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«Dissertationes Forestales 95 Institutions and forest tenure in the Russian forest policy Tatu Torniainen Faculty of Forest Sciences University of ...»

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Dissertationes Forestales 95

Institutions and forest tenure in the Russian forest policy

Tatu Torniainen

Faculty of Forest Sciences

University of Joensuu

Academic dissertation

To be presented, with the permission of the Faculty of Forest Sciences of the University of

Joensuu, for public criticism in auditorium Borealis 100 of the University of Joensuu,

Yliopistokatu 7, Joensuu on November 6th, 2009, at 12 noon

Title of dissertation: Institutions and forest tenure in the Russian forest policy Author: Tatu Torniainen Dissertationes Forestales 95

Thesis Supervisors:

Prof. Olli Saastamoinen Faculty of Forest Sciences, University of Joensuu, Finland Prof. Anatoly P. Petrov All-Russian Institute for Continuous Education in Forestry, Pushkino, Russia

Pre-examiners:

Doc. Galina Filyushkina St. Petersburg State Forest Technical Academy/ All-Russian Institute for Continuous Education in Forestry, Pushkino, Russia Doc. Pertti Veijola Opponent: Prof. Victor Teplyakov Department of Forest Sciences, College of Agriculture and Life Sciences, Seoul National University ISSN 1795-7389 ISBN 978-951-651-279-5 (PDF) (2009) Publishers Finnish Society of Forest Science Finnish Forest Research Institute Faculty of Agriculture and Forestry of the University of Helsinki Faculty of Forest Sciences of the University of Joensuu

Editorial Office:

Finnish Society of Forest Science P.O. Box 18 FI-01301 Vantaa, Finland http://www.metla.fi/dissertaniones Torniainen, T. 2009. Institutions and forest tenure in the Russian forest policy.

Dissertationes Forestales 95. 64 p. Available at http://www.metla.fi/dissertationes/df95.htm Forestry and the forest sector as a whole mirrors the political, economic and social changes that take place in a society. In Russia, the change of formal legal institutions in the forest sector has been fast since the beginning of 1990s. Since then, the Russian forest sector has been integrated more closely to the international market. The recognition of forests' role as the main renewable natural resource has fuelled increasing political and administrative effort on the development of the sector.

This study attempts to shed light on the reasons why the Russian forest policy has failed to effectively improve forest sector development. The arrangement of property rights to forest resources, and the institutional arrangement of forest tenure form the core of analysis. For this purpose, the framework of institutional analysis (IAD) is adapted to the organisation of forest tenure in Russia. In analysis a particular attention is paid to the content and enforcement of the Forest Code of 2007.

Institutions are the rules of game in a society and by structuring incentives they facilitate and constrain the economic sustainability of forestry. Formal rules can be created rapidly, whereas informal norms constrain the enforcement of formal rules. Property rights are key institutions facilitating the actions of economic actors. Property rights are referred to as a bundle of rights in relation to a certain property. The models of path-dependency and transaction costs are used to analyse and explain the institutional change. The materials used in this study consist of legislation, academic and professional papers, statistics collected from public sources as well as primary data collected.

Despite federal polity, the decision-making is highly centralised in Russia. The joint governance of forest resources between the federal and regional governments has been one of the focal issues of the forest policy in post-Soviet Russia. Results reveal that the there are constant struggles to achieve economic sustainability in forestry. Obscure property rights to forests have worked against economically, socially and ecologically sustainable forestry.

The effect of formal institutional changes on the everyday forestry operations has remained low. This is partly due to the strong informal institutions and weak enforcement of formal rules.

Historical courses of developments, like regional over cuttings, centralised forest administration, the separation of forestry and forest industries and the lack of market information are currently affecting available forest policy options in relation to management and use of forest resources. The lack of transparent allocation of forest resources has affected the transaction costs. This weakens the economic result of both the owner and tenant. Financing of forestry has relied on the business operations carried out by forest administration. Despite the past and previous uncertainties and problems of the Russian forest sector, the enterprise managers participating in the questionnaire viewed the future development positive.

The comparison between property rights to forests between Russia and Canadian British Columbia (BC) revealed differences in the governance systems of public forest lands. The long experiences of BC, such as the performance based renewal of tenure rights, are not fully utilised in Russian legislation. In order to improve the enforcement of new rules, the establishment of economic incentives should be considered in relations between, first, the state and private tenure holder, and second, the central and regional governments.

Based on the findings three main trends of the Russian forest policy can be identified: first, an administrative decentralisation of forest management, second, the increasing share of private long-term tenures in management and use of forests, and third, the consolidation of the private forest industries, which is facilitated by the institutional changes introduced largely by the Forest Code of 2007 and due re-distribution of property rights to forests. Presumably the transition in the Russian forest sector that is the establishment of new forest management regime will take years.





Keywords: Decentralisation, Federalism, Path-dependence, Property rights, Forestry Torniainen, T. 2009. Instituutiot ja metsien hallintaoikeudet Venäjän metsäpolitiikassa.

(Institutions and forest tenure in the Russian forest policy.) Dissertationes Forestales 95. 64 s. Saatavissa osoitteesta http://www.metla.fi/dissertationes/df95.htm Metsätalous ja metsäsektori yleensä heijastelevat yhteiskunnan poliittisia, taloudellisia ja sosiaalisia muutoksia. 1990-luvun alusta lähtien Venäjän metsäsektorin institutionaalinen muutos on nopeaa. Venäjän metsäsektori on integroitunut läheisemmin kansainvälisiin markkinoihin. Kansallisella tasolla metsien rooli tärkeimpänä uusiutuvana luonnonvarana on tiedostettu. Tämä on lisännyt poliittisia ja hallinnollisia ponnistuksia sektorin kehittämiseksi.

Tämä tutkimus pyrkii valaisemaan syitä miksi metsäpolitiikka Venäjällä ei ole kyennyt tehokkaasti ja määrätietoisesti tukemaan metsäsektorin kehitystä. Analyysi keskittyy erityisesti metsiin liittyviin omistussuhteisiin ja metsien hallinnan ja käytön järjestelyyn. Tähän tarkoitukseen on sovellettu institutionaalisen analyysin viitekehystä (framework of institutional analysis, IAD). Analyysissa kiinnitetään erityistä huomioita vuoden 2007 alusta voimaan tulleen Venäjän federaation metsälain sisältöön ja toimeenpanoon.

Instituutiot, jotka tässä tutkimuksessa määritetään uuden institutionaalisen taloustieteen (New institutional economics) mukaisesti pelisäännöiksi, vaikuttavat kannustimien ja rajoitteiden kautta metsätalouden taloudelliseen kestävyyteen. Muodolliset viralliset instituutiot, kuten lait, voidaan luoda tai muuttaa lyhyessä ajassa kun taas hitaammin muuttuvat epäviralliset normit rajoittavat edellisten toimeenpanoa ja vaikutusta.

Omistusoikeudet keskeisinä taloudellisina instituutioina ohjaavat taloudellisten toimijoiden käytöstä. Omistusoikeudet mielletään erilaisiksi nipuiksi oikeuksia, jotka liittyvät tiettyyn omaisuuteen. Polkuriippuvaisuus- ja transaktiokustannusmalleja hyödynnetään selitettäessä institutionaalisten muutosten syitä. Aineistona on käytetty Venäjän federaation metsälakeja, akateemista ja ammattikirjallisuutta sekä julkisia ja itse kerättyjä tilastoja Federatiivisesta valtiomuodosta huolimatta päätöksenteko on erittäin keskittynyttä Venäjällä. Metsien jaettu hallintovastuu keskushallinnon ja alueiden kesken on ollut metsäpolitiikan keskeisiä teemoja. Tutkimus osoittaa, että taloudellisesti kestävän metsätalouden harjoittaminen on ollut erittäin vaikeaa. Heikosti määritellyt omistussuhteet ovat heikentäneet mahdollisuuksia taloudelliseesti sosiaalisesti ja ekologisesti kestävän metsätalouden saavuttamiseksi. Muodollisten instituutioiden vaikutus metsänhoitotoimenpiteiden harjoittamiseen on jäänyt vähäiseksi. Tämä on johtunut lakien ja säädösten heikosta toteutuksesta sekä epävirallisten instituutioiden vahvasta vaikutuksesta.

Historialliset kehityssuuntaukset kuten alueelliset ylihakkuut, metsätalouden ja – teollisuuden erillisyys, keskitetty metsähallinto sekä markkinatiedon puute rajoittavat metsäpolitiikan vaihtoehtoja. Metsänvuokraukseen kuuluvien talousmetsien jakoprosessien heikko läpinäkyvyys on lisännyt yritysten transaktiokustannuksia. Tämä on vaikuttanut heikentävästi niin omistajan kuin vuokralaisen taloudellista tulosta. Metsätalouden julkinen rahoitus on perustunut metsähallinnon omaan liiketoimintaan. Metsäsektorin ongelmista ja epävarmuudesta huolimatta kyselyyn osallistuneet puunkorjuuyritysten johtajat suhtautuivat yrityksensä tulevaisuuteen positiivisesti.

Vertailu Venäjän ja Brittiläisen Kolumbian kesken paljasti eroja julkisomisteisten metsävarojen hallinnassa. Brittiläisen Kolumbian pitkäaikaista kokemusta metsien hallintaoikeuksien järjestelystä, kuten vuokralaisen toimintaan perustuva metsän käyttöoikeuden uusinta, ei ole täysimääräisesti hyödynnetty Venäjän metsälaissa. Uusien lakien ja ohjeistojen täytäntöönpanon tehostamiseksi tulisi harkita taloudellisten kannustimien luomista sekä valtion ja yksityisen metsänvuokralaisen että keskus- ja paikallishallintojen yhteistyön tehostamiseksi.

Tulosten perusteella voidaan Venäjän metsäpolitiikassa havaita kolme keskeistä kehityssuuntaa: metsien hallinnan hajauttaminen, yksityisen sektorin roolin kasvu metsien käytössä ja hallinnassa sekä metsäteollisuuden keskittyminen. Metsäteollisuuden muutosta edesauttaa metsälain käynnistämä metsien hallintasuhteiden uusjako. Tulosten perusteella voidaan arvioida, että Venäjän uuden metsien hallintajärjestelmän toimeenpano kestää useita vuosia.

Avainsanat: Vallan hajauttaminen, Federalismi, Polkuriippuvaisuus, Omistusoikeudet, Metsätalous Preface This doctoral dissertation is the result of work consisting of five closely interrelated papers.

This study saw its beginning in the spring 2004 when Professor Olli Saastamoinen asked me to join his then new four year research project "Forest policy, politics and forest programmes in Russia". The major part of the work was carried out within the project.

The themes studied in the project felt to some extent familiar, since I have had first hand contacts to Russian forestry since the mid 90s when I was working in the Russian Karelia forests as student. Later on, I have gained professional experience from various aspects of cooperation with Russian institutions, such as the development of educational programs in the field of forest economics, designing continuing education courses, and coordinating several educational and development projects within the Finnish-Russian Forest Development programme in the Ministry of Agriculture and Forestry. This work has given me numerous opportunities to work directly with research and education institutions, administrative bodies as well as private companies working in and with the Russian forest sector. I have also had concluded personal contacts and made friends with many highly skilled and knowledgeable Russian experts. This has helped me as a foreigner to better understand not only forestry and forest policy, but also the aspects of everyday life in Russia and the significant transformation of the country has been going through during the last two decades. These personal yet strictly narrow experiences form an integral background for this dissertation by affecting how I see and interpret the results of the scientific surveys. As foreigner I can never fully understand, but hopefully I can provide some alternative views from outside that give new and fresh angles to known problems and questions. I hope that apart from academic merit this could be the added value of my dissertation.

This study focused on forest policy in the Russian Federation. The federal level and national policies were chosen as starting points of this study because that was the main forum where policies were formulated during the study period. Russian forest policy offered a challenging but also rewarding and ever-changing subject for analysis. Turbulent policies produced over twenty Forest Code drafts (three of them are analysed in Article I) before finally adopted at the end of 2006. The studied period ends by the end of 2008.

However, the forest policy process studied continues its evolution. At that time, the Forest Code has been in force almost two years, yet there are numerous open questions related to the adoption of subordinate federal and regional normative and the enforcement of the rules. Also, several amendments have already been introduced and new ones will be introduced in rapid pace. The nature of the new forest management regime adopted is only beginning to take shape. From this point of view some of the results may already turn out obsolete that often is the case in studies focusing on current policy matters. However, I do believe that by identifying the elementary institutions regulating forest policy-making in Russia (and previously in the Soviet Union) this study despite its topicality also is able to present long-term academic staying power.

There are numerous people who have contributed one way or another to this dissertation work. Even if my memory does not serve me sufficiently here, I would like to express my gratitude to the following authors, colleagues and friends.



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