Local community's preferences for accepting a forestry partnership contract to grow pulpwood in Indonesia: A choice experiment study

Forestry partnership schemes have been deployed to integrate industrial plantations’ and local communities’ interests in forest resource management. However, the unsatisfactory impacts of the scheme lead to both parties reassessing the value of the partnership schemes. This article explores local communities’ willingness to remain in or opt-out of the partnership schemes designed to grow pulpwood in Indonesia, and investigates their preferences for accepting the modified contract attributes. The contract attributes include contract length, labor participation, insurance, training, road improvement and income. A choice experiment approach was used to estimate preferences of 287 smallholders, of which half were participating with the timber industry under Company-Community Partnership schemes. The results show that a bundle of the contract attributes that could increase local communities’ utility are provision of road improvement, higher expected income, and higher timber production insurance. Greater incentives are required to compensate smallholders’ loss of utility due to longer contract length and monitoring planted areas. The preferences vary significantly depending on smallholders’ participation status in the scheme but not land tenure status. The continuity of the partnership schemes is challenged by a significant number of respondents always rejecting the contract option. The implication of the findings is that designing a bundle of contract attributes focusing on a promotive social safeguard approach likely keeps the participating smallholders in the schemes.