1. Forest Policy and Land Tenure
Before reading this section, please review “afforestation” in ECON5 and the economic theory of land use in FOR4.
One of the fundamental institutions in any society is the set of property rights - the rules, laws, and social concepts that establish the ownership of, and access to property, and protect the pattern of ownership. This establishment of private property rights and an associated law of contract - by allowing for the transfer of these rights – has been crucial in the development of market economies.
Land used to be the major form of wealth in many countries up until the industrial revolution. It still is an important asset and production factor. In agriculture and forestry, land is naturally the fundamental resource.
On a global scale, the majority of forests (84%) are under public ownership. They are clearly defined, controlled and culturally accepted as property or hold other tenure rights, either private or public, and they are as necessary a foundation to forestry as they are elsewhere in society. In many parts of the world, as deforestation and forest degradation show, prevailing land tenure systems – or their implementation - have been inadequate to defend forests under growing populations and pressures – (sometimes) irregardless of the ownership forms.
In most tropical countries the public ownership of forests has been regarded as a failure (although perhaps not enough attention has been given to political and other prerequisites). On the other hand, in many industrialized countries state ownership has been able to show models of good forestry (it has also has been one of their tasks).
Specific features of land
As a “property” land has some specific features. It is necessary for all human activities and the amount of land is fixed, in practical terms. Land stands “forever” – one can degrade some of its characteristics (i.e., soil fertility) but generally speaking ground land can not be destroyed. Under proper management, soil fertility is a renewable natural resource. Land is natural asset, and as a raw land (excluding land development) it has no “original” production costs (similar to many other unexploited natural resources). Land is a non-removable asset, meaning its location cannot be moved. Therefore, each parcel of land is unique, at least due to its location if not in any other sense. Also, we can observe that land has had a capacity to maintain its value well and it is usually regarded as a safe investment. In this connection, a statement given by Mark Twain is well-known: “Land has a good price because its production has been closed.”
Price of land and land use changes
Basically the price of land depends on all the future monetary flows it can earn. If land is usable only for grazing, its value depends on the net present value of all future cash flows discounted at some minimum acceptable rate of return (interest rate). Similarly the best possible future use is afforestation, or land that is already growing a forest (see ECON5). If land has future leisure time like housing or urban housing demands, its value should be calculated from the expected cash flows from these uses. However, like all goods and resources, its price is finally determined in the markets, and the seller and buyer may (at least in the beginning) have different ideas concerning future uses. If pieces of land in some location already have markets, the existing market prices usually offer a good reference point.
Population growth and urbanisation, with an increased demand for second (holiday) homes and tourism have favourably increased the land prices in many areas, and often may include an element of excess profit (surplus rent). On the other hand, in remote areas, where people are moving away from primary industries (due to unemployment) land prices can decrease. As a result, agricultural land may again become land for forestry use, often as a result of an afforestation subsidy of agriculture policy. Basically, as was discussed in FOR4, the economic theory of land use says - that land use changes from less profitable to more profitable uses. Sometimes there may be legal or institutional restrictions and barriers for these changes. If the arguments for restriction are also valid in new circumstances, they will stay, otherwise they will be removed.
Diversity of land tenure and property rights on forests
Due to the specific features of land, states always have been keen on regulating, planning or guiding the use and development of land properties. The rights, restrictions and obligations concerning (to some extent all kinds of land properties) have particularly been found in forests.
The ownership forms and tenure rights in forests vary more than usually expected. State regulations differ from country to country and also by ownership forms. Land tenure also reflects historical developments and traditions that vary between countries. Various social and economic structures add to the variety of ownership forms so that the major division between public and private ownership of forests do not tell the whole story.
Land tenure is the relationship (legally, customarily or traditionally defined) among people (as individuals, groups or corporates) with respect to forest. In simple terms, land tenure systems regarding forests determine who can use which resources of forests, for how long, and under what conditions.
Land tenure is often categorised in the following way - where private (i.e., holding) property is most exclusive and has the most restrictive rights of use. Open access areas which do not belong to anyone, are at the other end of the continuum.
Private forest is the assignment of rights to an individual, a group of people, or a corporate body. Other people can be excluded from using these resources without the consent of those who hold the rights.
Communal and community forest is where a right of commons may exist within a community where each member has a right to independently use the holdings of the community. Sometimes a difference is made between the two terms: while community forest is open to every member of the community (but not for outsiders), access to a communal forest is only for some groups inside the community (FAO 1993). For example, the members of a community may have the right to graze cattle on a common pasture.
State forest are property rights that are assigned to some authority in the public sector. For example, in some countries, forest lands may fall under the mandate of the state, whether at a central or decentralised level of government.
Open access area are specific rights that are not assigned to anyone and no-one can be excluded. An important difference between open access and community systems is that under a community system the non-members of the community are excluded from using the common areas. For example access to the high seas is generally open to anyone.
Usufruct rights. Usufruct from latin usus et fructus “use and enjoyment” means the legal right of using and enjoying the fruits or profits of something belonging to the other.
“Tenure is one of the largest and most complex subjects in forest resource management. At the head of most inquiries are questions of rights over trees, forest- the land on which they stand and associated products. Mistakes in forest development often relate to inadequate understanding or appreciation of tenurial rights” (FAO 1993)
Neither property nor tenure is simply an act ownership. Both pertain to rights, relationships, responsibilities and duty.
Property is "a right to a benefit stream that is only as secure as the duty of all others with respect to the conditions that protect that stream". When one has a right, one has the expectation, both in law and practice, that their claims will be respected by those with duty. Hence, it is the use of land or some other resource in relation to others that is the central theme in property definitions. Property is a social contract that defines an individual and an object vis-à-vis all other individuals.
The right to use, or not use a property, or resource, implies inclusion and exclusion (i.e. rights of access). Relative access differentiates between private and common property. Common property implies relatively open access, at least to the group to whom it is common. Private property is the legally and socially sanctioned ability of one or a few individuals to restrict access and exclude others.
Property rights may cover a bundle of different rights, which often are grouped into:
(1) use rights: rights to use the land for grazing, growing subsistence crops, gathering minor forestry products, etc…
(2) control rights: rights to make decisions about how the land should be used (including deciding what crops should be planted), and to benefit financially from the sale of crops, etc…
(3) transfer rights: right to sell or mortgage the land, to convey the land to others through intra-community reallocations, to transmit the land to heirs through inheritance, and to reallocate use and control rights.
Government management of publicly owned land is another important policy tool. When policymakers believe that public goals cannot be met on private lands, public ownership is an option to be considered (Cubbage et al. 1993).