Government management of village commons: Comparing two forest policies

When monitoring or enforcement is difficult, governments may find it imposs ible to manage village forest commons directly. Village-level institutions might be better able to manage these commons, yet villagers' management obj ectives may not coincide with those of the state. This article considers th e effects of two different government policies on the local management Of v illage commons. One policy tool attempts to induce villagers to conserve fo rest commons by giving them a share of the timber harvest. We investigate t he question of whether or not this scheme Joint Forest Management (JFM) is preferred either by the villagers or the government to a simple benchmark p olicy, under which the government harvests at random. We show that. when vi llagers are sufficiently patient, for any equilibrium JFM policy there exis ts a benchmark policy which gives villagers the same level of utility. Howe ver. whether the government is similarly indifferent between these two arra ngements depends on the villagers' ability to enforce collective agreements , and on the curvature of villagers' utility functions. (C) 1999 Academic P ress.