With one-fifth of farming households dependent on palm oil production, policy considerations that look after the environment, lives, and livelihoods were essential.
– Oil palm has brought significant benefits and prosperity to Liberia. The export of crude palm oil is a major source of foreign exchange earnings for the government. The palm oil crop covers more than 1 million hectares, hundreds of thousands are employed in the palm oil sector, and at least 21 percent of the farming households produce palm oil.
Opportunities for the country’s palm oil and other palm products in the international markets are considerable—creating a temptation to prioritize development over environmental concerns.
In 2020, policymakers in the Inter-Ministerial Commission on Palm Oil Concessions in Liberia faced a significant challenge: developing a policy path that pursued quick short-term profits and faced long-term negative consequences to the environment, lives, and livelihoods—or a beneficial approach for people and planet.
Forests Belong to Humanity
“When decisions are too short-term, narrow, and short-sighted, we do not take into account the long-term impact of our action. We need to recognize that some goods are common goods or public goods, such as forests. They do not belong to one person or one company; they belong to humanity as a whole,” says Francisco Alpizar, Wageningen University and Research.
This was the case for Liberia’s palm oil sector, whose key stakeholders include government, the private sector, NGOs, business associations, smallholder associations, and households that directly or indirectly rely on it as their lifeline.
“From an economic perspective, the prices of goods and commodities should reflect the true cost to societies, not just the immediate cost of producing them but also the environmental impact the production of those goods and services carries for societies,” Alpizar says.
The Liberian National Oil Palm Strategy and Action Plan (NOPSAP) was facilitated by the Global Environment Facility-funded Good Growth Partnership. Here policymakers in Liberia decided to use the Targeted Analysis Scenario (TSA) to design a mutually beneficial policy path for communities, sectoral government agencies, and palm oil concessionaires.
Targeted Analysis Scenario Benefits All
As they developed the National Oil Palm Strategy and Action Plan (NOPSAP) facilitated by the Global Environment Facility-funded Good Growth Partnership, policymakers in Liberia decided to use the Targeted Analysis Scenario (TSA) to design a mutually beneficial policy path for communities, sectoral government agencies, and palm oil concessionaires.
UNDP developed the TSA to respond to the growing demand from decision-makers and stakeholders for more policy-relevant sustainable development analysis to support national SDG implementation facing diverse policy, management, and investment choices.
As an innovative analytical approach, the TSA captures and presents the value of ecosystem services within decision-making to help make the business case for sustainable policy and investment choices. By doing so, the TSA allows policymakers to calculate these costs and make decisions that harmonize with the environment.
In Liberia, policymakers needed economic data that compared the outcomes of continuing with conventional palm production with the results of taking a different route to make sound, informed decisions leading to sustainable palm concessions.
At the time, the situation in the West African country was characterized by contradictory forest management and concessions policies. The Commission had to balance the eagerness of communities and smallholder producers to engage in palm oil concessions because they brought employment and socioeconomic benefits and concerns in the global market about the environmental risks of palm oil production.
UNDP’s TSA provided an answer, enabling the Commission in Liberia to include all the relevant social, environmental, and economic impacts. TSA offered a systematic approach covering all aspects of the sector.
The TSA improves the decision-making process by capturing and presenting the value of ecosystem services and sectoral production to make policy decision-making more holistic. The tool applies to any sector, scenario, context, or country.
“TSA can, for instance, be applied for decision-making at the national level, when taking a national perspective, regional, company or even household level. For each and every one of those decisions, we need a careful analysis of what the current situation looks like and how it will look in the future and, what would be the alternative situation,” Alpizar explains.
Business-as-Usual Versus Sustainable Ecosystem Management
One is considered a business-as-usual scenario, and the other a sustainable ecosystem management scenario.
“When you compare one against the other, with a long-term perspective and focusing on the relevant indicators for the decision makers or the things that the decision maker cares for, then you can provide a better picture of the decision that is in front of us, and that is what targeted scenario analysis is.”
He says targeted scenario construction of business-as-usual versus sustainable ecosystem management outcomes is presented to the decision maker. When this is done, in principle, the decision maker will have a powerful decision-making tool to make informed decisions based on evidence.
“If we put ourselves in the feet of a decision maker, that is, for example, deciding whether to implement a series of policies to make the agricultural sector more sustainable, the business-as-usual scenario means you continue with the current practices. A sustainable ecosystem management scenario would be one in which you change a series of practices or actions, and with that, in principle, you achieve a different outcome,” Alpizar explains.
He gives an example of producing pineapples under a business-as-usual scenario with an impact on surrounding lands, agrochemicals, deforestation, land use change, competing diseases, or diseases that spread to the surrounding area, which might be viable but over a short period of time. The alternative scenario is to create and implement a more long-term, sustainable approach.
“Through UNDP’s application of TSA methodology, you can carefully construct the two scenarios by first asking this question: As the decision maker, what do you really care about? Is it employment, taxes, production, or reducing social unrest? Based on the answer, the analyst can construct a targeted scenario,” Alpizar says.
Returning to Liberia, the TSA was able to show that Smallholder Production (SPO) scenario and environmental sustainability were in the best interests of the concessionaire and the Liberian economy – with substantially greater benefits compared with the business-as-usual scenario (USD 333 million versus USD 188 million over 20 years).
When these results were discussed with the multistakeholder National Oil Palm Platform of Liberia, it was accepted and paved the way toward sustainable palm oil development in Liberia.
Across the world, TSAs have been conducted to assess the economic value of ecosystem services for various strategic economic sectors such as hydropower, agriculture, and tourism under the business-as-usual and sustainable ecosystem management scenarios to create a sustainable development path where humanity is in harmony with the environment.