Varieties of Institutional Failure

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From pp. 1-3: "Over the course of the past thirty years a consensus has begun to emerge that management of resources is basically an institutional problem. If we get the right rules and governance structures, natural resources will be used wisely and conservation goals will be met. However, there is no agreement as to what institutions will accomplish these goals. We have managed to come up with a long list of institutional possibilities. Garrett Hardin began the list in 1968 with the publication of his "Tragedy of the Commons" article. Hardin saw the solution to the tragedy as intervention by government, which might have to be very autocratic and repressive to achieve its goals. His commitment to action by the government is shared by many bureaucrats and professional resources managers. They believe, deep down, that in the last analysis, only action by central governments, and by this they mean "top down" management, will suffice to save resources. A whole series of economists from the late 1950's to the 1970's, working on what had become known as the "common property problem," concluded that the primary cause of the destruction and inefficient use of natural resources was the absence of property rights. The solution, from their perspective, was to establish private property rights. Their insights have had no small effect on the management of natural resources. Fisheries management, for example, is essentially an exercise in establishing property rights or simulating property rights through the use of rules concerning licenses, limited entry regimes, ITQs Individual Transferable Quotas: and the like. "A group of anthropologists and other social scientist have reacted to the analysis of Hardin, and others such as A. Scott(1955), Gordon (1954), Cheung (1970), and Johnson (1972), by pointing out that it is "open access" that causes problems, not the fact that resources are owned by communities. Communally owned property can be very well managed. In the 1980's they produced a series of volumes documenting the large number of cases in which resources were managed well at the local level by communities around the world (Berkes, Feeney, McCay and Acheson 1989). This fed into a movement which is very much in vogue at present, namely the call to manage resources "from the bottom" up or by "co-management" regimes in which management responsibility is shared between the government and local level communities. "Last, but certainly not least, others have proposed that it is efficient markets that result in efficient use of natural resources and the conservation of those resources. The Political Economy Research Center (PERC) in Bozeman Montana has produced a number of studies showing how markets have solved resource problems and arguing that free markets can solve still others. A part of the agenda of the so called "Free Market Environmentalists" is to argue against excessive government intervention in resource management. "In summary, then, there are four very different kinds of basic kinds of institutions, which various sets of scholars have argued can solve resource management and conservation problems: (1) private property, (2) government, (3) communal management, and (4) markets. There is a tendency for social scientists and others to lionize one of these and argue that the solution to resource management problems is this particular one. "I would argue none of these is a general solution. All of the institutions I just described will fail to solve resource conservation problems under certain conditions. This is not to say that none of them work. But one of the key question facing resource management at present, is: Under what conditions will each of these different kinds of institutions work? When will they fail? This evening, I would like to concentrate on the failures. I plan to attack this problem by going from institutions about which we know a good deal to those we know little about. Lets begin with market failure and go on to the failure of private property regimes and then to failures of the government. Well end with the failure of communal governance structures."



IASC, common pool resources, tragedy of the commons, institutional design, markets, property rights, outcomes, fisheries, forests