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This paper assesses the economic impacts of the Hutan Kamasyarakatan (HKm) social forestry program in the Sumberjaya watershed in West Lampung District of Sumatra, Indonesia, which began in 2001 to provide farmer groups permits to use already deforested state Protection Forest (PF) land in exchange for protecting remaining forests, planting timber and agro-forestry trees in their coffee plantations, and using soil and water conservation measures. The study is based on analysis of a survey conducted in 2005 for 640 plots in the watershed, selected using a stratified random sample of land of different tenure categories, and their operator households, and surveys of communities with PF land and HKm groups in the watershed. We find that HKm permit holders are poorer on average than owners of private land, but have comparable wealth to users of other eligible PF land who have not applied or received HKm permits, and users of National Park (NP) land, which is not eligible for HKm. Compared to eligible non-participants, households with a HKm permit by 2005 have greater education, are more involved in producer organizations, and have better access to markets, roads and technical assistance. Many communities and households are not aware of the program or its requirements, including some of those in HKm groups. Program participants and applicants perceive that it substantially increases tenure security, land values, land investments and incomes. Econometric analysis and propensity score matching methods using the survey data provide only limited support for these perceptions, showing that the program had statistically insignificant impacts on land purchase values, soil and water conservation investments, soil fertility management practices, and profits. The program did significantly increase planting of timber and multi-purpose agroforestry trees, but these have offsetting impacts on profits, with multi-purpose trees contributing to higher profits and timber trees causing lower profits because timber harvesting is not allowed. These findings indicate that the program has potentially important pro-poor benefits, though realization of these benefits is limited by potential beneficiaries' lack of access to necessary human and social capital, markets and technical assistance; lack of awareness about the program; and program restrictions that require planting of timber trees but prohibit timber harvesting.


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