September 13, 2011

Social costs and benefits of palm oil plantations

CJA Bradshaw angrily criticizes an awful piece by Phillip Lawrence that defends palm oil plantations in South-East Asia. But he actually agrees too much with Lawrence.

Bradshaw believes that "poverty alleviation" is "a key justification for their advocacy of oil palm expansion and forest exploitation in developing nations, and it is true that these sectors do offer significant local employment. Yet forest loss and degradation also have important societal costs." He sounds as if employment should be counted as a social benefit of oil palm expansion, to be weighed against social costs. But employment is not a social benefit but a social cost. The only social benefit of oil palm that I have heard of is palm oil consumption. Work is one of the costs that society has to pay in order to enjoy palm oil consumption. Wages (which are the good side of employment, the bad side being the hours worked) and business profits (which are the good side of investment, the bad side being risk and the postponement of consumption) are, from the social point of view, neutral - they benefit workers and owners as much as they hurt the consumers who pay them.

So, palm oil consumption is a benefit, work and capital risk involved in palm oil production are costs, and wages and profits are neutral. Thus, employment and business should count only as costs, not as benefits. To these costs we must add environmental and other social costs.

The important question that remains is how the social benefit of palm oil consumption compares to all the social costs (including employment) of its production. And that's a difficult one.

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