New Institutionalism

Proponents of new institutionalism have analyzed the factors that lead to successful collective action for the management of natural resources (Poteete and Ostrom 2004). New

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institutionalism recognizes that the operation of institutions is constrained by other institutions (institutional environment), but that a mutual monitoring of institutions can motivate community members to participate in collective action to manage their resources. Local resource user groups are capable of managing such resources through collective action (Bromley et al. 1992; McCay and Acheson 1990; Ostrom 1990). The theory maintains that community members will be willing to participate in collective action to manage their resources if they are assured that the benefit of institutional arrangements will be limited to small and stable communities (Berkes 1993; Ostrom 1990).

A seminal paper by Olson (1965) posited that smaller groups are more successful in organizing collective action than larger groups because smaller groups are better able to overcome the common problems of collective action, namely free riding, and the high cost of monitoring and enforcement of regulations. Olson observed that individuals, acting in their self- interest, are unlikely to act in ways that would facilitate the provision of collective goods for a group, even if all group members share the same interests. According to Olson, "unless the number of individuals in a group is quite small, or unless there is coercion or some other special devices to make individuals act in their common interest, rational self-interested individuals will not act to achieve their common or group interests" (Olson 1965: 2). However, other studies (e.g. Agarwal and Yadama 1997) have shown that smaller groups may find it too arduous to create viable institutions that will persist long enough to encourage collective actions.

Assuming well defined and enforced property rights and homogenous groups, Buchanan and Tullock (1962) observed that as group size increases, the costs of decision-making

externalities fall but the costs of coordination rise (Tullock 1962: 63-64). As a result, medium- sized groups are more likely to organize themselves for collective action. But group

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heterogeneity in terms of resource endowment, ethnic composition, goals and objectives, cultural values, also plays a vital role in effectiveness of organizing collective action in a given group (Poteete and Ostrom 2004). The more heterogeneous a group is, the lower its prospects for collective action (Ibid). The lack of well defined and enforceable property rights are always a problem in communities that can lead to the failure of collective action.

Ostrom (1990) maintains that the best approach to resolving the problem of the commons and achieve sustainable resource management is by designing cooperative institutions that are organized and governed by resource users themselves. Scholars who have studied common pool property management have maintained that the use of customary laws is a crucial strategy to deal effectively with possible “tragedies of the commons.” Statutory institutions should not

underestimate the creativity, power, and initiative of community members involved in

management of their resources (Bromley 1992). Thus, it is very important to involve the local users and customary institutions to promote successful and sustainable natural resource

management (Blomquist 1990; McKean 1992; Pinkerton 1989; Singleton and Taylor 1992; Tang 1992).

The argument here is that both customary and statutory institutions are needed for sustainable management of rural resources. Neither should preempt the other (Lambach 2004). Migdal (2001) pointed out that “states may help mould, but they are continually moulded by the societies with which they are embedded.” This means that statutory institutions and customary institutions need each other because both institutions influence and shape each other (Lambach 2004). Statutory institutions will be more efficient if they are congruent with customary institutions.

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Lambach (2004) and Migdal (2001) views are consistent with Rodrick (2000:3), who criticized statutory institutions. Rodrick argued that institutions “must not over-emphasize best practice ‘blueprints’ at the expense of local experimentations” (Rodrick 2000:3). He believed that neither statutory nor customary institution can work effectively on their own, but need each other because they all interact and may complement or substitute each other. Similar view are explained by North and Thomas (1973), and North and Weingast (1989), who observed that stable and secure property rights were crucial ingredients for sustainable development because rural communities won’t have the incentive to invest in the management of water and other resources unless they have adequate control of the resources. Statutory institutions may not work effectively in rural areas unless they offer control rights to rural communities. For example, the state may protect community water resources from outsiders, while customary institutions can be effective in controlling free-riders and the undesirable behavior of individuals in the community. If statutory institutions ignore or undermine customary institutions, conflicts and failure in water management are likely to occur (Grafton 2000).

Figure 3.1 presents a conceptual framework for this study. It shows that sustainable water resources management practices need to deal with water management in a holistic fashion, taking into account various factors that affect water use in rural areas. Sustainable water resource

management is defined as the design and management of water resource systems that consider the needs of present and future water users without system degradation (Richter et al. 2003). The conceptual framework in figure 3.1 shows that sustainable water management in rural areas is the outcome of the interaction between the multiple legal framework that govern water management and community characteristics.

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Customary institutions emerge from the interaction between community characteristics and statutory institutions (such as local government officials, state legislators, and village leaders), who make decisions about water management laws and property rights. This indicates that customary institutions are not static, but they emerge and evolve depending on changes that occur in the community. For example, changes in people’s behavior may require customary institutions to enact new laws or modify existing laws in order to reinforce desired individual behavior. Institutional arrangements affect individual’s behavior and their interaction with water resources through the laws and sanctions imposed to those who fail to comply with the laws. On one hand, statutory institutions may enact laws on land use, property rights, and water

management. On the other hand, land use, property rights, and water management in a particular community may be governed by customary institutions. This include social norms and societal expectations that influence individuals’ behavior and their participation in the management of water resources

Moreover, community characteristics affect individuals’ behavior and interaction with water resources. For example, competition for water resources may be higher in communities with shortage of water than in communities with plenty of water. Also community members may choose to participate in the collective action for management of their water resources according to their resources, needs and values, and their perception of whether statutory or customary institutions will grant them security of tenure and benefit of their actions. Community

participation in the management of water resources may lead to sustainable water management, improvement of water access to safe water and equitable water allocation.

Thus, sustainable water management in rural areas must involve a trade off between a multidisciplinary and multi-decision making process that involves all stakeholders and all

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institutions in the decision making process. “I believe no single discipline, and certainly no single profession or interest group that has wisdom to make these tradeoffs themselves” (Loucks 2000: 3).

Figure 3. 1: A Conceptual Framework for Analyzing the Impact of Institutions for Water Management

Rural communities

Community characteristics: Social, environment, and economic characteristics Statutory institutions

Individual’s behavior and pattern of interaction to water resources

Sustainable water management outcomes • Collective action for water management • Water quality and quantity

• Equitable water allocation Customary institutions

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CHAPTER FOUR