Successful Spinoff of Federal Enterprises: the Austrian Federal Forests

In most European states, large stretches of forest are public property. In Austria, 15 percent of the country's forests belong to the federal government (Austrian Federal Forests, ÖBF), and another 3 percent are in the hands of provinces and communities. Public ownership of forests has its roots in history, but is difficult to justify in economic terms. The society's interest in preserving the welfare (i.e., protective and recreational) function of the forest is assured by the forestry law, which, for 150 years, has set strict standards for forest management, and open access to forests for the public was first granted 25 years ago. ÖBF was a federally operated enterprise until 1997. State enterprises are usually less efficient than their privately owned counterparts, the consequence of limited decision-making powers, rigid and strictly regulated workflows and a wage system not affected by the economic success or failure of an operation. The operational and managerial weaknesses suffered by ÖBF were to be overcome by turning it into a public limited company (under sole federal ownership). From a macroeconomic point of view it is interesting to investigate whether the spinoff actually boosted productivity, both of labour and the land, and improved the utilisation of other resources.