Introduction to the Theory of HES
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Introduction to the Theory of HES Social Dilemmas and Collective Action in Human-Environment Systems Part II - November 10, 2008 Stefanie Engel PowerPoint PPT Presentation

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Introduction to the Theory of HES Social Dilemmas and Collective Action in Human-Environment Systems Part II - November 10, 2008 Stefanie Engel. Outline. Concepts (Social dilemmas, Public Goods, ‚Tragedy of the Commons‘) Ex. 1: Community-based natural resource management (CBNRM)

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Introduction to the Theory of HES Social Dilemmas and Collective Action in Human-Environment Systems Part II - November 10, 2008 Stefanie Engel

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Introduction to the Theory of HESSocial Dilemmas and Collective Action in Human-Environment Systems Part II - November 10, 2008Stefanie Engel


  • Concepts (Social dilemmas, Public Goods, ‚Tragedy of the Commons‘)

  • Ex. 1: Community-based natural resource management (CBNRM)

  • Collective Action & CBNRM (Theories, Success factors)

  • Experimental evidence (incl. Class Experiment)

  • Ex. 2: Collective Action & International commons

Readings for today‘s class

Already listed last class:

  • Ostrom, E., et al. (1999), Revisiting the Commons: Local Lessons, Global Challenges. Science 284:278-282.

  • Agrawal, A. (2001), Common Property Institutions and Sustainable Governance of Resources. World Development 29(10):1649-1672.

    Additional (International Commons):

  • Perman, R., Y. Ma, J. McGilvray and M. Common (2003), Natural Resource and Environmental Economics, Longman, 3rd ed., Essex.Chapter 10. (pp. 297-321 used in class; entire chapter of interest)

    Complementary (also used for class preparation):

  • Barrett, S. (2003), Environment & Statecraft. The Strategy of Environmental Treaty-Making. Chapters 3 and 8.


  • Concepts (Social dilemmas, Public Goods, ‚Tragedy of the Commons‘)

  • Ex. 1: Community-based natural resource management (CBNRM)

  • Collective Action & CBNRM (Theories, Success factors)

  • Experimental evidence

  • Ex. 2: Collective Action & International commons

Insights from various game structures

  • Game structure & outcomes depends on payoffs

  • Payoffs depend on various factors which may differ across communities and contexts, e.g.,

    • Type of resource

    • Distribution of benefits and costs from resource extraction

    • Exit possibilities (alternatives)

    • Subsistence constraints (e.g. ability to contribute)

    • etc.

  • Differences in such factors may explain differences in outcomes

  • Also: Relevance of communication, trust, norms, leadership

Summary of factors enabling success of CBNRM (Agrawal, 2001/2007)

(Based on review of theoretical and empirical studies)

1. Resource characteristics

Success more likely if

  • Small size of resource

  • Well-defined boundaries

  • Low levels of mobility

  • Storable benefits

  • Predictability in benefits flow

  • Easier to exclude outsiders and monitor use

    (lower cost of cooperation)

 Information more reliable and less costly

Summary of factors affecting success of CBNRM (Agrawal, 2001)

2. User group characteristics

  • Small size (debated, see earlier slide)

  • Clearly defined boundaries

  • Shared norms

  • Past successful experiences – ‚social capital‘

  • Appropriate leadership (young, familiar with environmental issues, connected to local traditional elite)

  • Interdependence among group members

  • Heterogeneity of endowments (debated)

  • Homogeneity of identities and interests (debated)

  • Low levels of poverty (debated)

Summary of factors affecting success of CBNRM (cont.)

1.&2. Relationship between resource & group characteristics

  • Overlap between user group residential location and resource location

  • High levels of dependence by group members on resource system

  • Fairness in allocation of benefits from common resource

  • Low levels of user demand

  • Gradual change in levels of demand (i.e., not too rapid)

Summary of factors affecting success of CBNRM (cont.)

3.Institutional Arrangements

  • Simple and easy-to-understand rules

  • Locally devised access and management rules

  • Ease in enforcement of rules

  • Graduated sanctions

  • Availability of low-cost adjudication (conflict resolution)

  • Accountability of monitors and other officials to users

    Note: Some of these are themselves outcomes of a collective action problem!

Summary of factors affecting success of CBNRM (cont.)

4.External Environment

  • Low-cost exclusion technology

  • Low levels of articulation with external markets

  • Gradual (not too rapid) change in articulation with external markets

  • Supportive State:

    • Central government not undermining local authority

    • Supportive external sanctioning institutions (‚Legal Backing‘)

  • External aid to compensate for conservation activities

Summary of factors affecting success of CBNRM (cont.)


  • Factors often causally linked to each other

    • E.g., small group size and low integration with markets leads to more interdependence between users

    • Market integration may affect resource dependence

  • Empirical evidence on significance of individual factors and direction of debated effects growing, but mixed (see Tutorial)


  • Concepts (Social dilemmas, Public Goods, ‚Tragedy of the Commons‘)

  • Ex. 1: Community-based natural resource management (CBNRM)

  • Collective Action & CBNRM (Theories, Success factors)

  • Experimental evidence

  • Ex. 2: Collective Action & International commons

Experimental Evidence

  • Economic experiments similar to the one in class

    • Confirm general result of collectively inefficient outcomes in situations without communication, but some cooperation even in Prisoner Dilemma games (e.g. Cardenas/Ostrom 2001; Fischbacher et al.)

    • Importance of communication (‚cheap talk‘), even in Prisoner Dilemma games

    • Significant % of individuals exhibit selfish behavior, but approx. 40-50% also exhibit social preferences, mostly conditional cooperation (cooperate if others cooperate, defect if others defect, regardless of material payoffs)

  • Conditional cooperator preferences can turn prisoners‘ dilemma in material payoffs into an assurance game in utility terms (explains cooperation in PDs and importance of ‚cheap talk‘)

Results from Class Experiment

  • Round 1:

  • Some free riding, but also some cooperation

  • Could be due to conditional cooperators who thought others cooperate as well

  • Reinforced by knowing each other well

  • Round 2:

  • Strong impact of cheap talk

  • Could be partially due to conditional cooperators adjusting expectations, but also to repeated interaction in other realms

Collective action with Conditional Cooperators (CCs)

  • With multiple players: Importance of beliefs on others‘ types

  • Interaction of selfish individuals and CCs results in some degree of cooperation, but which erodes over time

  • Implication: Once public perception is that cheating/corruption is common, becomes difficult to re-establish cooperation

  • With possibility of costly punishment (e.g., ostracism): CCs punish selfish free riders even at a cost to themselves  can sustain high levels of cooperation over time (Fischbacher/Gächter/Fehr 2001)

  • Material incentives may crowd out intrinsic motives for cooperation

  • Rustagi/Engel/Kosfeld (forthcoming): % of CCs significant factor in explaining success in participatory forest management in Ethiopia


  • Concepts (Social dilemmas, Public Goods, ‚Tragedy of the Commons‘)

  • Ex. 1: Community-based natural resource management (CBNRM)

  • Collective Action & CBNRM (Theories, Success factors)

  • Experimental evidence

  • Ex. 2: Collective Action & International commons

Ex. 2: International/Global Commons

  • Environmental impacts often spill over national boundaries

  • State sovereignty, no international organization with the power to induce or enforce collectively optimal outcome

  • Examples: Climate change, biodiversity conservation, international fisheries, acid rain pollution, stratospheric ozone depletion, infectious diseases

  • Forms of cooperation:

    • International environmental treaties, often by means of intergovernmental conference; proactive role of UN

    • Bilateral or regional agreements (often more informal)

Special Challenges of Global Commons(Ostrom et al., 1999)

  • Scaling-up problem:Billions of people affected; difficulty of organizing, agreeing to rules and enforcing them; national organizations may help but also hinder

  • Cultural diversity challenge

  • Complexity:e.g., complex links between biodiversity and climate change; impacts of our actions complex and not immediately visible to all (temporal and spatial lags)

  • Accelerating rates of change: population growth, economic development, technological change may push us past environmental threshholds before we know it; past lessons less applicable to current problems

  • Requirement of unanimous agreement as collective-choice rule

  • Only one globe: no possibility to migrate and do better

  • Also (not mentioned in Ostrom et al.): No supranational hierarchy that could back up rules or compensate for costs of cooperation

Self-enforcing agreements

  • Treaties may change payoff structure to make cooperation an equilibrium, e.g. Through built-in penalty clauses for defection (e.g. other signatories reducing abatement) or side-payments

  • But: Countries cannot be forced to keep promises or pay fines since there is no ‚supranational enforcer‘

  • Need for Self-enforcing International Environmental Agreements (IEAs)

Decisions involved in arriving at IEA

  • Participate or not participate

  • Terms of agreement (abatement level, penalties/rewards)

Def.: Self-enforcing IEA

  • Creates incentives on all parties – cooperators and noncooperators – to adhere to the agreement once it has come into effect, i.e., for each country

    • There is no incentive to renegotiate agreement

    • Payoffs must be such that cheating is deterred

    • Penalties to countries other than i should not be a disincentive to country i

    • Penalties to country i should not encourage country i to renegotiate

Key results on Self-enforcing IEAs

  • Non-signatories and signatories would both do better if all cooperate (cf. Prisoner Dilemma).

  • Non-signatories do better than signatories (cf. Chicken Game).

  • Full cooperation is not usually a stable equilibrium.

    • Intuition: Threat to cooperate only if 100% participation is achieved is usually not credible

    • Tradeoff between high participation and real cuts in abatement to get additional participants on board

Key results on Self-enforcing IEAs (cont.)

  • An IEA may enjoy high degree of cooperation, but only if difference between global net benefits under full cooperation and full non-cooperation is small ( little to be gained from cooperation).

    • Intuition: Threat to suspend cooperation becomes credible when gains are small.

  • When this difference is large (much to be gained), number of signatories in equilibrium is small.

    • Intuition: Threat to suspend cooperation when others do less credible when gains from cooperation are large.

  • When number of countries (N) is large, treaties can achieve very little, no matter how many signatories there are.

Implication of Key Results on Self-Enforcing IEAs

  • Pessimistic view of cooperation on international commons

  • „Treaties tend to codify actions that nations were already doing“

  • But: Based on strong assumptions (identical countries, restrictive functional forms, ...)

  • Other factors enhancing cooperation in IEAs (similar to discussion on local commons), for example

    • Repeated games (but key results still hold as N becomes large

    • Link to other areas of interaction (trade, health, antiterrorism, etc.)

    • Transfers/Side payments (but issue of self-enforcement or credible commitment again)...

Conditions conducive to effective cooperation between nations in dealing with international environmental problemsadapted fromPerman (2003)

Characteristics of group of affected countries

  • Small number of affected countries

  • Continuous relationship between countries

  • Relatively high cultural similarity among countries

  • Adoption of leadership role by one ‚important‘ nation

  • Substantial concentration of interests (e.g., few major polluters)

Conditions conducive to effective cooperation… (cont.)

Problem characteristics

  • Private benefits, not just public good benefits from an agreement

  • Large proportion of nation-specific/localized benefits relative to transnational benefits

  • Low short-run costs of implementation

  • High proportion of benefits obtained in the shorter run

  • Small degree of uncertainty about costs & benefits associated with resolving problem ( Role for science)

  • Existence of linked benefits

Conditions conducive to effective cooperation… (cont.)

Institutional Arrangements

  • Existence of an international political institution with the authority and power to construct, administer and enforce a collective agreement

  • Costs of bargaining small relative to gains expected from cooperation

  • Self-enforcing agreement


  • Stratospheric ozone depletion

  • Acid rain pollution

  • Climate change  Tutorial

 Next

Ex. A: Stratospheric Ozone Depletion

  • Dominant anthropogenic cause: emissions of chlorofluorocarbon (CFC) gases (and other ozone-depleting substances) into atmosphere

  • Emission sources: production, use and disposal of aerosol propellants, cushioning foams, cleaning materials and refrigerative materials

  • Consequences: increased incidence of skin cancer; plus potential impacts on human immune systems, radiation blindness, genetic damage to plants and animals, incl. marine plankton, faster degradation of polymer plastic materials, (CFCs also greenhouse gases)

International Cooperation on Stratospheric Ozone Depletion

  • Vienna Convention 1985

    • Agreements on cooperation in research, monitoring & information exchange; ratified by 27 countries by 1989

  • Montreal Protocol 1987

    • 24 signatories (mainly industrialized) agreeing to phase reductions in domestic consumption and production of 8 ozone-depleting substances, incl. ceasing production of CFCs by 1996

    • When entering into force in 1989: 30 signatories accounting for 83% of global consumption of ozone-depleting substances

    • 149 countries ratified by 1995, nearly all countries worldwide participating by now

International Cooperation on Stratospheric Ozone Depletion

  • London Amendments 1992

    • Accelerated and tightened reduction schedules from Montreal Protocol

    • Increase in number of controlled substances from 8 to 20

    • Financial support for cooperating poorer countries to cover incremental costs of compliance

    • Important developing countries like China and India acceding agreement

  • Copenhagen Amendmends 1994

    • Further speeding up phase out to 1996; controlled substances increased to 94

International Cooperation on Stratospheric Ozone Depletion

  • Beijing Amendment 1999

    • Increase in controlled substances to 95

    • Negotiations emphasizing effective implementation (increasing participation, limiting growth in emissions of developing countries, promote compliance, control black market trade in CFCs)

The Ozone case as a success story

  • Rapid decline in global CFC emissions; abundance of ozone-depleting compounds in atmosphere peaked in 1994 and now declining.

  • Lagged effects: Stratospheric ozone depletion increased through 2000, expected to return to natural state by 2050.

  • Widely regarded as the outstanding success of international environmental diplomacy

Success Factors

  • High concentration of interests among adversely affected parties

    • 3 countries (Soviet Union, USA, Japan) accounting for 46% of global CFC emissions in 1986  lower concern on free-riding of others

  • One influential nation (US) with high benefits from cooperation willing to adopt leadership role

    • 1988 US EPA study estimating very high values of health benefits (trillions of US$) from cooperation (particularly cancer deaths avoided) for the US; compared to costs that were several orders of magnitudes lower

    • Estimated benefit-cost ration of 6:1 even for unilaterally implementing Montreal measures; approx. twice as high for Protocol solution

Success Factors (cont.)

  • Barrett (2003) Substantial abatement by industrialized countries was unilaterally rational (i.e., would have occurred anyhow) due to high short-to-medium term benefits and low costs

    • Accession was dominant strategy for many industrialized countries

    • In fact several countries (Belgium, Canada, Norway, Sweden, US) had already unilaterally reduced CFC use significantly in the late 1970s; EC consumption of CFCs had already fallen 28% by 1980 when 30% reduction below 1976 level was decided

    • Confirms the idea that „Treaties tend to codify actions that nations were already doing“

Success Factors (cont.)

  • Accumulation of scientific evidence (discovery of ozone hole; research by US EPA in 1987/1989; ozone depletion & impacts thereof repeatedly exceeding predictions)

  • EC presidency changing in 1987 (before negotiation of Montreal protocol) from UK (opponent of strong controls) to Belgium (proponent); other committee members also proponents (Germany, Denmark)

  • Same companies producing CFCs likely to produce substitutes; Du Pont taking proactive role (announcing to cease production of CFCs & highlighting risk of leakage in absence of international cooperation)

  • Dramatic advances in development of CFC substitutes lowering costs of cooperation before London negotiations

Ex. B: Acid Rain Pollution

  • Emissions of nitrogen oxides and sulphur oxides moving across borders, then chemically converted into acid form.

  • Impacts regional, not global (up to 1000 miles)

  • Emission sources: Fossil-fuel-burning power generation, ore smelters, industrial boilers, to a lesser degree vehicle exhaust emissions

  • Consequences: Increased acidity of lakes and soils, forest destruction, human health effects, building & infrastructure erosion, loss of visibility; sulphor dioxides as urban air pollutant also causing respiratory illnesses and aggravating pulmonary and cardiovascular diseases

  • Pollution control techniques: change in fuel mix, more efficient combustion techniques, sulphur scrubbing equipment, etc.

Cooperation on Acid Rain Pollution in Europe

  • Long Range Transboundary Air Pollution Convention 1979 (ratified 1983)

  • Geneva Protocol 1984 (30 ratifiers by 1995)

  • Helsinki Protocol 1985

    • Binding 21 European states to a 30% reduction in sulphur dioxide emissions by 1993 as compared to 1980 base levels; 13 non-signatory countries (incl. UK)

  • 20 % reduction in SO2 emissions between 1980 and 1989; less progress on nitrogen emissions

  • Sofia Protocol 1988, Large Combustion Plant Directive 1988, Oslo Protocol 1994, Geneva Protocol 1995

Factors promoting success on sulphur emissions

  • Regional problem affecting relatively few countries

  • High degree of cultural similarity

  • Linkages on other issues (membership in EU eventually requiring UK to cooperate)

  • Strong local incentives to act (local pollution impacts; UK with low local impacts did not sign Helsinki protocol)

  • Technical change (reducing abatement costs)

  • High and well-understood pollution damages

  • Existence of international political institution (EC, EU)

  • Reasonably high degree of similarity in burdens imposed by agreements

Factors hindering success on nitrogen

  • Lower degree of local pollution impacts

  • Larger number and more mobile emission sources (e.g. cars), making it harder to implement abatement.

Comparison of outcome to non-cooperative solution

  • Sandler (1997)/Barrett (2003): Reductions in SO2 emissions would be similar in absence of IEA due to high local impacts

  • Again confirms idea that „Treaties tend to codify actions that nations were already doing“

  • Halkos & Hutton (1993): Cross-country differences in abatement, gains from agreement and costs of cooperation

  • Levy (1995): Helsinki protocol‘s effect not so much in binding states to measures they otherwise would not undertake, but in helping shift states‘ perceptions of their self-interest.

Final Comments

  • Many environmental problems have characteristics of social dilemmas

  • Yet, often state regulation/policies can help to resolve the problem

  • Examples discussed here (local commons in developing countries, international commons) have in common that there is a lack of a higher authority (supranational government, effective national government) that could successfully implement such regulation

  • Though in some sense, the establishment of such a higher authority is a collective action problem in itself (everyone contributing taxes to finance government…)

Examples to be presented in the Tutorial

Group 1: Community forest management in India and Nepal

Group 2: International cooperation on climate change

Tutorial instructions

  • Describe the problem addressed in the readings. In what sense is it a social dilemma situation? Is it a matter of public good(s) or common-pool resource(s)? Do the results reflect a Tragedy of the Commons?

  • Which factors appear to explain the outcome (success, failure, or inbetween) of collective action in this case? Link your answer to the material presented in class. Are there any important aspects missing from the analysis in the studies analyzed?

  • Establish the link between the cases you analyzed and the HES framework.

Literature for Tutorial

Group 1: Community forest management in India & Nepal

Varughese, G., Ostrom, E. The Contested Role of Heterogeneity in Collective Action: Some Evidence from Community Forestry in Nepal. World Development. Vol. 29 (5). p 747-65. May 2001.

Agrawal, A.; Chhatre, A. Explaining Success on the Commons: Community Forest Governance in the Indian Himalaya. World Development. Vol. 34 (1). p 149-66. January 2006.

Naidu, S. C. , Heterogeneity and Collective Management: Evidence from Common Forests in Himachal Pradesh, India. In Press. World Development (2008), doi:10.1016/j.worlddev.2008.07.001

Literature for Tutorial (cont.)

Group 2: International cooperation on climate change

Perman, R., Y. Ma, J. McGilvray and M. Common, Natural Resource and Environmental Economics, Longman, 3rd ed., Essex 2003. Chapter 10, Section 10.7, pp. 321-339.

Esty, D.C., 2008. Rethinking Global Environmental Governance to Deal with Climate Change: The Multiple Logics of Global Collective Action. American Economic Review: Papers & Proceedings 2008, 98:2, pp. 116–121.

Stern, N., et al. 2006. STERN REVIEW: The Economics of Climate Change. Executive Summary.

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