Multiple Products, Community Forestry and Contract Design: The Case of Timber Harvesting and Resin Tapping in Honduras Available to Purchase

In exchange for protecting the forest from theft and fire, communities in developing countries are sometimes granted sole rights to collect firewood and non-wood products such as medicinal plants, fruits and resins. state agencies, however, usually retain the right to harvest the mature timber. In this paper, production trades-offs and contracting problems presented by a combination of usufructuary rights to collect pine resin and the Honduran government's claim to charge for the right to harvest mature timber are analyzed. The analysis indicates the contract fails to establish as residual claimant the party with the greater ability to affect resource use, and therefore fails to maximize the rental value of the forest. This result has broader implications for community forest programs.