Theory of Optimum Tenure System for Timber Forest Management

Theory of Optimum Tenure System for Timber Forest Management Kei Otsuka In Beijing on January 24, 2010

Missing Issue in the Natural Resource Management Literature: Role of “Care” • In the common property literature, emphasis has been placed almost exclusively on the excessive use of resources, e.g., tragedy of the commons. • In order to produce valuable timber, management activities, such as planting, pruning, thinning, singling, and weeding, are required. Such “care” is ignored in the theoretical literature. • Note that silvicultural operations are unnecessary in the management of miscellaneous trees producing minor forest products because non-timber trees can grow and re-grow like weeds.

Major questions now are: (1) whether community management is effective in timber forest management, and (2) if not, what management systems would be most conducive to efficient management of timber forests? • Hypothesis 1: Community management is more efficient than private management for protection or regulated use of resources. • Hypothesis 2: Community management is less efficient than private management for “care” of trees, as the work incentives are stronger in the latter than the former. • Hypothesis 3: The optimum system is a “mixed” system in which protection is carried out communally and care is carried out individually.

Hypothesized relationships among cost of protection, management intensity, and efficient land tenure systems (p. 48)

Four Types of Management Systems in Inner Tarai Region of Nepal • Timber Plantations: (1) Small-scale private plantations on former agricultural fields (2) Large community plantations on degraded (portions of) natural forests under traditional “collective community management,” in which all community members participate in protection and management and are expected to receive fair shares of future benefits. • Natural Timber Forests: (3) “Collective community management” (4) “Centralized management,” in which all community members participate in protection, but forest user group committee hires wage workers for management. Community members can purchase tree products at lower prices and the committee receives the residual profits. This system was voluntarily created by the community and approved by a staff of department of forestry in Dang district.

Hypotheses on Private, Collective, and Centralized Management in Nepal • Collective community management is less costly than private management for the protection of timber tree plantations (because of scale economies in protection). • A larger amount of labor is allocated to the management of planted trees under private management than under collective management (because of stronger management/profit incentives). • Centralized management is more profitable than collective management in the management of natural timber forests (because of stronger management/profit incentives and lower cost of coordination).

Table 9.1 Comparison of three types of forests in inner Tarai a Years since registration.

Table 9.2 Characteristics of private and community plantations in inner Tarai a Person’s chi-square test statistics for the first seven comparisons and t-statistics for the last three. bUsed as agricultural land because of encroachment. cTotal becomes more than 100% because some plantations have more than one soil type. *.05 level **.01 level

Table 9.3 Comparison of protection cost between private and community plantations in inner Tarai a Pearson’s chi-square test. bBoth family labor users’ participatory labor are included. * .05 level ** .01 level

Table 9.5 Comparison of labor input between private and community plantations in inner Tarai ** .01 level

Table 9.10 Characteristics of centrally and collectively managed community forests in inner Tarai

Table 9.10 (continued) a If the current community forest area used to be covered by forest in 1978, this land use variable is unity, and otherwise it is zero. This dummy variable is constructed based on the interpretation of aerial photographs. bGross profit is defined as total revenue minus expenditures for forest management and protection. *.05 level

Difficulties in our study of community timber forests in Nepal • In the collective community forest management, user group committee does not know the amount of “free” labor contributions. We need household surveys. • Trees were immature so that the value of tree sales was not good indicator of “output.” We need new data now. • I wish that the Maoists did not harvest timber trees in our study site.

Characteristics of Japanese Timber Forests after WWII • Drastic reduction in demand for firewood, charcoal, and grasses and (2) Sharp increases in timber prices in the 1950s and 1960s. ⇒ (A) Plantation of timber trees became active and (B) some parcels of community forests were allocated for individual management and some community forests were completely privatized. ⇒Sharp reductions in timber prices because of the appreciation of Japanese yen since the early 1970s. Cost of harvesting exceeded sale revenue, so that no harvesting took place since the 1980s in my sites.

Findings on Collective vs. Individual Management of Timber Forests in Japan • Timber trees are more actively planted under individual management than under collective management. • Thinning is more actively carried out under individual management than under collective management. • Management of larger forests tends to be individualized, primarily because of the larger coordination costs of collective management.

Concluding Remarks • While the economic literature exclusively focuses on “protection of common property resources” or “prevention of their excessive use,” investments in those resources or “care” activities are often important in practice. • Private management or centralized management is more efficient than collective management in “management” or “care” of trees. • Collective management is more efficient than individual management in protection of timber trees, where demand for minor forest products exists. • Social forestry or community forestry projects, in which all the community members participate in protection and management and share benefits equally, are likely to fail to produce high-valued timber, because of the inadequate management incentives.

Concluding Remarks (continued) • Given that distributional justice of centralized management is unclear, the socially best system is combination of collective and private management, in which protection is carried out collectively and management is carried out individually by allocating use rights of tree planted parcels or ownership rights of trees equally to individual members. • The establishment of efficient or profitable institutions for tree resource management is important from the global point of view, as active tree planting is needed to reduce global warming. • I believe that it is worth testing my hypotheses in a variety of settings.

Theory of Optimum Tenure System for Timber Forest Management