Institutions for Environmental Governance
Federal scientific and environmental agencies should support a concerted effort to build scientific understanding needed for designing and evaluating institutions for governing human activities that affect environmental resources. Environmental governance refers to any institutional arrangement that attempts to control individual or organizational use of natural resources, ecological systems, and sinks for wastes in order to meet objectives such as sustainable use, protection of public health, and protection of valued species or places. Societies have developed many institutional structures for environmental governance, all of which are effective in some circumstances, but none of which is universally successful. This priority is to build more systematically the knowledge needed to design institutional forms, that is, sets of rules and associated cultural and organizational systems, that can effectively address specific environmental governance problems. In identifying this priority for research, we concur with previous reviews that have identified the same area as a “research imperative” (National Research Council, 1999b), a “grand challenge” in environmental sciences (National Research Council, 2001b), and a major research challenge in environmental research (Pfirman and the NSF Advisory Committee for Environmental Research and Education, 2003). The area presents challenges, but it is also ripe for progress.
THE RESEARCH NEED
Environmental resources present the governance problems typical of common-pool resources, that is, resources that can be used simultaneously
by more than one user, and anyone’s use potentially degrades the resource for all. When ownership and the assignment of rights and responsibilities are unclear and access is unrestricted, these resources often generate so-called social dilemmas or social traps in which the outcome of decision making is less than optimal, if not wasteful or destructive. Part of the difficulty is a fundamental issue in social interaction, the free-rider problem, which arises when the results of coordinated social action are public goods, available to everyone, so that the incentive is reduced for any user to contribute to their management (Olson, 1965). Without effective rules restricting access, even evidence of resource decline may fail to induce restraint, resulting in a “tragedy of the commons” (Hardin, 1968). Tragic outcomes are especially difficult to avoid when resources are highly unpredictable and poorly understood (Wilson, 2002).
A major finding of recent decades of research is that such results can be avoided through institutions for governing the commons that meet basic requirements of environmental governance, such as providing needed information and infrastructure, resolving conflict, inducing compliance with rules, and adapting to change (e.g., Ostrom, 1990; National Research Council, 2002a; Dietz, Ostrom, and Stern, 2003). By institutions we refer to rules and the social and cultural systems that maintain them. Common institutional forms include direct control by centralized government agencies; indirect control through quasi-privatized and tradable allowances or quotas; nongovernmental control through market mechanisms; nongovernmental control by associations of businesses, communities, and resource users or by representation of diverse interests on decision-making bodies (e.g., of environmental interests on corporate boards); partnerships and collaborations that cross jurisdictional or sectoral lines; and participatory forms of governance that combine expert and lay knowledge and authority. Although each of these institutional forms can meet governance requirements under the right conditions, none is uniformly successful. The research need is to develop sufficient knowledge to enable improved choices of institutional forms that are well suited to meeting environmental and other objectives in particular situations and at particular spatial and temporal scales, as well as being capable of adapting to the dynamics of complex socioecological systems.
Analyzing environmental governance as a problem of institutional design is useful because it reframes the central governance question from one of selecting a single best governance strategy (e.g., choosing between top-down regulation and market-oriented policies) to one that considers a full range of governance options and seeks to match institutional forms to specific governance needs. It expands discussion from a debate over which actors are best able to govern resource use (e.g., national governments versus local governments, governments versus businesses) to a discussion of
the most appropriate roles in governance systems for all types of actors, including governments, businesses, formal and informal “civil society” organizations, scientific groups, and individuals.
Environmental policy in the United States has been moving slowly toward recognition that a broad array of governance options is available. At first, policies were commonly built on assumptions about the authority and legitimacy of centralized government (the state), the centrality of science, and the possibility of full understanding and control of natural and social systems. From the turn of the twentieth century, a dominant and continuing model for environmental policy was the multipurpose management of public lands, forests, surface waters, wildlife, and minerals underlying public lands and waters by federal agencies, based on scientific and technical expertise and guided by a doctrine of public trust to serve the overall public interest. Beginning in the New Deal era, this model was augmented by the large-scale use of government subsidies, especially for multipurpose water management projects, and by partnership arrangements with favored resource user interests, such as farmers and ranchers. In the late 20th century, it was supplemented by an unprecedented new suite of federal regulatory statutes mandating control of pollution and of toxic contamination, as well as by vastly increased federal subsidies for wastewater treatment facilities and for cleanup of sites contaminated by toxic chemicals (Andrews, 1999). Difficulties with these forms of governance have contributed to challenges to them and to their underlying assumptions, leading in some cases to the introduction of more market-oriented mechanisms for compliance, such as tradable property rights, information disclosure requirements, and strict liability principles, as well as statutorily automated and nondiscretionary penalties for noncompliance.
The question of environmental governance is typically posed as a choice among a few basic policy strategies. The dominant strategy—direct management or regulation by centralized government agencies, with top-down creation and implementation of rules imposed on businesses and utilities—has generated considerable dissatisfaction in the United States in recent years. Rules derived from national legislation such as the Clean Air Act, the Clean Water Act, and the Comprehensive Environmental Response, Compensation, and Liability Act (Superfund) have contributed to major reductions in pollution discharges and environmental contamination hazards. They also have been criticized for varying combinations of administrative burdens, technological rigidity, imperfect compliance, imposition of uniform national approaches on diverse environmental circumstances, political influence on the regulatory process by regulated interests, and regulation of some source categories but not others; and, as a result, for gaps between outcomes and legislative objectives (Vig and Kraft, 2003). Similar mixtures of success, criticism, and political conflict have been directed at
top-down natural resource management programs (forests, grazing lands, fisheries, wildlife) in the United States (Knight and Bates, 1995; Weber, 2002) and elsewhere, particularly developing nations (Gibson, McKean, and Ostrom, 2000; Hulme and Murphree, 2000).
Criticism of centralized environmental management and regulation has drawn attention to an alternative institutional form—market-based governance—which has been advocated as more flexible and more economically efficient. This approach relies on creating incentives for individual and firm behavior by privatizing certain rights and allowing markets to emerge for them (Freeman, 2003). Examples include tradable environmental allowance schemes for regulating pollutants and individual fishery quota schemes for fisheries management. Government establishes a limit to resource use, allocates use rights, and allows those rights to be exchanged in markets in a “cap-and-trade” system, in which governments set limits on resource use or pollutant emissions, allocate initial rights to those resources or pollutants, and allow those rights to be traded in the market (Rose, 2002; Tietenberg, 2002; Young and McCay, 1995). Although this approach has performed well in some policy arenas (Tietenberg, 2002), it has been very controversial in general and in particular applications, and it has not always lived up to its advocates’ expectations (see Marine Fish Conservation Network, 2004, and U.S. General Accounting Office, 2004, for the fishing case; Solomon and Lee, 2000, on sulfur emissions; Lee, 2004, on mercury emissions from coal-fired power plants; McCay and Brandt, 2001, on surf clam and ocean quahog quotas). Tradable allowances and related approaches are sometimes presented as an alternative to centralized government regulation and management, but in fact they combine centralized regulation with a market-based procedure for allocating a property right that has been created by central government.
Dissatisfaction with national-level control has also led to interest in approaches that decentralize or devolve elements of institutional authority and responsibility from the federal government to state or local governments, as for example, the National Environmental Performance Standards arrangements between the U.S. Environmental Protection Agency and many states created during the Clinton Administration (Rabe, 2003), or to firms or other private-sector organizations, as in so-called voluntary alternatives to regulation (National Research Council, 2002b; see also Chapter 4). The theme of devolution is also evident in natural resource policy (Lowry, 2003), particularly in the American West, where much of the land is under federal ownership and control (David, 1997; Steel, 1997).
Shifts from top-down, direct regulation by the federal government to other forms and levels of governance have been accompanied by interest in deliberative, discursive, and participatory approaches (Dryzek, 1990; Press, 1994; Renn, Webler, and Wiedemann, 1995; National Research Council,
1996) and improved processes of public participation (Kelleher and Reccia, 1998; Beierle and Cayford, 2002), especially when health risks are involved (Chess, Hance, and Gibson, 2000). These approaches are discussed in Chapter 2 in relation to the need for a science-based approach to developing participatory decision processes. They also play an important role in efforts to make environmental science increasingly decision relevant (see Chapter 6). The effectiveness of participatory approaches to environmental governance, particularly in natural resource management and other policy arenas that require a long series of decisions over time, depends also on the creation of organizations and rules that can maintain the quality of decision processes over time and induce compliance with decisions. In this context, an important institutional innovation is collaborative planning (Brick, Snow, and Van de Wetering, 2001; Porter and Salvesen, 1995) involving public-private partnerships and multistakeholder groups (e.g., Leach, Pelkey, and Sabatier, 2002). This approach faces challenges of implementation, particularly in developing institutional frameworks for improved communication and cooperation between technical and scientific experts and lay members of the public (Fischer, 2000; Irwin, 1995) and in creating community-based programs of environmental protection, restoration, and management that act consistently with the responsibilities of higher levels of government (Brick et al., 2001; U.S. Environmental Protection Agency, 1997, 2002a).
Attention to ideas of ecosystem management has added further complexities to questions about environmental governance, including how to deal with mismatches between the jurisdiction and scope of government and the spatial and temporal scales and dynamics of ecological and human-ecological systems (Lee, 1993) and how to address the stubborn persistence of certain long-lived institutional arrangements (Wilkinson, 1992). Concepts such as adaptive management, though appealing in principle, have proved difficult to implement, largely due to institutional problems (Gunderson, 1995; Walters, 1997).
Environmental governance institutions must increasingly deal with new challenges. For example, those affected by environmental decisions, even at the local scale, may have very heterogeneous backgrounds, needs, and interests to be represented and considered. Nongovernmental organizations (NGOs), international lending institutions, and private foundations sometimes strongly influence or overshadow government agencies (World Resources Institute, 2003; Ribot, 2002). For example, structural readjustment policies of the International Monetary Fund have led governments to cut back on their services while transnational and national NGOs were trying to help local communities exercise governance over local resources such as forests, waterholes, and fisheries. Privatization of certain common resources, such as drinking water, has sometimes been promoted by international
agencies and by trade associations, while being contested by grassroots organizations and national and transnational NGOs.
The developments just discussed have led to increased attention to decentralization, pluralism, and innovation in crafting and adapting institutions for environmental and natural resource governance (Wilson, Nielsen, and Degnbol, 2003; National Research Council, 2002a; Schelhas, 2003; Haas, 2004a). They also raise questions about the appropriate roles of a variety of governmental, private-sector, and nongovernmental or civil society organizations in governance systems that involve all these types of participants. The critical research need is to develop the knowledge needed to inform decisions about how to choose effective institutional forms or develop new forms drawing on elements from existing approaches so as to create governance institutions that will work well for specific environmental governance problems.
AREAS OF RESEARCH
The recommended research would explore questions of environmental governance by linking traditional approaches to policy analysis and evaluation (discussed in more detail in Chapter 6 and Appendix D) with a research tradition that conceptualizes environmental governance more broadly in terms of institutional design. The institutional research tradition, which builds on theory in several social science fields, has broadened its scope over time to encompass a wide range of environmental and other resources. Research on institutions for managing common-pool resources (e.g., Ostrom, 1990; National Research Council, 2002a) has developed an intellectual framework that can help refine past debates about the relative merits of command-and-control, market-based, and voluntaristic policy strategies. Research can be focused on how particular institutional forms address the basic tasks of environmental governance in specific environmental and social contexts and to identify strategies, including combinations of institutional forms, that are likely to perform those tasks well in particular contexts. The research needs have been described in considerable detail elsewhere (National Research Council, 1999b, 2002a). Here we identify a few illustrative and promising areas of research.
Requirements of Governance
Recent reviews (National Research Council, 2002b; Dietz et al., 2003; Acheson, 2003) have identified key requirements for adaptive governance of complex systems of human-environment relationships. These requirements suggest questions for future research that can be pursued in studies of specific decisions at specific sites and in comparative research across set-
tings aimed at building knowledge about ways to meet the governance requirements in specific settings and at particular scales. These questions include:
What kinds of information are needed for effective governance and through which mechanisms or organizations can they most effectively be provided?
What are the key conflict issues and the effective ways to manage them?
What are the most promising strategies for inducing rule compliance?
What kinds of physical and informational infrastructure are needed for governance, and how might they best be provided?
What characteristics of governance institutions are most likely to enhance the capability to adapt effectively to change?
In what ways are the answers to the above questions contingent on aspects of the environmental, social, political, and economic context?
Property rules are key to participation in governance, to conflict management and rule compliance, and to resource distribution. They assign rights to outputs of common resources and other matters, including decision-making rights and responsibilities. Research has helped refine understanding of property institutions from the simple distinction between public and private property to recognition of a broader variety of property regimes, including “no property” (open access) and common or communal property (Feeny, Berkes, McCay, and Acheson, 1990). It has recognized the complexity and plurality of property regimes (Geisler and Daneker, 2000) and their embeddedness in particular political, historical, and cultural systems (Hann, 1998; McCay, 2002; McCay and Acheson, 1987). These refinements have begun to be applied to the analysis of land use, environmental, and natural resource management questions in the United States (Cole, 2002; Geisler and Daneker, 2000). This research has included comparative institutional analyses that compare community-based management regimes with market-based property regimes, such as tradable environmental allowances (McCay, 2000; Rose, 2002). These analyses address a variety of issues, including environmental outcomes, economic efficiency, and social equity. They also consider the effects of ecological, technological, institutional, and cultural context and show why institutions that function consistently across settings in theory may in fact function quite differently in different settings. For example, tradable permit systems that look the same from a theoretical standpoint have performed much better in managing air
pollution than in managing fisheries or fresh water supplies (Tietenberg, 2002). Future research on property institutions in their contexts can more fully illuminate choices of institutional forms to match their settings and identify opportunities for adaptation.
Legitimacy and Trust
Conflict management and rule compliance are affected by the heterogeneity of resource users, the kinds of communication and levels of trust among them, and the perceived legitimacy of governance institutions (Falk, Fehr, and Fischbacher, 2002; Kopelman, Weber, and Messick, 2002). Future research can usefully focus on how findings from experimental research on trust, reciprocity, and related aspects of decision processes relate to experiences in actual resource governance situations at different scales and on how various features of decision situations and institutions affect trust, communication, and legitimacy. Future research should also address how legitimacy and trust—and hence the effectiveness of commons institutions—are affected by the increased complexity and scale of environmental problems and interested publics.
Linkages Across Scales
The trend toward decentralization and devolution, increased interest in “co-management” institutions, and the need to govern transnational environmental resources all raise questions of how to integrate smaller-scale and place-based institutions with higher levels of governance (Hanna, Folke, and Maeler, 1996; McCay and Acheson, 1987; Ostrom, 1990; Wilson et al., 2003; World Resources Institute, 2003). Such cross-scale linkages are a critical focus for future research on institutional design. Vertical linkages between local-level institutions and subnational or national ones or between national and international ones, both governmental and nongovernmental, are often characterized by tensions and unintended consequences (Young, 2002). There are trade-offs between the potential benefits of higher level arrangements, such as efficiencies of scale, correspondence with large-scale ecological structures and functions, and avoidance of externalities problems, and the benefits of smaller scale institutions, such as more accurate monitoring of environmental variation and variability and the ability to use low-cost informal sanctions to induce compliance (Berkes, 2002; Wilson, 2002; Young, 2002). The increasing globalization and complexity of environmental problems and governance underline the importance of developing governance systems that cross scales, improve information flows, and allow for high levels of flexibility and adaptability (Cash and Moser,
2000; Haas, 2004a; Ostrom, 2001; Wilson, 2002). Developing and improving such systems is a very high priority for research.
Future research should address questions of scale linkage such as these:
To what extent can lessons learned at one level of governance transfer to other levels?
How can subnational institutions be effectively linked to management objectives established nationally or internationally (e.g., climate change)?
How do the proliferation of horizontal linkages such as indigenous people’s movements and the increased activity of nongovernmental organizations affect environmental governance?
What are the comparative advantages in complex governance systems of the various governmental and nongovernmental actors, including NGOs, multinational corporations and business associations, scientific networks, and international institutions that have developed some autonomy?
How can governance institutions be structured to provide for an effective division of labor among the above actors in meeting the requirements of environmental governance?
RATIONALE FOR THE SCIENCE PRIORITY
The rationale for devoting significant research efforts to understanding environmental governance in terms of institutional design has been laid out in several previous National Research Council reports, one of which placed the topic on a short list of grand challenges in environmental science (National Research Council, 1992, 1999b, 2001b) and in a recent priority-setting exercise at the National Science Foundation (Pfirman and the NSF Advisory Committee for Environmental Research and Education, 2003). Research on environmental governance continues to deserve high priority under the decision criteria imposed by this study.
Likelihood of Scientific Advances
Improvements over the past decade in the conceptual framework for understanding environmental governance and the development of growing data bases of comparable cases (see the common-pool resources database maintained at Indiana University, online at http://www.indiana.edu/~iascp/Iforms/searchcpr.html) have created a very favorable situation for scientific advance in the understanding of the functioning of systems for environmental governance. Conceptually guided case comparisons, experimental simulations, and modeling of governance systems together provide a very strong
base for developing generalizations about the effects of particular institutional forms and for showing how and where these generalizations are context dependent. It is becoming possible to move beyond normative modes of analysis toward far more pragmatic approaches (see Haas, 2004b) that are capable of yielding helpful results.
The products of the recommended research can be of considerable value to a variety of environmental policy actors by providing them with a useful and flexible conceptual framework and a growing body of knowledge, interpretable within that framework, with clear policy implications. Federal and state environmental protection and natural resource management agencies in the United States can use it to identify challenges and opportunities for improvement in the institutions they manage and to help make choices when institutional change is possible or is demanded. Participants in collaborative environmental governance institutions can use the research for similar purposes. International lending institutions can use it when they consider which institutional regimes are appropriate for what kinds of environmental problems, at what scales, and in which contexts. Participants in crafting international environmental agreements can use it to gain insight into ways to judge the adequacy of national-level policies for meeting international commitments. All these actors can use comparative institutional analyses to help identify the nature of both problems and assets of existing systems.
Research on governing the commons can sometimes be used in a program evaluation mode, for example when it focuses on the functioning of institutions under the purview of a specific governmental unit (e.g., a forest management plan under the U.S. Forest Service). Its primary value, however, is to provide insights about commons management in general (Ostrom, 1990; National Research Council, 2002b) or with specific resources in specific contexts (e.g., irrigation systems in South India—Wade, 1994; tradable emissions permits for air pollution—Tietenberg, 2002). Such generic knowledge must be interpreted for its implications for decisions at hand. Thus, the main function of this research for decision makers will be to enlighten their choices. It can help identify the approaches that are most promising for a given situation, the governance challenges that are likely to be most difficult, and ways those challenges have been met successfully in similar situations. This research field provides new frameworks for policy analysis that have helped identify key governance problems (for example, the tragedy of the commons) and expanded the set of possible solutions (e.g., refining conceptions of property rights; identifying the potential of hybrid institutional forms). Future research, more contextualized and with
greater attention to issues of scale and heterogeneity and the roles of nongovernmental institutions, will enhance and fill in the details of policy analysis based on those frameworks; it may also generate new frameworks or paradigms.
Likelihood of Use
Individual research projects are seldom translated directly into policy choices. However, an accumulation of findings, including challenges to existing assumptions and interpretations of fact, can make a difference in policy (Lindblom and Cohen, 1979). An accumulation of research findings on environmental governance has demonstrated the limitations of policies that indiscriminately promote particular property rules, such as nationalization or privatization: each property regime can lead to either success or failure, depending on how it meets governance requirements (e.g., Feeny et al., 1990, Dietz et al., 2003 and online supplement). Such results appear to have already had some influence on federal marine fisheries policy, in which market-based management regimes are increasingly modified to reflect concerns about both conservation and community (McCay, 2004), and with appropriate attention from decision makers they may become influential in other areas of environmental policy as well. The relevance is clearly there.
The use of research is often influenced by uncontrollable factors, such as its compatibility with the agendas of specific policy leaders and the occurrence of dramatic environmental events that lead to serious reassessments of policies and institutions. Research can nevertheless be organized in ways that increase the likelihood that its results will be used. One way is to encourage a body of research that covers a large enough scale and that continues over a long enough time to become integrated into cumulative changes in understanding and incremental changes in policy (Lindblom, 1959; Lindblom and Cohen, 1979). A recent example with considerable promise is the large comparative case study research project on forest dynamics and governance institutions carried out by the Center for Institutions, Population, and Environmental Conservation at Indiana University (Gibson et al., 2000). Research can also be brought to the attention of policy decision makers by encouraging networks that link the producers and consumers of the research, through formal organizations, such as the International Association for the Study of Common Property (www.iascp.org) and through the participation of researchers in scientific advisory panels and other units of governmental and nongovernmental institutions.