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Royalty Systems, Government Revenues, and Forest Condition: An Application from Malaysia

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  • Gregory S. Amacher
  • Richard J. Brazee
  • Meindert Witvliet

Abstract

Royalty structure has been linked to deforestation through non-sustainable harvesting and high grading. Yet royalties are an important rent generation mechanism for governments. In this paper, a dynamic model of government policy choice is used to compare different royalty systems with respect to government revenue generation and high grading. Empirical analyses of the various royalty systems is then undertaken for forest concessions in Malaysia. One unique aspect of our study is an examination of how different royalty systems impact harvesting of highand low-valued timber species, government rent capture, and concessionaire profits. The results should help with future royalty design.

Suggested Citation

  • Gregory S. Amacher & Richard J. Brazee & Meindert Witvliet, 2001. "Royalty Systems, Government Revenues, and Forest Condition: An Application from Malaysia," Land Economics, University of Wisconsin Press, vol. 77(2), pages 300-313.
    • Handle: RePEc:uwp:landec:v:77:y:2001:i:2:p:300-313
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    References listed on IDEAS

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    1. Jeffrey R. Vincent, 1990. "Rent Capture and the Feasibility of Tropical Forest Management," Land Economics, University of Wisconsin Press, vol. 66(2), pages 212-223.
    2. N. Bockstael & J.C. Burgess & I. Strand, 1998. "The linkages between the timber trade and tropical deforestation – Indonesia," Chapters, in: The Economics of Environment and Development, chapter 20, pages 444-475, Edward Elgar Publishing.
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    Cited by:

    1. Gregory Amacher & Erkki Koskela & Markku Ollikainen, 2007. "Royalty reform and illegal reporting of harvest volumes under alternative penalty schemes," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 38(2), pages 189-211, October.
    2. Wang, Sen & Bogle, Tim & van Kooten, G. Cornelis, 2012. "Forestry and the New Institutional Economics," Working Papers 130818, University of Victoria, Resource Economics and Policy.
    3. Giudice, Renzo & Soares-Filho, Britaldo S. & Merry, Frank & Rodrigues, Hermann O. & Bowman, Maria, 2012. "Timber concessions in Madre de Dios: Are they a good deal?," Ecological Economics, Elsevier, vol. 77(C), pages 158-165.
    4. Liu, Shilei & Xia, Jun, 2021. "Forest harvesting restriction and forest restoration in China," Forest Policy and Economics, Elsevier, vol. 129(C).
    5. Christopher Costello & Nicolas Querou & Agnès Tomini, 2014. "Spatial concessions with limited tenure," Post-Print hal-01123392, HAL.
    6. Cornelia Luchsinger & Adrian Müller, 2003. "Incentive Compatible Extraction of Natural Resource Rent," CEPE Working paper series 03-21, CEPE Center for Energy Policy and Economics, ETH Zurich.
    7. Mumbunan, Sonny & Wahyudi, Riko, 2016. "Revenue loss from legal timber in Indonesia," Forest Policy and Economics, Elsevier, vol. 71(C), pages 115-123.

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    More about this item

    JEL classification:

    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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