Experimental and survey research, as well as theoretical analyses, indicate that effective cooperation for resource management depends on the presence of a sufficient proportion of individuals in a group of appropriators who place a value on the group’s well-being or who are willing to trust other group members to keep their promises most of the time (see Campbell, 1975; Axelrod, 1984; Sober and Wilson, 1998; Kopelman et al., Chapter 4; Richerson and Boyd, in press). The prevalence of supportive values and attitudes is associated with cultural traditions and strength of community among the appropriators, two factors that institutional designers cannot readily change. They should, however, be alert to a lack of supportive values and attitudes as a major challenge. One of the key challenges of institutional design is to cope effectively with heterogeneity among resource users with respect to predisposition to cooperate in the absence of clear sanctions.
A related challenge is the presence of conflicting values and interests among the appropriators. This challenge, ubiquitous when policy decisions are being made, is most severe when groups are economically and culturally heterogeneous, when members are heterogeneous in their relationships to the resource (e.g., upstream and downstream water users) (Lam, 1998; Tang, 1992), and when members differ in their degree of dependence on the resource (Berkes, 1992). It is also more disruptive when the dynamics of the resource are poorly understood (to be discussed). Resource designs based on market principles, such as tradable permits, are intended to address conflicting interests by facilitating tradeoffs; they may, however, be rejected by some resource users on equity grounds. Recommendations for developing low-cost conflict resolution mechanisms are intended to address the full range of conflicts of values and interests.
Empirical research suggests that it is easier to create and maintain institutions to manage resources whose dynamics are well understood (Gibson et al., 2000a; McCay, Chapter 11; Wilson, Chapter 10). Similar findings are reported in theoretical analyses (Olsen and Shortle, 1996; Pindyck, 1984, 1991). Unfortunately, many important common-pool resources, including ocean fisheries, tropical ecosystems, and the global climate, have poorly understood dynamics that create major management challenges.
Our understanding of the dynamics of a resource may be imperfect in two ways. In one instance, the variables affecting resource stocks are understood, but the relationship is probabilistic and/or highly nonlinear rather than deterministic and linear. Imperfect understanding presents its most serious challenge in a second instance, when the users do not know which variables affect the stocks of a resource or the nature (functional form) or strength of the relationships (see Wilson, Chapter 10; Rosa, 1998; Dietz et al., 2000). This situation makes monitoring