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In many countries, forest resources represent a significant natural asset that can be used to produce a wide range of economic, environmental and social goods and services. Where they are held by the government on behalf of the nation, they can also be used to generate government revenues to support economic development and other government policies and programmes.

In purely economic terms, governments can choose to earn revenues from the management of their forest resources either by directly managing them themselves (e.g. through state-owned forestry companies) or by allowing the private-sector to manage them (e.g. as forest concessions) in return for the payment of a charge, fee or levy. In many countries, governments choose the latter option as a way of generating government revenues. This allows them to benefit from the perceived greater efficiency of the private-sector in the production of commercial goods and services. It also enables them to concentrate their attention on forestry policy development. However, under such arrangements, governments are presented with two major challenges:

the effective monitoring and control of private-sector forest operations; and

the design and implementation of an appropriate system of forest charges and revenue collection.

An earlier report (Mitchell, 1998b) has already proposed a large number of measures to support the monitoring and control of forest concessions. This report addresses the second of these issues.

Forest charges are paid to the government in return for permission to utilise state-owned forest resources and can be structured in a variety of ways, such as: flat-rate charges per cubic metre of roundwood cut or taken from the forest; annual charges on the area of forest in a concession; percentage tariffs on the value of forest products produced; or as a combination of such charges (see: Gray (1983), for a comprehensive discussion of the different types of forest charges commonly in use around the world). Such charges are often set with reference to the economic rent from roundwood production. However, there has been a long-running debate about whether forest charges in may countries have been set at sufficiently high levels to capture a significant share of the economic rent from roundwood production (see, for example: Repetto and Gillis (1988) for an early review of the level of forest charges in place around the world).

This report presents the results of an analysis of economic rent from roundwood production in Suriname, which has been produced to help staff of the Suriname State Forest Service (Lands Bosbeheer or LBB) and Foundation for Forest Management and Production Control (Stichting voor Bosbeheer en Bostoezicht or SBB) calculate economic rent and use this measure as a basis for setting forest charges in the future. During this analysis, it was noted that there are several areas where efficiency and profitability could be improved in the forestry sector in Suriname. This would suggest that the potential value of roundwood production and economic rent in the sector could be higher than is currently realised. Therefore, the report also examines the main areas where efficiency and profitability could be improved, discusses the current constraints to such development and suggests policy measures that might encourage such development.

The remainder of this report is in five main sections. Section two briefly describes the concept of economic rent: what it means; how it is calculated; and why it is so important. The third section of the report presents the results of the economic rent analysis and the fourth section presents some recommendations for forest charges in Suriname. Section five describes some of the most important ways in which the efficiency and profitability of the forestry sector in Suriname might be improved in the future. Section six discusses the current constraints to such developments and describes ways in which such constraints may be overcome through changes to current government policies.

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