http://www.rspo.eu/docs/rspo_presentation_extended.pdf

I think that overall this initiative alone is insufficient to be the solution to forest conversion problems in Indonesia.

Inherent market failure is occurring in Indonesia, there appears to be a lack of understanding that the problem lies with the concept of scarcity and not just sustainability. Without the understanding of this initial resource problem it will be difficult to adequately respond to the pressures of forest conversion.  In this case there needs to be identification of 3 things to help bring success to the policy: uncertainty of tenure, under valuation of resources and under regulation of negative externalities.

Presently in Indonesia there is a problem with uncertainty of tenure. Having land and then having property rights that are without a legal definition, that are not enforced and are poorly valued will lead to market failure.  Land owners, whether it be the government or private firms are left without confidence and have feelings of insecurity with a lack of property rights. Therefore these problems would need to be initially solved in order to not have market failure.  This would be important because the goal of this initiative is the conversion to sustainable land and development. These developments need to have visible benefits to farmers and land owners in order for them to change there farming practices, without long term benefits these initiatives become unappealing. With 25-year contacts you would profit maximize, take as much as you could and leave. Where is the initiative to choose sustainable?

The presentation acknowledges there could be conflict with social issues such as: land ownership, workers rights, conditions, and the treatment of small-holders. What it appears to be missing is the social, and economic valuation of the land.  This under valuation of the forest is a real problem. The undervaluation not only discourages open markets, it also cuts market opportunity, which could possibly lower the price. Without some valuation of the natural resource we cannot show how this would effect society is a cost/benefit analysis.  There is also no measure to show the reflection of value to society.

What helps is having measurable goals/targets and a baseline to work of from. These should be transparent and can create a total economic value

(RSPO) has preliminary regulation in place – Codes of conduct, certification bodies, principles, supply chain certification and guidelines on communication.  What is import to make this initiative successful is governance of these programs to make sure that they are adhering to these codes of conduct and that they are: transparent, inclusive, responsive, timely and accountable.  Policy failure occurs when this under regulation and un-enforcement takes place in the market place. As a result there is corruption and the government is seen as centralized which creates a displacement between the land and the government.  There are potential problem in the supply chain for corrupt blending, or arbitrage from rent seekers. Therefore Indonesia would need to increase this enforcement, which appears to be lacking in the presentation.

“pathology of resource management” Holling et al. (2002a: 6)

Hollings quote is a simplistic description of the summary of Alaska Tongass case study whereby the authors are investigating the linkages between market failure and policy failure.

Although concise this case study is both analytical and logical in its questions and findings.  Primary strengths of this brief include the identification of key dynamic interactions (resource governance and management supply) and the role they play within the theoretical framework and diagnostic methods. They apply a realistic measurement approach (adaptive cycle), and clearly identify 4 distinct phases within the cycle backed by empirical data (ex. longitudinal analysis).  This case sets up a strong research inquiry with 6 key questions they intend to answer. The questions presented unfortunately are insufficient in themselves to provide a full scope of the Tongass National Forest failure.

The initial question is left incomplete as the case study identifies many policy and market failures but is unable to identify a primary offender, instead creates a grouping of institution, policy and economic subsystems, which lacks transparency.  The second question is innovative in trying to identify the weakness of the strategy this will be beneficial in identifying recommendations for the future.  The third and fourth question, are well answered in the case study with evidence and valid correlations, they are impartial and also attribute world market fluctuations into the analysis which is a positive.   The last 2 questions are where there could be improvements in the study, more perspective is needed on the social and environmental impacts, as well there could be room for stronger recommendations for the re-organization phase 5. As well there is a lack of additional examples of this specific type of market/policy failure.  Overall it was a strong case study that positively identified key issues that caused this market failure.

References

Beier, C., A. L. Lovecraft, and T. Chapin. 2009. Growth and collapse of a resource system: an adaptive cycle of change in public lands governance and forest management in Alaska. Ecology and Society 14(2): 5. URL: http://www.ecologyandsociety.org/vol14/iss2/art5/

Holling, C. S., and G. K. Meffe. 1996. Command and control and the pathology of natural resource management. Conservation Biology 10:328–337.