Varieties of Institutional Failure

James Acheson

Professor of Anthropology and Marine Science

University of Maine

Orono, Maine 04469

Keynote Address for the Meetings of the

International Association for the Study of Common Property Resources

June 3, 2000 Bloomington, Indiana

Introduction

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

1
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, ITQ’s [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.

2
 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. Let’s

begin with market failure and go on to the failure of private property regimes and then to failures

of the government. We’ll end with the failure of communal governance structures.

Market Failure

According to neo-classical economics, competitive markets operate to allocate

resources, goods and services produced in efficient ways. Moreover, if markets are working

competitively, there should be no divergence between the goals of individuals and what is

optimal for society (Arrow 1951, Debreu 1951). From this perspective, efficient markets are the

quintessential invisible hand solution.

Unfortunately, markets are rarely perfectly competitive and efficient. There are several

causes. The most common source of market failure is externalities, which are the effects of one’s

economic decisions on the welfare of others not regulated by prices. In the case of positive

3
externalities one person is producing goods or services for others for which the producer cannot

charge. The owner of a hive of bees cannot charge for the pollination services of his bees. An

industrialist who produces smoke and pollutes a river is producing negative externalities, for

which he does not have to pay. The costs are being borne by people down wind or down stream

who are deprived of a clean environment. Externalities stem from incomplete, insecure property

rights or a complete absence of property rights. The famous common property problem is the

best known case in point. But the important point is that when externalities exist, it is difficult or

impossible to depend on markets to solve resource problems. How do people on the east coast

gain compensation for the damage done by acid rain? East coast residents do not own the air,

and owners of coal burning plants in the mid-west are allowed to foist negative externalities on

them. Who do they deal with? How can they charge anyone for the problems caused by acid rain?

Markets will not work in cases where such externalities exist.

Another source of market failure is public goods. As Olson (1965) pointed out, public

goods are those that cannot be restricted to those who pay for them. National defense is a classic

example of a public good. It must be made available to all, including tax cheats and draft

dodgers. As a result, individuals have a strong incentive not to pay for such goods and to become

free riders on the efforts of others. Under these circumstances, markets will not be effective in

allocating such goods. As Olson points out, people will pay for something they can get for free

only when special incentives are present. Public parks, national forests, and fisheries have many

characteristics of public goods.

Third, another source of market failure are those factors that make the acquisition of

accurate information costly or impossible to obtain. After all, market efficiency describes a

4
situation in which all consumers maximize utility and all firms maximize profits. This is

impossible when consumers do not know price of goods or producers send goods to the wrong

place in anticipation of demand that never materializes. Opportunism (bargaining with guile),

quality problems, and asymmetrically held information all increase the cost of information on

prices, and all can lead to gluts and shortages characteristic of market inefficiency or market

failure. Several kinds of circumstances can also make information difficult to come by and thus

impede market efficiency including “hidden action,” “hidden type,” [both of which make it

difficult to assess what one is getting for one’s money] and “unforseen contingencies” stemming

from the inability of humans to foresee the future.

A number of social scientists from different disciplines have noted that problems in

markets, or exchange systems, lead to the creation of non-market institutions. That is, when

people can obtain the goods and services they require by direct exchange with others, they will

do so, but when exchange or transactions are difficult, people will turn to other kinds of

institutions to do the same job. Nobel Prize winning economist Ronald Coase (1937) began this

line of analysis, pointing out that markets and firms are substitutes for each other. Other

institutionalists such as Oliver Williamson (1977, 1985), Douglass North (1990), Robert Bates

(1994), and anthropologist Fredrik Barth (1981) broadened out this idea to discuss a variety of

kinds of institutions associated with different kinds of market failure. But I do not want to dwell

on the way that institutions are generated. I want to talk about institutional failure. Back to

work.

Private Property

It is one of the basic tenets of the theory of common property resources that private

5
property rights conserve natural resources because the owners of those resources have an

incentive to protect them. By way of contrast, the absence of secure property rights results in

high transaction costs, mal-distribution, overcapitalization, and overexploitation (Acheson 1989).

Unfortunately, private property rights do not always result in the conservation of resources.

Under certain circumstances, people can and will over-exploit resources they own privately, even

when property rights are secure. The literature on pastoralists, farmers, and loggers shows that

“resource conservation is not always ensured by the private property status of the resource.”

(McCay and Acheson 1987: 9). The dustbowl conditions of the 1930's, soil erosion in more

modern times, and depletion of industrial forests are all cases that underline the fact that at times

private landowners are no more responsible than users of open-access resources. Nor are such

cases all that rare. What conditions make it rational for owners to over-exploit their own

resources? I think there are four such circumstances.[There are two comments before I continue.

(1) Here we are on less certain ground since much less work has been done on the failure of

private property institutions. (2) We need to ask whether overexploitation of privately owned

resources indicates the failure of the institution of private property. It certainly does from the

point of view of the society. Overexploitation is not Pareto Optimum or in the long run best

interest of the society. The question needs to be asked?]

First, Colin Clark (1973: 630) argues that “A corporate owner of property rights in a

biological resource might actually prefer extermination to conservation, on the basis of

maximization of profits.” This occurs when the growth rate of the resource is less than the

interest rate. It makes no sense to borrow money from the bank at 8% interest to invest in a

resource that increases in value at only 4% per year. This would not be a rational investment.

6
Under these circumstances, it would only be sensible to use up the resource as fast as possible,

and invest the money obtained in another income stream with higher returns.

Second, long time horizons–in and of themselves-- make it rational to over-exploit

privately owned resources. Forests are an excellent example. An analysis done by Mass and

Vicary (1991) assessed the returns that could be realized from Maine forest plantations under the

most ideal conditions. That is, they assumed that the plantation would be harvested in 50 years,

that during those years there would be no outbreak of disease, that stumpage rates would rise

steadily, that the land cost nothing, and that there were no taxes. At a 4% discount rate, the NPV

was $231.00; at 5% it was $59.05; and at 6% the NPV was -$50.30.. If conditions were less

ideal and the discount rate at competitive industry levels, investment in a plantation would lead

to substantial losses. I reworked their figures and found that if these trees were harvested in 80

years (it takes 80 years for pine and red spruce to reach maturity), the Net Present Value would

be negative at all discount rates above 2%. Under these conditions, there is a strong incentive to

cut forests as soon as possible.

Second, it is illogical to invest in slow maturing resources if there are two, three or more

generations between investment in the resource and harvest. Baskerville (1995: 96) points out

that in the case of New Brunswick forests there is a strong tendency to make decisions with the

interests of the current generation in mind. The same point can be made of other resources.

Simply put, most people--including most owners of firms--figure that there is little sense

investing in a resource that someone else is going to harvest far into the future.

Third, uncertainty about availability of the resource can lead to overexploitation. For

example, fishing takes place in a very complex and even chaotic environment in which a large

7
number of factors affect recruitment, growth rates, and reproductive success, including food

supply, pollution, factors affecting the nursery and breeding grounds, and community predation.

In addition, the effect of human predation is not known with certainty. Therefore, large changes

in stock sizes and catches can occur unpredictably for reasons that no one is certain. Forests and

stocks of animals are also subject to periodic outbreaks of diseases that can strongly affect forest

stocks and species mix. In some cases, it is possible to specify the probability of such events

occurring, but in other instances even that is impossible. As a result, when biological systems are

unpredictable, people have little incentive to conserve the stocks of such species. It is irrational

for people to invest in such stocks or curb their own exploitive behavior when it is uncertain that

these activities will result in any payoff?

Last, economic competition and low profit margins can also force owners of resources to

over-exploit them. Farmers may know that rotating crops is a wise strategy, and owners of forest

land might be fully aware of the advantages of selective cutting. But their economic situation

might be so precarious that they are forced to forego such strategies in an effort to stay in

business in the short run, even though this will degrade their property in the long run.

Any one of these circumstances can motivate owners of natural resources to over-exploit

them, or fail to maintain them at optimal levels. But even worse, often two or more of these

circumstances can occur together, creating very strong incentives to damage privately owned

resources.

In Maine, many of these circumstances exist in the forest industry (Acheson 2000). The

rate of cutting is not sustainable. Many decisions of owners of Maine forests stem from the fact

that investing in forests does not give high returns given the long time horizons involved and the

8
slow growth rate of trees in this area. All knowledgeable observers admit that the return on

Maine forests is no more than 6%. Moreover, regardless of what discount rate is used, the Net

Present Value of investing in Maine forests is very low or even negative.

The forest contractors get around this problem by reducing the duration of an investment

to a few months by purchasing land, stripping it of trees and then selling the land. They are not

tying up expensive capital for long periods in slow growing trees. This strategy effectively

reduces the cost of waiting to nothing, and passes the costs of heavy, unsustainable harvesting

levels onto future owners and the public.

The industrial land owners (i.e. the pulp and paper industry) face a more difficult set of

circumstances. In addition to the problems stemming from the low returns on investment in

forest land, they have had to contend with vastly increased competition and cut throat price

competition. Demand for magazines and newsprint has declined, and prices for paper products

are very volatile (Legasse 1997; McDonald 1997). Moreover, Maine mills face increasing

competition from the modern mills that have been built in the southern part of the U.S. and in

foreign countries. Moreover, pulp is a commodity whose price can‘t be increased by advertising.

The paper companies have reacted to this situation not by investing in the most modern

technology to maximize output and efficiency. Rather, they have sought to keep profits at

acceptable levels by keeping costs low.

They have lobbied the government for a variety of services such as fire control, and

spruce budworm spraying and low land taxes. They have cut costs by keeping investment in

mills low and by running their mills continually (three shifts for 365 days a year). Most

important, the paper companies are cutting their forests heavily, using low cost techniques such

9
as clearcutting and poor quality partial cuts. These strategies avoid the full costs of investing in

sustainable forests.

The pulp and paper companies own such a large percentage of Maine and Maine’s forests

that their activities are affecting the health of the forests as a whole. McWilliams (1997:1) points

out that in the 1990's total growing stock volume decreased by seven percent, and the current cut

to growth ratios was 1 to .8 indicating that for every cord of wood cut only .8 cords were growing

back. A simulation modelling study done by officers of the Maine Forest Service demonstrated

that the growth to removals ratio would be negative well into the 21st century, assuming the use

of both current cutting practices and improved harvesting practices (Gadzik, Blanck and

Caldwell 1998). The situation in the northern counties of Maine, which are primarily owned by

the paper companies, is much worse. In all of these counties the cut to growth ratio was 2 to 1 or

higher indicating at least twice as much wood was being cut as was growing back. In Piscataquis

County it is 3.6 to 1. As a result, the quality of stands has decreased, the amount of land in

hardwoods has increased, the percentage of land in large saw timber has decreased from 39% to

34% from 1959 to 1995; in that same period the amount of land in seedlings and saplings

increase from 14% of total forest acreage to 25% (Gadzik, Blanck and Caldwell 1998; 3-4;

McWilliams 1997: 177-178.).

This is not to say that all forest landowners are doing a bad job managing their land in

Maine. The culprits are the industrial landowners ( i.e. pulp and paper companies) and the forest

contractors. But they own such a large percentage of the state that their poor forest practices

have strongly affected the quality of the forests in Maine as a whole. I want to remind you that

virtually all of this land is privately owned. (Only a small percentage is owned by the federal and

10
state government.) It is private owners who are treating their own forests in this way.

Government

Governments do wonderful things. We have come to depend on them for a huge variety

of services and goods. In the past few decades, we in the United States have come to look to the

government to be our primary bulwark against environmental pollution and degradation. There is

little question that these efforts by government have borne fruit. Our environment is much

cleaner now than it was a few decades ago. Many of us in this room can recall the time when

many major rivers in the U.S. were literally open sewers. Those rivers are much cleaner now due

to the actions of the government agencies.

There are many people in the U.S.-- especially professional managers and the

conservation community--who assume that resources can only be managed by the government. I

have no doubt that they have a strong argument. But government can also fail in the resource

area–sometimes massively. One of the best examples is fisheries management. Very large

numbers of marine fisheries in the world are in a state of crisis. Many of these have been under

scientific management choreographed by central governments for decades (McGoodwin 1990).

Something has gone desperately wrong in these cases. Moreover many forests under government

control have apparently not been well managed. I do not need to go very far from home to find

examples. The ground-fisheries of the Gulf of Maine are at 500 year lows. They are truly in

desperate condition. The forests on Crown land in New Brunswick have apparently not been

managed well either.

One thing to note is that governments generally attempt to preserve resources in two

11
ways: first they have been buying up large amounts of land and resources to create parks, national

forests, and biosphere reserves; second, they have passed laws and regulations designed to

protect resources. They generally have not been doing either for very long. In the U. S., as we

all know, the first national parks go back to the administration of Teddy Roosevelt in the early

years of the 20th century. Virtually, all of our important environmental legislation, including the

Clean Air Act, the Clean Water Act, and the Fisheries Conservation and Management Act were

enacted only in the 1970's. During most of our history, resource management was not a primary

goal of the government. I believe that is still the case in many, but not all, of the countries of the

Third World, and in countries in the ex- Soviet block.

It is important to make a distinction between the destruction of resources in cases where

governments do not perceive of conservation of natural resources as a primary goal, and cases

where governments have accepted the responsibility for conserving resources. There are

different kinds of government failure involved in both.

In the literature on the Third World, several causes of government failure have been

stressed in the literature. The first, as has been noted by innumerable commentators on the Third

World, is corruption. There are huge transaction costs involved in monitoring the enforcers.

When this is not done, enforcers can act with their own selfish interests in mind. When they are

supposed to enforce conservation laws, this can mean over exploitation of resources. Another

problem is inefficiency. A third is conflict between bureaucracies, where one part of the

government undermines efforts by another part to save resources (Gibson 1999).

Another source of problems lies in the interests of the state, as people such as Douglass

North (1981) and Jack Knight (1992: 190) have noted. The goals of owners of resources are to

12
get rules that will give them “distributional advantage.” The goals of officers of the state are

different: “an economic interest in revenues, and political interest in maintaining a level of

aggregate growth sufficient to satisfy social actors necessary to maintain power. The rights that

satisfy the most powerful resource owners may differ from those preferred by the state” (Knight

1992: 190). But the interests of the state and of owners of resources may coincide as well. The

result can be exploitation of resources unimpeded by the government, or even augmented by the

government. An example is afforded by the administration of Porfirio Diaz in Mexico–the

period between 1876 and 1910. One of Diaz’s primary goals was the development of his

country. With this end in mind, he arranged for the British to build railroads, Standard Oil of

New Jersey (Rockefeller) to develop the oil fields in the Gulf of Campeche, British and

American mining and timber harvesting companies to open mines and exploit the tropical forests

of southern Mexico. Diaz did have some success in modernizing the country. But the actions of

his government also resulted in impoverishing the Mexican working class, buttressing of the debt

peonage system on haciendas, and the virtual destruction of the tropical rain forests of Chiapas

and Campeche (Collier and Quartiello 1994).

In modern states, there is less outright corruption (I trust and hope) but there certainly

continue to be instances in which the government consented to allow resources to be damaged

with revenue and political support in mind. In my own state of Maine, the paper companies had

such influence in the legislature that they got virtually all of the laws and subsidies they wanted.

For this reason, William Osborne (1974) called Maine the “paper plantation.” The result was a

set of laws that subsidized the paper companies and gave them carte blanch to do what they

wanted with a sizeable percentage of the state. People in the legislature were passing such

13
legislation with the best of intentions in mind: jobs, communities, and development. This has not

resulted in sustainable forest practices to say the least. In retrospect, it is a case of government

failure.

In the modern era when governments have taken primary responsibility for conserving

natural resources, other more subtle forces work against sustainable resource use.

Anthropologist James Scott in his new book Seeing Like a State (1998) focuses on describing the

failure of state enterprises designed to better the human condition in the 20th century, and the

underlying causes of that failure. He analyzes such diverse phenomena as China’s great leap

forward, Soviet collectivization, which resulted in massive starvation, and to less lethal mistakes

such as compulsory Villigization in Tanzania, the planning of certain cities such as Brazilia, and

agricultural modernization in Europe and the United States that has resulted in crop epidemics.

Scott says that four factors underlie these disastrous mistakes by governments. First,

states must make complex, diverse social and ecological phenomena “legible.” They invent tax

lists, land maps, census data, etc. to make the society they are in charge of legible and hence

controllable from the top. To do this they have to simplify very complex phenomena. Second,

he says is “high modernism”, an uncritical and unskeptical faith in science and technical

progress. [Note this is faith, not scientific practice.] The practitioners of high modernism are

unwilling to admit to the high degree of uncertainty and complexity that surrounds human and

ecological phenomena. Legibility and “high modernism” only become “lethal,” he says, when

they are combined with a third force--namely a powerful, highly centralized state willing and

eager to use its power to bring these high modernistic schemes into being. Last, is a “prostrate

civil society that lacks the capacity to resist these plans.”

14
 Now you say that Scott is taking about Soviet Russia and Communist China, and that this

could not happen here in modern democratic states. Yes, he is talking about Stalinist Russia and

Mao’s China, but he is also talking about failed schemes in such places as Israel, Brazil, France,

Ireland under British rule, and in the U.S. [U.S. industrial agriculture].

You say that this could not underlie the problems that we are having with resource

management. I am not so sure. Let us examine the disaster that has befallen groundfish in the

Northwest Atlantic in the past few decades. Canadian groundfish stocks off Newfoundland are at

500 year lows. There is strong reason to believe that much, if not all of, the fault for this disaster

can be traced to decisions of the Canadian government. The facts I have on this case come

largely from Chris Finalyson, an anthropologist now working for the Maine Department of

Marine Resources, who described the disaster in Newfoundland in a book entitled Fishing for

Truth (1994). Basically cod in Newfoundland for centuries were caught very near shore in fish

traps, and by hook and line technology. The cod fishery gave an average sustainable yield of

300,000 metric tons per year.

In the 1970's, the Canadian government decided that it was going to develop the

economy of Newfoundland and improve the lives of its citizens, a large number of whom were

dependent on the dole, by developing the ground-fishery. To this end the Canadian government

built a fleet of 170 large trawlers capable of taking far more than 300,000 metric tons of

groundfish. Fisheries spokesmen, such as Cabot Martin, repeatedly warned the government that

the fishery could not sustain this level of catch, but the position of the DFO (Department of

Fisheries and Oceans) was that the stock could support a high total allowable catch.

In the early 1980's catches were very high. However, by 1989 it was clear that cod stocks

15
were in serious trouble. In 1991, the Canadian government stopped all directed fishing for cod.

The stock has not recovered yet. This disaster was not only caused by the huge catches that

destroyed the breeding stock, but also by the use of trawling gear--large nets towed along the

bottom--which are highly unselective, and which also does a lot of damage to the bottom.

Note that it is easy to make the case that the elements Scott says cause failures by

government are present in this case. A highly powerful, centralized government determined to

foist a “high modernist” scheme on a poor, and relatively powerless Province. The Canadian

Department of Fisheries and Oceans is highly centralized and has been given a lot of power. The

plan was supported by scientists, unwilling to admit the complexity and uncertainty of predicting

fish stocks, and a bureaucracy all too willing to ignore local knowledge about catch levels and

practices such as use of fish traps.

Participation by industry and people at the local level does not always work either. I

remind you of what has happened with the groundfish of New England. Since 1977 the ground-

fishery of the Gulf of Maine has been managed by the New England Regional Fisheries

Management Council, a group containing federal fisheries officials and representatives appointed

by the governors of the New England Coastal States. The ground-fishery has plenty of

representatives on this body. The Council develops fishery management plans, which it

recommends to the National Marine Fisheries Service and the U.S. Secretary of Commerce. The

Council’s recommendations are enforceable after the Secretary of Commerce accepts them. It is

aided in its decisions by data supplied by federal and state scientists. Has this more decentralized

system worked well? It has not. Stocks of many of the species managed by the Council,

including cod and herring, are at all time lows.

16
 The basic cause of the problem is over fishing. Over fishing has been permitted, even

encouraged by the council, by the development of rules which can be evaded or which favor the

large boats–the ones that take the most fish. The result is a set of accidental after effects that are

quite damaging to the stocks.

Two examples will suffice. In 1977, the council produced its first groundfish plan which

called for managing the stocks based on three month quotas. A quota would be set for a three

month period. When that quota was taken, all fishing would be stopped. In January 1978 the

plan went into effect. It was a stormy winter, and the small boats from Maine and New

Hampshire could not get out. Within weeks the entire three month quota had been taken. The

lesson was clear: the catch would go to the largest and best equipped boats. Large numbers of

owners replaced their older boats with larger boats with better fishing gear and fish finding

electronics. The result was a quota race which produced a fleet capable of putting far more effort

on the stocks. By the early 1980's the stocks were showing signs of trouble (Acheson 1984).

In the 1990's, the groundfish stocks, especially those on Georges Bank, were in very bad

condition. The council produced rules to exacerbate the problem. Basically the Georges Bank

stocks were fished by large vessels, and these stocks were in bad condition. The inshore banks

were fished by small vessels, and the stocks there were in much better shape. In 1994, the New

England Council passed Amendment 5 calling for management by days at sea. At this point,

many of the large vessels began to fish inshore banks because they did not want to waste valuable

“days at sea” traveling to the offshore banks. Then the Council produced Amendment 6 closing

all fishing on parts of Georges Bank with little thought about where the 200 large boats that

fished there would go. Predicably, they went to the inshore banks and quickly fished those out as

17
well. Given the history of the last 25 years, it is difficult to escape from the conclusion that the

Regional Council is a case of institutional failure--another case where the government has failed

in attempts to manage resources.

Scott’s analysis again appears to apply, if not quite so closely. Groundfish are managed

by the federal government, from the top down, over the entire range of the stock. The primary

scientific tools involved are stock-recruitment models, which have many of the traits of “high

modernistic schemes.” The ground-fishery has not been well enough organized to oppose what

they considered ineffective and costly management proposals. As a result, the industry

has developed a gold rush mentality, which has enhanced the over fishing problem.

These few examples make no pretense at describing all of the kinds of government

failure. Much more needs to be done in this area.

Local Level Management

I am not going to say very much about the failure of local level management efforts. I

personally have great hopes for co-management or bottoms up management. Pinkerton and

Weinstein’s book Fisheries that Work (1995), Fikret Berkes (ed) Common Property Resources:

Ecology and Community-Based Sustainable Development (1989), Elinor Ostrom’s book

Governing the Commons (1990), and the book edited by Bonnie McCay and myself The Question

of the Commons (1987) give a number of cases of successful local level management. But I

have no doubt that it is very difficult for local groups to generate successful local level or co-

management institutions. These can fail easily.

There are a number of circumstances that can cause such failure. Most important, efforts

at local level management will fail if the rules put in place benefit people [free riders] who did

18
not make the sacrifice in the cause of conservation. This can occur when groups are large, when

people have not built up social capital and know who to trust, where boundaries cannot be

enforced, and where people do not have to live with the consequences of their actions. All of

these factors will lead to rules that are unenforceable and defection from the norm will follow.

There is no large literature on the failure of co-management or local level management

regimes. One should be developed. I know from looking at the papers being given here that a

large number of local level management experiments and efforts are underway in many areas of

the world. Some of these will succeed; many will fail. I would urge you to do something that is

very difficult--namely, when a project fails to describe those failures. We need a set of case

studies of both successes and failures if this effort is to go forward.

Conclusion

Let me conclude where I began. Several kinds of institutions can be used effectively to

manage resources. Markets, property rights, government, and local level or co-management can

all be effective. They can also fail. None of them is a universal solution to the problems we

face. One of the key questions that social scientists interested in resource management need to

answer is: When and under what conditions will each of these kinds of institutions succeed in

conserving resources. Under what conditions will they fail? This is not an easy question to

answer.

I would like to end by suggesting that what is needed is a far more sophisticated type of

analysis than we have now. We need to determine the exact characteristics of resources and the

problems they are having. Then we need to match to those problems specific kinds of

institutions capable of solving those problems. Moreover, we cannot expect that these resource

19
problems can be solved by a simplistic use of markets, or local level management, or

government, etc. We are going to need to combine various elements of property rights,

government control, local control and markets in ways that we have not imagined could be done.

This is going to require some very creative thinking.

20
 Bibliography

Acheson, James M.

1984 Government Regulation and Exploitive Capacity: The Case of the New England

Groundfishery. Human Organization 43(4): 319-29.

1989 Management of Common Property Resources. In, Stuart Plattner, ed., Economic

Anthropology. Stanford: Stanford University Press.

2000 Clearcutting Maine: Implications for the Theory of Common Property Resources. Human

Ecology.

Arrow, Kenneth

1951 An extension of the Basic Theorems of Classical Welfare in Economics. In J. Neyman,

ed., Proceedings of the Second Berkeley Symposium on Mathematical Statistics and Probability.

Berkeley: University of California Press.

Barth, Fredrik

1981 Process and Form in Social Life: Selected Essays of Fredrik Barth. Vol 1. London:

Routeledge & Kegan Paul.

21
Baskerville, Gordon L.

1995 The Forestry Problem: Adaptive Lurches of Renewal. In, Barriers and Bridges to the

Renewal of Ecosystems and Institutions. Lance H. Gunderson, C.S. Hollings and Stephen S.

Light, eds. New York: Columbia University Press.

Bates, Robert H.

1994 Social Dilemmas and Rational Individuals: An Essay on the New Institutionalism.

In, James Acheson, ed., Anthropology and Institutional Economics. Lanham, Maryland;

University Press of America, pp 43-66 .

Berkes, Fikret

1989 Common Property Resources: Ecology and Community-Based Sustainable Development.

London. Belhaven Press.

Berkes, Fikret, Daniel Feeney, Bonnie McCay and James Acheson

1989 The Benefits of the Commons. Nature (340): 91-93.

Cheung, Steven N.S. (1970). The Structure of a Contract and the Theory of a Non-Exclusive

Resource. Journal of Law and Economics 13 (1): 45-70.

Clark, Colin

1973 The Economics of Over-exploitation. Science 181:630-634.

22
Coase, Ronald

1937 The Nature of the Firm. Economica 4(3):386-404

Collier, George and Elizabeth Lowery Quartiello

1994 Basta: Land and the Zapatista Rebellion in Chiapas. Oakland, California: The Institute for

Food and Development Policy.

Debreu, Gerard

1951 Theory of Value. New York: John Wiley and Son.

Finlayson, Christopher

1994 Fishing for Truth. Institute for Social and Economic Studies. Saint John’s: Memorial

University of Newfoundland.

Gadzik, Charles, James Blanck and Lawrence Caldwell.

1998 Timber Supply Outlook for Maine: 1995-2045. Augusta, Maine: Maine Forest Service.

Gibson, Clark

1999 Politicians and Poachers : The Political Economy of Wildlife Policy in Africa.

Cambridge: Cambridge University Press.

23
Gordon, H. Scott

1954 The Economic Theory of a Common Property Resource: The Fishery. Journal of Political

Economy 62: 124-142.

Hardin, Garrett

1977 The Tragedy of the Commons. Science 162: 1243-8.

Johnson, Omohund E.G.

1972 Economic Analysis, the Legal Framework and Land Tenure Systems. Law and

Economics (15): 259-276.

Knight, Jack

1992 Institutions and Social Conflict. Cambridge: Cambridge University Press.

Legasse, Mary Anne

1997 Wall Street Gem No Community Hero. Bangor Daily News, December 30, 1997, p A1.

Mass, David and Bret Vicary

1991 The Value of Increased Survival and Stocking with Herbicide Treatments. In, Proceedings

of Northeastern Wood Science Society Meeting, Vol. 45.

24
McCay, Bonnie and James Acheson, eds.

1987 The Question of the Commons. Tucson: University of Arizona Press.

McDonald, Michael

1997 Paper Industry Struggles in Ever-tougher Market. Bangor Daily News. December 27-28,

1997, p. A1.

McGoodwin, James

1990 Crisis in the World's Fisheries. Stanford: Stanford University Press.

McWilliams, William H.

1997 Results from the 1995 Maine Forest Inventory. Special Report No. 97-07. USDA Forest

Service. Radnor, PA: Northeastern Forest Experiment Station.

1998 Maine’s Recent Forest Inventory: What Does It Tell Us? Presentation to the Committee

on Agriculture, Conservation and Forestry, Augusta, Maine January 29, 1998. Radnor, Pa.:

USDA. Forest Service.

North, Douglass

1990 Institutions, Institutional Change and Economic Performance. Cambridge: Cambridge

University Press.

25
Olson, Mancur

1965 The Logic of Collective Action: Public Goods and the Theory of Groups. Cambridge,

Mass: Harvard University Press.

Osborne, William

1974 The Paper Plantation. New York: Viking Press

Ostrom, Elinor

1990 Governing the Commons: The Evolution of Institutions for Collective Action. Cambridge:

Cambridge University Press.

Pinkerton, Evelyn

1989 Co-operative Management of Local Fisheries: New Directions for Improved Management

and Community Development. Vancouver: University of British Columbia Press.

Pinkerton, Evelyn and Martin Weinstein

1995 Fisheries that Work: Sustainability through Community-based Management. Vancouver,

B.C.: The David Suzuki Foundation.

Scott, Anthony

1955 The Fishery: Objectives of Sole Ownership. Journal of Political Economy 63: 116-34.

26
Scott, James C.

1998 Seeing Like a State. New Haven: Yale University Press.

Williamson, Oliver

1977 Markets and Hierarchies: Analysis and Antitrust Implications. New York: The Free Press.

1985 The Economic Institutions of Capitalism. New York: The Free Press.

27