Forest Policy and Economics 8 (2006) 458 – 469 www.elsevier.com/locate/forpol
Why policy reforms fail to improve logging practices: The role of governance and norms in Peru Joyotee Smith *, Violeta Colan, Cesar Sabogal, Laura Snook Center for International Forestry Research (CIFOR), PO Box 6596 JKPWB, Jakarta 10065, Indonesia
Abstract Although policies to improve forest management have been widely introduced, poor logging practices remain prevalent in tropical forests. We assess whether recent radical changes in forestry laws in Peru will result in significant improvements in logging practices. We adapt North’s conceptual framework of institutional change to analyze the impact of governance on loggers’ norms and argue that improvements in logging practices will require changes in both laws and norms. The analysis uses survey and field evaluation data on logging practices in Peru, as well as secondary sources. Results show that bringing about radical changes in logging practices is particularly difficult in countries with a history of governance failures in the timber sector. In Peru, governance failures that have promoted norms inconsistent with good management are government’s perceived lack of interest in long-term timber management, inconsistent forestry laws, perceived discrimination against the timber sector, and ineffective law enforcement. As a result of decades of these governance failures, loggers developed a short-term perspective on timber extraction and felt entitled to violate government’s laws. Poor logging practices continued under the new law because of governance failures. The Peruvian experience shows that changing laws radically is often easier than avoiding governance failures in implementation. While some governance failures were partially rectified, others assumed added significance under the provisions of the new law. Decentralization also exacerbated existing and new governance problems. These failures reinforced existing norms and may, in addition, lead to norms condoning corruption. Modifications need to occur both in norms and in logging laws to reduce the inconsistency between the two. Notable improvements in governance will be required to bring about changes in norms. Changes in the logging system are therefore likely to be far less revolutionary, and to take far longer, than envisioned. D 2005 Elsevier B.V. All rights reserved. Keywords: Policy; Forestry; Logging; Governance; Amazon
1. Introduction
* Corresponding author. Ayara Surin, Villa 6A, 124/22 Moo3, Cherng Talay, Thalang, Phuket 83110, Thailand. E-mail address:
[email protected] (J. Smith). 1389-9341/$ - see front matter D 2005 Elsevier B.V. All rights reserved. doi:10.1016/j.forpol.2005.08.001
The past two decades have seen considerable efforts to improve logging practices in tropical forests. Practices that reduce the impact of timber harvesting have been developed (Dykstra and Hein-
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rich, 1996). Researchers have identified critical policy failures that impede the adoption of sound logging practices (see Pearce et al., 2001) for a summary of policy recommendations). Although many of these policy reforms have been introduced in tropical regions (Poore and Chiew, 2000), good logging practices are practiced by a tiny minority of managers of tropical forests (FAO, 2001). Even in Bolivia, where radical reform in forestry laws are widely perceived to have achieved impressive results, there is a serious risk that widespread illegal logging, non-payment of forestry fees by concessionaires and lack of political will could derail the movement toward better management (Contreras and Vargas, 2002). Why have the results of policy reforms been disappointing? We argue that improved logging practices require not only radical changes in laws, but also changes in certain norms or codes of behavior among loggers that are inconsistent with good management practices. We contend that such norms become acceptable largely as a result of governance failures. We take the case of Peru, where recent radical changes in forestry laws are attempting to achieve improved forest management practices and show how governance failures under the new forestry regime may, in fact, reinforce existing norms and thus undermine improvements in logging practices.
2. The study area Understanding the conditions under which policy reform could effectively improve logging practices in Peru is of critical importance for the sustainable use of the Amazon rain forest because, after Brazil, Peru has the largest extension of Amazonian forest (around 75 million ha: INRENA, 1995) of which 48 million ha are estimated to be capable of longterm timber production (CONAM, 2001). The study was carried out in two of the principal timber extraction areas in the lowland humid forest of Peru: the Ucayali and Loreto regions. Pucallpa, in the Ucayali region, is also the most important timber processing center in Peru. Peru’s old forestry law, dating back to 1975, set up a dual system of large and small contracts, both of which were subject to volume-based timber extraction
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and reforestation fees. In theory, small contracts could only be acquired by individual extractors, each of whom could obtain only one contract of up to 1000 ha, with a duration of only 2–10 years. Small contracts were subject to few requirements: timber harvests were not to exceed authorized volumes, and at least 6 species were to be harvested. Logging companies could legally acquire only large contracts, with a maximum size of 100,000 ha and a duration of 10 years, renewable. Large contract holders had stricter requirements. They had to harvest a minimum of 20 species, submit technical and economic feasibility studies, a forest management plan and an operative plan for the annual authorized area (Galarza Contreras and La Serna, 2005). They were also supposed to follow a number of mandated logging practices, which we describe later. In practice, however, although a few logging companies took on large contracts, the majority acquired multiple small contracts, in order to escape the more onerous requirements of large contracts.
3. Data collection Primary data collection consisted of a structured questionnaire administered to 10% of small contract holders and holders of all active large contracts in Ucayali and Loreto. This was carried out in 2001/02, just prior to the implementation of the new regime in 2002. Secondary data sources and unstructured interviews with government agencies, NGOs, producers’ associations and forestry professionals complemented the survey. A field evaluation of the logging practices of a small percentage of the survey sample was carried out in 2002/03, in logging areas authorized under the old regime. Information on the implementation of the new regime was obtained from secondary sources as well as from discussions of a round table of stakeholders (MNDCF), in which one of the authors has been the technical secretary of the Ucayali branch since 2003.
4. Analytical framework To analyze the impact of governance on norms and logging practices, we draw on the framework of insti-
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tutional change of North (1990). North defines institutions as the formal and informal rules of the game in a society. Forestry laws are examples of formal institutions. Informal institutions consist of society’s norms or accepted codes of behavior. Improved outcomes, such as improved logging practices, require changes in both laws and norms, because together they form a complex, interconnected web that defines and limits the set of choices individuals face, such as, for example, deciding on logging practices. Changes in laws alone are unlikely to suffice because an important function of norms is, precisely, to modify ways in which laws function in practice, so as to resolve problems people face when confronted by laws (North, 1990). Thus if logging laws are perceived to be inconsistent, informal codes of behavior will evolve to circumvent laws. The types of norms that become acceptable and persist are strongly influenced by the quality of governance (defined here as the manner in which government carries out its functions). Norms become acceptable when they succeed in resolving problems people face. Thus if laws can be flouted with impunity, because of ineffective law enforcement, violating inconvenient laws can become an ingrained norm of society. If government is perceived to have little interest in long-term management of forests, mining forests for short-term gains may be considered by loggers to be the most successful strategy, and may therefore become widely acceptable. Norms also tend to be widely followed when they acquire moral force by being considered legitimate, due to governance failures. Thus if government is perceived to be corrupt or to be discriminatory against the timber sector, nonpayment of timber taxes may be considered justified by members of the logging community. Thus the quality of governance is an important determinant of norms.1 If governance failures persist after radical improvements in laws are introduced, inconsistencies typically arise between laws and people’s codes of behavior. Under these circumstances, the transac-
1 Clearly culture, as well as other factors, such as local traditions of forest management, also influences norms.
tion costs of penalizing violators can be insurmountably high (North, 1990). In these cases, improved outcomes, such as better logging practices, can usually only be brought about through modifying both laws and norms (North, 1990). Modifying norms requires changes in governance and in people’s perception of governance, both of which are complex and time-consuming. As a result, improvements in logging practices tend to be far less radical and more time-consuming than originally envisioned.
5. Production systems of logging enterprises: old regime Survey data (Table 1) show that the sample falls into 3 broad categories. The first consists of nonindigenous small-scale extractors living in the forest margins. Their production systems indicate that they are capital-constrained. Logs are extracted manually. They own no major capital items or processing facilities, such as saw mills. Almost all have only fluvial access to their contracted areas and almost two thirds of these are not accessible by barges. Overall, the data indicate that these extractors belong to the category to which small contracts were legally applicable. By far the dominant and expanding group of timber producers consists of companies, who have circumvented the law and acquired multiple small logging contracts. This category of producers consists of migrants from other regions of Peru, who have moved to the regional capitals of Ucayali and Loreto to take advantage of business opportunities. Table 1 shows that they are well capitalized as indicated by their ownership of processing industries and major capital items, such as skidders. Although most have contracts with only fluvial access, two-thirds can be reached by barges. Levels of value added are, however, relatively low, with only a small minority doing secondary processing or drying or preserving. Very few logging companies operate large contracts. Only 8 were active in the study area at the time of the survey. All others had ceased operations. Companies with large contracts claim that their competitiveness is eroded by the many restric-
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Table 1 Characteristics of logging enterprises: survey data, Ucayali and Loreto, Peruvian Amazon, 2001/02
No. of observations Area managed (ha) Restricted fluvial access (% enterprises)a Permanent fluvial access (% enterprises) Terrestrial access (% enterprises) Mechanized extraction (% enterprises) Total number of extracted species Secondary processing (% enterprises) Drying and preserving (% enterprises) Ownership of major capital items (% enterprises) Own processing industry (% enterprises) a
Small-scale extractors
Companies with multiple small contracts
Companies with large contracts
34 1697 64 33 12 9 5 0 0 0 0
24 9826 32 67 25 71 6 8 8 21 54
8 24,236 4 25 63 100 8 57 17 100 38
Percentages on mode of access add up to more than 100, because some enterprises have more than one mode of access.
tions they face relative to companies with multiple small contracts. Most large contract holders are migrants from the affluent coastal regions of Peru, whose families have had business interests in regional capitals of the Amazon for several generations. Table 1 indicates that active holders of large contracts have significant capital resources. Most also have terrestrial access and over half carry out some form of secondary processing.
6. Logging practices under the old regime In Table 2, we demonstrate the extent to which each category of extractor follows management practices intended to reduce damage resulting from timber harvesting and ensure future timber production.
vest area, including a topographical map showing the location of trees. Survey data (Table 2) show that 80% of large contract holders carry out an inventory, but none of the other categories of extractors do so. Virtually no one in the sample carried out a census, as defined above. The field evaluations revealed that inventories and censuses were carried out purely because they were requirements. Censuses did not include maps, were not used for planning harvesting operations and in many cases did not reflect actual volumes or species densities in the concession. Instead of using inventories and censuses for planning harvests, most respondents used indigenous tree hunters to locate and mark trees to be harvested, a practice that was far less costly. 6.2. Planning and construction of roads and skid trails
6.1. Timber stock survey The objective of stock surveys is to provide loggers with a tool that can be used for planning harvest operations, so as to increase skidding efficiency, protect future harvest trees and seed trees and reduce damage to soils and rivers (Snook et al., 2002; Applegate et al., 2004). Under the old regime, only large contract holders were required to carry out stock surveys, consisting of a samplebased inventory of commercial volumes over the entire contracted area and a complete census of trees to be extracted in the authorized annual har-
Careful planning and construction of roads and skid trails reduces damage to soil, rivers, and future harvest trees and reduces transport and skidding costs (Snook et al., 2002; Applegate et al., 2004). While the majority of large contract holders claimed that professional foresters supervised road construction and planned skid trails (Table 2), their effectiveness in reducing damage was doubtful, given that field evaluations revealed that maps were not used, there was virtually no preplanning and ad hoc decisions on roads and skid trails were taken in the field primarily to maximize production.
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Table 2 Logging practices of enterprises: survey data: Ucayali and Loreto, Peruvian Amazon, 2001/02a Logging practices Timber stock survey Sample inventory 100% census Indigenous tree hunter locates harvest trees Planning of skid trails and roads Skid trail planned by tree hunter/contract owner/skidder operators Skid trail planned by forester (no map) Road construction supervised by tree hunter/foremanc Road construction supervised by forester (no map)c No road construction
Small-scale extractors
Companies with multiple small contracts
Companies with large contracts
0 0 100
% Respondents b 0 4 100
80 0 83
100
96
50
0 100 0 97
4 89 11 61
50 17 83 0
0 0
0 4
0 33
Protection of future harvests Directional felling using wedges Seed trees selected and unharvested a b c
See text on logging practices for discrepancies between survey and field evaluation data. Some percentages add up to more than 100, because some extractors follow more than one practice. Percentages of those who construct roads.
6.3. Protection of future harvests Directional felling protects next-harvest trees and seed trees. Leaving and protecting seed trees provides for regeneration and thus maintains future timber supplies (Snook et al., 2002; Applegate et al., 2004). Around one-third of large contract holders, who were required to mark and protect seed trees, claimed that they selected seed trees for good characteristics and left them unharvested. The rest took no deliberate measures to conserve seed trees. Directional felling was not correctly practiced by any extractors. 6.4. Limiting logging to authorized areas Limiting logging to authorized annual harvest areas promotes long term sustainability by protecting timber volumes, biodiversity and ecological processes in unlogged areas (Snook et al., 2002). Logging outside authorized areas was clearly widespread (CMLTI, 2003). In our survey, 78% to 88% of respondents admitted seeing logs being extracted outside authorized areas and 56% to 80% said that they had been requested to blaunderQ illegal logs by including them as part of their authorized volumes.
The overall conclusion from this evaluation is that most producers made no attempt to reduce logging damage or ensure future harvests.
7. What accounts for poor practices? In this section we demonstrate that governance failures and flawed logging laws led to norms inconsistent with good management. 7.1. Government’s perceived lack of interest in long-term management of forests Over decades, forestry policy in Peru has resulted in the perception that the government has little interest in the long-term management of forests. As a result producers sought to maximize short-term returns and therefore ignored low impact logging practices, many of which, as explained above, provide benefits primarily in terms of future harvests. The perception that the government had little interest in using the Amazon for sustained timber production was fostered by several policies. For example, the Ministry of Agriculture, which admi-
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nistered forestry, frequently gave out permits for agricultural use in areas with potential for longterm timber production (Torres, 2003). Logging contracts were given for only short durations, because the military dictatorship of the 1970s visualized forests as eventually being converted to agriculture or cattle ranching (Barrantes and Trivelli, 1996). The Belaunde government of the 1980s also saw the Amazon as an area to be colonized (Barrantes and Trivelli, 1996). Thus the timber industry believed that the Amazon was regarded by the government as an opportunity for extending the agricultural frontier, rather than as an area for permanent timber production. 7.2. Flawed logging laws Logging laws that were in some cases inconsistent with each other led producers to conclude that regulatory agencies had little knowledge and understanding of timber management. As a result violations of all logging regulations, whether flawed or not, became an accepted code of practice. Several examples of inconsistent regulations existed under the old regime (Smith et al., 2003b). By mandating a minimum number of species, the law sought to prevent loggers from extracting only high value species and then moving on to open new areas. Yet, by basing timber taxes on the volume extracted, rather than on the area logged, it imposed no fiscal penalties for expanding the area logged. When taxes are volume based, it is also in the interests of producers to specialize in only a few species with the lowest transport costs. Although during the survey, producers claimed to be harvesting close to the specified minimum number of species (Table 1), our field evaluations showed that in practice, small-scale extractors and companies with multiple small contracts harvest only about half the mandated minimum, most of which were species that could be floated out, thus incurring relatively low transport costs. Another inconsistency was that logging contracts not only had short durations, but were also nontransferable, thus providing no incentive to sustain future harvests. Yet, the law mandated practices that yielded only long-term benefits, such as protection of seed trees.
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7.3. Ineffective law enforcement Violating laws became an accepted code of practice, because poor enforcement resulted in punishment being unlikely. Under the old regime, the Director General of Forestry, under the Ministry of Agriculture, had responsibility for authorizing and supervising logging contracts, administering timber tax revenues and enforcing forestry laws. In 1992, these responsibilities were given to the regional branches of the Ministry of Agriculture and then in 1999, to INRENA (Instituto Nacional de Recursos Naturales), also under the Ministry of Agriculture (Torres, 2003). Forestry law enforcement is widely perceived to have been weak during the old regime (Barrantes and Trivelli, 1996; Galarza Contreras and La Serna, 2005; Torres, 2003; CMLTI, 2003). This is consistent with our survey data. While there was some degree of supervision of logging practices on large contracts, which were few in number and more visible, it appears that there was virtually no supervision of the numerous geographically scattered small contracts. In our survey, for example, 62% of smallscale extractors, 39% of companies with multiple contracts and 14% of companies with large contracts had never in their history of timber extraction been visited by enforcement agencies. Respondents also commented that even when violations were detected, no penalties were imposed. A number of other logging regulations were violated with impunity. Although small contracts were legally limited to one 1000 ha contract per person, Table 1 shows that most logging companies typically held multiple small contracts and that their average holding is around 10 times the size of the mandated maximum. Logging enterprises and producers’ associations openly admitted to us that companies acquired multiple small contracts in order to have a viable holding size for mechanized extraction. The fact that this information was dispensed openly to us, indicates that in the perception of companies, penalties were unlikely. Producers had also successfully developed mechanisms for legalizing logs extracted from unauthorized areas. When requesting authorized volumes, producers artificially inflated the volume of preferred species, relative to their existence in their
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contracts, and minimized the volume of less desirable species. Shortfalls relative to authorized volumes were met by blaunderingQ timber harvested from unauthorized areas (Confidential interviews, 2001; CMLTI, 2003). 7.4. Perceived discrimination against timber sector Traditionally Peru’s strengths were perceived to be in agriculture and mining. The timber industry, whose contribution to Gross Domestic Product was under 2% (Galarza Contreras and La Serna, 2005), was perceived to have only a marginal role in government agendas (Torres, 2003). Over the decades, the timber industry developed the perception that government policies discriminated against the timber sector, relative to other activities in the Amazon. For example, they claimed that in the 1980s, the Belaunde government regulated logging while subsidizing and imposing no restrictions on cattle ranchers, who burned forests for clearing (Barrantes and Trivelli, 1996). The timber industry was also indignant about the government’s use of the reforestation tax. Although the proceeds were supposed to be invested in sustaining timber productivity in the Amazon, only 10% of reforestation was carried out in the Amazon. Reforestation took place on agricultural lands rather than in logged-over forests (Barrantes and Trivelli, 1996). The committee in charge of reforestation was also believed to be siphoning off reforestation revenues (Torres, 2003), which in mid 1990s was about double the revenue from timber extraction fees. Because of this perceived discrimination, producers felt entitled to break government’s laws.
based on bids for annual extraction fees. The duration of concessions was increased to 40 years and concessions were made transferable, with the objective of promoting a longer-term perspective. Volume-based fees were replaced by area-based taxes, subject to a minimum bid of US$ 0.4/ha to encourage the timber industry to increase the value of production per area logged, instead of opening up new areas. Logging practices of concessionaires were to be evaluated every 5 years to ascertain compliance with an approved Forest Management Plan (PGMF) for the whole concession area, and an Annual Operational Plan (POA) for the annual authorized harvest area. Improvements in logging practices were to be achieved by making the continuation of timber extraction rights contingent on compliance with PGMFs and POAs and other conditions under which concessions were granted, such as the payment of timber extraction fees (Galarza Contreras and La Serna, 2005). Concessionaires whose logging practices are certified as sustainable by internationally credited agencies were also entitled to a discount in area-based fees (Galarza Contreras and La Serna, 2005). Provisions were made for improving supervision of concessions. While INRENA remains part of the Ministry of Agriculture and is charged with the responsibility of supervising all natural resources, including concessions, the law provides for a new organization, OSINFOR, independent of the Ministry of Agriculture, whose main responsibility will be to supervise concessions, evaluate their compliance with PGMFs and POAs and apply sanctions for non-compliance (Torres, 2003).
9. Logging practices under the new regime 8. The new forestry regime The new forestry law introduces radical changes that signal government’s interest in long-term intensified timber production. It also corrected many of the deficiencies of the old regime, by drawing on insights obtained from international debates and from the Bolivian experience (Torres, 2003). The government designated 25 million ha of forests for permanent timber management. It sought to make the process of assigning timber extraction rights more transparent by introducing open competition,
Currently, producers fall under three categories: those that have obtained concessions under the new regime, those that have deliberately opted out of the new system and those that have been unable to bid successfully for concessions. Data on logging practices followed on the new concessions are not available. However, significant improvements are unlikely to have occurred as yet, given that most concessionaires were failing to submit pre-harvest management plans for approval. By June 2003, approximately 11 months after their conces-
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sions were authorized, not one concessionaire in Pucallpa had submitted a PGMF, only 30% had presented POAs and the POAs of only 20% of concessionaires had been approved (Galarza Contreras and La Serna, 2005). This undermines planned evaluations of compliance with approved plans. Many concessionaires were also failing to pay annual timber extraction fees. In Ucayali, only 8% of outstanding fees had been paid by June 2003 (Galarza Contreras and La Serna, 2005). Data from other regions show that the Ucayali experience with violations is not atypical (Galarza Contreras and La Serna, 2005). This undermines effective enforcement because enforcement is partly funded from timber taxes. On the other hand, some concessionaires now appear to believe that the new law signals a reversal of government’s ambivalent attitude towards forest management. This group is therefore keen to improve market access through certification and is working closely with NGOs to achieve better management (WWF-CEDEFOR, 2004). Visits by one of the authors to the concessions of some of these producers demonstrated that some improvements have indeed occurred in the logging practices of capitalized producers in this group. Over time, there may well be reason to be optimistic about the logging practices of some of these producers. The visits also indicated however, that producers with fewer resources are facing significant difficulties in adopting many of the practices recommended by NGOs. Producers who have opted out of the new system consist of a large and powerful group of timber companies, who are opposed to the new regime because supervision threatens to be more stringent, and rights to concessions could be suspended if approved logging practices are not followed. Many are part of a mafia running illegal logging operations, in which groups of small extractors are provided with machinery, and often arms, to harvest high value species from unauthorized areas, as well as from concessions granted under the new regime (CMLTI, 2003). Loggers recruited to extract logs illegally belong, generally, to the third group of producers, i.e. previous contract holders who have failed to obtain concessions under the new system. As a result of the activities of these two groups of extractors, illegal logging is believed to have increased significantly under the new regime (Torres, 2003).
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10. Why have poor logging practices persisted? Although, in theory, many of the provisions of the new law have the potential to rectify old norms that impede good logging practices, we show below that some of the old governance failures have not yet been rectified. Of even greater concern is that several new governance failures have emerged. These old and new governance problems may reinforce existing norms and even generate new norms, and thereby undermine improvements in logging practices. 10.1. Government’s perceived lack of interest in long-term management of forests Although the new law was approved in 2000, implementation was delayed until 2002, thus reinforcing perceptions about the government’s lack of interest in sound management of forests. Implementation delays were primarily due to opposition to the new law from members of the timber industry, who had benefited from the old regime, and feared it would be less easy to do so under the provisions of the new law. Governance failures during the policy formulation stage, may also have contributed to delayed implementation, as it has done in other parts of the world (Silva et al., 2002). Instead of cultivating the support of civil society (producers’ associations, NGOs, forestry professionals), who could have been strong allies in overcoming opposition to the new law, government officials showed minimal interest in participating in dialogues organized by them during the policy formulation process (Torres, 2003). Although consultations were held with a wide variety of interest groups, many felt that new elements that had previously not been discussed were included at the last moment (Torres, 2003). Civil society was therefore ambivalent about the new law, although not opposed to its basic principles. Perceptions about the government’s interest in forestry improved significantly in 2002, when implementation of the new law was pushed through by the then Minister of Agriculture, who, with the support of development agencies, principally of the Netherlands, formed a coalition between government forestry officials and non-government forestry stakeholders (Torres, 2003). The combined weight of this coalition was able to counteract, relatively effectively, those
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who were opposed to the new law. The coalition built on and expanded a round table of stakeholders (MNDCF), which has been working to develop a consensus on the implementation of the new law among a wide range of actors, and to present their feedback and recommendations to the government. Members include national level chambers of timber production (CNF and CORMADERA), representatives of INRENA and of other bodies of the Ministry of Agriculture, environmental and social NGOs, producers’ associations favorably disposed towards the new law and associations of indigenous communities. The MNDCF and its regional branches, set up in 2003, are widely credited with catalyzing the implementation of contests for concessions (Torres, 2003; Galarza Contreras and La Serna, 2005). The organizations also strove to increase the participation of the resource-poor by making contest rules more favorable for small-scale extractors in Ucayali in 2003 (Torres, 2003). Implementation however lost steam in 2003 due to a breakdown in the coalition. This is attributed by some (Torres, 2003; Galarza Contreras and La Serna, 2005) to a change in the Minister of Agriculture and in the organization of INRENA, which occurred when a new political party came into power in 2003. The new party inherited the forestry law from the previous administration and presumably had very different priorities, because government backing for the new law weakened considerably. A particularly worrying allegation is that INRENA is now subject to pressures from those who want to stymie implementation of the new law (Torres, 2003). This may partly account for a power struggle that ensued between INRENA and the non-government members of the MNDCF (Torres, 2003), with each resisting what it perceived as the expanding role of the other. As a result of these upheavals the MNDCF lost its effectiveness in catalyzing implementation. This may reinforce perceptions about the government’s ambivalent attitude towards long-term timber management and strengthen norms that maximize short-term returns. 10.2. Insecurity of property rights With the increase in the duration of concessions under the new law, the issue of insecure property rights has assumed heightened importance. Invasions
of concessions, sponsored by those opposed to the law, have been increasing under the new law (Torres, 2003). This is likely to reinforce the short-term perspectives on timber production. 10.3. Ineffective law enforcement Enforcement remains poor under the new law. Concessionaires complain that INRENA has been unable to resolve territorial disputes arising from invasions of concessions and that they have suffered from innumerable administrative delays and costs as a result of these failings (Torres, 2003). Logging practices of concessionaires and their compliance with the obligations of concession holders are not being adequately monitored or penalized (Torres, 2003). This is partly because instead of establishing OSINFOR as an independent agency with prime responsibility for supervising concessions, OSINFOR and INRENA have been combined. As a result, OSINFOR is no longer independent of the Ministry of Agriculture, as specified under the forestry law. INRENA, therefore, in effect, remains charged with the responsibility of supervising not only concessions, but also all natural resources, which necessarily includes the responsibility for controlling illegal logging. The budget allocated for INRENA is considered by some to be inadequate for such far-reaching responsibilities (Torres, 2003). As a result, staff has not been adequately trained and has been frequently changed, particularly in the regions, due to problems related to corruption (Torres, 2003). These internal problems as well as pressure from those opposing the law have undermined INRENA’s ability to prevent invasions, control illegal logging and supervise concessions. These governance failures may reinforce informal codes of practice that justify violations when government agencies do not comply with their obligations. This probably explains why, instead of sanctioning violations, INRENA has resorted to granting exceptions to the law. In 2002 for instance, concessionaires were permitted to submit pre-harvest management plans 6 months after harvesting and were given discounts on area-based fees (Galarza Contreras and La Serna, 2005). These exceptions pose a serious risk to the success of the new law, because they may strengthen perceptions about the inability of the state to enforce laws. In
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addition, OSINFOR’s lack of independence has discouraged many stakeholders who had noted that the integrity and professionalism of the independent supervisory agency in Bolivia had been decisive in achieving improved practices (Contreras and Vargas, 2002). 10.4. Increased corruption Corruption has a symbiotic relationship with illegal logging (Smith et al., 2003a). Illegal logging creates the need to blaunderQ illegal logs, thus increasing the demand for corruption. At the same time, corruption allows illegal logging to occur and lets it go unpunished. Under the new regime, as illegal logging has increased, so has corruption among officials of INRENA, the police and the judiciary (Torres, 2003). As corruption becomes more generalized, bribing of supervisory agencies could well become an acceptable code of behavior. In fact, there are indications that concessionaires are already resorting to bribes to overcome administrative delays and to resolve invasion disputes (Torres, 2003).
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10.6. Lack of clarity on responsibilities of regional governments A new governance failure emerged from the implementation of decentralization in 2003. The new forestry law lacks clarity on the distribution of responsibilities between the central and regional governments. This has led to conflicts and power struggles between central and regional governments, major bones of contention being the authorization of concessions and the sharing of forestry fees. Timber enterprises opposed to the new law have exploited this conflict by supporting the regional government’s quest for additional power. In return, some regional governments have helped to stonewall implementation of the new law, by, for example passing decrees suspending competitive auctions for concessions, irrespective of their contradiction with national laws (Torres, 2003). To the extent that these conflicts impede implementation of the new law, they may reinforce perceptions about the government’s lack of interest in long-term management of forests.
11. Conclusions 10.5. Perceived discrimination against the timber sector Certain changes under the new law should have reduced perceptions of discrimination against the timber sector. An example is the establishment, in 2002, of FONDEBOSQUE, a non-profit organization funded by the Dutch and Peruvian governments to improve the timber industry’s access to capital. To date it has provided credit for operational costs of loggers through a process of open competition, implemented projects to increase value added and developed guidelines to improve the timber industry’s access to credit from formal sources (Torres, 2003). Another improvement is the removal of subsidies for cattle ranches in the Amazon. On the other hand, some loggers claim that discrimination still exists, citing the case of the mining sector, which is required to pay royalties only after production commences, while the timber sector is required to pay area-based fees whether or not any timber is extracted. Such perceptions of discrimination may justify non-payment of timber taxes.
We have analyzed the difficulties of radically improving logging practices, by highlighting the importance of governance and its impact on society’s norms, and therefore on the quality of logging practices. Our analysis shows that bringing about radical change in logging practices is particularly difficult in countries with a history of governance failures in the timber sector. We argue that the quality of governance (defined here as the way in which government exercises its functions) is an important determinant of society’s norms. The Peruvian experience shows that among the governance failures that have impacted most negatively on the norms of the timber industry are perceptions of government’s lack of interest in long-term management of forests, flawed laws, perceived discrimination against timber extraction relative to other forest-based activities, and ineffective enforcement of logging regulations. As a result of decades of such governance failures, producers developed a short-term perspective towards timber extraction.
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In addition, violating timber laws became an accepted code of behavior that was considered to be both justified and safe. Norms such as these have led to poor logging practices. The Peruvian experience also shows that bringing about radical change in forestry laws is frequently easier than avoiding governance failures in administering them. While certain governance failures, such as discrimination against the timber sector, may have been partially rectified under the new forestry regime, others such as ineffective law enforcement have persisted. Other governance failures have assumed added significance under the new law, such as insecurity of property rights and corruption. These have reinforced existing shortterm perspectives and may lead to new norms condoning bribing of monitoring agencies. In addition, new developments, such as decentralization, have enabled producers opposed to the law to forge new alliances by exploiting conflicts between central and regional governments. This has impeded implementation and enforcement of the law and thus exacerbated existing governance problems. On the brighter side, perceptions about the government’s interest in long-term management of forests did appear to improve during 2002, when a coalition of government and non-government stakeholders pushed through implementation of some key provisions of the new law, in the face of strong opposition. Although implementation wavered in the following year owing to the breakdown of the coalition, the experience indicates that effective implementation may hold the key to rectifying a key governance failure that has contributed to a short-term perspective among producers. Currently, the process of implementation of the new law in Peru appears to be at a critical stage, in which the final outcome could go either way, depending on which of the now disparate interest groups gets the upper hand. Our analysis indicates that key elements in achieving a favorable outcome will be rebuilding the coalition by regaining government support for the implementation process, making OSINFOR independent of the Ministry of Agriculture, and obtaining negotiated agreement on the division of forestry responsibilities between the center and the regions in order to undermine the alliance between regional governments and produ-
cers opposing the law. Undoubtedly, achieving these will be both complex and time-consuming. In the meantime, a pragmatic approach may be to take a more measured approach to the introduction of logging regulations, thus allowing norms to adjust over time. Given that most extractors in Peru have a short-term perspective, only practices that provide current as well as long-term benefits, could initially be made mandatory. Examples are stock surveys and skid trail planning and layout. As governance improves and norms adjust over time, practices that provide only long-term benefits could incrementally be made mandatory. The overall conclusion is that when radical changes are introduced in forestry laws, inconsistencies typically arise between the new laws and producers’ norms in countries with a long history of governance failures. Improved logging practices require changes in both laws and norms. Changes in norms require improvements in governance, which are complex to achieve. Expectations about the impact of radical changes in forestry laws therefore need to be scaled down. Changes in the logging system are likely to be far less revolutionary, and to take far longer, than envisioned.
Acknowledgements The authors are grateful to USAID for funding this research.
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