Environmental Engineering Reference
In-Depth Information
communal resources, for example costs incurred for fencing, measure-
ment, title insurance, record-keeping and so on are greater than those of
collective management. However, when various hidden costs of resource
management are incorporated into the analysis, a somewhat modii ed
picture appears. A common property regime would not have the need
for extensive records on boundaries and sales, but instead require meet-
ings and discussions where the co-owners decided their strategies for the
coming period (Bromley, 1991). This may constitute a signii cant portion
of costs of resource management. In many i eld settings, ei cient manage-
ment of common property resources is often challenged by various sources
of uncertainty that result in high levels of transactions costs. For individual
resource users, the transaction costs of resource management are related to
participation, opportunity cost of time involved in meetings, time required
to acquire information and to communicate and direct monetary expenses
for travel, communication and information. These costs are directly related
to the ef ectiveness and ei ciency of a collective action; and at the com-
munity level these costs may well be borne by poor community members
(Adhikari et al., 2004; Adhikari and Lovett, 2006a; Meshack et al., 2006).
It may therefore be that benei ts from collective action are exceeded by
transaction costs (Hanna, 1995). Thus, ignoring transaction costs in policy
design and evaluation leads to the risk of producing suboptimal policy rec-
ommendations. A starting point for analysing this lies in an examination
of what transactions occur, and what interactions are needed as the bare
minimum for ef ective policy operation (Falconer, 2000).
High transaction costs, whether perceived or actual, related to entry
into collective action may pose signii cant constraints on participation.
The private transaction costs incurred by individuals may be so high that
they might limit participation of poorer sections of society in some form
of collective action. The existence of transaction costs may also have
important distributional aspects. For example, sizeable i xed transaction
costs related to participation (that is, mandatory start-up costs to be con-
tributed by each participating community member at the initial stage of
collective action) may discourage poor community members entering into
community-based management regimes, as their income from the man-
agement of CPRs is relatively small. Room (1980) argues that economic
studies of participatory forest management have been biased towards
measuring benei ts as opposed to costs, especially the likely major transac-
tion costs of management for local forest users. In most of the community-
based resource management systems with an initially degraded resource
base, the costs associated with management are reported to be higher than
the expected benei ts. Nonetheless, in many economic models, physical
input and property rights are taken as variables and transaction costs of
