School of Agriculture, Food and Ecosystem Sciences - Theses
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ItemA new institutional economic approach to the organization of community forestry enterprises( 2016)Forests play a vital role in the livelihood and socio-cultural systems of hundreds of millions of people around the world. They have been the subject of ever changing managerial approaches derived from distinct conceptions of what role the state, local communities and individuals should play in their use and conservation. Government-led concession schemes that have favored logging companies and their business models have been linked to overexploitation and deterioration of forests due to lack of forest law enforcement. This has driven the emergence of community-led forestry: systems where communities are able to exercise responsibility and authority over forest management. Community-forestry enterprises (CFEs) are the latest development in community forestry. They have risen as an alternative to industrial scale logging and have been proposed as an innovative business model that can democratize forest governance and involve forest-farm producers in decision-making processes about forest resources. The ultimate aim is to develop forest-farm landscapes reflecting multiple stakeholder interests. The purpose of this thesis is to understand the organization and functioning of these unique enterprises through the use of new institutional economic (NIE) theory of the firm. The study answers the call for greater research to understand the real and potential role of communities in producing timber for commercial purposes and how local resource management functions in the economy in general. Concepts of transaction costs, separation of ownership and control, and ownership are used to identify a general set of characteristics of these enterprises and how they operate. The study used a qualitative methodology that involved semi-structured interviews to understand details about institutions and transactions. The research found that lowering information costs between CFEs and their transacting partners can improve trading relationships. Lowering information costs has spillover effects on the costs of bargaining and monitoring of contractual relationships between both parties thus improving the exchange environment. The results also show that CFEs face internal organizational transaction costs in the form of principal-agent problems. Overlaps between CFE membership and a geographical community exacerbate these costs and external managers can have a positive impact on reducing them. Finally, CFEs are vulnerable to a series of organizational weaknesses such as lack of investment, managerial problems and costly collective decision-making processes that can compromise their ability to survive in competitive productive environments. The results of this research have implications for policymakers and practitioners. Reducing information costs between CFEs and their trading partners becomes a key area for policy action to improve the transacting environment for both parties. Training in administrative issues and monitoring mechanisms, as well as additional expertise from outsiders, are essential for reducing principal-agent problems and improving management in CFEs. Institutional changes to motivate owners and outside capital to invest in the enterprises may be necessary, as is streamlining of decision-making processes to balance community and business priorities. However, greater understanding of the non-monetary motivations that differentiate community firms from investor-owned ones is also necessary so that their comparative strengths can be magnified and used to their advantage.