Rethinking Forest Management: A Participatory Blockchain-based
Governance Approach
Sven Willrich
1
, Felix Melcher
1
and Christof Weinhardt
2
1
FZI Forschungszentrum Informatik, Haid-und-Neu-Straße 10-14, 76131, Karlsruhe, Germany
2
Karlsruhe Institute of Technology, Karlsruhe, Germany
Keywords: Blockchain, Governance, Forest, Participation, Business.
Abstract: The forest is a high-potential area for many stakeholders, provides valuable contributions to the climate, is
profoundly important for sustainability with respect to resources, biodiversity, and so forth. In contrast,
today’s forest is frequently managed in a top-down organizational flow where some stakeholders are involved
in decision-making whilst others remain uninvolved but still affected. Meanwhile, the process of digital
transformation takes place in almost any realm and shows up new ways of participation and of how people
can secure their interests. Against this background, we rest on scientific literature and the current forest
management situation in Germany and introduce the blockchain technology as a potential enabler for a
participatory management (PM) of forest. At the end, we discuss economic potential and incentives for forest
owners since adoption is closely linked to acceptance of such models.
1 INTRODUCTION
The forest is a complex system with several functions
for different stakeholders as it has a high importance
in the endeavor of reaching climate goals, e.g., it
absorbs billions of CO
2
globally every year (Canadell
and Raupach, 2008) and plays an important role for
the preservation of biodiversity. Meanwhile, the
forest is a place for leisure and recreation for people
(a recreational function). Furthermore, it provides
additional services, e.g., timber supply (productive
function). While recreational and productive
functions increase the intensity of intervention
(because exploiting the forest’s productive function is
in conflict to nature protection), the protection
function focuses on maintenance of, for example,
biodiversity, tree species composition, nature
protection measures and so forth (Herbert and Kant,
2010). Overall, these functions address crucial
economic, ecologic, and social value (Ní Dhubháin et
al., 2007), (Karppinen, 1998).
Next, precisely these functions are those that are
requested by different stakeholders – depending on
her interest and their appropriate power of self-
assertion. This is why forest management can be
modeled as a multi-objective optimization problem
where the weights are set depending on the individual
utility functions for the participating stakeholders. In
this process, stakeholders are involved in and affected
by forest decisions. In the end the forest is a source of
natural resources to deliver raw wood, otherwise the
society should benefit by its health – therefore a
sustainable forest management is in everyone's
interest (Food and Agriculture Organization (FAO),
2006). Hence, a balanced management is of
importance.
Consequently, we argue that especially the forest
as a public good might be a suitable candidate of
being governed in a participatory manner instead of a
single person or institution (for more reasoning, see
section 2). From this point of view, our aim is to
sketch a forest management vision for the future
where stakeholders have the ability to participate in
co-decision-making. In order to achieve this, we first
introduce our use case where we describe the current
situation in Germany (section 2). Following this, we
introduce blockchain (here synonymously used to
distributed ledger technologies, short DLT) in general
and related concepts of decentralized governance.
Especially as candidates that might be able to tackle
such challenges arising when participatory-driven
governance across multiple stakeholders is sought-
after. To support our blockchain approach, we argue
with the aid of a process (Wust and Gervais, 2018)
helping us to answer the question if a blockchain
Willrich, S., Melcher, F. and Weinhardt, C.
Rethinking Forest Management: A Participatory Blockchain-based Governance Approach.
DOI: 10.5220/0007949101390146
In Proceedings of the 16th International Joint Conference on e-Business and Telecommunications (ICETE 2019), pages 139-146
ISBN: 978-989-758-378-0
Copyright
c
2019 by SCITEPRESS Science and Technology Publications, Lda. All rights reserved
139
makes sense or not (section 3). In section 4, we
present a participatory and blockchain-based forest
management approach and in section 5, we highlight
managerial / business opportunities and incentives to
adopt such a blockchain-driven approach.
2 PARTICIPATORY
MANAGEMENT
Participatory management (Guyot, 2012) is not new
and already broadly examined in the context of
natural resource management (Reed et al., 2009),
including the way how stakeholders are to be
identified (Reed, 2008). This reasoning is also
supported by the principle 10 of the Rio declaration
on environment and development (McAllister, 1992):
Environmental issues are best handled with the
participation of all concerned citizens, at the relevant
level. At the national level, each individual shall have
appropriate access to information concerning the
environment that is held by public authorities,
including information on hazardous materials and
activities in their communities, and the opportunity to
participate in decision-making processes. States
shall facilitate and encourage public awareness and
participation by making information widely
available. Effective access to judicial and
administrative proceedings, including redress and
remedy, shall be provided.
Furthermore, participatory management is closely
linked to participative decision-making and the
relationship to satisfaction and performance of
decisions are examined (Black and Gregersen, 1997).
Nevertheless, participatory management is frequently
discussed in terms of an organization instead of a
public good or a natural resource, although it is
further objective of research. For example, the
Tanzanian government had applied participatory
management for a long time and researched
participatory and non-participatory forest
management in over three case studies where
community involvement seemed to be correlated with
improving forest conditions (Blomley et al., 2008).
2.1 The Forest in Germany
We describe the situation in Germany and want to
motivate the suitability and importance for this
approach, since current stakeholders are involved in
and partly affected by contemporary forestry
decisions. Therefore, the situation in Germany is the
starting point and might be applicable to other
country’s situations.
To illustrate this use case, we focus on small
private forest owners in Germany and support our
reasoning by relevant facts (UNIQUE forestry and
land use GmbH, 2018): In Germany are 1.1 million
people employed within the field forest and wood.
The annual revenue is 180 billion Euro. In contrast to
other countries, Germany is one of the largest
exporting nation for wood and wood-products. A
detailed report of the forest inventory of Germany is
updated every ten years. The data from 2012 are
showing that about 1/3 of Germany is filled by forest,
which is equivalent to about 11 billion hectare
(almost the half is held by private owners). The
question of how to farm a forest is highly important.
Next, with the growing awareness of sustainability,
an ecological viewpoint is required. In the
certification of sustainably farmed forest, Germany is
a leading nation worldwide (Bundesministerium für
Ernährung und Landwirtschaft (BMEL), 2008).
Although this seems quite good, it is frequently
highlighted that numerous potentials are not yet
exploited to its maximum. As already mentioned
above, there are many private forest owners. The
number of small forest owners (less than 20 hectares)
is estimated at 2 billion (UNIQUE forestry and land
use GmbH, 2018). In this context, potentials relating
raw wood or wood reserve within small forests are
assumed to be existing. Utilizing potentials allow for
a more sustainable usage of a forest; consequently
and among others, this may reduce dependencies on
import wood, reduction of atomic power or to slow
down climate change. These potentials are based, for
instance, on unused wood caused by absent
mobilization of wood or other objectives private
forest owners are pursuing. This includes that forest
owners have their own ambitions, which might
contradict with the common good(UNIQUE forestry
and land use GmbH, 2018). Thus, on the one hand,
forest owners have main jobs apart the forest domain
and the forest potentials are not utilized completely
(Bundesministerium für Ernährung und
Landwirtschaft (BMEL), 2008). On the other hand, a
multitude of stakeholders such as hikers or
environmentalists have desires that are not met.
2.2 Towards Participatory Governance
While such conflicting interests exist, we do not
propose an approach to dissolve such conflicts but
rather to allow participation and give the ability to
exercise one's voting right. Following a set of
participation requirements (Shepherd and Bowler,
ICE-B 2019 - 16th International Conference on e-Business
140
1997), we derived a subset of those required to be
satisfied when participation should happen in a fair
manner (Innes and Booher, 2004):
Requirement 1: Since every stakeholder needs
voice in order to co-decide, the entrance must be open
for everyone. No access restrictions for everyone.
Requirement 2: Since every stakeholder must
rely on the condition that his or her voice will be
given a fair consideration, the voice aggregation
procedure must be tamper-proof and in accordance
with the stakeholder preferences.
Requirement 3: Since every stakeholder has to
be able to see any activity, transparency across all
proposals and decisions need to be guaranteed.
Requirement 4: Since every participating
stakeholder has own interests and the activities and
decisions are made with respect to a public good (the
forest) with social and ecological implications, the
overall process should be conducted in a transparent
and secured manner.
Since we follow a requirement-driven approach
and to satisfy these requirements, we propose an
approach based on blockchain that is justified by a
comparison between mentioned requirements and
blockchain features.
3 BLOCKCHAIN-BASED
GOVERNANCE
Blockchain is no longer just a cryptocurrency but
nowadays applicable to so much more use cases, e.g.
governance is gaining more and more attention in the
Information Systems (IS) literature (Beck et al.,
2016) (Böhme et al., 2015).
With requirements R1, R2, R3, R4 at hand, we
propose a blockchain-driven approach for
decentralized governance (Jentzsch, 2016) where
participatory features (Ølnes, Ubacht and Janssen,
2017) are implemented.
For this purpose, we briefly introduce the rise and
today’s use of blockchain-based governance (Reijers,
O’Brolcháin and Haynes, 2016). We argue that this
approach can be a promising candidate for satisfying
participatory requirement while taking into account
the concept of decentralized autonomous
organizations (DAO) – for instance implemented
within the Ethereum protocol (Jentzsch, 2016). The
main purpose of a DAO is the decentralized
governance of “computerized rules and contracts”
(Chohan, 2017) in a transparent manner. Since DAOs
are essentially based on a blockchain, we use an
1
a person or a group of people
understanding of blockchain that gives necessary
preliminaries for our approach.
The rise of blockchain, often referred to as an
expression of Distributed Ledger Technologies
(DLT), has most probably begun when Satoshi
Nakamoto
1
had published his understanding of the
blockchain technology in 2008 (Nakamoto, 2008).
Therein, blockchain can be understood as one
potential implementation of DLT (Cachin, 2016). As
conceptualized, the blockchain potentials come from
its distributed structure – resulting in the missing
necessity of intermediaries. Where the trust in
platforms can become a problem, blockchain
provides an alternative way to interact without the
need of trust (Hawlitschek, Notheisen and Teubner,
2018). Hence, intermediaries, such as lawyers,
brokers, or bankers, cease to be a vital or
indispensable part of transactions. Through its shared
ledger and its consensus mechanisms, transactions are
persistent in a transparent, immutable, and traceable
way (Nakamoto, 2008) and consequently protected
from deletion, tampering, and revision (Iansiti and
Lakhani, 2017). Furthermore, a blockchain may offer
the ability to trigger transactions automatically. This
automation is possible by smart contracts. With this
feature at hand, a blockchain is empowered to execute
Turing complete programs that are able to react when
certain conditions are met (based on the implemented
contract logic) and then trigger events (Buterin and
others, 2014).
With those smart contracts, it is possible to write
DAOs as a digital and decentralized autonomous
company (Swan, 2015). This concept raises
popularity as it was added by the Ethereum
Foundation to their public blockchain protocol
(Jentzsch, 2016). It is strongly aligned to blockchain-
driven governance that is decentralized and trust-less.
To setup a decentralized governance on a blockchain,
there might be rules that describe how the
organization handles different situations when certain
conditions are met (if we focus on the concept of a
DAO, it definitely belongs to it). Beside the technical
specifications of decentralized governance, there are
also social-economic impacts on how organizations
are steered and managed. Because there is no central
authority on top of the organization, it is possible to
create a distributed, self-organized, and non-
hierarchical social structure (Reijers, O’Brolcháin
and Haynes, 2016).
Furthermore, it is common sense that today’s
organizations are usually coordinated and controlled
in a centralized way – in this case, a classical top-
Rethinking Forest Management: A Participatory Blockchain-based Governance Approach
141
down flow is applied. In contrast, a DAO follows a
bottom-up approach. In the start-up phase of a DAO,
an initial coin offering (ICO) takes place. That way,
tokens (used synonymously to coins) are offered and
can be bought by shareholders who then participate in
a group / co-decision decision process where different
voting systems can be used (Pilkington, 2016).
3.1 How Our Requirements Justify a
Blockchain
The topic around can be regarded as a hype (Carson
et al., 2018), this is why we argue very carefully.
On the one hand, we have our mentioned
requirement for a participatory forest management
vision. On the other hand, we have blockchain
features that might be required. Anyway, if they are
held to be required, they definitely yield a higher
system complexity. To support our argument for the
application of a blockchain approach, we gradually
go through a process that helps answer if a blockchain
is advisable for getting applied. This process is
conducted and closely linked to our requirements R1
– R4 and takes blockchain properties into account
such as public verifiability, transparency, privacy,
integrity, redundancy, and trust anchor. The
following questions are part of the decision process
(Wust and Gervais, 2018).
The first question is: (1) Do you need to store
state? Since the blockchain stores both, the forest
state data and the history of participatory-driven
decisions, we answer the question with yes (satisfying
requirement 3). (2) Are there multiple writers? Since
multiple stakeholders are involved in taking part in
co-decision-making, we answer this question with
yes. (3) Can you use an always online TTP? TTP
means trust third party, i.e., a party that has trust of
those involved. Indeed, this question is hard to
answer. Our first assumption is that the participants
(the stakeholder) have own interests and objectives –
hence at least incentives exist to manipulate or tamper
upcoming data in an (un)intentionally way. Our
second assumption is that a participatory-driven
forest management system of a public good should
not be assigned to the responsibility of one single
party (satisfying requirement 2 and 4). Therefore,
the answer to this question is no; no always online
TTP can be used. The next question is: (4) Are all
writers known? Due to the openness of the forest and,
consequently, the system, the answer is no.
Potentially every stakeholder can decide to become
part of the system and henceforth in the co-decision-
making (satisfying requirement 1). The structure can
be designed in such a way that every stakeholder is
able to participate and access is not restricted to
anybody.
According the proposed process, the
recommendation is that a permissionless blockchain
can be a technical solution. Taking this into
consideration, we sketch a participatory and
blockchain-based governance approach for a
visionary forest management alternative in section 4.
4 A PARTICIPATORY FOREST
MANAGEMENT
We describe a forest management approach enabling
stakeholders to co-decide while the forest owner
dispenses from its right to decide solely. At this, a
stakeholder can put his preference into a
superordinated co-decision-making process, which is
embedded in a participatory forest management
(PFM), see Figure 1.
4.1 The Life Cycle Process
The PFM is modeled according to the Business
Process Model and Notation (BPMN), where we
differentiate between three stages: (1) a construction
phase that acts as long as the start-up continues and
which embraces all nodes until the state Tokens
emitted. Afterwards, (2) an operational phase that acts
while the system is running and spans until the
shareholders decide against its further existence (after
the event Voting finished). For the sake of
completeness, the life cycle (3) ends with a
deconstruction phase.
First, the PFM is non-initialized. The process
starts with the willingness of the forest owner to adopt
a PFM. Hereafter, the construction phase (1)
initializes the state of the forest by inserting the forest
inventory data into the blockchain (database Forest
State Data (DB) in Figure 1). Next, a forest invariant
(FI) is derived. We use the FI to describe a desired
state of the forest. The data stored in the (blockchain)
DB has to fulfil the conditions of the FI. The forest
invariant is satisfied as long as the described state is
fulfilled by the forest. The real data is stored and
maintained in the DB, i.e., while the DB contains
specific values representing the state of the forest, the
FI describes the valid value ranges which DB data has
to fulfil. The invariant is a describing ruleset that, for
instance, consists of basal area (a factor indicating the
timber stocks) or the amount of timber for energy
purposes. Those condition attributes describe the
desired real-word state of the forest and have to be
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142
Figure 1: Life Cycle Process of a Forest Management System.
compared periodically. In the participatory process,
the shareholders have to exercise their voting right to
agree on conditions. The initial value for the FI is
derived by the current state of the forest. After the
construction phase has finished, the FI is satisfied.
However, as time passes, the forest is changing by
deforestation, forestation or other natural and non-
natural affecting activities.
In the last activity of the construction phase, with
Start ICO the Initial Coin Offering (ICO) is
conducted, i.e., every stakeholder has the opportunity
to buy or sell shares (tokens in a blockchain meaning)
and hence to gain voice to co-decide. Once a certain
amount of shares has been emitted, the construction
phase ends with the event Tokens emitted.
The next nodes focus on the running system, the
operational phase (2). The first node is an event and
indicates that the forest satisfies the FI condition.
Whenever an event occurs, the Receive event activity
catches the signal and propagates the flow further. An
event can be stimulated by shareholders endeavors or
by forest changes. Shareholders might express wishes
towards the forest and trigger polls by proposing a
topic to which every shareholder can vote - a voting
phase is conducted and finished by the Voting
finished event. In the Invariant change co-decided
flow, every voting has a result possibly affecting the
FI, i.e., that means the shareholders can collectively
co-decide on the FI. Afterwards, the flow goes back
to the gateway and follows the Forest or invariant has
changed flow. Since the invariant has changed by the
FI update and whenever the shareholders conduct a
voting, the next activity is to check if the invariant is
still valid. That activity takes the invariant and
ensures that the current forest values satisfy the FI.
While satisfying, the flow goes back to the Invariant
satisfied event. Otherwise, there are any deviation
from the wished forest state and the FI condition is
violated. Consequently, the system automatically
triggers compensating activities leading to forest state
changes again (the Time has passed event indicates
that time is needed and should elapse after activities
have been triggered). This is a loop starting from
Receive event to the Time has passed. The exit
condition is met whenever the forest state satisfies the
FI.
After a voting for deconstruction has finished, the
branch PFM deconstruction co-decided will be taken,
that means the shareholders have to co-decide against
the further existence of the participatory forest
management system. At this point, the outcome is the
deconstruction phase (3) via the activity
Deconstruct PFM and ends with the event PFM
destroyed.
4.2 Special Characteristics
Beyond the life cycle process discussed beforehand,
there are further explanations worth considering to
provide a comprehensive understanding.
Data Insertion. The immediate action is to insert the
forest inventory data into the blockchain database.
Attention should be paid to this point, as both storage
capacity and authenticity of data being inserted are
critical. First, large amounts of data may usually be
stored in distributed cloud file storages instead of
multiplying them across all blockchain nodes
(Wilkinson, Lowry and Boshevski, 2014). This way,
data aggregations can be used to reduce the amount
of data. Second, ensuring data correctness is
Rethinking Forest Management: A Participatory Blockchain-based Governance Approach
143
challenging. While blockchain let contracts and data
become solid and tamper-proof, that the data are
correct and represent the reality can not be
guaranteed. To tackle this problem in the forest
domain, it might be mentionable that the forest is
publicly visitable and everyone is able to verify the
data. Lastly, in a participatory forest management, we
could also argue that the data insertion process might
work in a participatory manner.
Token / Shares. Tokens are part of the incentive
schema on blockchain (Catalini and Gans, 2016).
Typically, tokens are shares held by shareholders
where every stakeholder might become a shareholder.
A decentralized organization such as a PFM has
assigned a token that, in turn, has a demand-driven
course. That way, every shareholder has an interest to
behave according to the interests of stake- and
shareholders since they all affect supply & demand.
Voice to Co-decide. Voting systems are established
to coordinate among participating members (Osgood,
2016). The voice gives someone the right to co-decide
or to propose topics. Every stakeholder has that right
as he or she has become a shareholder by buying
tokens. An example for a co-decision might be the
voting question whether the amount of timber for
energy purposes should be increased (to apply the
example mentioned above). In this regard, the
existence of a multi-stage voting system could be
discussed where veto power is given. A forester or an
environmentalist might have veto power to pursue
legal purposes or higher interests.
5 HOW ECONOMICAL
INCENTIVES MAKE NEW
BUSINESS MODELS POSSIBLE
We believe that our PFM vision will both target
inequalities among affected stakeholders and offer
new business opportunities to create economic
values. Here, we discuss a business model innovation
disrupting established forest business models by
utilization of blockchain benefits. The main
disrupting fields can be described alongside the
Business Model Canvas (Osterwalder and Pigneur,
2013) where we have innovations especially in the
sectors of Value Propositions, Customer
Relationships/Segments and Revenue Streams. The
newly items of the value proposition are the
transparent state and activities concerning forest as
well as the participation process itself. Moreover, the
opportunity to generate additional income through
new revenue streams by novel services offered in the
context of forest is limited to the wealth of ideas of
the shareholders; a completely new set of services
based in the forest is imaginable. These services in
turn generate new income opportunities. For
example, the monetarization of ecosystem services is
expected in the future. Ecosystem services describe
ecosystems that influence human well-being. The
underlying economic value was estimated by the EU
at 200 to 300 billion euros. This high economic value
is hardly used (Knoke, 2017). The decentralized
participation of new stakeholders could make use of
these ecosystem services and create additional
income streams, especially for forestry enterprises.
In order to make these innovations possible, it is
necessary to set incentives for forest owners so they
have an interest and increased willingness in handing
over the freedom to decide to others. The benefits for
a forest owner are, on the one hand, the increased
liquidity after (s)he has sold shares (of a well-
managed forest) and, on the other hand, the accruing
income by margins of additional services. Another
factor is the relief provided by a participatory forest
management, i.e., since participation steers the forest
management, the forest is managed without active
further intervention by the forest owner. This is in line
with the above introduced fact that small forests are
often not well managed because small forest owner’s
main jobs are possibly apart from the domain of forest
and its management (UNIQUE forestry and land use
GmbH, 2018). From shareholder’s point of view, the
incentive to buy shares is justified by getting co-
decision voice to be able to co-decide. Moreover,
there is an economic incentive to act in common
interests and on behalf of the forest since the
attractiveness of forest shares is reflected in the price
of tokens. Share-based returns on services could also
be expected from economic effective forest
management.
Beyond the possibilities of an innovative business
model, the legal aspects of DAOs and the Smart
Contracts on which they are based must be taken into
account. Since a permissonless blockchain knows no
borders, it must be secured by law internationally.
Contract law varies widely from country to country,
so it is difficult to make a general statement about the
legal enforceability of smart contracts. In order to
create a framework that, like the current legal system,
regulates conventional contracts, the following points
must be clarified: contractual capacity, loss of
contract due to errors, identification of an offer and
acceptance, follow-on contractual relationship,
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security of conditions and interpretation of the
contents of judges and lawyers (Giancaspro, 2017).
6 CONCLUSION
With our work, we have proposed a participatory
forest management by applying benefits of the
blockchain technology. To use blockchain for
governance purposes is not new (Reijers,
O’Brolcháin and Haynes, 2016), but it seems still not
be examined intensively so far. With respect to
participation and forest management, there is – to the
best of our knowledge – no contribution so far.
Hence, we have sketched a visionary participatory
forest management aiming at a reduction of
inequalities between stakeholders, to set economic
incentives for the benefit of the forest owner to reach
a better common good by incorporating claims of
different stakeholders. Limitations of this system are
numerous, i.e., from the specific design of the
mentioned life cycle activities, the legal aspects, the
complexity, acceptance, usability of the system, and
so forth. Potentials, on the other hand, are possible in
ecological, economical, and social areas by inherent
blockchain features, for example transparency,
immutability, openness and automation of technical
processes. Following this, further research might
focus on the feasibility of those potentials and the
question of how to treat the mentioned limitations,
e.g., to address the power structure for decision-
makers: distribution constraints of tokens to
shareholders, number of shares per shareholders to
prevent too much control per stakeholder. Overall,
blockchain is a promising candidate to disrupt
business models (Hwang et al., 2017), (Oh and
Shong, 2017), to change the way people take part in
co-decision processes (Lafarre and Van der Elst,
2018), and – in our opinion – to allow participation in
the forest management for the future.
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