A Monte Carlo Simulation Approach for Estimating the Economic Impact of Sustainable Plantation Scenarios

This paper investigates the economic impact of sustainable plantation scenarios for oil palm, rubber, cocoa, and coffee in East Kalimantan Province, Indonesia, using a Monte Carlo simulation approach. Currently dominated by oil palm, the region faces challenges regarding environmental sustainability and economic resilience. We propose a Monte Carlo simulation approach with a model to estimate the best scenarios of sustainable estate crop plantations based on net value over a year. Results indicate that Scenario 1, representing the existing plantation, has a high probability of incurring losses (17.3 %) and the lowest likelihood of achieving huge profits (32.8<sup xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">%</sup>). Scenario 3, which involves diversifying from oil palm and rubber into cocoa and coffee, offers moderate improvements over existing conditions. It shows a better outcome probability (35.5% huge profit and 12.4% loss) and has potential for significant maximum profits (325 trillion IDR). Scenario 3 is a viable option for short-term improvements. On the other hand, Scenario 2, which balances land distribution approximately equally for all commodities, demonstrates the highest probability of achieving huge profits (61.1 %) with minimal risk (0.01 % probability of loss) and also the highest average outcome in the simulation (113 trillion IDR), making it the most advantageous option. This study underscores the importance of diversifying plantation portfolios to enhance economic resilience and sustainability. Decision-makers can utilize these findings to optimize future plantation strategies, balancing economic growth with environmental stewardship.