Performance Improvement Of Natural Forest Concession Through Institutional Approach

Abstract

This study is intended to predict the performance of natural production forest concession in Indonesia by using institution impact model under consideration that forest concessions is an economic activity. It is found that the institution of the concessions within the last 25 years has not been able to promote sustainable forest management. It contributes about 2.5% annualy to the degradation of natural production forest, which can be considered as a social cost of the system. The cost is driven by fiee riders in the utilization of the forest that give more profit to concession holders and rent seekers nourished by institution weakness. This indicates the need to integrate kee riders and rent seeker in the contribution system in order to achieve the sustainable forest management.