Consumers will pay higher prices for palm oil made by companies that help to protect endangered species, finds a new study by North American and U.K. researchers. Palm oil is widely used in processed food and cosmetics. But the conversion of tropical forests to oil palm plantations has devastated a huge number of plant and animal species, including tigers, elephants, rhinos and orangutans.

The study, published in the Proceedings of the National Academy of Sciences, finds that shoppers' willingness to pay more for sustainably grown palm oil could create profitable incentives for producers to preserve certain wildlife habitats.

"One way to save species and biodiversity threatened by agricultural expansion is to show companies the business case for conservation," says professor Brendan Fisher of the University of Vermont's Gund Institute for Ecological Economics, study co-author. "This study shows how important it is for industry and scientists to work together to find potential win-win solutions."

Researchers analyzed the finances of a major palm oil company to determine the impacts of conserving land on biodiversity and profits. They studied the prices firms could reasonably charge for 'conservation grade' palm oil by companies who set aside land for conservation programs. Their findings show that the higher prices shoppers were willing to pay for conservation grade products - determined through experiments in supermarkets - more than made up for companies' costs of providing conservation land.

"International governments have failed to stem the environmental damage caused by oil palm plantations," says Ian Bateman of the University of East Anglia, lead author of the study. "We wanted to find a new way of halting biodiversity loss that actually becomes profitable for private companies."

Palm oil is used in roughly 50 percent of supermarket products today, including many processed foods (margarine, packaged bread, ice cream, cookies) and cosmetic products (lipstick, shampoo, soap, detergent). It is also used as a biofuel. Palm oil and its derivatives can appear on food and cosmetics labels under many names, including: Palmate, Palmitate, Palmitic Acid, Palmolein, Palm Stearine, Palmitoyl Oxostearamide, Palmitoyl Tetrapeptide-3 and Palmityl Alcohol.

Oil palms, which primarily grow in Southeast Asia and Africa, are highly productive, yielding more vegetable oil per hectare than any other oil-producing crop.

Additional methods
For the study, researchers surveyed palm plantations, nurseries, forests and cleared land in Sumatra, the Indonesian island where tropical forests have been replaced by palm oil plantations, resulting in significant species declines.

Researchers determined that areas near existing forests were best for conservation, while areas away from existing roads reduced the impacts on company profits. They used these rules to identify which areas promoted biodiversity at the least cost to oil palm companies.

In price experiments, researchers found that shoppers were willing to pay of between 15 and 56 percent more for 'conservation grade' palm oil products. The study finds that even in low-productivity regions, a 15 percent price premium could induce a 32,000-hectare plantation to conserve up to 6,000 hectares.

Two researchers from UVM's Gund Institute for Ecological Economics participated in the study: Brendan Fisher, a professor in the Rubenstein School of Environment and Natural Resources, and Robin Naidoo of the World Wildlife Fund, a Gund Affiliate. Their co-authors were Ian Bateman of the University of East Anglia and Chris Carbone of the Zoological Society of London. The researchers are comprised of environmental economists and conservation scientists.

"This research shows how important it is for industry and scientists to work together and find potential win-win solutions - or at least to mitigate the tradeoffs between conservation and agricultural production," says UVM's Fisher. "It offers a model for aligning two huge, potentially opposing forces. One is the increasing demand for food, fiber and fuel products across the globe. The other is the absolute imperative to stop the loss of biodiversity from the planet."

"This research is critical because one fifth of the world's vertebrates are at imminent risk of extinction," says Robin Naidoo of WWF US, lead wildlife scientist and an affiliate of UVM's Gund Institute. "The overwhelming cause of this biodiversity loss is land-use change, driven by the expansion of agriculture and plantations for crops such as oil palm. Conversion to agriculture is resulting in the loss of tropical forests at an estimated rate of 13 million hectares each year, therefore it is imperative we find solutions that minimize the negative impact of agriculture on biodiversity."

"Consumers' willingness to pay for sustainably grown palm oil has the potential to incentivise private producers enough to engage in conservation activities. This would support vulnerable 'Red List' species," adds UEA's Bateman. "Combining all of these findings together allows us to harness the power of the market and identify locations where cost-effective and even profitable conservation can take place."

"Our research shows that habitats surrounding palm oil plantations, although they are affected by agricultural activity, still sustain a number of threatened species," says Chris Carbone, a senior research fellow at the Zoological Society of London. "It may be possible to protect, and even encourage, wildlife in these areas at relatively low and sustainable economic costs without heavily impacting palm oil production."

The title of study is 'Conserving tropical biodiversity via market forces and spatial targeting.'