P.A. Barresi
Paul A. Barresi is an environmental lawyer pursuing advanced studies in environmental politics and policy in the United States. As a Ford Foundation Fellow in Public International Law at FAO in 1993, he undertook a comparative case-study of the new forestry and forestry-related laws of Poland and Albania, which included in-depth fact-finding visits to boa, countries.
Like the bursting of a dyke, the rending of the "iron curtain" unleashed a torrent of reform legislation in Eastern Europe. Land law reform, agricultural law reform and environmental law reform have all figured prominently in this flurry of legislative activity. It was only a matter of time before forests would be drawn into the maelstrom. The countries of the region have long regarded their forests as precious resources. In some cases, forests have been the focus of special laws for centuries.
Poland and Albania have been pioneers in East European forestry law reform. Poland enacted a new comprehensive law - the Act on Forests - in the autumn of 1991. Albania followed a year later with new legislation of its own - the Law for Forestry and the Forest Police Service. Both countries have since elaborated on the provisions of these legislative enactments - or statutes - with several government orders.
Both the Act on Forests in Poland and the Law on Forestry and the Forest Police Service in Albania address a host of traditional forestry issues, from forest management planning to the control of fire hazards. They also address a number of new issues made salient by the introduction or expansion of private property and market economics in Poland and Albania during the past few years. As we shall see, the Polish and Albanian forestry statutes have responded to these developments in slightly different ways. The Polish statute is the more dynamic of the two. It explores the implications of the expanded role of private property in great detail and strongly applies selected free market principles to several aspects of the forest economy. The Albanian statute takes a more conservative approach, distinguishing to a much smaller degree between state forests and other types of forests for regulatory purposes and experimenting in less drastic yet still significant ways with market economics. Taken together, the Polish and the Albanian statutes offer a rich palette of legislative tools for the consideration of other countries with economies in transition and that may wish to pursue forestry law reform.
Forestry legislation, no matter how comprehensive, does not occur in a vacuum. It is merely one component of a country's legal infrastructure and must be drafted with the rest of that infrastructure in mind. This is especially true in countries with economies in transition, where forestry statutes must take into account the dramatic restructuring of basic legal relationships which is a necessary part of the transition process. This restructuring may take place at several levels within the hierarchy of a country's domestic laws. The legalization of private property in land, for example, may require a constitutional amendment. The subsequent privatization or reprivatization of state property, on the other hand, can often be effected by a mere statute enacted by the national legislature. In any event, basic legal principles and procedures such as these are rarely legislated on a sector-by-sector basis. Sectorally based statutes - such as forestry legislation usually take these fundamental principles and procedures as given and merely articulate a set of more detailed sector specific rules that may build on but are not inconsistent with them.
The Polish and the Albanian forestry statutes follow the typical pattern. The Polish Act on Forests, for example, specifically applies to forests without regard to their ownership. It does recognize that there may be several types of property rights in forests, however, including state ownership, "private" ownership (which includes both private ownership per se and municipal ownership) and private leasing of either state - owned or privately owned forests.
In Poland, legislative recognition of private property rights in forests is not as revolutionary a development as it has been in some other East European countries. A significant proportion of Poland's 8.6 million ha of forests remained in private hands throughout the communist period. At the end of that period, 17 percent of Poland's forests were privately owned, the same proportion that is privately owned today. The Polish Government expects to reprivatize another 1 million ha of state-owned forests in the future, which would bring the proportion of privately owned forests to almost 30 percent.
The presence of a sizeable, pre-existing class of private forest owners in Poland presents reformers with both opportunities and challenges, as it would in any country undergoing similar economic and political transformations. On the one hand, this class of foresters constitutes a ready-made laboratory in which private economic incentives and enlightened self-interest can be invoked immediately in the service of sustainable forest management. On the other hand, these foresters laboured for decades in an environment where central government authorities tightly controlled even the smallest details of private forest management, and may react to their newfound autonomy in unexpected ways.
The task of helping Poland's private forest owners to manage their forests sustainably falls to the State Forest Administration, which is located within the Ministry of Environmental Protection, Natural Resources and Forestry. According to the Act on Forests, the State Forest Administration has three administrative layers - the General Directorate, located in Warsaw; the Regional Directorates, of which there are 17 dispersed throughout the country; and the Forest District offices, of which there is one in each of the 430 Forest Districts into which the regions have been divided. One of the most striking features of the Act on Forests is the extent to which it devolves decision-making authority to the lowest appropriate administrative level. The Forest Districts enjoy substantial independence from the General and Regional Directorates.
Under the Act on Forests, the State Forest Administration has three principal functions. First, it actively manages the 83 percent of Polish forests that are currently owned by the state. Second, at the behest of provincial government officials, it supervises the private management of private forests to ensure that they are managed in accordance with the law. Third, it functions as an extension agent in private forests, giving private forest owners the technical and informational assistance they need in order to manage their forests sustainably. This third role is vital in any country that, like Poland, has either an emerging private forestry sector or a preexisting private forestry sector suddenly freed from tight government control. Even though private forests persisted throughout Poland's communist period' the legal regime in place at that time did not encourage sustainable private forest management initiatives. For example, the owners of these forests were required to obtain state permission before cutting even a single tree, which in practice compelled them to steal timber from their own lands. They were primarily responsible for carrying out the instructions of state authorities and were given few incentives to acquire the technical knowledge and develop the decision - making ability necessary to manage forests sustainably on their own. As a result, many of Poland's private forests are in much worse shape biologically than its state forests, and many private forest owners are ill-prepared to make significant improvements in the near future. Pursuant to the Act on Forests, the Forest District offices have stepped in to fill this void. They provide private forest owners with management advice and technical assistance and have succeeded in developing a very productive relationship with them.
In Albania, the recognition of private property rights in forests has been a much more revolutionary development than in Poland. During Albania's communist period, all forests were state-owned. In a significant departure from past practice, the new Law on Forestry and the Forest Police Service recognizes three forms of forest ownership: i) state forests; ii) private forests; and iii) community forests, which are owned by the state but used in common by the local inhabitants in accordance with a contract between the state and the relevant community.
This ownership structure at least superficially resembles the one in Poland, in which state forests, private forests and community-based forests all play a role. Significant differences lurk just beneath the surface, however, largely as a consequence of the fact that Albania has no recent history of private forest ownership.
About 95 percent of Albania's forests are state-owned. The other 5 percent are private forests, which a small number of peasants have planted on their newly private lands. The Albanian forest authorities have no plans to privatize any significant amount of state forests, although a new Albanian privatization law would allow them to do so. The forest authorities consider the state forests to be well managed, and see little to gain from privatizing them.
Communal forests, a concept which the drafters of the Albanian forestry statute borrowed from French law, were meant to constitute a class of forests intermediate in legal character between state forests and private forests. The Albanian authorities have been very reluctant to establish any community forests, however, for fear that the local inhabitants will overexploit them for short-term economic gains or to meet immediate subsistence needs. This fear seems well founded. The dangers posed by relaxing state control over Albania's forests in the short term were graphically demonstrated during the period of civil disorder that followed the collapse of the communist regime beginning in 1990 and from which Albania has not yet fully recovered, when even 500-year-old olive trees in the capital city were cut down by the local inhabitants for use as fuel.
The Albanian forest authorities have two principal administrative layers - the General Directorate, located in Tirana; and the District Directorates of the Forest Police Service, which are dispersed throughout the country. Decision-making authority within this structure remains much more centralized than in Poland's State Forest Administration. Pursuant to the Law on Forestry and the Forest Police Service, the forest authorities perform two major functions. First, they manage the 95 percent of Albania's forests that are owned by the state. Second, they regulate the management of non-state forests and exercise much more power in that regard than their Polish counterparts. According to the statute, the forest authorities have much the same powers and duties in private and community forests as they do in state forests, even though the forest authorities anticipate that the role they will play in particular forests will vary depending on who owns them. Presumably, this multifaceted role that the forest authorities expect to play will be spelled out in government orders, albeit within the constraints imposed by a statute that appears to have a more monolithic role in mind.
Unlike the Polish Act on Forests, the Albanian statute does not emphasize the role of the forest authorities as extension agents. It merely notes that the state assists in the development of agrosilviculture and in the foundation of private forestry with investments and technical assistance. The amount of assistance that the forest authorities can provide is severely constrained by the government's difficult financial circumstances, and little, if any, investment or technical assistance has been provided so far.
One of the most interesting aspects of the Polish Act on Forests is that it affirms the status of the State Forest Administration as a self-financing entity. For the most part, the State Forest Administration generates its own income and pays its own bills, although recourse to the state budget is possible in the event of a severe revenue shortfall caused by an emergency situation. The agency's income is derived from several sources. Ninety percent of it comes from the sale of timber by the Forest District offices, of which 16 million to 18 million m3 are sold annually Some income comes from the state budget, which pays for certain types of forest acquisition, forest conservation and environmental protection activities. A small amount of additional income is derived from various fees, fines and other payments that the State Forest Administration is authorized to collect from forest users or abusers in certain circumstances.
Two of the revenue-raising powers that the Act on Forests confers on the State Forest Administration are especially interesting. First, the statute authorizes the agency to participate in companies of limited liability or joint-stock companies, provided that forests do not constitute the initial capital of these companies. The agency currently participates in about 50 such companies, including timber trading firms, forest fruit-gathering companies and forestry-related construction companies. Second, the statute authorizes the State Forest Administration to obtain bank credits, provided that the annual total of these credits does not exceed 30 percent of the previous year's sales. The credits may be secured by the assets of the State Forest Administration, excluding the forests themselves.
This combination of revenue-raising features makes the State Forest Administration an extraordinary entity. In many ways it resembles a private company, especially as far as its customers, business partners and creditors are concerned. This resemblance is enhanced by its internal financial allocation practices, which revolve around a Forest Fund established by the Act on Forests. The Forest Districts make payments to this fund in amounts that vary from district to district in accordance with the prevailing natural and economic conditions. Most of the State Forest Administration's other income is also deposited in the fund.
Forest Fund monies may be used for two purposes. First, they may be used to finance the deficits incurred by Forest Districts that are disadvantaged because of unfavourable natural or economic conditions - for example, a predominance of tree stands that are too young to be harvested. The Forest Fund thus acts to channel money from the more prosperous districts to the less prosperous ones, much as profitable divisions of a private company may be used to finance the activities of temporarily unprofitable ones. Second, Forest Fund monies may be used to create performance incentives for the various subunits of the State Forest Administration, particularly in the fields of silviculture, forest protection, research and the development of infrastructure necessary for managing the forest economy. Thus, it is an integral part of a bonus system, much like the one a private company might use to encourage a superior performance among its various subdivisions.
The fact that the State Forest Administration is both a major seller of Polish timber and the agency responsible for nurturing the country's fledgling private forestry industry places it in a difficult position. On the one hand, as a self-financing entity that derives 90 percent of its income from timber sales, it is in the State Forest Administration's interest to obtain as large a share of the Polish timber market as possible. On the other hand, it could become such a formidable market presence that it could crowd out private foresters. The Administration relies on three factors to prevent its economic impact on private foresters from being unduly negative. First, it relies on Poland's strong antitrust statute, which is intended to keep markets competitive by preventing monopolization. Second, it relies on the limited marketability of much of the timber cut in state-owned forests, which have been damaged by air pollution. Third, it actively cooperates with private foresters as a matter of custom in order to ensure their survival, based on the theory that all of Poland's forests are part of a common estate of natural renewable resources and that the privately owned forests must be managed properly in order to ensure the health of the state-owned ones. The Act on Forests has in part codified this custom by casting the State Forest Administration in the role of extension agent.
Of these three factors that limit manipulation of the timber market by the State Forest Administration, the first is the most important because it is the only one that imposes a legally binding restraint on its economic power. Even the quality and quantity of the state-supplied extension services supplied by the Administration pursuant to the Act on Forests, from which private foresters clearly stand to benefit, are largely dependent on the Administration's goodwill. Whether that goodwill can or will be sustained indefinitely, whatever economic or political misfortunes may befall the State Forest Administration in the future, remains to be seen. In any country where the state forestry agency remains a major player in the timber market, a strong antitrust law or similar legal restraint on the agency's economic power would be a valuable safeguard for ensuring the health of a nascent private forestry industry.
To a greater degree than the Polish State Forest Administration, the Albanian forest authorities resemble a purely public sector administrative agency. However, they have been experimenting with free market innovations to some extent. The most important of these innovations relates to the extraction of timber from state forests. Within months of the passage of the new forestry law, Albania was privatizing state timber extraction enterprises. This led to a hybrid system in which both private and state enterprises compete at auction for the right to extract timber from state forests. To date, all or most of the private enterprises have been Albanian. Although these enterprises tend to suffer from insufficient capitalization, which impairs their ability to purchase the equipment they need or otherwise to harvest timber in the most sound, cost-effective manner, they have already proved themselves capable of outcompeting the state enterprises. They are thus forcing the state enterprises to become more efficient.
The formation of joint enterprises with foreign companies, newly permissible under Albanian law, may make this environment even more competitive. Three joint ventures with state extraction enterprises were being formed as early as the summer of 1993. Two or three private joint ventures had also been proposed, but had not yet moved beyond the proposal stage.
Any country wishing to move away quickly and markedly from the centrally planned system of property ownership and economics in the forestry sector would do well to look to the Polish Act on Forests for inspiration. By investing the Forest District offices with substantial independence from the General and Regional Directorates, it carves out a broad sphere in which psychological and material incentives can work to harness individual initiative. By constituting the State Forest Administration as a self-financing entity, the Act on Forests has created a powerful institutional incentive for efficient state forest management. In addition, the Act on Forests attempts to recognize the special needs of private forest owners and to extend them a helping hand in the form of extension services provided by the Forest Districts. This augurs well for the long-term success of Polish private forestry.
The Albanian statute, on the other hand, contains a number of provisions that may be more attractive to a country that wishes to take a more gradual approach. It authorizes the forest authorities to retain a very high degree of state control over all types of forests, regardless of who owns them, which may be beneficial in the short term where recent experience suggests that private parties cannot yet be relied on to manage forests for long-term, rather than short-term, gains.
Albania's apparently successful experiment with competitive bidding among state and private extraction enterprises suggests that this approach may be a viable option, with benefits for both the state and private industry.
The weakness of the more gradual approach is that it could lead to stagnation over the long term. For example, a statute that failed to recognize the differing needs and interests of private and state forestry, and the need to vary the regulatory role played by the state forestry authorities in each type of forest in accordance with those differing needs and interests, would be likely to allow private forestry to develop only to a certain point. Any country whose goal is to create a forestry sector capable of realizing its full potential would do well to recognize the more gradual approach as a transitional measure only.
