Government Management of Village Commons: Comparing Two Forest Policies

When monitoring or enforcement is difficult, governments may find it impossible to manage village forest commons directly. Village-level institutions might be better able to manage these commons, yet villagers' management objectives may not coincide with those of the state. This article considers the effects of two different government policies on the local management of village commons. One policy tool attempts to induce villagers to conserve forest commons by giving them a share of the timber harvest. We investigate the question of whether or not this scheme Joint Forest Management (JFM) is preferred either by the villagers or the government to a simple benchmark policy, under which the government harvests at random. We show that, when villagers are sufficiently patient, for any equilibrium JFM policy there exists a benchmark policy which gives villagers the same level of utility. However, whether the government is similarly indifferent between these two arrangements depends on the villagers' ability to enforce collective agreements, and on the curvature of villagers' utility functions.