Over-Regulated and Under-Marketed: Smallholders and the Wood Economy in Isabela, The Philippines - Smallholder Tree Growing for Rural Development and Environmental Services - page 163

is required to transport wood and to make this matter worse, the agency does not
accept tax declarations as such proof. Ownership has to be proven by an application
filed to the DENR for titling purposes (Calub 2005). There are many private tree
plantation owners who are not registered with the DENR. Their existence is known
only once the owners request for verification and inventory and issued a 'Certificate
of Tree Ownership' that serves as a cutting permit. For collective forests planted by
social forestry projects on public land, there is a 'Resource Use Permit (RUP)' that
serves as the permit to cut and sell the logs, lumber and other forest products. Aside
from the high cost and cumbersomeness of the required documentation, taxes are
imposed by the local government unit ( barangay tax), the reformed value-added tax
and sometimes revolutionary tax in some regions (Cortiguerra 2006). In other
words, smallholder tree growers are still heavily burdened by uncertainties, admin-
istrative requirements and levies.
Due to the logging moratorium and the exception on deregulation (see above), all
cutting and transport of natural forest-sourced timber is basically illegal in the region.
One regulatory instrument is noteworthy in this respect, however, namely the 'Wood
Recovery Permit' that allows anybody to gather, retrieve and dispose abandoned logs,
drifted logs, sunken logs, uprooted and fire or typhoon damaged trees, tree stumps,
tops and branches. This permit is a major vehicle for the massive cutting and trade of
forest species in the region, since for an appropriate payment, any log can be declared
abandoned, drifted, sunken or damaged. Organizing such a trade cannot be done by
smallholders but requires capital and political involvement. Driven by the large profits
to be made, such structures have come into being in the region, however, as smaller-
scale re-enactments of the once national-level deforestation machinery.
Overall, then and in spite of all good intentions, the regulations as enforced
locally de facto largely exclude the smallholders from legal trade of planted wood
but allow others to engage in the illegal trade of forest species.
7.5 Discussion
As we have seen, the situation with fuelwood and charcoal in the region is that of
a relatively regular market with low profits and development opportunities. The
present discussion is therefore fully focused on the timber trade.
The degree of fine-tuning of regulations poses a well-known dilemma in policy
design. On the one hand, coarse, across-the-board regulations often tend to create
inefficiencies that fine-grained regulations then may rectify. In our case, for
instance, a declaration of registration appears rational to ensure that DENR receives
information on plantation stands without cost; a declaration of ownership ensures
that timber is not extracted from the neighbor's or state plantations; and a wood
recovery permit ensures that fallen or abandoned timber is not left to rot as it would
be under a blanket logging ban.
On the other hand, fine-grained regulations increase the regulatory burden on the
actors, which distorts markets. Generally speaking, the higher the regulatory