• Working Paper

Economic Impacts of Tropical Forest Conservation: The Case of Logger Households Around Ruteng Park

Citation

Butry, D. T., & Pattanayak, S. K. (2001). Economic Impacts of Tropical Forest Conservation: The Case of Logger Households Around Ruteng Park.

Abstract

The debate over tropical forest conservation remains contentious in the absence of quantitative evidence on the local benefits or costs of protection. We surveyed logging households in the buffer zone of Ruteng Park in Manggarai, Indonesia to develop micro-level measures of forest dependence as forest profits and to correlate it with wealth, forest size, and prices by estimating a profit function. Regression analysis reveals that there are differences in forest use behavior across rich and poor households. Rich households are sensitive to changes in prices of forest products, while poor households are sensitive to wages. We also find that merely designating greater areas of ‘protected’ forests will have serious regressive effects. Calculated profits show that representative logging households can lose between $340 to $460 of annual profits from a policy that completely bans forest uses. We conclude that complete restriction on forest use will be politically difficult and will require compensation. Moreover, mere designation of forest protection creates the twin problems of hurting the poorer local households and furthering local deforestation by rich households. Instead, the government should consider economic instruments such as permits and taxes/subsidies. Contingent valuation data shows that regulating forest use by a permit scheme is a viable alternative because it enjoys the support of the local people. Economic instruments can help developing country governments design forest protection policies that distribute benefits more evenly and that pay attention to the people living at the forest margins.