Area fees have become an increasingly important component of forest revenue systems in tropical developing countries. They are commonly viewed as having a neutral impact on decisions by timber concessionaires. This view is incorrect. Using both theoretical and empirical models, we demonstrate that area fees can induce concessionaires to accelerate timber harvests and to harvest more selectively. In Cameroon, area fees at recent levels create an incentive for concessionaires to harvest forests in half the estimated sustained-yield period. Countries that wish to encourage concessionaires to comply with sustained-yield requirements must implement measures that counter the depletion-accelerating effects of area fees.
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