The economic feasibility of coconut-oil bio-fuels in the Pacific

89 Pacific Economic Bulletin Volume 25 number 3 © 2010 The australian national university The declining or insufficient returns from copra farming have forced Pacific producers to seek alternative sources of income. Burning coconut oil as a fuel is a relatively low-valued end use for the coconut. The labour intensiveness of copra production presents an intractable cost frontier that renders coconut bio-fuel projects uneconomic in most parts of the Pacific. Consequently, those communities that have managed to access alternative markets are unlikely to be attracted back to copra. While copra farmers in low-wage locations in remote Melanesia and Micronesia could benefit from local consumption of coconut bio-fuels, there is a need to explore alternative policies to reduce the Pacific’s dependence on imported oil, electrify rural areas and increase rural incomes. Tim Martyn is a resource economist with the Secretariat of the Pacific Community. The economic feasibility of coconut-oil bio-fuels in the Pacific