The role of governments in forest certification - a normative analysis based on new institutional economics theories

Forest certification is an issue that changes the forestry sector more Profoundly than many governmental initiatives. Governments have taken quite different approaches across the globe and over time in dealing with the phenomenon. In most regions, they have seemingly switched to a 'wait and see' mode when confronted with the complex and fast-developing issue of forest certification. This paper explores the usefulness of economic theories to come up with recommendations on the role of governments. The approach taken is mainly based on 'new institutional economics' theories, especially on economics of information and related agent issues. Data collected from policy makers are used to compare theoretical positions against empirical findings (Werle, 1997). The paper shows that the economic theories applied provide rather clear indications on the role of governments. There are essential roles, such as ensuring compatibility with laws and international obligations. These have largely been fulfilled. Ensuring legal compliance, however, might well not be the only guiding function that governments Should exert for the sake of market transparency, and thus market efficiency. That concerns both setting standards for forest management and roles in setting up and running private certification systems. (C) 2002 Elsevier Science B.V. All rights reserved.