofuel crops, production models (smallholder vs. industrial-scale) and land use changes so as to set more informed policy aims for the sector. Efforts are then needed to understand how best to get us there,” says Laura German,  lead editor of the special issue that examined the local social and environmental impacts of biofuels through a set of case studies from Africa, Asia and Latin America. 

The recent expansion of biofuel crops in response to policy commitments to renewable energy has led to heated debates over the social and environmental costs and benefits associated with this energy transition. Those in favor of biofuels stress their potential to reduce greenhouse gas emissions by providing a green alternative to fossil fuels, and their potential as an engine of rural economic development.  Yet others have raised concern over the deleterious social and environmental impacts associated with large-scale land acquisition for biofuel expansion, which has led to the displacement of carbon- and biodiversity-rich vegetation and negatively impacted local communities who rely on this land  for their livelihoods.

Previous research by CIFOR and the wider scientific community has significantly enhanced understanding of the effects of the emerging biofuel industry on food prices and carbon emissions associated with land use change. However, evidence of local livelihood impacts or carbon emissions in specific locations and drawing on land use change data has been limited. This knowledge gap is of particular concern since the local livelihood and climatic benefits of biofuels are key rationales propelling their increasing usage worldwide.

The papers in this special issue examine the positive and negative impacts for local households affected in different ways by biodiesel or multi-purpose feedstock expansion.  Several papers note that concrete gains often accrue to employees, and in more mature industries where small-scale growers play an important role in biofuel feedstock production alongside industrial-scale plantations, to small-scale farmers. Yet the case studies also note that the combined effect of livelihood displacement and limited opportunities for livelihood reconstruction following land loss make land users particularly vulnerable. Furthermore, where land use change leads to the conversion of forests and woodlands, the resulting carbon emissions are difficult to reverse, undermining the main rationale for supporting biofuel development as a green alternative to fossil fuels.

One of the primary justifications for a shift to biofuels as an alternative energy source has to do with the climatic benefits that are anticipated to occur from the substitution of fossil fuels (whose combustion results in large net CO₂ emissions) to fuels whose combustion releases gases sequestered through cultivation and are therefore considered greenhouse gas (GHG) neutral. This promise of a greener energy for transport has led to the inclusion of biofuels in alternative energy targets in many industrialised countries, notably the USA and the EU, and a growing number of developing countries, notably Brazil.

Recent studies have quantified the climate effects of biofuel feedstock cultivation and suggest that these benefits cannot be assumed due to the potentially significant GHG emissions associated with land use change, fossil fuel usage in cropping and processing, and marketing.  Some studies suggest that the emissions associated with the land use changes brought about by plantation establishment alone may negate estimated climatic benefits, particularly where biofuels displace carbon-rich ecosystems or displaces food production to these areas. 

The case studies analysed in the synthesis paper of the mentioned Special issue show  that where biofuels are grown in landscapes with significant forest and woodland cover, anywhere from 13 to 99% of feedstock expansion may occur at the expense of forests.  For multi-purpose crops such as soy and oil palm (for which end products may be destined for human or livestock food or fuel), not all of this can be attributed to biofuels per se. However, the ecological impact, most notably of crops grown in tropical and sub-tropical climates for biodiesel, can be significant.  This is particularly true where producer country governments target forested areas as a means to minimise population displacement and enhance the economic productivity of these areas. 

One of the papers in the volume looks at the “carbon debts,” or carbon emissions occurring when existing land uses (forest, agricultural land or mixed vegetation) are converted to biofuels, for the different case studies. Based on these debts and the rate at which the biofuel crop itself sequesters carbon, carbon debt “repayment times” were calculated.  The repayment times were found to be the lowest for soy, and the highest for oil palm on peatlands. In the majority of cases analysed here, carbon debts were found to postpone net greenhouse gas reductions putting into question the likely contribution of biofuels for reducing GHG emissions.

Rural economic benefits are a key rationale behind expansion targets and biofuel policies and incentives established by producer country governments around the world.  Multi-purpose feedstock such as oil palm and soybean tend to have positive socio-economic benefits to rural communities through employment, infrastructure improvements, increases in land value and income from smallholder cultivation, while producing important economic multipliers in downstream industries. Yet, the tendency for biofuel crops to be grown on industrial-scale plantations and therefore to displace customary land users and uses, and to place upward pressure on food prices, has been cause for concern.

The main benefits from biofuel feestock expansion were often found to accrue to employees and small-scale producers.  In established industries in Brazil and Southeast Asia, for example, concrete livelihood improvements were reported by a majority of employees.  Livelihood improvements to small-scale growers were also observed in Indonesia and Malaysia due to increased income, a shift away from traditional revenue streams, more flexible working hours, and improvements in infrastructure. However, in cases where wages are low, benefits from employment may be associated with regularity of income flows rather than net improvements in income. Furthermore, evidence suggests that wealthier operators are better able to capture the benefits of the emerging biofuel industry. And as is shown in the papers from MexicoandZambia, smallholder engagement in emerging industries – such as the rapid expansion of jatropha, a plant cultivated for its oil-bearing seeds – can transfer risk rather than opportunity to smallholders.

As the Zambia paper shows, smallholder-based production may be best for avoiding negative effects on food security. This may be particularly true where population density is still low enough to enable households to creatively buffer negative effects on household level food production: intercropping food and fuel crops, expanding the area under cultivation, or incorporating biofuel crops in degraded land while shifting food crops to more productive areas.  With industrial-scale plantations displacing agricultural land and forests with important livelihood and food security functions, options for buffering food security impacts are limited. Yet while creative buffering holds true for the majority of small-scale growers, inter-household variability was found in food security impacts – with some households experiencing drops in food production due to land use changes or labor shortages.  

The most profound negative impacts were found to be associated with the displacement of customary livelihoods resulting from large-scale land transfer to investors. Economic losses stem from the loss of both agricultural and forest income, and from the failure to effectively channel benefits to affected households. One of the key underlying causes are observed deficiencies in the process by which investors acquire land that is under customary use and ownership – particularly in Southeast Asia and sub-Saharan Africa, where land ownership is largely informal and land markets poorly established. The case study from Ghana, for example, shows that the economic value of displaced land uses may be greater than the net value of employment generated by plantations.

The findings provided in this Special Issue raise concerns about the social and ecological impacts of biofuel development. The frequent ineffectiveness of environmental controls to halt deforestation and related impacts on biodiversity loss and greenhouse gas emissions, the persistent insecurity of land and resource tenure for local people, and the limited ability of smallholders to benefit from opportunities of emerging markets are issues that are causally linked in the biofuel feedstock sector. Several policy and market failures currently hinder the ability of the biofuel sector and other emerging markets to generate durable, shared value for the rural poor and to contribute to models of local economic development that minimise negative environmental impacts. There is a need to put in place more effective policy incentives and business models as a way to increase the options for biofuels