A DATA-DRIVEN COMPOSITE SUSTAINABILITY INDEX (CSI) FOR INDEPENDENT SMALLHOLDER PALM OIL: EVIDENCE FROM PRINCIPAL COMPONENT ANALYSIS (PCA)
DOI:
https://doi.org/10.35631/IJIREV.824015Keywords:
Composite Sustainability Index, Data-Driven Weighting, Principal Component Analysis, Palm Oil Smallholders, Smallholder Agriculture, Sustainability AssessmentAbstract
Sustainability assessment in smallholder agricultural systems is essential for food security and long-term development. However, many composite indices rely on subjective weighting schemes and rigid sustainability pillars. This paper constructs a data-based Composite Sustainability Index (CSI) for smallholder agriculture using Principal Component Analysis (PCA) to empirically derive sustainability dimensions and indicator weights. Principal Component Analysis (PCA) was employed to empirically identify latent sustainability dimensions and derive indicator weights based on variance contribution, thereby reducing subjectivity in composite index construction. The findings show three significant dimensions of sustainability that account for 53.9 percent of the total variance, which are: integrated sustainability issues, environmental-economic trade-offs and social-environmental tensions. Such results imply that smallholders view sustainability as systemic and not as independent aspects. The results of PCA-based weighting showed equal contribution in the economic, environmental, and social dimensions (34.2, 32.7, and 33.1), respectively, which highlights the necessity of composite sustainability interventions. The refined weights were then applied to build a CSI, which enabled the categorisation smallholders into the below-average, average, and above-average sustainability performance groups. Methodologically, this study advances sustainability assessment by proposing an empirically grounded composite index that avoids subjective weighting schemes and predefined sustainability structures. From a policy perspective, the resulting Composite Sustainability Index provides a practical decision-support tool for prioritising interventions, allocating resources, and monitoring sustainability performance in smallholder agricultural systems.
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