Property Rights and Collective Action in Natural Resources with Application to Mexico Lecture 1: Introduction to the political economy of natural resources.

Property Rights and Collective Action in Natural Resources with Application to Mexico

Lecture 1: Introduction to the political economy of natural resources

Lecture 2: Theories of collective action, cooperation, and common property

Lecture 3: Principal-agent analysis and institutional organization

Lecture 4: Incomplete contracts with application to Mexico

Lecture 5: A political economy model

Lecture 6: Power and the distribution of benefits with application to Mexico

Lecture 7: Problems with empirical measurement with application to Mexico

Lecture 8: Beyond economics: An interdisciplinary perspective

From property to power

• Move attention away from property rights• Consider actors, power and accountability• Power: ability to influence others to increase

your benefits• Related work:

– Theories of access (Ribot 1998)– Devolution (Larson and Ribot 2004)– Accountability frameworks (Nygren 2000)– Social capital (Wilshusen 2007)– Political economy (Our work in progress)

Power through lens of natural resource problems

Natural resources:

– critical for local livelihoods– Significant wealth base of government and

national elites

Often a point of struggle

Theory of Access – Ribot (1998)

• Property is one mechanism among many to access the market

• Access as a bundle of powers

• Advocates moving back to empirical political economy models

• Come back to in last lecture

Devolution

• Worldwide policy trend• Changes locale of decisionmaking from central

to local• Goals: economic development• Many forms:

– Decentralization, administrative, Deconcentration– Co-administration or co-management– Political-democratic– Environmental justice movement

Rationale for Devolution

• Equity: opens up decisionmaking process

• Efficiency: better information at local level to make better policies; more incentives for stakeholders to invest

• Cons: Local level susceptible to capture by elite

Problems with Devolution

• Barely happening:– Tanner Act, California state law on toxic waste, top down– Local actors not given adequate power– Local actors not accountable– Larger political economy constrains devolution

• Better where locals mobilized to demand authority:– Examples from Cameroon, Nicaragua, India cited in (LR 2004)– Mexico: included state reformers and local communities

• Recommend: – Identify when inadequate powers transferred to actors who are

not accountable– Understand larger political economy of state formation

Creating local institutions “not enough”

• Nygren (2005) – Honduras– Maps actors and accountability

• Wilshusen (2007) – Mexico– Applies social capital (Bourdieu) approach

• “Institutions” fell short of program goals

The “Lepartique process”

• 1992-2003: Finnish government project, MAFOR in Lepartique

• Defined criteria and indicators of sustainable forest management

• Over time: Structural exclusion and political marginalization of “subalterns”

Problems

1. Low political commitment of officials to social forestry

2. When community leaders not legitimate representatives

3. Accountability (e.g. Transporting timber at night)

Alternative view:– “Illegal forestry as an institutionalized political

economic system forged from state authorities and molded around local power.”

– “Networks of corruption and path from legal regulations to illegal practices.”

Timber marketing fund

• Subgroup of SS created a fondo de acopio maderero to help move lesser known species– Holding facility– Marketing– Financing

• Initial funds from federal agency• Funds to be used for:

– Working capital advances– Processing

• Assembly of delegates and staff• Increased volume and sales 1997-2001

Collapse of fund

• No institutional organization– No formal procedures– No accountability or reporting– No meetings of delegates after 1st

– Unclear affiliation

• Loans to:– Individuals– Work groups– Wholesalers (in form of timber)

• Unregulated lending operation

Effect

• Shifted power between and among ejidos

• Members and brokers and individuals accumulated timber stock and capital

Social capital framework

• Bourdieu (1986)

• SK as power relationship and power resource– “aggregate of actual or potential resources

which are linked to possession of a durable network of more or less institutionalized relationships of mutual acquaintance and recognition.”

• Both positive and negative outcomes

Social capital framework

Fields of play: institutional and cultural contexts of social interactions:

1. Field of lending

2. Field of technical management

• Overlap• Informal lending custom eroded enterprise• Informal lending had tacit legitimacy; history

traced to 60s• Institutional design insufficient to stop

Power and status

• Elements of cooperation in commons (Kopelman et al.)• Massey study of power, status and offending acts:

– Act was less proper if reason given was invalid as opposed to valid.

– If offender has higher status, it positively impacts other’s judgments if justification is also valid or at least ambiguous in terms of validity. High status was a liability if the offense was not valid.

– Higher level of power had a positive impact on public judgments but not on private judgments of the impropriety.

– If offender has high status and high power, then positive impact on public and private judgments.

Political economy of forestry in Mexico

• Who are actors?

• Who are decision makers?

• Who are interest groups?

• What is power and what does it effect?

• Can we apply a multilateral bargaining model to Mexican forestry?

Power groups

• Center

• Groups– Organized– Unorganized but responsive

Decisionmaking centers

• Anyone who can authorize decisions, e.g.:– Community authorities– General Assembly– Consultative councils or committees– SEMARNAT– CONAFOR– Unions (pricing?)

Policy instrument: xo

• Investments levels in public goods and types of public goods

• Investment in diversification away from forestry • Repartos (dividends)• Degree of local hiring • Wage advance payments and loans• Change in land cover over time (see land use change

component of survey)• Conservation programs• Reinvestments in forestry (including investments in

roads, physical capital, natural capital)• Forestry diversification

Center objectives

Centers choose xo to maximize:

uok(xo;Z) + (si(xi;Z))

where:uok: authorities’ utility xo: decisions or policy instrumentssi: “strength function” of interest group ixi: actions by groups or individuals to deliver the

reward/penaltyZ: set of exogenous shift parameters for costs/benefits of

delivering rewards or penalties

Interest groups

• Organized and unorganized groups:– Workers in forestry operations– Parcel owners – Women – Non-comunero residents – “Elite” within the community– NGOs– Buyers, private sector?

External actors

• Examples:– Broader citizenship

• Centers’ objectives may account for “reaction function” of external actors: r(x0)

Groups’ objectives

Groups choose xi to maximize the following function:

ui(xo;Z) – ci

where:

ui: each group or individual’s evaluation in utility terms of xo

ci: cost of exercising influence to deliver rewards/penalties.

Actions to exert influence: xi

• Nonoberservable

Cost of exerting power

Groups choose xi to maximize the following function:

ui(xo;Z) – ci

• ci = ci (i, si)

i = pressure you want to exert

• si = strength function (function of power base)

The b’s

• Function of cost of generating power through penalties or rewards

Power bases

• Members’ political and social connections• “Social capital” among individuals in the community• Wealth, asset base• Socioeconomic status• Sources of income• Knowledge, skills, training at the collective level• Governance characteristics (structure, delegation of

authority and decisionmaking processes, networking capital at the community level/external connections)

• Peer pressure

Z-characteristics

• Resource characteristics– Forest size– Physical location (e.g. slope, altitude)– Ecological zones (e.g. tropical, temperate)

• Pre-existing infrastructure (e.g. roads access)

• Demographics

Solving the model

• Nash-Harsanyi bargaining solution among the centers and interest groups

• Maximize “political governance function” – sum of the decision makers’ and group’s utility functions:

W(xo) = max [Bk*uok(xo) + bi*ui(xo)]

where:Bk: weight for center’s marginal power to make decisions bi: weight for each interest group’s marginal strength of

power over centers.

Centers choose xo to maximize the function

Modeling tactic and empirical strategy

• Use revealed preference approach:– surmise objectives for each group

– look at the outcomes (xo)

– work backwards – dynamic game gives weight on b’s to explain

what is observed– comparative statics to generate hypotheses

Conclusions

• Need attention to power, influence and accountability

• Studies of access, devolution, SK, accountability

• How measure accountability?

• How identify actors?

• Collecting data

• Is this adequate?