An optimal contract for monitoring illegal exploitation of co-managed forests in Benin

Abstract

In Benin, natural forest reserves are seriously threatened by legal and illegal loggers, poachers, hunters, farmers, herders and wood traders. Since 1990, Benin Government has adopted co-management as the institutional device to promote sharing of power and responsibility among local community resource users and resource management agencies. In this paper, we develop an agency theory framework and employ it to evaluate the performance of a co-management experience of Benin forest reserves. Our analysis shows that the contract devised by the principal (Government) is ill-designed. Specifically, we conclude that compensations of the monitors don’t fit the crime. We propose that the co-management of Benin forests’ reserves be revised based on agency theory principles. This will help to assure success in achieving the combined public and private goals of environmental protection and private welfare of local communities. This is especially important to avoid a situation whereby State interventions can damage local institutions and turns common resources into open access resources