Fiscal Obsolescence in Forest Resource Governance: A Market Benchmarking Analysis of Kenya Forest Service Fee Regulations
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Abstract
Kenya's forest sector operates under a fee regime last revised in 2016 under Legal Notice No. 21, enacted pursuant to the Forest Act 2005. Nearly a decade on, these fees remain operationally current yet economically dysfunctional, a condition we term fiscal obsolescence. This paper benchmarks seven Kenya Forest Service (KFS) fee categories, namely nursery seedlings, bamboo poles, cypress stumpage, commercial honey licences, firewood licences, camping fees, and forest recreation entry, against current market prices observed across Kenyan agricultural, construction, and tourism markets. Obsolescence ratios range from approximately 2× (forest recreation entry) to 37× (exotic nursery seedlings), with annual licence fees for commercial honey and firewood representing less than 3% of the revenue streams they nominally regulate. KFS raised only KSh. 644 million in own-source revenue against a KSh. 6.5 billion operational allocation in 2021/22, a cost-recovery rate below 10%. We argue that fee stagnation is not a consequence of poor initial policy design but of a structural governance failure: the absence of mandatory periodic review mechanisms embedded in the regulatory framework. Drawing on regulatory economics and public finance theory, we identify three pathways through which fiscal obsolescence impairs forest governance: revenue attrition, market distortion, and conservation incentive failure. We propose a triennial fee review mechanism anchored in KNBS inflation indices as the most feasible corrective instrument. The study contributes an original concept to forest governance scholarship and provides an evidence base for reform of the Forests (Fees and Charges) Regulations.
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