Risky economics of rubber plantations

Ahrends, A., Hollingsworth, P. M., Ziegler, A., Fox, J., Chen, H., Su, Y., Xu, J.

Expanding rubber plantations

• Natural rubber (Hevea brasiliensis) major source of world’s rubber for high pressure applications.

• Used in manufacture of >1 billion tyres per year.

• Rubber prices have tripled in the last decade (Chinese car industry). rubber production globally has increased by 50% since 2000 rapid land use conversion to rubber in SE Asia (supplies 97%)

1984 1994 20040

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Natural rubber price (US$/kg RSS3 SG)

At 1 US$/kg conversion generally lucrative

Source: index mundi

Rubber plantations Xishuangbanna, China, 2010

credit: Science 2009 324:1024 credit: Science 2009 324:1024credit:

Nature 2009 457:246

>20,000 km2 have been converted to mono-culture rubber in mainland SE Asia (5,000 km2 forest)

Environmental/social implications

• Often planted by small-holders brought wealth to impoverished areas.

• Dependence global markets of small-scale farmers. Less food security?

• Clearance of primary and secondary forest (biodiversity, carbon).

• Rubber pulls water from sub-soils in dry season groundwater reserves.

• Heavy use of fertilisers and pesticides water contamination.

Xishuangbanna, China 2013 Laos 2009 (Mongabay)

Rapid and large-scale land conversion to rubber all over mainland SE Asia in areas previously regarded as unsuitable for rubber consequences?

No systematically collated evidence whether rubber can tolerate marginal environments (long-term) or whether there is a concern.

Study aims:

1. Quantify extent to which plantations have moved in marginal areas.

2. Tease out the different types of risks and establish whether there is evidence for poor plantation performance in relation to these risks.

Provide region-wide overview and much needed information to guide management and policy.

Xishuangbanna, China (Google Earth Jan 2013)

High Low

Global bioclimatic model of suitability for rubber

(based on the natural distribution of H. brasiliensis)

Environmental suitability

High Low

Spread into non-traditionally suitable habitats

Traditional rubber-growing space is becoming scarce.

90% of plantations are now located in non-traditional habitat.

In many of these areas rubber seems to be currently performing fine but this does not necessarily equate to long-term sustainability.

500 km0 250

63% of plantations now situated in risk zones

typhoon zone

high-alt. zone

frost zone

dry zone

>3,800 km2 in zones with frequent extreme events (e.g. typhoons, frost)

• Loss of plantations worth US$250 Mio in Vietnam due to typhoons Wutip and Nari (Sep-Oct 2013); additional loss due to Haiyan (Nov 2013).

• Cold weather kills 95% plantations in 4 Provinces in Vietnam in 2010.

• Freezing hazard in China causes major damage to plantations in 2008.

• A typhoon causes devastating plantation loss in Hainan, China in 2005.

Recent examples of storm and frost damages

http://tuoitrenews.vn/society/13714/devastating-loss-of-rubber-forests-to-typhoon-wutip

typhoon zone

high-alt. zone

frost zone

dry zone

>6,300 km2 at >900 m altitude or

on slopes >24⁰

>3,800 km2 in zones with frequent extreme events (e.g. typhoons, frost)

63% of plantations now situated in risk zones

(1) Yi et al. 2014. Ecol. Indicators 36: 788-797(2) Li et al. 2012Environmental Management 50: 837-848

• Plantations >900 m and/or slopes >24⁰ not deemed economically viable1.

• Soil compaction, erosion, stream sedimentation, risk of landslides (e.g. hazardous landslide southern Thailand 1988)2.

small-scale farmers may be left with degraded land.

Risks at high altitudes and steep slopes

Rubber plantation on slope Natural forest on slope

typhoon zone

high-alt. zone

frost zone

dry zone

63% of plantations now situated in risk zones

>3,300 km2 in dry zone

>6,300 km2 at >900 m altitude or

on slopes >24⁰

>3,800 km2 in zones with frequent extreme events (e.g. typhoons, frost)

• Reduced yield, and no yield during the dry season (up to 5-6 months).

• Loss of US$26 Mio plantations in Xishuangbanna, China in drought 2010.

• Mortality of trees up to 50% in dry provinces in NE Thailand.

• 24% reduction in yield in Hainan, China during drought in 2005.

• Plantations may deplete ground water.

Risks in dry zones

Yunnan, China 2010Rubber in dry season, Phitsanulok, Thailand

39 models (CMIP Phase 5) across RCPs 2.6, 4.5, 6.0, 8.5 for 2050

• Temperature increase in 100% of rubber area (decreased frost risk).

But• Generally seasonality will increase.

Increased rainfall wet season in 96-100% of area erosion/landslides

Increased risk of drought for 43-77% plantations in dry zone

• The number and severity of typhoons may increase.

Net exacerbation of marginality with future climate change

Yunnan, China 2010 Typhoon Haiyan (Karen Nyberg, ISS)Landslide SW China (www.news.cn)

Global consumption expected to increaseRegional rubber consumption

Natural vs. synthetic rubber

• Synthetic rubber does not match performance.

• Production price high (coupled with Crude Oil price).

No immediate alternatives.

• Consumption increase 2-3% yr-1.

• Available stocks likely to decrease relative to demand.

Rubber prices likely to remain high/increase.

The Rubber Economist Ltd. Quarterly Report (2013)

1. Increasing demand for rubber will continue to lead to land conversion.

2. Conversion to cash-crops is the main driver of forest loss in SE Asia. Plantations increasingly in areas with potential environmental risks.

3. Possibility for worst-case “loss-loss” scenarios: conversion of high-biodiversity value land to mono-culture plantations which yield short-term returns before becoming degraded and abandoned.

4. Study highlights urgent need for systematic monitoring of plantation losses. Policy interventions and agro-forestry practices (intercropping) may be necessary to avoid loss-loss scenarios, and to reduce exposure of small-holders to economic risks.

Conclusions