Market, policies and institutions in NTFP trade: nothing is perfect

New tree varieties and related technological innovations require years to affect smallholders' profits. But policies affecting trade in non-timber tree products (NTTPs) can have immediate effects that are transmitted through markets to prices at the forest or the farmgate. These trade policies also affect incentives to adopt innovations. There have been few studies of the political economy of trade in NTTPs, but substantial literature from development economics and agricultural economics contains relevant insights. The development economics literature of the 1950s and 1960s placed great faith in public institutions to implement policies that addressed market failures and imperfections. In contrast, the `new political economy' that emerged in the 1970s and 1980s pointed out that policies were a product of political processes that often favour individuals with wealth and power. In this view, `bad' policy (from an economic perspective) is not a mistake but a product of self-serving influence. Characteristics of NTTPs and their markets make them susceptible to failures in markets, policies and institutions. Although much can be gained from improving basic understanding of these markets, it is naive to think that better information is a panacea.

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