Financing the Management of the Commons: A Case of the Forestry Sector in Sri Lanka

Abstract

"The sustainable management of the commons is now being highly discussed with the recognition of the role played by the commons for social welfare and realizing the necessity of maintaining the stock of common resources for well being of the future generations. However, just like for other environmental resources, for commons, financing has posed a major challenge. This has opened the way for various financing mechanisms to be adopted for sustainable management of common resources. Among them are ‘market based instruments (MBIs)’ (environmental levies, user fees, tradable permits/quotas, deposit refund systems etc.), budgetary allocations and donor funding. Despite these achievements, however, it is not clear to what extent public and private financial management systems are transformed to cater to broad goals of sustainable management of the commons. One cannot overemphasize the necessity of innovative mechanisms for financing sustainable management of common resources amidst the vast commercial values involved with alternative uses of those resources. This study focused on the common resource of natural forests in Sri Lanka to examine the current situation of financial mechanisms existing to mobilize resources for implementation of sustainable management measures. Data gathered through secondary sources (policy documents, annual reports, budget statements etc.) as well as primary information gathered from key informants was used for this analysis. It was found that significant funds are being generated by the relevant institutions which are directed to the treasury through the Consolidated Fund mechanism and only a part of it comes back to these organizations by way of budgetary allocations. Unless supported by donor funded projects, these budgetary allocations are sufficient only for the management of these institutions rather than for mandated activities. This implies that conventional system of state financial management has not been geared to cater to the needs of sustainable management. It further indicates the necessity of working out appropriate fiscal allocation systems so as to enable respective institutions to mobilize necessary investment funds through self-generated income sources, within the laws of the country."