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Mark Allocation To access the full mark range, you should be able to demonstrate clearknowledge and understandingof market failure, positive externalities and negative externalities and government...

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Mark Allocation

To access the full mark range, you should be able to

  • demonstrate clearknowledge and understandingof market failure, positive externalities and negative externalities and government intervention.

  • clearlyapplyyour knowledge to issues surrounding the global palm oil industry. You may wish to consider the current growth of the industry and the impact that palm oil has on different economic agents.

  • provide relevant and precise economicanalysisof the strengths and weaknesses of government intervention in the palm oil industry. You may wish to consider the rationale for government intervention and the different ways in which governments might intervene.

  • provide anevaluativejudgement on whether the benefits of government intervention outweigh the costs, or vice versa. You may also wish to consider the impact of leaving the palm oil industry to the free market.

  • demonstrate effectivestudy skillsin the research and presentation of your work.

Answered Same Day Nov 17, 2021

Solution

Dr. Smita answered on Nov 20 2021
139 Votes
Externalities in the Palm Oil Production with Special Reference to Malaysia
Introduction
Palm oil is the most consumed edible oil in the world. You name the tastiest dish available on this planet and you would find palm oil as a vital ingredient in it. Pizzas, doughnuts, chips and even in kebabs and biryani palm oil is an ingredients used in the majority of the kitchens. It is because of its versatility of being odorless it can be used in almost all dishes of the world. It is used in most of the restaurants because of its cost effectiveness and economical pricing. One can imagine the high demand of this oil world over. (Colding, 2017)
Malaysia is the second largest producer of palm oil in the world. Nonetheless to say it is one of the most important exporters of palm oil on the platform of world trade.
Palm oil sector in Malaysia is one of the most important economic aggregate of the country. In 2012, the Malaysian palm oil industry employed an estimated 491,000 workers. Hence, the palm oil production in the nation is giving support to majority of the households in the nation. Every positive growth
ings cost along with it. There the concept of negativity arose in economics.
( Satish, K.B,2013)
Negative Externality
Negative externality refers to the additional cost of the economic transaction borne by the third parties who are not involved in the economic transaction directly. The producer or the supplier and the consumer or the buyers are the first and the second party respectively.
The most serious negative externality of large scale production is environmental pollution as well as the ecological distu
ances. The extensive palm oil plantation in the South East Asia specifically Indonesia and Malaysia have led to the large scale deforestation in the nations. The rising demand for palm oil world over and their expectation to increase their economic growth through production and export of palm oil have raised concerns over the deforestation in the nation. UNEP, United Nations Environment Program has reported that most of the nations might get destroyed because of deforestation by 2022 in the greed to turn them into palm oil plantation.
With the greed to increase the palm oil production, many land areas have been developed for the palm oil production without consulting the recognized agencies, authorities and even local planters. In the Sarawak state of Malaysian Borneo, there has been debate over whether there was an appropriate level of consultation with the Long Teran Kanan community prior to the development of local land for palm oil plantations. Many conflicts have arisen between the natives who are also the residents of the area and the palm oil planters to wish to expand their plantations as far as possible. Many NGOs have even reported that big palm oil producing companies have forcefully acquired land from the natives who were growing food grains and living agrarian life with an objective to turn these small owner lands into big acquired palm oil plantations. (Allan. 2008)
Apart from the land acquisitions there have been numerous environmental issues that have been reported by environmental agencies and NGOs working in the area of conserving the nature and environment. The various concerns raised over the issues are:
1. Increasing...
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