Subject The article investigates how institutions of sustainable development of timber lands originate, illustrating the case of the Republic of Karelia. Objectives The study evaluates substantive aspects of the developing institution of forest certification by analyzing the business behavior and the way people of forest districts of Karelia take part in forest management. Methods The methodological approach is based on the sustainable development concept and sustainable forest management model. We especially stress the social component, including the quality of human capital and quality of social capital. They are viewed in terms of the ability and readiness of local communities to get involved in forest management. The empirical framework relies upon the economic and sociological survey of some timber districts of the Republic of Karelia, which were conducted in 2018. Results Ineffective formal institutions actually fail to create an environment where people could exercise their legal rights complying with sustainability principles. Forest companies fail to meet sustainability requirements. However, they still may apply for forest certificates. Conclusions and Relevance The study reveals latent challenges arising from the forest certification institution. The principle of social compensation is often neglected. A forest certificate provides some guarantees for local people. As local people have negative views on environmental and socio-economic aspects of forest management and, furthermore, do not know about forest certificates as a means protecting their rights, forest certificates get less significant institutionally and the institutional mechanism for forest certification becomes distorted. The findings can be used to substantiate and outline relevant tools for a forest management policy.
Keywords: timber land, sustainable forest management, social sustainability, forest certification, social capital
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