1 Law Compliance: Bolivia Case Study By Pablo Pacheco Introduction In the last years, many countries in the developing world have undertaken serious steps to modernize their forestry sectors, to make forest extraction more equitable to forest users, and to involve different levels of government on overseeing forest resources use. In spite of the efforts spent on changing the rules of the game for forest resources use, mainly seeking to establish more proper conditions for enabling sustainable forest resources management, still persist illegal activities that affect the management of the forest sector in many countries but specially so in developing forest rich ones (Contreras-Hermosilla 2001) It is not uncommon to find, in several countries, that the illegal timber harvest exceeds legal extraction, and this has decisive implications on the functioning of legal markets of forest products. Illegality adopts so many forms either during logs extraction in the field to timber processing, commercialization, or exporting. There are some studies available focus on characterizing the causes of illegal logging, the forms it adopts, and its consequences (Contreras- Hermosilla 2002, Tacconi et al. 2003). In several cases, many illicit acts are associated with corruption of public officials at all levels of government, and often favor to wealthy groups due to their ability to pay large bribes. Illegal forestry deprive government of substantial amount of financial resources in tax revenues, and cause environmental damage because it threaten forest. Nevertheless, the control of illegal logging may also affect livelihoods from people who depend on forest resources to survive (Kaimowitz 2003). In Bolivia, dramatic changes in the forestry regulations have been implemented seeking to arrest illegality and informality within the forestry sector, and to enable clearer legal frameworks and institutional conditions for promoting the introduction of good practices for forest management. Yet, illegal logging is still a relevant issue in Bolivia because illegal logging practices, and illicit actions associated to transportation, and processing of timber is still widespread. Nevertheless, the catalogue of illegal acts in the sector might be long since those actions could include illegal trade and timber smuggling, and inappropriate accounting practices. This work seeks to contribute to the debate on law compliance and illegality in the forestry sector, and the initiatives to arrest it, by looking at the Bolivian case. This work fits within a broader effort to improve law compliance in the forest sector. The Food and Agriculture Organization of the United Nations (FAO), and the International Tropical Timber Organization (ITTO) are producing guidelines for improving law compliance in the forest based sector of developing countries that could be used by decision makers and public sector executives for securing greater compliance with the legal framework in the forest sector and greater governance. Several countries that have attempted to achieve improved law compliance have tried different mechanisms. This work, therefore, attempts to take a closer look at the approaches and mechanisms used in the Bolivian case. This paper is organized in five sections including this introduction. The second introduces the Bolivian forest, along with the main social, economic, and institutional features of the forestry sector highlighting the way in which forest are managed, the structure and ownership and government control. The third focus on describing the forest policy and regulatory framework issued in the mid-1990s, and their main implications for forest use and management. The fourth concentrates on identifying the illegal acts in the use of forest resources along the timber