Forest Investment Account (FIA) - Forest Science Program
FIA Project Y071311

    Open access, common pool resources and government intervention: an evaluative model for government intervention and a case study of the commercial harvest of salal in British Columbia
 
Project lead: Gulati, Sumeet
Contributing Authors: Tedder, Sinclair; Gulati, Sumeet
Imprint: Vancouver, BC : University of British Columbia, 2007
Subject: Forest Investment Account (FIA), Salal, British Columbia
Series: Forest Investment Account (FIA) - Forest Science Program
Description:
The purpose of this project is to further develop and test an evaluation model conceptualized by Sinclair Tedder, a PhD student, under a directed study course at the Faculty of Forestry, University of BC, during the winter session 2005-06. The model can be used by government policy analysts to identify the risk of over-exploitation of renewable natural resources that exist within an open access environment and the subsequent type of government response required. The research question that the project seeks to answer is why and at what point should government intervene in a resource market, when that resource is not regulated or otherwise managed. The model has four components: 1) a measure of the risk of over-exploitation; 2) the exploitation outcome, given various contextual factors; 3) the likelihood of rent dissipation or capture; and 4) the appropriate government response. The central concept and framework of the model has been developed, thus the intent of this proposed project is to further develop and test the model by evaluating a single non-timber forest product (NTFP) in BC. This model can become an integral tool for governments attempting to understand the point at which intervention is required to manage open access or under-managed resources, including but not limited to NTFPs, eco-tourism and back-country tourism operations, wildlife management, fisheries and other emerging product uses. The objective of the paper on which the model is based was to provide a rationale for government intervention in common pool resource situations where over-exploitation of the resource is possible, due to market and institutional failure. In particular, the paper considers the commercial use of NTFPs in British Columbia where most of the land base is public with management responsibility vested in the Crown. The commercial use of NTFPs in B.C. has continued for several decades and has grown into an industry generating hundreds of millions of dollars, yet the provincial government has introduced no regulations or other system of resource management to ensure its appropriate use or encourage investment (Centre for Non-Timber Resources 2006, Tedder et al 2002, Tedder et al 2000, Wills and Lipsey 1999). The result is a de facto open access for NTFPs on public land. Open access reflects the nature of property rights. Hanna (1996) defines property rights to natural resources as 'the arrangements which people devise to control their use of natural resources, and comprise property rights, bundles of entitlements defining owner’s rights and duties in the use of the resource, and property rules, the rules under which those rights and duties are exercised.' Property rights may be well defined, such as with private rights, which are exclusive, comprehensive, transferable, and enforceable. The property rights typology also includes common property rights, which are a form of private rights held in common, state based rights which reflect public ownership, and open access where no specific rights or rules exist (Grafton, 2000). Relevant for this discussion are externalities that result from an inadequately defined regime of property rights, and more specifically an 'open access' externality with its attendant problems, including over-exploitation and complete dissipation of resource rent (Stevenson 1991, Gordon 1954). Market and institutional failure would suggest that government intervention in the particular market is appropriate (Bromley, 1991), if the benefits of management outweighed the costs. For NTFPs, however, the necessary biological and economic data needed to undertake an econometric study to identify unsustainable use and rent dissipation is not available. Consequently, the research sought to identify indicators that could be used to suggest whether or not the over-exploitation of the resource and dissipation of rents may occur. The paper on which this proposal is based concludes that ten indicators can provide direction: resource congestion; source of demand; effective property rights; increasing resource value; dissipation of resource rent; user cost homogeneity; unclear or uncertain transaction costs; enforcement of legislation or regulations; information requirements of regulation; and a breakdown of operational rules. The model introduced in the paper is an attempt to operationalize these indicators. The proposed project would test and refine the model using an actual case study of a resource exploited under de facto open access conditions.
Contact: Tedder, Sinclair, (250) 384-1875, sjtedder@interchange.ubc.ca

    Deliverables:

Executive Summary (69Kb)

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Updated August 16, 2010 

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