Abstract: Forest resource management has a characteristic of high transaction cost particularly due to lack of valid information and policy process. Such characteristic requires unique institution to ensure an effective policy implementation. This study shows that state has inadequate control over forests and forest governance, extra-legal access, as well as patron-client relationships as the causes of the high transaction costs. Consequently, more and more the natural production forests are degraded and this does not only cause loss of state revenue from natural resources, but also a bankruptcy of corporations which exploit natural production forests.
Keywords: high transaction costs, institution, extra-legal access, patron-client, natural production forests
Author: Hariadi Kartodihardjo
Journal Code: jpkehutanangg150017