Abstract
Law 11/2020 on job creation has changed a partial forest business license to a multi-purpose forest business and devolved some authorities in forest management to local communities. Studies on common-pool resources demonstrate that devolution of common property is one of the most important factors for sustainability. This study aims to analyze the factors that influence reducing deforestation and focuses on two different village forest organizations in East Kalimantan: first, village forests under the management of the Forest Management Unit of Berau Barat -forests managed by a provincial government (Long Duhung and Merapun village forests), and second, devolution of village forest managed by a local village institution (Merabu village forest). Recent evidence from these study sites indicates that the devolution of forest management associated with village forests has not consistently reduced forest cover loss. There was a complex interaction between the passage of robustness of the institutional settings and economic preferences linked to deforestation. The forest governance systems, including rules that determine property rights, can promote forest conservation when people's interests are served by forest land use. Conversely, economic preferences also control deforestation. This study confirms that the institutional robustness of forest governance systems and actors' economic preferences play an important role in controlling deforestation. This study suggests the devolution of rights for forest management and incentivizing economic alternatives for using forest resources to reduce deforestation.