Macroeconomic, political- legal and institutional frameworks of small and medium forest enterprises: The Case of Mexico Camille Antinori.

Macroeconomic, political-Macroeconomic, political-legal and institutional legal and institutional

frameworks of small and frameworks of small and medium forest enterprisesmedium forest enterprises::

The Case of Mexico The Case of Mexico

Camille AntinoriCamille Antinori

Community Forestry Enterprises: Community Forestry Enterprises: Subset of Forest SMEsSubset of Forest SMEs

• 22% of forest in developing countries

• Maybe 80% of Mexican forests

• In Mexico, organization at “community” level

• Collective action over multiple benefits

• CFEs (and SMEs) engage resource with significant public and private benefits

Differing PerspectivesDiffering Perspectives

• Important, prevalent but under-invested

• CP v. private v. public property

• Forest stewards v. productive orgs.

• Community- v. market-oriented decisions

• Democratic v. decentralized v. community

Questions in TalkQuestions in Talk

• Meaning of “CFE” for Mexico and beyond? – To analyze meaning, I will look at structure and

process of governance over the activities in question

• How emerged in Mexico and who benefits?– Look at primary data from field projects

• How integrated into policy and markets?– Overview of data and reports

Linkages

GLOBAL

STATE

REGIONAL

COMMUNITY

Mexican Forestry Sector:Mexican Forestry Sector: Tenancy over Forest Tenancy over Forest

Permit by Tenancy

Total = 3136Private = 2128

Communal = 1008

Community

Private

Authorized Forest Land By Tenancy

# hectares= 2.5 millionPrivate = 550,233

Communal = 1.9 million

Community

Private

Mexican CFEMexican CFE

• In Mexico, “community” has a specific legal meaning:

The ejidos and comunidades of the agrarian reform

How did CFEs emerge?How did CFEs emerge?

• Post-revolutionary laws gave rights over forests to agrarian communities.

• Community governance structure was in place and eventually acquired authority over forests.

Pre-existing factors conditioning Pre-existing factors conditioning further vertical integrationfurther vertical integration

• Institutional capital to organize

• Size and quality of resource

• Past skills and experience

Typical Organizational FormTypical Organizational Form

Monitors:General AssemblyAdvisory councilAuditorsNGOsGovernment

Managers:STFCBCGerentesNGOsGovernment

Owners:Community members

Structure of a Productive Organization

Monitors

ManagersOwners

Decisionmaking Process

Patterns of influence?

Do they meet?

Give reports?

Share information?

Enforce rules?

Who Benefits from CFE?Who Benefits from CFE?

Depends on:• Governance structure and process• Opportunities for voice and exit (Hirschman

1970)• Market demand

Precise estimate awaits incidence study, SAM, value chain analysis (e.g. Taylor and Adelman (1996), Ribot)

Flow of Revenues: OaxacaPublic Goods Investments Percent contributing Average in pesos S.E. Stumpage 88% .08 Roundwood 82% .12 Sawnwood 88% .12 Secondary Products 100% 0 Profits distributed to members >0 Stumpage 16% 10194 9390 Roundwood 46% 814 548 Sawnwood 38% 2333 1155 Secondary Products 50% 2250 2411 Reinvestment in ongoing operations Stumpage 38% .50 Roundwood 83% .39 Sawnwood 88% .35 Secondary Products 100% 0

State PoliciesState Policies

• Emphasize public goods and HK

• Less on physical or working capital

• VI achieved with little credit or subsidies

• Rely on own funds or arrangements with private firms

Source of Funds

Count Total in ongoing sample 64 Received bank credit 7

Working capital 2 Equipment 5

Government assistance 40 Management plan 10

Equipment 6

ProgramsPrograms

• PRONARE: reforestation• PROCYMAF: institutional capacity,

technical assistance• PRODEFOR: About 6500 projects funded,

about 4000 of those for management, mainly thinnings, fire prevention, and management plans

• PSAH: ecosystem services outside of forestry sector

Back to Governance: Back to Governance: Legal InstitutionsLegal Institutions

• Communal v. private v. public property

• Agrarian law ambiguous re forests

• Creation of legal shares to forest

• Outside ownership of shares possible

• Potential for risk sharing

• Not implemented

• Unclear rules

Regional Institutions and UnionsRegional Institutions and Unions

• Motivation: political, services, market power• Achieving power and scale?• Need to balance interests of members

Oaxaca 13 of 44 (random)

Michoacan 6 of 13 (random)

Durango 8 of 11 (incomplete random)

Global MarketGlobal Market

• Link between international demand and local supply?

• Possible shift in demand from international to domestic after peso devaluation 1994

• Some export

• Still learning to compete on global scale.

• Need quality of product and service

EmigrationEmigration

• Logger: maybe $30/day in Mexico + repartos + public goods

• Ag worker: about $100/day in US

• Average of 24 communities surveyed is that 50% of village population receive remesas.

• 12 said that remesas were ½ or a little more than ½ of families’ yearly income.

Concluding Remarks: Concluding Remarks: CFE as Local InstitutionCFE as Local Institution

• Mexico had property rights and process in place.• Path dependency? • Difficult to recreate without radical movement. • Study of control and ownership could suggest

other configurations and mechanisms for local stakeholders to participate and benefit from management of that resource.

• Need more theoretical frameworks for collective action and accountability

Concluding Remarks: Concluding Remarks: CFE as Productive OrganizationCFE as Productive Organization

• “Community” in structure and process.

• Organization affects benefit distribution.

• Linkages exist at all levels.

• Redefinition of property affects wealth.

• Tradeoffs?

Thank youThank you

GraciasGracias