A social forestry program known as the PHBM was applied in state forests in Java to overcome forest encroachments. In this program each village surrounding state forests was entrusted with its own village forest. Each village forms an LMDH, which was a village level organization formed as a representative of the village that managed village's forest together with the State Forest Company. Tumpang sari was a conventional way to provide incentive to the communities to take part in the forest management. In the PHBM, tumpang sari and a timber sharing arrangement between the state and the communities were integrated to provide better incentive to the communities to participate in the management of state forest. Despite the PHBM implementation and the available timber sharing revenue, tumpang sari farmers and other community members still faced incentive problems that affected their contribution to forest management and their forest resource extraction pattern. The problem needed to be solved in the PHBM was the problem of compensation for the contributions of each stakeholder in forest resource management and protection. A more efficient timber sharing distribution is needed to solve the problem and to ensure a more cost‐effective collective action for forest management and protection by the community at large.
