Kehala Ilir is a village in Kenohan sub-district. The population of the village is 1,090, with 97.5% of households being fishermen. The village is surrounded by peatland and lies next to Lake Semayang and the Kenohan River, where fishing takes place. The local community, dominated by ethnic Kutai, mostly also own land for wetland paddy farming or vegetable production, usually for subsistence. These local communities maintain their traditional livelihoods because their lands are not suitable for growing palm oil, or it is not permitted to do so owing to a moratorium on oil palm expansion in wetlands. Before the opening of the new Tabang road in 2015, income was also derived from water transportation, delivering passengers between villages and even from and to Samarinda (the capital city of East Kalimantan). The head of the Kehala Ilir village, for example, said “We used to have 100 water taxies, generating an income of around 7–9 million per month, but at certain times, they could bring in 25 million. Usually, staff from the palm oil companies used our service. This job would become an alternative livelihood after fishing.” Currently, many local communities, who have financial capital, are establishing Edible swiftlet-nests businesses as an alternative income. Two companies are located near to the village. An oil palm company has operated since 2007, and a timber company.

Local community from Kehala Ilir reported that in early 2016 the village suffered from water pollution resulting in fish kills and bad odors from the river. According to the local community, the pollution was attributed to waste from the mill of an upstream oil palm company. Local communities reported that such events did not occur before the mill was built in 2015. They additionally complained about the Tabang road infrastructure as being a contributing factor to pollution as barriers reduced or blocked the flow of Balayan river tributaries. The local communities claimed that the only water flow now came from the stream where the mill located. Since then, they reported that fish continue to decline, and this has affected the livelihoods in the village.

This village is located mid-stream of the Balayan River, Kembang Janggut sub-district, the surrounded landscape is a mix of drylands and wetlands, and large palm oil plantations are located within 10 km of the village. The population is 866 families (3,367 individuals). Before the development of oil palm, the local communities engaged in paddy farming, vegetable gardening, and fishing. Since the local establishment of the oil palm plantations by two companies in 1992 and later in 2007, many local communities gave up fishing and paddy farming and started to work in the palm oil business. In 2016, the head of the village reported that 60 percent of households were working in the oil palm business as employees and independent smallholders. In 2015, 600 households were engaged in plasma schemes that are linked to the oil palm companies. In the plasma, scheme community land is planted with oil palm using capital loaned by the company. To repay the loan, the company directly deducts a certain amount of the income derived from the harvest. The process is managed by a cooperative (Koperasi), consisting of village representatives and officers, and company staff. The main sources of conflicts between local communities and cooperative concerned the lack of transparency of the cooperative and the small income that the plasma generates. “Koperasi gives us only IDR 150,000 every 3 months because we have to pay the loan to the company” (oil palm smallholder). Local communities also mentioned high pest pressure by rodents leading to harvest failure as a contributing factor to seeking employment in the oil palm sector.

This village is located in the Kembang Janggut sub-district. The local communities are mainly independent oil palm smallholders, with 147 families having around 5 ha of oil palm plantation, 23 families around 10–50 ha, and 5 families between 50 and 100 ha. While total plasma was 1,215 ha in 2016. The production is around 3 tons of FFB oil palm per ha. Of the 460 families in the village, 250 were directly dependent on water sourced from the Balayan River in 2016 (refer to the Monograph data of Pulau Pinang village, 2016). Other families relied on water sourced from wells or bought water from Perusahaan Daerah Air Minum, a municipal water-works company. The company itself draws water resources from the Balayan River and filters it before distribution to the householders.

The local communities are recognized as being owners of their land, which is passed on within families through the generations. The land certificate (SKT/surat keterangan tanah) issued by the village official, certifying who is controlling the land, the size of the land and show how the land is obtained. While the letter is not proof of land ownership as recognized by law, the land can be sold and the letter can be transferred to other parties (e.g., company, migrants). Thus, decisions related to their lands are made by each family (not by village). Before the arrival of an oil palm company in 1992, forest clearance required permission from ethnic group leaders, mainly where this was carried out close to ancestral graves and other sacred sites (Colchester et al., 2013). Local communities reported that they sold their lands because they were not aware of its value, and only later did they realize the potential that the land has when planted with oil palm.

The first oil palm nurseries near to the village were established in 1992 by the oil palm company following permission granted by the provincial government (Colchester et al., 2013). This led to increased migration rate into the village. Around 40% of the populations are now non-native, and either bought lands from local communities or later married into local communities‘ households. Since 2007, the government requires companies to create plasma schemes on at least 20% of their concession. Consequently, the company bought community-owned lands and created benefit-sharing agreements. In August 2016, it was apparent that land claim conflicts remain.

This village is located in the Tabang sub-district in the upper Balayan river watershed. Six hundred eighty-six individuals (in 2017), distributed across 164 families of the Dayak Kenyah ethnic group inhabit it (only four individuals are non-Dayak). The village area is 18,103 ha. This village has been accessible by road since 2015. Electricity was provided by the oil palm company PT REA from April 2016. Unlike Dayak Tunjung in Pulau Pinang village, the local communities have legal land tenure, but decisions on land sales to outside agencies or actors are agreed communally across the village. Decisions relating to village lands are discussed among them, with leadership being provided by the village head and ethnic leader. Until August 2016, the majority of the population (80%) took basic needs from forest and field (Ladang). They practiced swidden agricultural relying on local knowledge. Rice and vegetables are planted, and after harvest, the land is left to fallow, with a new 2 ha area of land being cleared and planted. Rotation periods are 5–6 years. Farming is conducted communally with relatives or neighbors (gotong-royong) and no pesticides or fertilizers are used. The village suffered a harvest failure in 2015 due to drought and pests. In 2016 only 20% of the village, labor force works in the palm oil sector. The younger members of the labor force (25 people) tend to either work as laborers in oil palm company estates or have their oil palm plantations, while older village members prefer paddy farming. A subsequent visit in 2017 revealed that within 1 year 90% of local communities had started to plant oil palm, and around 5,000 young oil palm trees had been planted.

There are three palm oil concessions around the village, as well as the mining company. The companies provide jobs to the local communities. According to the head of the village, a proposal for a water tank aid submitted to an oil palm company resulted in uneven water distribution to the village, which created tensions among local communities and village officers in 2016. Some household did not receive access to water from the tank, while others gained good access. The tank itself provided filtered water from the Belayan River. Other conflicts between local communities and companies have arisen about access to land and cultivation rights. Continued expansion of company plantations has led to the development of oil palm even up to local communities' houses.

We started by collecting data through observation and 9 unstructured interviews from 20 to 26 May 2016, aiming to get more insight into tangible aspects such as the physical context of villages and intangible elements such as culture, stakeholders, and social organization. We also explored villages, observed people, and their activities, and took notes and pictures. Doing observation help us gain a better understanding of the context and phenomenon under study, that is not mentioned or is perhaps misrepresented by interview or group discussion (Scott and Garner, 2013). We stayed in a guesthouse, in a village near the oldest oil palm company in the areas. This allowed us to engage in conversation with, and listen to the life stories of, the hosts as well as neighbors (one male and two females). In the following days, we had, separately, other unstructured interviews with the heads of the four villages, and one ethnic group to get more understanding from the key decision-makers' perspective on oil palm development. We also reviewed village monographs, consisting of demographic data village profile.

We conducted Focus Group Discussions (FGD) between 24 June and 01 July 2016 in selected four villages, aiming to identify ecosystem services and explore communities' perception of ES current condition and drivers of change. The events were organized together with the village officers at the Balai Desa (village office) and were attended by 6–10 people in each village.

Using a matrix, we encouraged participants to write down the ES they know about, using the agreed term of ES (MEA, 2005), that is “benefits from ecosystem to a human being.” Participants were then asked to value each ES based on a Likert scale, an ordinal score from 1 to 10, where “10” is the highest value that indicates an ES is essential, while “1” reflects no perceived value or benefit. Moreover, to investigate the condition of the ES compared to 5–10 years ago, we asked the participants to allocate a symbol (1), (2), (3) to each ES, representing “decrease,” “no change,” and “increase,” respectively, in the condition of each ecosystem service. Based on this information provided by local communities, we were able to identify ecosystem services of the highest value as well as the greatest vulnerability.

Following up FGDs, in August 2016, we undertook semi-structured interviews with 74 local communities (Fisher, oil palm smallholders, and farmers) in four different villages, selected using stratified purposeful sampling (Table 2), and excluded local communities who already attended the FGDs. The interviews aimed to gain in-depth knowledge of the local communities' perceptions of the priority ecosystem services, their change, and the impact of and perceptions about oil palm.

We prepared questions that cover the basic topics, but not limited to encourage respondents in expanding their answer (Scott and Garner, 2013). The interviews focused on the following topics: (i) demographic, cultural and economic characteristics (e.g., name, age, gender, education, occupation, and income); (ii) usage and the current conditions of ecosystem services (e.g., river); (iii) the perspectives of oil palm development. We additionally asked open-ended questions, for example, on their opinion of the palm oil companies nearby and their expectations and plans for the future, assuming access to sufficient capital. We categorized answers as being: “positive,” “negative,” and “neutral.” We defined a negative view as one where palm oil was said to provide not profits or other benefits, and when people were unwilling to plant oil palm. A neutral view was when informants said they had no particular opinion or did not know. A positive perception was when participants expressed interest and willingness to expand oil palm, and/or mentioned that palm oil is more beneficial than other livelihoods and crops.

Participants from four villages agreed that the ES they listed were the most important. A total of 20 out of 29 ESs are considered crucial, being given a maximal score of 10 (Figure 3). Three ES were considered unimportant (scores of 1–5). There were, however, many variations in the degree of importance attached to ES by each community. Pulau Pinang listed the highest number of ESs (9.6 ± 0.7) followed by Kehala Ilir village (9.4 ± 1.6), Buluq Sen (8.75 ± 1.6), while participants in Hambau village listed the fewest ES (7.4 ± 2.5). Using the Kruskal-Wallis non-parametric test to compare ES importance scores as given by the four villages, we found significant differences in the reported values of ESs (H: 11.52, p = 0.0092). Pulau Pinang and Buluq Sen village reported broadly similar responses (r = 0.880, p = 0.011), despite the fact that 90% of local communities in Pulau Pinang are palm oil smallholders, while the local community in Buluq Sen are mostly paddy farmers.

The majority of ES were scored high important, but that the state of that service was poor (Figure 4). The four villages had broadly similar responses concerning ecosystem services. While most ES reported by participants from Kehala Ilir and Pulau Pinang were scored high but low condition, local communities from Hambau and Buluq Sen allocated several ES to medium score but low condition (bottom left), indicating recognition of the decline of these services, but attaching little importance or value to them.

Cultural services were given recognition by all villages, although reporting of these services was highly uneven. For instance, the indigenous Dayak of Pulau Pinang and Buluq Sen villages recognized a large number of cultural services, particularly related to their cultural heritage and traditional social practices. Many goods, valued by the local communities, were also related to cultural purposes (Daniel et al., 2012; Meijaard et al., 2013). These include the harvesting of Ulin timber/Ironwood (Eusideroxylon zwageri) for traditional Dayak coffins (called Lungun), herbs for medicines, rattan to build houses and furniture, and Biruuq leaves (Johannestijsmania altifrons) to make caps (called Seraung) to block the sun, all of which are synonymous with Dayak identity. Indigenous Kutai inhabitants in the Hambau also listed cultural services, teamwork/community self-help (called “Gotong-Royong”).

Only participants from Buluq Sen recognized the importance of Supporting Service (e.g., soil fertility). Members of this community, which still practices traditional farming, determine soil fertility by observing a variety of rattan and other plants, including those from the families Zingiberaceae and Euphorbiaceae, and employ Myrtaceae as an indicator of soil infertility (Siahaya et al., 2016). These indicators are used to plan rotational fallow periods. Thus, Dayak communities employ rattan not only for building but also to indicate the soil's need for shifts in cultivation (Siahaya et al., 2016).

Regulating services were recognized only by participants in Buluq Sen and Kehala Ilir– peat forests for flood mitigation, fresh air, and pollinators (from the peat-forest). The participants from Kehala Ilir were unique in identifying the importance of peat forests for the mitigation of floods and water pollution (RS19). They ranked peat forests highly because they reduced water pollution by filtering waste. These also act as a natural buffer to the nearby environment and aid in flood mitigation. Consequently, these villagers supported the moratorium on oil palm expansion on peatland (Daemeter, 2016). Swiftlet nest (PS3) as an ES that was increasing, but attached different degrees of value to this service. For example, the fishing community, Kehala Ilir, recognized it as a highly important ES (10), but it was deemed less so by palm oil smallholders from Hambau village (score 8). During the FGD, only participants in the Buluq Sen did not list it, as it had not been started in 2016.

The four communities that reported the resources were identified as having been subject to decline or degradation. The drivers of change were attributed by local communities to water pollution (Allen, 2013), as well as the fishing behavior of migrants—who use poison and electric fishing, upstream mining, and palm plantations, which the local communities claim cause water pollution (Table 4, statements 1-4). Despite the perceived decline in fish stocks, the local communities acknowledged that their household economies had improved (Table 4, statement 2).

Declining incomes from fishing are perceived to have been caused by water pollution that has caused reputedly caused substantial declines in fish stocks. Typically, local communities reported fish catches to have dropped from around 15 kg per day 5 years previously, to only 5–6 kg per day at the time of the study in 2016. One species, Betutu (Oxyeleotris marmorata), was considered to now be rare in the wild and may have become locally extinct. Other fish such as Puyau (Osteochilus hasselti), Lais (Cyptopterus sp.), Baung (Macrones sp.), and Pahat (Osteochilus repang) are reported to be rare.

Decreasing the provisioning services has caused crime and unemployment to increase (Table 5, statement 25 and 26). As reported by local communities in Kehala Ilir, who depend on the river (97% of populations are fishing), they now store fish collected from the river in their house (rather than in front of it as before) for security. The perceived decline in fish populations was also claimed to affect employment. Mr. H, a fish distributor, said that he used to employ five workers, but is now no longer able to do so due to insufficient fish catches. Both undermine the fabric of a community and can lead to tensions within and among communities.

Local communities also expressed concerns about the quality of the river water used for drinking and washing, as well as for mill operation (Table 4, statements 4–9). All stakeholders living in the area draw water for daily requirements, either directly or indirectly, from the Belayan River. They were also concerned over increased living costs, is now compelled to buy drinking water (and even water for cooking) from the water company (statements 1–3). They dated these changes to the establishment of the upstream palm oil mill and its waste flowing into the river.

In addition, the expansion of oil palm has led to the adoption of more intensive farming systems as opposed to the more traditional shifting cultivation practices of the past. Oil palm cultivation undermines the shifting cultivation system by committing a parcel of land to continuous agricultural use for 25 years, and thus requires fertilizer to maintain soil fertility. Buluq Sen and Pulau Pinang Dayak communities had, for example, never used synthetic chemicals on their paddy and banana farms, but this changed following the adoption of oil palm. Pulau Pinang local communities reported that each oil palm tree needs 3 kg of fertilizer every 3 months, and in at least one case in Buluq Sen it was reported that the oil palm trees died because they were given too much fertilizer.

Meanwhile, local communities from Buluq Sen reported a decline in soil fertility, which they attributed to nearby palm oil plantations, which used pesticide sprays. While we cannot verify the validity of this statement, it seems possible that frequent use of pesticides might cause pest agents to move from the treated fields to adjacent untreated lands, as detailed by Arias-Estévez et al. (2008).

While understanding the likely linkage between decreased ES and oil palm development around them, local communities still like growing such a lucrative crop. Aware of the dilemma, they still favor palm oil development mostly because of the benefits of high revenue (Feintrenie et al., 2010; Pfund et al., 2011; Saswattecha et al., 2016), yet losses from forest income, other crops, and fish might be higher than previously assumed (Angelsen et al., 2014). We found that local communities motivated by several reasons other than the economy for planting palm, such as unpredictable weather, governmental policies, government incentives (Rist et al., 2010), as well as influencing from neighbors (Figure 5).

Oil palm is also perceived as being more tolerant to drought (Table 7, statements 49–50) and unpredictable weather events (Masato Kawanishi, 2013) than rice. To adapt to uncertainty, farmers switched from paddy farms to oil palm plantation (Masato Kawanishi, 2013). Indeed, on several occasions, entire rice crops had been lost to rats and root-eating insects. Recent extended dry seasons, occurring most recently in 2015, had affected upland paddies, particularly in Buluq Sen village, causing rice crop failure. These collective experiences have driven communities to convert or consider converting, their lands to oil palm plantations.

Growing and maintaining oil palm was reported to be easier than rice. Planting oil palm seedlings is done once with no need to replant for 25 years. Paddy, by contrast, needs to be replanted after harvest (once a year for upland rice at Buluq Sen and Pulau Pinang, and twice a year for wetland rice at Kehala Ilir and Hambau). Rice farming is a strong part of the cultural heritage of Buluq Sen and Pulau Pinang local communities, yet considering the effort required, it is becoming less attractive than oil palm. This also relates to local communities' age and health concerns, with a few villagers stating that as they get older they have reduced the ability to farm paddies and work in fisheries, whereas oil palm remains productive for 25 years with little management input (Rist et al., 2010).

Local communities' motivation to invest in oil palm is further fueled by local government policies at different levels affecting decisions among farmer to grow oil palm (Rist et al., 2010). In one of the study areas in Buluq Sen village, farmers became encouraged to plant oil palm once the village government decided to allocate some of the village budget allocations (Alokasi Dana Desa or ADD) to provide village farmers with subsidies to cover 80% of initial planting cost, including seedlings and nurseries. ADD is sourced from the local government budget, and is allocated to villages across the country. However, the ways in which the budget is allocated depends on the village authority, which has discretion in proposing budgets and potential programs that would increase the wealth of their own village, making the use of ADD vary from one village to another (Magdalena et al., 2013). Across four different village sites, the use of ADD to promote the planting of oil palm was only found in Buluq Sen village.

In Pulau Pinang village, the central governments' decision to stop issuing permits for logging in 2011 has forced local villagers (many former loggers) to grow oil palm or become laborers in oil palm companies, though a palm oil company had been present in the region since 1992. Since then, increasing numbers of oil palm processing mills and the construction of roads and other facilities, which have been promoted by the government, have encouraged other local actors to invest in oil palm businesses, further driving oil palm expansion. In addition, the government's policy of nucleus and smallholder scheme requires that companies enter into an agreement with local communities and facilitate the establishment of a plantation. In so doing, the government provides a favorable scheme for local communities to engage in this business, start to plant and influence each other to plant oil palm. One of the local communities said that he saw his neighbors achieve economic success after harvesting palm oil (Table 7, statement 47–48).

Finally, the existence and proliferation of mills have tempted communities to plant oil palm through the availability of a readily accessible market [see also (Masato Kawanishi, 2013)]. The readily available market makes oil palm more attractive than other crops (e.g., bananas). Local communities also frequently mentioned the crucial role of middlemen in facilitating ES and land cover change. As a market intermediary, middlemen facilitate trade between suppliers (farmers) and buyers (mills), making FFB trading accessible across the region, and thereby promoting the adoption of oil palm cultivation. While middlemen are not a direct driver of ES degradation, they have information and capacity (e.g., they know the location of the smallholder plantations and have vehicles for transportation of the FFB to the mills) which is crucial to the expansion of smallholder oil palm systems. Moreover, middlemen can buy from and sell to whomever they want, and they often prefer to sell FFB to non-RSPO companies, as the FFB quality screening is not as strict. This results in lower incentives to adopt certification standards by producers and undermines the competitiveness of RSPO certified mills.