Managing Small Scale Private Forests, a New Commons?

Abstract

"In huge areas of Central and Western Europe, we find - due to inheritance laws - particular small scale private forestry holdings. In the last decades huge changes have taken place: structural changes within forest owners - e.g. they moved far away or got out of agriculture; technological changes in harvesting (but also in the area of timber mills) with significant economies of scale and tough competition on the supply side of the timber market. Those changes have made it in many cases unreasonable to manage or to harvest the forests as a private property by an individual or a family. Therefore, many of those forests are not used for timber production anymore. Not only non-timber functions of forests, like hunting, but also harvesting itself got typical common pool resource characteristics: economies of scale and a relative increase in exclusion costs.

"One could argue that this does not lead forcefully to a common property regime. There could also develop institutional systems, like leasing contracts. For example, big saw mills would rent substantial areas of land, to harvest them and to secure thereby the needed timber supply. Keeping transaction costs in mind, this would only work with standardised, self-renewing and simple leasing contracts. However, complexity of the resource and the long production process would lead to considerable principal-agent problems in such a contractual relationship. This might be one of the reasons, why such an institutional solution does not emerge. Furthermore, many other forest products have, as mentioned above, clear common pool characteristics. Forest owners have made considerable experiences with joint management regimes. The many German 'hunting associations' (Jagdgenossenschaften), for example, are the co-operatives of land-owners, which then lease out the hunting right of the land. However, forest owner associations (Forstbetriebsgemeinschaften; Waldbesitzervereinigungen), which exist in many regions, have considerable difficulties to organise a joint management and harvesting of the timber production process.

"This paper has two aims. First, it wants to analyse the reasons, why such joint management regimes have difficulties to emerge. It is an analysis of the particular collective action problems of small scale forest owners. Second, the paper wants to discuss different imaginable institutional solutions to this common pool resource management problem. Particular emphasis will be laid on a land fund solution, where individual forest owners give there land into a pool, where it is then managed collectively and they remain the owners of a virtual share."