Ever since Bob Repetto and Malcolm Gillis published their classic book ’Public Policies and the Misuse of Forest Resources’ in 1988, working as a forest policy advisor has required remarkably little talent. By simply repeating the mantra: ’remove log export bans, capture resource rents, give long-term forest concessions, and require forest management plans’ one could rest assured that he or she had given the best advise money could buy. It really did not matter that no tropical country had ever actually achieved sustainable management of its forests by following that advice. Few doubted that by getting your prices right, providing tenure security, and regulating a bit now and then you could get things on the right track.

That was before Chris Barr wrote ’Will HPH Reform Lead to Sustainable Forest Management? Questioning the Assumptions of the Sustainable Logging Paradigm in Indonesia’ for WWF-International’s Macroeconomic Program Office and CIFOR. Barr’s study uses the example of recent attempts to reform concession policies in Indonesia to raise fundamental questions about key assumptions underlying most of the current thinking about forest policy reform.

Until now, analysts have generally presumed that removing export bans and increasing timber royalties to capture rents would raise the cost of timber to logging companies and processors and induce them to use it more efficiently. If you cut down on waste in forests and factories you would need fewer logs to produce the same amount of products, which they argued would help save forests. However, Barr points out that making large diameter logs of commercial species more expensive encourages loggers and processors to adopt technologies that allow processors to use smaller diameter logs and non-conventional species. That can threaten large areas of forests that timber companies had previously considered of marginal value. He uses the recent adoption of small-spindle rotaries by Indonesian plywood producers as a case in point. He notes that lowering export taxes also makes it profitable for companies to log many forests that they would have otherwise shown no interest in.

On the issue of concession duration and management plans, Barr provides evidence that the only way companies can profitably log the large and rapidly increasing area of forests that are in their second rotation is if they do it illegally and / or in a non-sustainable fashion. This also applies to many unlogged forests with low value timber. Sustainable forest management for commercial timber production of such forests is often not economically attractive. That is one reason illegal and non-sustainable logging practices are so widespread. Under these circumstances no changes in concession duration or forest regulations can convince companies to sustainably manage their forests. To do so they would have to operate at a loss.