The Understanding of Institutions and their Link to Resource Management from a New Institutionalism Perspective

Abstract

"This paper looks at the theory of the New Institutionalism and how it helps to understand livelihood strategies and institutional change in regard to resource management. This economic theory makes use of methodological individualism and looks at the role formal and informal institutions (rules, norms, values and laws) play in lowering or rising transaction costs in resource management. The paper argues that this approach is a useful tool in order to discuss livelihood strategies. The New Institutionalism looks at historic changes and at power questions (bargaining power of individuals or groups) that are so crucial in the debate on natural resource management. One of the themes useful to illustrate the position of the New Institutionalism is the debate on common property resource management where the notion of the Tragedy of the Commons can be critically questioned. This is done by showing cases where institutions work in order to regulate a sustainable use of common property resources and cases where such rules are absent or do not work (Ostrom 1990). The approach is interesting because it also focuses on the role of the state and external economic, political, demographic and technical changes and how these influence prices for goods and the terms of trade (changes in relative prices). These prices then have an influence on the local level and lead to changes in informal, local institutions, organisation, ideology and bargaining power (Ensminger 1992). In order to illustrate the approach and its use an illustrative example on the institutional changes in African floodplain wetlands is given in the paper."