How Effective is Property Right to Deter Deforestation in Indonesia 2001-2005

Rokhedi Priyo Santoso


The rate of deforestation in Indonesia is higher than the world average. The lack of property
rights could potentially result in overexploitation on forest resources. This paper argues that
the presence of assigned property rights (natural forest concession) would prevent further
deforestation in Indonesia. Using panel data estimation, the main result is that natural forest
concession is negatively significant in influencing deforestation in Indonesia. This effect is
explained by relatively high of the elasticity of deforestation rates with respect to area of assigned
natural forest concession accounted for 0.33. This elasticity outweighs the positive
significant effect of logs production in worsening deforestation in Indonesia.
Keywords: deforestation, property right, natural forest concession, panel data

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