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Institutional Failure in Resource Management

Author(s): James M. AchesonReviewed work(s):Source: Annual Review of Anthropology, Vol. 35 (2006), pp. 117-134Published by: Annual Reviews

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Institutional Failure in

Resource Management

JamesM. Acheson

Departments ofAnthropology andMarine Science, University ofMaine, Orono,Maine 04469; email: [email protected]

Annu. Rev. Anthropol. 2006.35:117-34

The Annual Review of nthropology s

online at anthro.annualreviews.org

This article'sdoi:

10.1146/annurev.anthro.35.081705.123238

Copyright ? 2006 byAnnual Reviews.

All rightsreserved

0084-6570/06/1021-0117$20.00

Key Words

conservation rules, collective action, natural resources, devising

institutions, ational choice

Abstract

Many of the world's natural resources are in a state of crisis. The

solution to this crisis is todevelop effective management institu

tions, but there is no consensus on what those institutions are. Some

economists favor solving resource-management problems through

the institution of private property; others advocate central govern

ment control; and many anthropologistssee local-level management

as the solution. In this review, I argue that all these governance struc

tures fail under certain conditions. However, the factors contributing

to failurein each of these institutional ormsdifferradically, nd the

causes of that failure are not always predictedon the basis of exist

ing theory. This chapter contains a review of the literature on the

factors identified as causing the failure of private-property regimes,

government-controlled resources, and local-level management. We

will have to learn tomatch the resource problems with governance

institutions and specific management techniques ifwe are tomanage

resources effectively. We also will have to understand the complex

biosocial factorsinfluencing ustainability.

i*7

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INTRODUCTION

Over the past 50 years ithas become increas

ingly apparent the world is facinga resource

management crisis. Large numbers of marine

fisherieshave been seriouslydepleted.Forests

are being harvested at unsustainable levels;acid rainand smogareproblems inwidespread

partsof the industrializedworld; soil erosion

threatens vast areas; parts of Africa and the

Middle East are returning odesert; industrial

waste dumpsmake life hazardous for largenumbers of humans and other animals; many

rivers and estuaries arepolluted; and virtually

everylarge lake intheworld is inaprecariousstate.

There is increasing consensus that the

cause of resourcedegradation is institutional.

Ifwe get the right rules and governance struc

tures, natural resources will be used wisely and

conservation goals will be met.Unfortunately,

weclearly have not gotten those rules right.

That somany resources are in such dire straits

indicates we are witnessing widespread insti

tutional failure.

Although

there is

agreement

that institu

tions are needed to solve resource problems,

there is no agreement as to what institutions

would do the jobbest.At thispoint, it isgen

erally agreed that three possible governance

structures exist: private property, government

management, and local community manage

ment. Each of these structures has strong ad

vocates (Ostrom 1990).A number of economists from the late

1950sto

the 1970s,workingon

what became known as the common property prob

lem, concluded that the primary cause of the

destruction and inefficient use of natural re

sources was the absence of property rights.

The solution was to put resources in pri

vate hands or to simulate private-property

rights, for example, by establishing licenses

or limiting entry schemes (Cheung 1970,Gordon 1954, Johnson 1972, Posner 1977,

Scott 1955). Their insights have had nosmall effect on the management of natural

resources.

Hardin (1968) advocated government

management inhis article "The Tragedy of

the Commons." Many bureaucrats and en

vironmentalists share Hardin's advocacy of

strong and possibly repressive government

action, and theyhave persuaded theU.S.

Congressto enact a number of important

con

servation laws, including the Clean Air Act,the Clean Water Act, the Environmental Pro

tectionAct, and theEndangered SpeciesAct.

Since the 1980s,many anthropologistsand

other social scientists have come to advo

cate management by local-level communi

ties. They have buttressed their arguments

by pointing to the largenumber of cases in

whichresources were

managed wellat

the local level by communities around the world

or by communities inpartnershipwith governments (i.e., co-management) (Anderson &

Hill 2004, Baland & Platteau 1996, Berkes

1989,McCay & Acheson 1987,Ostrom 1990,Pinkerton&Weinstein 1995).

Social scientists nd others tend to lionize

one of these solutions to resource dilemmas.

I argue none of these is ageneral solution.

All these different inds ofgovernance structures have succeeded in conserving natural re

sources in some instances, but they have all

had their share of failures as well. In this re

view, I concentrate on the failures. Focusing

on cases where these governance structures

didnotwork gives someunusual insights nto

the resource-management problemswe cur

rently face. As discussed below, many institu

tions have failed to conserve resources, and

the reasons for those failures are not always

predicted on thebasis of existingtheory.There is no

well-developed literature

on institutional failure because analysts far

prefer to write about successful resource

management ventures rather than the failures.

Nevertheless, there is agood deal of scattered

information on cases where mismanagement

occurred and the reasons for it.

Onegeneral

cause of resourcedepletion

is

that people may not recognize that resources

arebeing depleted

or even that theyare under

ii8 Acheson

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stress, particularly in the first stages of overex

ploitation.The factorsinfluencing hanges in

resources' stocks are socomplex that genuine

uncertainty may exist about the role of hu

man activities n stocksizes (Berkes& Folke

1998,Wilson 2002). In aboriginal societies,where game is thought to be provided by

spirits or other supernatural forces, the idea

that shortages of fish and game could be a

result of overexploitation may not even oc

cur (Anderson 1996,p. 101;Brightman 1993).

However, even in cases where people recog

nize the problem, theycan fail to conserve.

The primaryreason for conservation failure

isthatthey annotdevise effectivenstitutions

orrules.

Assessing institutions s difficultbecause

several different criteria can be used tomea

sure the success or failure of institutions de

signed to conserve renewable resources, rang

ing rom economic efficiencynd equity Fehr& Gachter 2000) to adaptability nd account

ability. However, in this review I assess insti

tutional failure in terms of resource sustain

ability. lthough thereareproblemswith this

definition (see Singleton 1998,pp. 15-16), Ido not believe we can

judge rules to conserve

renewable resources asbeing successful if the

resource isnot maintained in the longrun. Be

fore I discuss institutional failure, information

isneeded on some basic concepts and their ap

plication to resource management.

COMMON-POOL RESOURCES,

COMMUNAL ACTIONDILEMMAS, AND PROPERTYRIGHTS

The root of the resource-management prob

lem, accordingto many social scientists, lies

in the common-pool nature of many of our

most important natural resources. Common

poolresources (such as water, air, grasslands,

forests,and stocksof fish andwildlife) have

twocharacteristics,

which in combination

cause serious problems. First, theyare sub

tractable, which means the amount of the re

source used byone person cannot be used by

another. Second, it can be difficult to exclude

people from using these resources (Ostrom

et al. 1994). As a result, oceans, rivers, lakes,

air, parks, and wildlife can be exploited by

large numbers of people, who, after a time,

deplete the resource.

The solution to managing common-pool

resources is to establish rules curtailingre

source use in the interest of long-term sustain

ability.Such ruleswould presumably bene

fiteveryonebypreventingoverexploitationof

the resource and/or its complete destruction.

However, eventhough such rules bring favor

able results, there isno guarantee they will be

provided.Olson (1965) firstrecognized this

problem:He pointedout

thateven

ifrulesor other public goods would benefit all, theywould only be provided ifspecial incentives

exist. The basic problem, he argued,was that

individualshave no incentive to voluntarily

help to produce a public good because theywill have the benefit of it regardless of

whether they help to produce it.Because it

is rational for everyone to free ride on the

efforts of others, no one cooperates, and the

ruleorpublic good isnot provided. Everyoneisworse off than iftheyhad cooperated, even

thougheveryonehas acted rationally.More recently, the problem has been

phrased in terms of a collective-action

dilemma.This is a situationinwhich there is

a divergence ofwhat is in the interests f the

individual andwhat is optimal for the com

munityor

larger group. In collective-action

dilemmas, rational behavior by individuals

leads them "to behave inways that are collec

tivelydisastrous" (Elster 1989, p. 17;Taylor

1990). In the case of common-pool resources,

it can be all too rational to refuse to coop

erate in conserving natural resources, even

though cooperation would have benefited

everyone.

Collective-action dilemmas have received

a good deal of attention rom social scientists

becausethey

escribemany

ofthemostvexing

problems facing humans. In fact,Taylor states,

"politics is the study fways of solvingcollec

tive action problems" (Taylor 1990, p. 224.)

www.annualreviews.org ResourceManagement 119








However collective-action dilemmas have

not received much attention in anthropology.

One exception is thework ofHawkes (1992),who uses concepts from rational-choice

theory to study sharing among hunters and

gatherers, and I use collective-action dilem

mas to understand rule development in the

Maine lobsterindustryAcheson 2003).

Adding to the difficultyof managing

common-pool resources is that two differ

ent kinds of rulesmust be put in place to

solve twodifferent inds of collective-action

dilemmas. First, property rightsmust be de

vised and enforced. If everyone is permit

ted to harvest a resource (i.e., open access),

the resource is almost certain to be overex

ploited by all comers because there is little

incentive to maintain it. Second, those per

mitted to exploit the resource have to agree

to establish rules curbing their exploitationrate (i.e., management mechanisms). Doing

one without the other will not suffice. From

this perspective, effective management means

that a group must solve a two-tier collective

action problem (Hechter 1990). Institutional

failure is a situation inwhich a group cannotsolve one, or both, of these collective-action

problems.

Generally,two different kinds of rules can

be used to control effort. he firstkind are

rules that limit how the resource is harvested,

i.e., rules governing the time, place, and tech

niques thatcan be used (Acheson& Wilson

1996).The second kind are rules specifyinghow much of the resource may be taken (i.e.,

a quota). Currently, individual transferable

quotas (ITQs), a solution that combines quo

tas with market-based solutions, are much in

vogue (Rose 2002).

Property rightscan be held by awide va

rietyof organizations (Acheson 1984,Hann

1998). Furthermore, rules giving access, man

agement, inheritance, and exclusion rights

can be combined in differentconfigurations

(Schlager& Ostrom

1993).In the resource

management literature, it is standard to see

property as owned or affected by local com

munities, governments, or private individuals

(Berkes 1989,p. 9). In thisreview, followthis

convention.

PRIVATE PROPERTY

The effect of private-property rights on nat

ural resources was explored in some detail by

economistsworking from the 1950s to the

1980s (Acheson 1989,Gordon 1954, Scott

1955),who made a distinction between private property (called sole owner in some of

the literature)and common property. heyconcluded that owners of private property

have an incentive to protect and make in

vestments in it becausethey

can be assured

that they, and only they, receive the bene

fits. Common-property resources, by way of

contrast, areoverexploited because no one

has any incentive to invest in those resources

or conserve them for the future. Whycon

servewhen the resourcewill likelybe taken

bysomeone else?perhaps in amatter of a few

hours (Acheson 1989,Gordon 1954,Hardin

1968)? Ciriancy-Wantrup & Bishop (1975)

challenged this analysisby pointing out thatitwas open-access resources that were sub

ject to abuse and that communally owned

resources could be managed quite well. No

one has challenged the idea that complete

private-property rights help to conserve re

sources, and itwill be helpful to review what

these economists claim are the benefits of sole

ownership.

In addition to conservation, economists

pointed out thatprivate-property ightshavea number of other virtues. Private ownership

promotes efficient use because the owners of

those resources are free to use them in ways

that grant them the highest income and to re

ject less productive options. Owners of agri

cultural land, for example,can grow crops,

lease the land, enter into an arrangement with

asharecropper,

or sell the land outright?

whichever choice is to their

advantage.

Users

of open-access resources, conversely,cannot

enter into any exchanges regardingresources

120 Acheson








they do not own. Their onlyrecourse is to

harvest the resource themselves asquickly

as

possible (Acheson 1989).In addition, private property is said to pro

mote efficient use of capital. Open-access re

sources are

subject

to

overcapitalization,

a sit

uation where farmore firms enter the industry

withmore equipment than isneeded tohar

vest the resource, a situation that can facilitate

overharvesting. Private property also lowers

transactioncosts bymaking itrelatively asyfor an owner to go to court and gain

com

pensation if theproperty isdamaged or de

stroyed by another person. Private-property

rights make it possible to solve a number of

resource problems by entering into market

exchanges. Eggertsson (1993, p. 2) summa

rizes the deleterious effects of the absence of

property rights: "It is obvious that the nature

of control matters for economic actors: short

term control shortens the time horizon; un

certain control discourages potentially prof

itable projects; lackof control incitescostlyraces for possession; restricted control allo

cates assets to inferior uses."

Because these economists see private prop

erty ashaving many advantages, they have

long advocated solving resource-management

problems by effecting rivate-property ightsor

by simulating such rights with mecha

nisms such aslicensing

or quotas (Acheson

1989). Contraryto what the theory suggests,

the potential formanaging natural resources

by privatizing them is much more limited

than assumed by the economists advocat

ing this solution. Ifprivatization isgoing to

solve resource-management problems, prop

ertyrightshave tobe complete and well de

fined, efficient markets for those resources

have to exist, and enforcement of property

rightsmust be possible at low cost. In the

real world, some important resources, such

asmigratory species of fish, cannot be priva

tized. Moreover, market inefficiency and mar

ket failureare common

(North 1990).Thereis no market for some resources such as air.

The primarycause of market failure is in

complete property rights, which result in ex

ternalities (Bates 1994).Negative externali

ties exist when firms are allowed to pass some

of their productioncosts to others external

to the firm (e.g.,a

polluter who damages the

property of others downstream or downwind).

Positive externalities exist when owners can

not capture all the benefits of their own pro

ductive activity e.g., the owner of a beehive

who cannot charge farmers for pollination

services). (For a morecomplete discussion of

theseproblems, see Baland & Platteau 1996,

pp. 37^47). Privatization will not solve re

sourceproblems inmany cases.

More important, even where complete

property rightsto a resource exist and mar

kets are efficient, private-property rights donot always result in resource conservation.

Under certain circumstances, peoplecan and

will overexploitresources

theyown

privately,

even when property rightsare secure. The lit

erature onpastoralists, farmers, and loggers

shows that "resource conservation is not al

ways ensured by the private property status of

theresource" (McCay & Acheson 1987,p. 9).The dust-bowl conditions of the 1930s, soil

erosion inmore modern times, and depletion

of industrial orests ll underline the factthat

at times private landowners are no more re

sponsible than users of open-access resources.

Such cases are not all that rare.What condi

tions make it rational for owners to overex

ploit their own resources? Four such circum

stances are mentioned in scattered parts of the

literature.

First,Clark (1973) has advanced themost

widely known explanationof the failure fprivate property to conserve resources. He ar

gues that "[a] corporate owner of property

rights in a biological resourcemight actually

prefer extermination to conservation, on the

basis ofmaximization ofprofits" p.630).This

occurs when the growth rate of the resource

is less than the discount rate. It does not make

sense toborrowmoney from the bank at 8%

interest to invest in a resourcethat increases

invalue at only4% peryear.This would not

be a rational investment. Under these circum

stances, itwould only be sensible to deplete

www.annualreviews.org ResourceManagement








the resource as fast aspossible and invest the

money where itwill give higher returns.

Second, long time horizons?in and of

themselves?make it rational to overexploit

privately owned resources. Forests are an ex

cellent example. Economic analyses of forests

demonstrate that forests grow soslowly that

money invested nthemwould get a farbetter

return put into other industries. Regardless of

what discount rate is used, the future value of

forests squite low (Mass& Vicary 1991).Baskerville (1995) advances a closely con

nected time-horizon argument. He argues it is

illogical to invest inslow-maturing

resources

if there are two, three, or moregenerations

between resource investment and harvest. He

pointsout that in the case ofNew Brunswick

forests, there is a strong tendencytomake de

cisions with the interests of the current gen

eration inmind. This same point can be made

of other resources. Most people?includingmost owners of firms?figure there is little

senseinvesting in a resource that someone else

is going to harvest far into the future.

Third, uncertainty about resource avail

ability can lead to overexploitation. Forests

and stocks of fish and wildlife are harvested

in acomplex and even chaotic environment,

so rapid, unpredictable fluctuations occur ow

ing to, for example, disease, pr?dation, and

weather (Wilson 2002).When biological systems are

unpredictable, the incentive for peo

pleto invest in such stocks or curb their own

exploitivebehavior is reduced because of the

uncertaintythat these activitieswill result in

any payoff.

Fourth, economic pressures also can force

resource owners to overexploit them. With

regardto the hirdWorld, Baland & Platteau

(1996, p. 46) state, "forpeople in 'extreme

poverty'.. . all that matters is consumption

today." Similar pressures can exist in indus

trialized countries. The economic situation

of someprivate-property

ownersmight be so

precarious that theyare

forcedto

forego optimal strategies (e.g., selective cutting, crop

rotation) in an effort to stay in business in

the short run, eventhough this degrades their

property in the longrun.

Any one of these four circumstances can

motivate owners of natural resources to over

exploit or fail to maintain resources at opti

mal levels. When two or more of these cir

cumstances occurtogether, strong incentives

todegrade privately owned resources can be

created.

InMaine, many of these circumstances ex

ist nthepulp andpaper industry,hich owns

alarge percentage of the northern part of

the state (Acheson 2000). In all the north

ern counties of the state, the rate of cutting

is not sustainable. Recent studies found that

the cut-to-growth ratio was 2 to 1 or higher,

indicatingat least twice as much wood was

being cut as wasgrowing back. In Piscataquis

County, the ratio was 3.6 to 1. As a result,

thequalityof stands has decreased,while the

amountof land inhardwoods and saplingshas

increasedgreatly Gadzik et al. 1998,pp. 3-4;McWilliams 1997).

Why are companies in this industryn the

process of destroying their own forests? First,

the paper industry faces a variety of economic

pressures that reduce profits to low levels. All

forest landowners contend with economic re

turns on investment that are no more than

6%, given the low rates of forest growth. Sec

ond, the pulp and paper companies have cut

throat price competition from more modern

mills built in the southernpartof theUnited

States and in foreign countries, lowered de

mand for paper products, and volatile prices

(Legasse 1997,McDonald 1997).To keep profits

at an acceptable level, the

paper companies have reacted to this situation

by keeping costs low,keeping capital equipment as

longas

possible, and running their

mills continually. hey have successfully ob

bied the state government for a variety of ser

vices, such as fire control, spruce budworm

spraying, and low land taxes. Most impor

tant,the

paper companiesare

cuttingtheir

own forests heavily, using low-cost techniques

such as clear cutting and poor-quality partial

122 Acheson








cuts.These strategiesavoid the full costs of

investing in sustainable forests. In this case, it

isprivateowners who are

degrading their own

forests.

GOVERNMENTGovernments do wonderful things. We have

come todepend on themfor huge varietyof

services and goods. In the past few decades,

we in theUnited Stateshave come to see the

government as ourprimary bulwark against

environmental pollution and degradation.

Governments generally attempt to pre

serve resources in two ways: First they buy

large amounts of land and resources to create parks, national forests, and biosphere re

serves; second, they pass laws and regulations

designedto protect resources.

They gener

allyhave not been doing either for long. In

the United States, the first national parkswere established in the early twentieth cen

tury.Virtually all ourimportant environmen

tal legislation (including theClean Air Act,theCleanWater Act, and theFisheries Con

servation and Management Act) was enacted

in the 1970s.During most of our history,re

source management has not been aprimary

goal of thegovernment. I believe this is still

the case inmany, but not all, of the countries

of theThirdWorld, and in countries in the

ex-Soviet block.

There is little question that these govern

ment efforts have borne fruit. Our environ

ment ismuch cleaner now than itwas a few

decades ago. There are many people in the

United States?especially professionalman

agers and the conservation community?who

assume resources can be managed only by the

government.

But government can also fail in the

resource area?sometimes massively. Some

70% of all marine fisheries are depletedor

endangered. Countries such as Haiti,

Bangladesh, Thailand, Pakistan, and thePhilippines have lost over 40% of their

forests in the past 20 years alone (Ascher

1995, pp. 3-4). Many of these resources have

been under scientific management chore

ographed by centralgovernmentsfordecades

(McGoodwin 1990).Wunsch (1999, p. 244)summarizes the situation by saying, "the cen

tralized, hierarchical, bureaucratic adminis

trativemodel has failed."Durrenberger

&

King (2000, p. 4) echo this conclusion by

pointing out that "centralized management

systems themselves can cause 'tragedies'."

The government record inThird World

countries is far worse. Baland & Platteau

(1996, p. x)write of the "absolutely appallingrecord ofmost of the national governments of

the poorest countries."

When discussing government failure, an

importantdistinction existsbetween the destruction of resources in cases where govern

ments do not perceive of natural resource con

servation as aprimary goal and cases where

governments have accepted the responsibility

for resource conservation. There are different

kinds ofgovernmentfailure nvolved ineach.

Here I focus on cases where the government

has tried to conserve natural resources and has

failed.

There isa large body of literature n pol

icy failure and government failure.On the

whole, it does not providean

adequate expla

nation for the failure of government resource

management policy.

Why do so many government efforts to

manage resources fail somiserably? In some

cases, the problem lies in the open-access na

ture of the resources. Air, for example, is not

owned, and thishasmade regulationdifficult.

But governments have property rightsover

many resources, includingoceans in the exclu

sive economic zone and national forests and

parks. In these cases, resource abuse is a result

of the mismanagement of state-owned prop

erty,resultingfrom policy failure (Marchak

1987). For avariety of reasons, government

agents cannot or will not generate effective

management rules.

The literatureon

government failuremen

tions agency problemsas the most impor

tant reason that the government works poorly.

That is, the problems of governments stem, in









themain, from thebehavior ofpoliticians and

government officials who opt to serve their

own interests rather than those of the pub

lic (Cook & Levi 1990,p. 411;Moberg 1994;Shleifer& Vishny 1998,p. 4).These activities

can

rangefrom

votingfor the interests of con

stituents nways thatdo not serve thepublicat large to outright bribery.Corruption is a

particularlyseriousproblem in hirdWorld

countries (Wade 1982, 1985). Baland &

Platteau (1996, p. x)write of thepeople of ru

ral communities as"oppressed and repressed

by the autocratic leaders andkleptocraticcivil

and military officers of those countries."

Buchanan& Tullock (1962),Olson (1965),

and Becker (1983) see the source of government failure in the interest groups or

winning

majorities that pressure the government into

redistributing oods and services to them at

enormous cost to the public. Others see the

problem in terms of rentseeking, which oc

curs when an interest group "colonizes a gov

ernment bureau so that the bureau promotes

thespecific nterests f theorganized group at

the expense of the public as awhole" (Bickers

& Williams 2001, p. 194;Yandle & Dewees

2003).Others argue the organization of bureau

cracies contains the seeds of failure. Bureau

cratic incentives can make it difficult for

agencies to cooperate (Sproule-Jones 2002)or even to work against each other (Gibson

1999).A number of authors, includingMiller

(1992,pp. 140-42),Williamson (1970,pp. 25

27),andTullock

(1965, pp. 142-93),have ar

gued that llbureaucracies, includingthose of

the government, have problems with asym

metrical information. That is, as information

is transmitted from the bottom of a hierar

chy to the top, it is simplified nd distorted,

resulting in top executivesmaking decisions

based onfaulty information. Some eminent

social scientistssay government inefficiencycan be theproduct of deliberate design.Moe

(1990) argues politicians deliberately designgovernment institutionsto be inefficient o

avoid having an efficient nventionof their

ownmaking used against them when they

are out of power.North (1990, p. 59) pointsout that sometimes it serves the interests of

rulers to allow inefficient institutions to exist,

including monopolies, barriers to entry, and

featherbedding rules.

However,I believe two additional factors

play importantroles in thefailureof governments to

effectively manage their resource:

problems with science and top-down man

agement. Neither has been given adequate

attention.

Problems with Science

and Engineering

In large numbers of cases, government effortstomanage resources fail because of the mis

takes made by scientists and engineers. In the

modern world, an aura of certainty and infal

libility has come to surround science and sci

entists. heir advice is soughton all kinds of

matters, and it is usually accepted because it is

difficult orlaypeople to challenge them.Un

fortunately, the science involved in resource

management is plagued with problems, mak

ing scientists ll too fallible.When those ad

vising government policy makers make mis

takes, the results can be disastrous.

Scientific and engineering problems pro

duce differentkinds of problems in dif

ferent resources. For example, reforestation

attempts have failed, in part, because govern

ment foresters have imported foreign, fast

growing trees, which do not grow well or have

been killed offowing

todisease,

insect infes

tations, and inadequate soil or water (Ascher

1995,p. 9).

Government-sponsored irrigation efforts

have been plaguedwith errors.Irrigation ffi

cials and engineers have apenchant for large

scale projects, even when small projectsare

more cost efficient Ostrom 1992, p. 6). In

some cases, thesepoorlyplanned projects lost

massive amounts of money or could not be

sustained at all (Ostrom 1992, pp. 2-3); inothers, they did not deliver adequate amounts

of water to farmers who were forced to ob

tainwater by illegalmeans (Chambers 1980).

12^ Acheson








In otherprojects,poor design problemswere

compounded by theunwillingnessofgovernments to provide adequate money for mainte

nance.Interestingly, farmers are often blamed

for theproblems stemming rom inadequate

design (Freeman& Lowdermilk 1985).Fisheries' scientists are not able to mea

sure stock sizes accuratelyor understand the

reasons that stocks change because of serious

conceptual problems and problems in gather

ingdata (Acheson 2003,Durrenberger 1996).Wilson (2002, p. 329) reportsthatwhenmea

suring stock size, "errors of measurement on

theorder of 30 to 50% are common."All too

often, the advice of scientistsfalls far off the

mark and leads to seriousconsequences.

In

the ew England groundfishery,orexample,scientists overestimated the stock size, which

exacerbated the overfishingproblem in the

1980s and 1990s. In the lobsterfishery, ci

entificproblems ledfishery dministrators o

recommend the elimination of management

measures thatwere effectiveAcheson 2003).Fishermen are

fullyaware of these inadequa

cies, and as a result, they often give litde sup

port tofisheriesmanagement plans.This, inturn, increases enforcement problems.

Top-Down Management

In the past decade, there has been alitany

of criticism of centralized government efforts

tomanage resources. Decentralized manage

ment efforts generally appear towork better in

managing forests Ascher 1995,p. 10;Gibson

et al. 2000, p. 3), irrigationsystems (Lam

1998,Ostrom 1992), andfisheries Pinkerton&Weinstein 1995).

Centralized, hierarchical government

units have a number of traits that in the

long run work against effective resource

management. Government agencies have a

strong penchant for regulatory uniformity.

As a result, central governments are apt to

promulgate

one set of rules for

large

areas

that do not take into account variations

in the local ecology.Agencies are invested

with a good deal of power,which theyoften

use to ride roughshodover the wishes of

local government units. This can result in

a lot of hostility and opposition from local

governmentofficials Ascher 1995).Government agencies concerned with re

source management generally are staffed with

well-educated engineers and scientists from

urban areas who tend to have an interest

only inscientific nd technicalaspectsof their

job and have little interest in the local cul

ture. Many cannot communicate with peas

ants (Weeks 2000); othershave contemptfor

local-level knowledge based on decades of

experience (Ascher 1995, p. 125; Anderson

1996,p. 101;Coward 1985;Lam 1998,p. 37).

Often,no

attemptis made to

organizethe

farmers, wood harvesters, or fishermen who

are affected by these plansor to frame rules

theywill support (Freeman & Lowdermilk

1985).The plans produced by agencyofficials

often have anegative effect on the resource

and impose huge costs on the resource users

aswell (Takahashi 1970,p. 52).Peasants often

react to this situation by working around of

ficials ina varietyofways (Baland& Platteau

1996,pp. 238-241; Lam 1998,p. 43).Far worse, government agents in innu

merable cases have so little understanding of

human social organizationor behavior that

they introduce changes in technology, rules,

and subsidies inways that motivate resource

users to make decisions that result in dis

aster for the resources involved. There are

many examples of such government-produced

perverse incentives. Reforestation programs

inmanyThird World countrieshave failed,in part, because the incentive system set up

by the government did not induce peopleto plant trees and maintain forests (Ascher

1995, p. 8). In another example, the gov

ernment of Kenya encouraged growing cat

tle (to provide beef for the urbanmarkets)and having fewer goats, which are more

drought resistant.When drought hit, largenumbers of cattle

died, puttingthe tribes

men intodire straightsDyson-Hudson 1985,

p. 178). Fisheries provide stillmore exam

ples. InMaine and Hawaii, conservation laws

www.annualreviews.org ResourceManagement 12$








motivated skippers to put more effort on

the resource than they would have otherwise

(Acheson 1984, ownsend & Pooley 1995). In

California, a state law designedto increase the

amount of sardines packed for human con

sumptionresulted in a

largeamount of the

catch being turned into fishmeal (see also

McEvoy 1986,p. 140).In addition to

failingto conserve the re

source, governments actions have produced

other deleterious effects. These range from

loss of autonomy and control (Apostle &

Barrett 1992) to conflicts over resources

(Anderson 1987, Smith 2000). In addition,

government policies all too often result in the

concentration of the resource in the hands

of local elites or corporations (Leslie 2000,Palsson & Helgason 1997, Polioudaltis &

Polioudakis 2000).

Finally, and most serious, central govern

ments often "frustrate rather than facilitate"

the local level or private effortsto provide

public goods, including rules to manage re

sources (Ostrom 2000a, p. 138; Pinkerton

& Weinstein 1995, pp. 177fr).By making it

impossible for local governments to experi

ment in solving problems, top-down manage

ment policies stifle learning and curtail adap

tive responses to problem solving (Wunsch

1999).Government programs are sometimes

plagued byboth scientificproblems and topdown management simultaneously. When

this occurs, the result can be devastating. In

perhapsthe best

example,Scott

(1998)fo

cuseshis book SeeingLike a State on describ

ing the failure of state enterprisesdesignedtobetter the human condition in the twenti

eth century and the underlyingcauses of that

failure. He analyzes such diverse disasters as

China's great leap forward and Soviet collec

tivization,both ofwhich resulted inmassive

starvation, along with less deadly enterprises,

such ascompulsory villagization in Tanzania

and the planning of certain cities such as

Brazilia.

Scott says four factors underlie these dis

astrous mistakes by governments. First, states

must make complex, diverse social and eco

logicalphenomena "legible."They invent, or

example, tax lists, land maps, and census data

tomake the society theyare in charge of un

derstandable and hence controllable from the

top.To

dothis

theyhave to

simplify omplexphenomena. Second, Scott says, is "high mod

ernism,"anuncritical andunskeptical faith n

science and technicalprogress. (Note thatthis

is faith,not scientificpractice.)The practitioners of highmodernism are unwilling to

admit to thehigh degree of uncertaintyand

complexity that surrounds human and eco

logicalphenomena. Legibility andhighmod

ernism only become lethal, Scott says, when

they re combinedwith thefinal twofactors:powerful,highly centralized statewilling and

eager touse itspower tobringthesehighmod

ernistic schemes into being and a"prostrate

civilsocietylackingthecapacitytoresistthese

plans."

Of course Scott is referringto Lenin's

Russia andCommunist China, buthis analysisalso applies to cases inNorth America. One

example is Canada's failed attempts to man

age groundfish i.e.,cod, haddock, pollock) in

Newfoundland, which has resulted in stocks

of thesefishbeing reduced to 500-year lows.

According to Finlayson (1994), this disaster

can be traced to decisions of the Canadian

government. To develop the poor province of

Newfoundland, the Canadian government fi

nanced the construction of 170 large offshore

trawlerscapable of takingfarmore fish than

had been takenhistorically.

Government sci

entists said the stock could support highercatches, although industry spokesmen warned

against puttinga lotmore pressure on them.

The result wasoverexploitation, leading

to

adevastating stock failure. The causes of

theNewfoundland disaster are reminiscent of

Scott's (1998) analysis. In theNewfoundland

case, the roots of disaster are found in poor

science in the formof an overly optimistic,

politicized stock assessment used by a pow

erful, centralized bureaucracy determined to

improvea poor and relatively weak province,

with a poorly advisedfleetexpansion.

126 Acheson








LOCAL-LEVEL MANAGEMENT

Although therearemany instances inwhich

local-level communities successfully orga

nized to conserve the resources on which

their livelihood depends (e.g., Berkes 1989,

Berkes & Folke 1998,Dyer & McGoodwin1994,McCay & Acheson 1987,Ostrom 1990,Pinkerton&Weinstein 1995), thereare also

many cases of failure. The problem is also not

confined to industrial societies. Recent work

has demonstrated thatpeople in tribal soci

etieshave done a good deal ofdamage to land

and wildlife inmany parts of theworld, in

some caseslong before contact with Western

civilization (Jacksonet al. 2001,Krech 1999).

Local-level efforts to conserve resources

fail because thepeople of those communities

either cannot devise rules tomanage them or

because the rules fail after theyare established.

Different sets of factors are involved in each.

There is agrowing

consensus that the fail

ure to get rules is traceable in great part to

the characteristics of communities. A number

of characteristics are said to make the pro

cess of

devising

and

enforcing

rules easier: a

sense of community, social capital, social ho

mogeneity, dependenceon the resource, lead

ership, and secure boundaries (North 1990,

p. 12;Ostrom 1990, 2000a,b;Wade 1988).An absence of any one or a combination of

these factors can result in the inabilityto de

velop effective conservation rules. (This isnot

to suggest there is complete agreement on the

factors that predispose communities to be able

togenerate

rules tomanage

natural resources.

See Agrawal 2002 forgood coverage of this

debate.)The reasons for the inabilityto get rules

vary from case to case and resource to

resource. In some instances, aninability

to establish and enforce boundaries under

mines efforts at local-level management (e.g.,

Ostrom 1992,2000a; Pomeroy 1994).Where

boundaries cannot be defended, outsiders can

gain the benefits of any resource-management

effort, making it senseless to invest time and

energy in conservation. Social heterogeneity

can make it impossible to produce rules. In

Nepal, for example, conflict owing to ethnic

differences ade itimpossibletomaintain and

operate some of the local irrigation systems

(Lam 1998,p. 68). Still other local efforts o

manage resources failed owing to a decrease

in the dependenceon the resource. InNepal,

when rural people got other sources of income

orpart-time city jobs, the incentive to man

age forests Pradham& Parks 1995, p. 174)and irrigationsystems (Lam 1998, p. 67) at

the local levelwas reduced.

Singleton& Taylor (1992) note thatmanycases of failure are a result of an absence of

a sense of community, which they stress is a

key factor in solving communal action levels atthe local level.A number of anthropologists

suggest the inability to cooperate in peasant

cultures is rooted in a complex of social and

culturalfactors hatmake itdifficult orpeopleto trustone another (Banfield 1958, Foster

1967). In some cultures,the incentivetofree

ride is so strong among so many groups in

the community that there is no "demand for

institutions to conserve resources" (Gibson &

Becker 2000).In many instances, efforts to manage re

sources locallyfailbecause of a combination

of such factors. good example is the efforts

of Maine lobster fishing communities to get

informaltrap limitsat the local level. In the

1950s when the number of traps beganto esca

laterapidly, high percentage of lobsterfish

ermen came to favor trap limits (i.e., a cap on

the number a single license holder could use)to reduce tangles and contain costs. When

the legislature proved unable to pass a trap

limit law, largenumbers of fishermen talked

about getting informaltrap-limit aws at the

local level. The only communities able to de

vise such rules were five small islands, which

were isolated, closely knit, with strong terri

torialboundaries.The other 92 harbors couldnot do so, and those thattried failed (Acheson

2003, chapter 3).The harbors that could not

devise informaltrap limitshad such a largenumber of fishermen that they could not mon

itor each other. Theywere

heterogeneous,









with both full-time nd part-timefishermen

with differentnterests; hefishermendidnot

interact much and had little sense of com

munity; and these towns were not primarily

dependent on the lobster industry. Most im

portant,

none of these communities had much

exclusive fishing area, nor could they limit en

tryto thewaters theydid control.With no

boundaries or limits n thosewho could fish,itmade little sense to erect local trap lim

its because traps taken out of the water bya

group agreeing to the rules would only be re

placed by trapsput inby people from adjacentharbors.

In some cases, local-level management

effortsfail because of factors outside thecommunity. igh on this listof factors is in

terference by government officials who are re

luctantto give power to locals (Pinkerton&

Weinstein 1995). Class antagonismcan also

make it impossible to establish and enforce

local-level management rules. In Teelin, Ire

land, for example, the local priest tried to

get local fishermen to form acooperative

to

buy out salmon-fishing rights and manage the

salmonfortheir wn benefit. is efforts ailedbecause of an

unwillingness to sanction other

community members and along tradition of

poaching well-grounded in class hatred and

antagonismto authority. In Teelin, enforcing

ruleswould not onlybe difficult,twould un

dermine local solidarity Taylor 1987).There are many cases in the litera

turewhere ruleswere established by local

communities and then went out of exis

tence. In Third World countries,Western

colonial governments may undermine the

power of local political authorities and the

resource-management rules they had en

forced (Johannes 1978, Pradham & Parks

1995).Growing population, new technology,and new markets can result in growing

com

petition for resources and can motivate peo

pleto

disobey rules, invade areas of others, or

increase their exploitive efforts to the detriment of theresource (Aswani2002, Becker&

Leon 2000,McGoodwin 1994, Pradham &

Parks 1995). Becoming engaged in interna

tional markets, coupled with a weakening of

traditional rules, can have anespecially dev

astatingeffect Rose 2002, p. 249).Sometimes a number of cultural and so

cial factors can conspire to undermine ex

isting

rules. For

example,

with the Orma of

Kenya, social change made the elders unwill

ingto continue to enforce rules to control the

number of cattle. This resulted in overgraz

ing,whichEnsminger (1992, p. 151)describes

as "a classic failure of collective action."

SUMMARY AND FUTURERESEARCH NEEDS

Few generalizations can be made about thereasons humans are unable tomanage natural

resources, save for the fact that failure is trace

able to a lackofwillingness or abilityto solve

collective-action dilemmas toproduce effec

tive rules. As noted above, the authors of the

literature on resource management and insti

tutionshave identified largenumber of such

factors thatmake itdifficult o produce such

rules. However, ourknowledge is far from

complete at this point. Our understanding of

theconditionsunder which institutions ail is

messy and poorly thought-outat best. This

problem deserves far more attention than it

has received to date.

In an effort oextendandmodify thisbodyof theory, Imake three points about institu

tional failure. First, there is no universal solu

tion to the problems of resource management.

Private owners, governments, and local com

munities all can be effective inmanagingnat

ural resources.They also can fail.Moreover,

alarge number of circumstances can cause

that failure. For private-property institutions

towork, a set of conditions arerequired that

are not commonly found in reality. Prop

erty rightsare often incomplete,

so external

ities abound. Even ifprivate-property ightsare secure and markets are efficient, poverty,

economic competition, and problems associated with slow-growing

resources can lead

to overexploitation. State efforts to manage

resources founder because of a wide variety

128 Acheson








of problems, ranging from rentseeking, win

ningmajorities, and deliberately introduced

design flaws to agency problems and out

right corruption. Governments of industrial

ized countriesoftenare stymiedbyproblems

stemmingfrom

poorscience and

top-downmanagement. Local-level management is of

ten a precarious enterprise, at best. Efforts to

manage resources at the local level are likelytofail f ommunitiesdo nothave therightset

of characteristics.

Management will be effectiveonly ifre

sources are matched with governance struc

tures and management techniques. A gov

ernance structureusing

atechnique

on one

resource might succeed, whereas the same

governance organization using the same tech

nique might failmiserably when applied to

another resource. For example, tradable en

vironmental allowances have worked well in

controlling air pollution (Tietenberg 2002),but such programs (e.g., ITQs) have gener

allynot done well inmanaging fisheriesbe

cause theyhavemotivated fishermentohigh

grade (discard all fishexcept themost desir

able) (Leal 2002), have led to a concentration

incontrolbya smallelite (Palsson& Helgason

1997), and in many cases have not con

served the fish stocks (Organization forCo

operation and Development 1997, p. 82).

To manage resources effectively,we will

have to be quite imaginative.We will need

to combine various elements of privatization,

government control, local control, and man

agerial techniques (e.g.,selective

cuttingof

forests, TQs forfisheries) inways we have

notimagined could be done. The exact com

bination used will have tovarywith the specific resource and place.

Second, one of the basic axioms running

through the literature on resource manage

ment is that failure or success is a result of one

factor or a few separate factors (see Agrawal

2002). There has been littleattempt to dis

cuss factor interdependence and the way thatvarious complex factor combinations cause

resource-management attempts to fail. This

seems a strange oversight, given there is a

growing consensus among environmental sci

entists that stocks of fish, wild animals, and

other natural resources are part of complex

and possibly chaotic systems (Ludwig et al.

2002). In either case these populationsare

subjectto

unpredictable changesin size in re

sponse to acomplicated set of interactive fac

tors (Acheson& Wilson 1996,Wilson 2002).If this is true,and I believe it is,thepenchantof social scientiststo see institutionalfailure

in terms of single factors or a list of uncon

nected factors s simplistic. fwe are going to

modify and extendourunderstandingof insti

tutional failure, we need to see such resource

management institutions as parts of complex

socioenvironmental systems, and the successor failure f those institutionseeds tobe con

sidered as the result of acomplex of factors

working in tandem. Inmany cases, the factors

producingsuccess or failure are quite subtle.

Ostrom writes, "we have all seen in thefield

nearby villages facing similar circumstances

sometimes succeeding in overcoming collec

tive action problems and sometimes failing"(E. Ostrom, personal communication).

Moreover, the complex nature of these so

cioenvironmental systems also means it is go

ing to be difficult o improve the science on

which resource management isbased. We may

have to admit we cannot predict changes in the

quantities of resources at all, and we may need

to concentrate instead ondeveloping ways to

manage resources in the face of great uncer

tainty Acheson&Wilson 1996,Ludwig et al.

2002,Wilson

2002).Third, rules tomanage resources and the

enforcement of those rules are public goods.

The provision of public goods isusually the

purview of governments because such goods

cannotbe provided bymarkets andfree rider

problems abound (Ostrom et al. 1994).This

means governments need to be involved in the

management ofmany different indsofnatu

ral resources inmany parts of the world. Given

the inevitability f government involvement,the failure of governments to manage many

resources effectively s particularlydisturb

ing. How can weimprove the track record of

www.annualreviews.org ResourceManagement








governments? One way to begin is to ask the

following questions: How much government

dowe need?What kind ofgovernmentdowe

need? One set of scholars has answered these

questions by calling for co-management that

involvesmanagerial authority eing splitbe

tween government units and industry groups

(Baland & Platteau 1996, Pinkerton 1989,Pinkerton&Weinstein 1995).Another sug

gestion is polycentric governance, utilizing

the federalistprinciple on which theU.S.

government was formed. That is, resource

management would be accomplished bya

hierarchy of governmental units. Author

itywould be given to the smallest unit in

the hierarchy possible (local government,state

government), but it needs to be rec

ognized that some functions can be per

formed only by central governments (Ostrom

1999).

ACKNOWLEDGMENTS

An earlier version of this article waspresented

as the keynote address at the meetings of the

InternationalAssociation for the Study ofCommon PropertyResources, June 3, 2000, in

Bloomington,Indiana. The author wishes to thank Elinor Ostrom for her comments on an

earlier draft.

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