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Illegal Logging in Indonesia

This document analyzes the extent and causes of illegal logging in Indonesia, which is a major driver of deforestation. It finds that illegal logging rates were extremely high during 1997-1998 based on a materials balance model. The behavior of illegal loggers is driven by market failures, government corruption, and a culture of rent-seeking that originated under former President Suharto and spread throughout government. High rents from illegal logging compared to legal logging create incentives for unsustainable forest use. Weak enforcement and policy failures at national and international levels further enable illegal logging. As a result, Indonesia's forests have been heavily deforested for perhaps 30 years without sustainable management.

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44 views3 pages

Illegal Logging in Indonesia

This document analyzes the extent and causes of illegal logging in Indonesia, which is a major driver of deforestation. It finds that illegal logging rates were extremely high during 1997-1998 based on a materials balance model. The behavior of illegal loggers is driven by market failures, government corruption, and a culture of rent-seeking that originated under former President Suharto and spread throughout government. High rents from illegal logging compared to legal logging create incentives for unsustainable forest use. Weak enforcement and policy failures at national and international levels further enable illegal logging. As a result, Indonesia's forests have been heavily deforested for perhaps 30 years without sustainable management.

Uploaded by

Fakhrurrazi RA
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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THE EXTENT AND CAUSES OF ILLEGAL LOGGING:

AN ANALYSIS OF A MAJOR CAUSE OF TROPICAL


DEFORESTATION IN INDONESIA

by

Charles E. Palmer

CSERGE Working Paper


THE EXTENT AND CAUSES OF ILLEGAL LOGGING:
AN ANALYSIS OF A MAJOR CAUSE OF TROPICAL
DEFORESTATION IN INDONESIA

by

Charles E. Palmer

CSERGE Working Paper

Economics Department
University College London

and

Centre for Social and Economic Research


on the Global Environment
University College London
and
University of East Anglia

Acknowledgements

The Centre for Social and Economic Research on the Global Environment is a
designated research centre of the UK Economic and Social Research Council (ESRC).

An earlier and longer version of this paper was examined as a dissertation in 2000, a
compulsory component of UCLs Environmental and Resource Economics MSc.
Charles Palmer gratefully acknowledges Professor David Pearce (the dissertation
supervisor) for guidance and advice. This work follows studies undertaken by the
Indonesia-UK Tropical Forest Management Programme (ITFMP) on behalf of the
Centre for International Forestry Research (CIFOR).

ISSN 0967-8875

2
Abstract:

This paper considers the scale and underlying causes of recent high rates
of deforestation in Indonesia. Its extent during 1997-98 is analysed using
a materials balance model, the results of which demonstrate the
seriousness of the problem at a time when the Indonesian economy was
suffering the effects of the Asian financial crisis. The behaviour of the
principal agents, illegal loggers, is discussed in the context of market and
government failures and rent-seeking or corruption. A culture of
corruption originated at the top of government during the tenure of ex-
President Suharto, leading to market and government failures in the
forestry sector, thus resulting in the creation of high levels of rent. A
culture of corruption ensures that policy failures cannot be reversed and
may lead to further intervention to benefit the status quo. Rent-seeking
behaviour then spread to all levels of government, via a lack of good
example at the top, leading to the creation of illegal logging networks.
Since rent from illegal logging is higher than that for legal logging, there
is an incentive for agents to ignore costs associated with sustainable
forest management. Illegal logging, and hence inefficient resource use, is
further encouraged by institutional failures such as weak enforcement and
monitoring capacity, as well as policy failures at the international level
too. Consequently, Indonesias forests have been intensively deforested
for perhaps as long as 30 years, with little or no attention given to
sustainable forest management.

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