Forest taxes, government revenues, and the   sustainable exploitation of tropical forests

Barbone, Luca; Zalduendo, Juan

Forest taxes, government revenues, and the sustainable exploitation of tropical forests

Barbone, Luca | Zalduendo, Juan

This paper presents a model of forester, and government behavior applicable to the Central African context. The aim of the model is to gain insights on the role of different fiscal instruments at the disposal of governments, for achieving the dual objective of environmental sustainability, and revenue maximization. The paper recognizes the limits on the role fiscal instruments may play for sustainability, but argues that these should still be given attention, to ensure that at least, sustainability is not compromised. The paper also argues that models of concession rotation, are not applicable to tropical forests when there are doubts as to the quality of the property rights generated by forest concessions. Rather, the model proposes links deforestation to the firm's choice of size, and number of harvested trees per hectare, thus allowing a richer examination of the challenges faced by the firm, and their link to the incentive framework within which firms, and government operate. Taxes, and fees are viewed as essential components of this incentive framework, and, their role is assessed in light of the weak institutional capacity characterizing the public administrations of developing countries, particularly those in Central Africa. Finally, the paper distinguishes between tax implications, and fees relating to the exploitation of marginal land, and those of the firm's choice of number, and size of harvested trees per hectare.

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