of the total actual cuts and illegal timber cuts in Russia at 12% (WWF 2000). Poachers would cut around 21 million cubic meters per year, or 15-20% of total reported cuts, with half of that originating from the Russian Far East (Medetsky 2000).

2.62 A significant part of illegal cuts take the form of sanitary cuts by _leskhozy._ Here is an unequivocal testimony by a _leskhoz_ director in the Vladivostok region: It is no secret that we ourselves, local forest services in administrative districts of the Russian Far East, are some of the most serious violators of forestry rules and regulations. Even though logging may be our only means to survive, as we receive almost no financing from the local administration and from the government, we have no right, I suppose, to log commercially under the label "salvage logging." (Viktor Kozachko, Director of the Melnichny Leskhoz, Krasnoarmeiskii District, Primorsky Krai, cited by BROC _et al._ 2000, 21) 2.63 Concerning exports, a variety of frauds are possible, including outright avoidance of customs verification, bribing of officials, forged export licenses, misrepresentation of quality or quantity, _etc._ Several estimates of the magnitude of the problem have been published. At the high end of the spectrum, one source reports that the actual export value of timber is double the official one (RCN 1999). An audit carried out in 1995 at the customs post of Vyborg (Leningrad region) revealed that the weight of export cargoes by truck was underreported by 20-25% (University of Joensuu 1996). Based upon a comparison of the Novgorod region customs data with import data from Finnish firms, it is estimated that illegal round wood exports from Novgorod to Finland did not exceed 10-15% in 1999.

# **Estimation of Timber Rents**

2.64 In order to estimate the current average timber rent, at least three methods can be used. First, the simple net-back method nets out reported timber production costs from timber market prices. Second, the normative net-back method consists of netting out normnative (engineering) timber production costs from timber market prices. Third, auction prices can be used to derive the rent. In this method, the difference between actual auction prices and minimal stumpage fees reveals the loggers' willingness to pay for the timber, in other words the stumpage appraisal value.<sup>2</sup> 1 2.65 Though some Russian forestry specialists claim they know how to estimate the timber rent (see, _e.g.,_ Moiseev 1999), practically the task presents challenges. Markets are generally non-competitive and reliable accounting information is not available. The literature is indeed very poor in attempts to measure the timber rent in Russia. Among the few exceptions, sources have reported rents in the region of US$ 6-25 per cubic meter in Khabarovsk (Pankratova 1999; Sheingauz 1997). Recent research on one experimental _leskhoz_ in the Moscow region using the normative net-back approach estimated that 23 out of the 28 forest enterprises operating on the territory of that _leskhoz_ register a positive rent ranging from 21 Auctions will reveal the rent in the absence of road building costs, in accordance with the Russian legislation, which provides that auctions are held for short-term cutting permits not subject to road building obligations.

28