Efficiency implications of silvicultural expenditures from separating ownership and management on forest lands

Abstract

In pursuing silvicultural goals on licensed public lands, governments worldwide have adopted various policy instruments including contractual requirements, the reimbursement of silvicultural costs, and investment incentives in the form of shares in the value of timber crops resulting from voluntary silvicultural activities. Monte Carlo simulations are used to investigate the efficiency implications of alternative silvicultural policy options. Results indicate that current policies, dominated by requirements and reimbursements with uncertain costs, may create significantly less wealth than policies that include some share of future timber crops. Means of granting shares include reimbursing tenure holders according to the present value of the future benefits created by their expenditures or by sharecropping arrangements. Such policies could potentially provide tenure holders with incentives to efficiently invest in silvicultural activities, by alleviating tenure insecurity while correcting for market failures.