A Conjoint Analysis of Farmer Preferences for Community Forestry Contracts in the Sumber Jaya Watershed, Indonesia

A Conjoint Analysis of Farmer
Preferences for Community
Forestry Contracts in the Sumber Jaya
Watershed, Indonesia
Bustanul Arifin, Brent Swallow, Suyanto, Richard Coe
Southeast Asia

---

A Conjoint Analysis of Farmer
Preferences for Community Forestry
Contracts in the Sumber Jaya
Watershed, Indonesia

Bustanul Arifin, Brent Swallow, Suyanto, Richard Coe

1

---

LIMITED
CIRCULATION
















Correct citation: Arifin B, Swallow B, Suyanto, Coe R. 2008. A Conjoint Analysis of Farmer
Preferences for Community forestry Contracts in the Sumber Jaya Watershed, Indonesia. ICRAF
Working Paper 63. Nairobi: World Agroforestry Centre. 36 pgs

Titles in the Working Paper Series aim to disseminate interim results on agroforestry research and
practices and stimulate feedback from the scientific community. Other publication series from the
World Agroforestry Centre include: Agroforestry Perspectives, Technical Manuals and Occasional
Papers.

Published by the World Agroforestry Centre
United Nations Avenue
PO Box 30677, GPO 00100
Nairobi, Kenya

Tel: +254(0)20 7224000, via USA +1 650 833 6645
Fax: +254(0)20 7224001, via USA +1 650 833 6646
Email: icraf@cgiar.org
Internet: www.worldagroforestry.org

© World Agroforestry Centre 2005
Working Paper # 63


The views expressed in this publication are those of the author(s) and not necessarily those of the
World Agroforestry Centre.
Articles appearing in this publication may be quoted or reproduced without charge, provided the source
is acknowledged.
All images remain the sole property of their source and may not be used for any purpose without
written permission of the source.




2

---

About the authors

Bustanul Arifin
Professor, Department of Agricultural
Economics and Social Sciences. University of
Lampung, Bandar Lampung 35145,
Indonesia
e-mail: barifin@uwalumni.com

Brent Swallow
Principal Economist, World Agroforestry

Center (ICRAF) PO Box 30677, Nairobi,
Kenya
e-mail: b.swallow@cgiar.org

Suyanto
Agricultural Economist, World Agroforestry

Center (ICRAF) Southeast Asia, Jl. CIFOR,
Situ Gede, Bogor 16001, Indonesia
e-mail: suyanto@cgiar.org

Richard Coe
Principal Scientist, World Agroforestry Center

(ICRAF) PO Box 30677, Nairobi, Kenya
e-mail: r.coe@cgiar.org










3

---

Abstract
A wide range of policy instruments have been devised and applied to support the goals
of sustainable forestry management. Community forestry programs can contain
elements of several of these instruments. This paper considers the design of community
forestry contracts in Indonesia. In the research site, community forestry contracts are
contracts between the Forestry Department and community groups that provide group
members with time-bound leasehold rights to protection forests, provided that farmers
abide by specified land-use restrictions and pay any required fees. Farmers perceive that
the contracts represent a bundle of restrictions and instruments, some of which are
explicitly stated in the contract and others that are implied by the contract. Conjoint
analysis was used to quantify farmers’ tradeoffs among the explicit and implicit
attributes of the contracts. The results of bivariate and ordered logit models show that
farmers are most concerned about the length of the contract, and surprisingly
unconcerned about requirements on tree density and species composition. An implicit
attribute, greater access to forestry and agroforestry extension, emerged as an important
implicit attribute. The results imply that farmers in this part of Indonesia would be
willing to abide by fairly strict limitations on land use, provided that they can be assured
of long-term rights to the planted trees.

Keywords
Community forestry programs, community forestry contracts, conjoint analysis,
Indonesia; ordered logit

4

---

Acknowledgements
The study reported in this paper was conducted under a project entitled: “Property
rights, Environmental Service Mechanisms and Poverty in Indonesia.” The project was
supported by the Strengthening Input Systems (BASIS) Collaborative Research Support
Program (CRSP), funded by the United States Agency for International Development.
Financial support was also provided by the European Union and the International Fund
for Agricultural Development. The contents of this publication are the sole
responsibility of the authors and can in no way be taken to reflect the views of the
funding agencies. The study benefited from useful comments from Meine Van
Noordwijk, Peter Frost, John Kerr, John Pender and members of the faculty of the
Department of Agricultural Economics at Lampung University. Edwin Jonson,
Noviana Khususiyah, Hutman Kariadi and Rio Jaladri administered the survey and
assisted with data management.

5

---

Contents
1. Introduction......................................................................................................... 7
2. Background ......................................................................................................... 8
3. Applying Conjoint Analysis for Assessing Preferences for the Elements of
Community forestry Contracts.......................................................................... 14
4. Study design and methods ................................................................................ 15
5. Results............................................................................................................... 22
6. Discussion
and
Conclusions ............................................................................. 27
References................................................................................................................. 29













6

---

1. Introduction
Tropical forested landscapes are prototypical multi-value resources. Different portfolios
of private, collective and public goods and services are produced by those landscapes:
products of interest to a range of local and external stakeholders. Research conducted
across the humid tropics shows that there are almost always tradeoffs between the
extremes of intense production and complete conservation of tropical forested
landscapes. Between the extremes there is considerable scope for achieving outcomes of
mutual benefit for different stakeholder groups (Tomich et al. 2005).

A wide array of policy instruments has been devised for promoting the management of
tropical forest landscapes. These include “traditional” instruments such as state forest
ownership, timber harvest concessions, public tree planting programs and restrictions on
commercial trade of forest products. They also include a variety of community and co-
management tenure arrangements, decentralization to local government authorities,
agroforestry extension, conservation trust funds, product certification, and conditional
payments for water quality preservation or carbon sequestration (Cubbage, Harou and
Sills 2007 p.839; Swallow et al. 2007).

In any particular context, governments and other organizations interested in the
management of forest landscapes need to make informed choices about which
instruments to apply. Cubbage, Harou and Sills (2007) propose that the choice of
instruments should be guided by benefit-cost analysis, with gaps between private and
social returns defining the need for particular policy instruments. An alternative
approach is to design the policy instrument to balance the interests and perceptions of
key stakeholder groups. In this paper we show that conjoint analysis can be a powerful
tool for understanding the way that farmers perceive the attributes of community
forestry contracts in Indonesia. Results from the study can smoothen the processes of
negotiation between farmers and other key stakeholders in community forestry.
Depending upon the context, a similar study could also be done with representatives of
other stakeholders or other communities in order to identify areas of similarity and
difference in preferences (e.g. Tsalikis, Seaton and Tomaras 2002).

Forest landscape management in Indonesia is an instructive case of multiple values,
multiple interests, and multiple policy instruments. After many decades of top-down
regulation and central government ownership of large tracts of land, Indonesia’s forest
policy began in 1998 to slowly evolve toward decentralization, forestry extension, and
stronger ownership rights for communities and indigenous peoples. Although the

7

---

central government Forest Department continues to exert overall control over a large
portion of the Indonesian land mass, some progress has been made in opening the space
for negotiation between communities and the government (Fay, Sirait and Kusworo
2000). Community forestry contracts (HKm) provide one possible avenue for
negotiated settlements of mutual benefit for government and community interests.

This paper addresses the challenge of understanding farmer perceptions of community
forestry contracts in Indonesia. The paper focuses on a case study in the Sumber Jaya
watershed in Lampung Province on the island of Sumatra. The contract can be
conceived as a bundle of policy instruments, some of which are explicitly stated in the
contract and others implicitly implied by the contract. This study applies conjoint
analysis to understand the way that farmers value and tradeoff the different policy
instruments – expressed as different attributes of a possible contract. The results, many
of which were unexpected, have important implications for community forestry
contracts in Lampung province, and potentially other community forestry contexts in
the developing world.
2. Background
2.1 Forest Policy in Indonesia
Indonesia inherited its approach to forestry law from the Dutch colonial government.
In that view, forests are viewed as strategic assets that a government should protect and
manage in order to generate income and secure environmental services of general public
benefit. Government agencies in charge of the forests generate income from the sale of
timber concessions, but do not yield ownership rights to individual forest owners or
communities. This approach to foreset law was institutionalized over a twenty-year
period, beginning with the Forest Act of 1967. Based on the Forest Act of 1967, the
Ministry of Forests asserted control of more than 70 percent of the total area of the
country, despite the fact that those areas were home for as many as 90 million people.
The Ministry of Forests classified the forest estate into conservation forests, production
forests and protection forests, with little or no recognition of the ownership rights of the
local residents, many of whom were indigenous people who had lived in the areas for
generations (Fay and Michon 2005, Colchester et al. 2005).

International development agencies began to press for reforms of the Forest Law in
1989, achieving modest changes through the 1990s. In 1995 the Minister for Forests
issued a decree that allowed farmers to apply for permits to harvest non-timber forest
products from state forest lands. Another Ministerial decree was issued in 1998 that

8

---

permitted customary communities to have their lands designated as Special Purpose
Areas (KDTI).

The fall of President Suharto in 1998 ushered in the era of Reformasi and the hope for
much greater recognition of the rights of indigenous people and local communities. A
new Forestry Act was passed in 1999 that included provisions for areas of forest domain
to be designated as Special Purpose Areas and customary forests. Neither of these
designations provided for community ownership of forest land, but rather were
articulated as temporary leases or permits. The legal provisions and implementation
arrangements for the Forest Act have periodically changed since 1999. The
Government passed laws on regional autonomy in 1999 (Law 12/1999) and 2004
(32/2004) which granted local governments more authority over natural resource
management (Colchester et al. 2005).

In 2001, the Minister of Forestry issued decree 31/2001, which provided operational
guidelines for community forestry contracts, Hutan Kemasyarakatan (HKm). Farmer
groups interested in securing HKm contracts are required to form recognized farmers’
organizations and to follow management guidelines that local forestry officials approve
as being protective of the watershed functions of the landscape. Five-year initial
contracts can be extended to a maximum of 25 years. As of 2005, the area under HKm
permits comprises 2100 square kilometers, less than 0.2% of the forest estate of the
country (Colchester et al. 2005).

As defined by the Indonesia forestry law, therefore, HKm permits are community
forestry contracts in which the Indonesia government grants limited duration rights to
forest estate land provided that the communities abide by management requirements.
Van Noordwijk et al. (2007) regard the HKm contracts in protection forest areas to be a
type of reward for the provision of environmental services, which can be evaluated by
the extent to which they are realistic, conditional, voluntary and propoor (Van
Noodwijk et al. 2007).
2.2 Study site
The conjoint analysis study was conducted in the Way Besay sub-watershed in the sub-
district of Sumber Jaya in West Lampung, Indonesia. As of the mid-1990s the Sumber
Jaya area was known as an area of intense land-use conflicts. Between 1980 and 1990,
the area was demarcated into a small area of private farm land, conservation forests for
biodiversity conservation, and large areas of protection forests for watershed protection
(Verbist et al. 2005). Although much of the protection forests had been deforested and
converted to coffee farms as early as the 1950s, government officials periodically evicted

9

---