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

1. 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

2. 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)

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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”

10. Problems • Low political commitment of officials to social forestry • When community leaders not legitimate representatives • 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.”

11. 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

12. 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

13. Effect • Shifted power between and among ejidos • Members and brokers and individuals accumulated timber stock and capital

14. 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

15. Social capital framework Fields of play: institutional and cultural contexts of social interactions: • Field of lending • Field of technical management • Overlap • Informal lending custom eroded enterprise • Informal lending had tacit legitimacy; history traced to 60s • Institutional design insufficient to stop

16. 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.

17. 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?

18. Power groups • Center • Groups • Organized • Unorganized but responsive

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

20. 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

21. Center objectives Centers choose xo to maximize: uok(xo;Z) +  (si(xi;Z)) where: uok: authorities’ utility xo: decisions or policy instruments si: “strength function” of interest group i xi: actions by groups or individuals to deliver the reward/penalty Z: set of exogenous shift parameters for costs/benefits of delivering rewards or penalties

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

23. External actors • Examples: • Broader citizenship • Centers’ objectives may account for “reaction function” of external actors: r(x0)

24. 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.

25. Actions to exert influence: xi • Nonoberservable

26. 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)

27. The b’s • Function of cost of generating power through penalties or rewards

28. 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

29. 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

30. 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

31. 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

32. 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?