Who Should Own Indonesia's forests? Exploring the Links between Economic Incentives, Property Rights and Sustainable Forest Management

The existing economic incentive regime was one main factor behind high deforestation rates in Indonesia. Government intervention to push for the expansion wood processing industries resulted in unsustainable resource use patterns. Uncertain tenurial arrangements and property rights, unenforceable contractual obligations and weak monitoring and enforcement by the government exacerbated the situation. Indonesia's existing forest management system does not provide efficient structures of control rights to any of the sector's many stakeholders. The lack of well-defined property rights has prevented various stakeholders from trading their control rights so as to improve the efficiency of the management. Future economic research on forestry issues in Indonesia could therefore highlight the importance of secure property and ownership rights in any strategies to implement sustainable forestry management.