Environmental Engineering Reference
In-Depth Information
pump installation, construction of waterways and electricity connec-
tion. The major operating expenses were the costs of electricity used in
pumping, the cost of pump repair and maintenance and costs associated
with periodic removal of silt from the well. The community also invests
substantial amounts of money periodically for the expansion of the wells.
He observed that costs of negotiating are likely to be higher in the case of
expansion activities, particularly in groups where heterogeneity among
members in terms of their endowments and needs is high. Because of the
higher stakes involved in the case of expansion activities, a higher peer
pressure is required to enforce collective arrangements (Aggarwal, 2000).
Moreover, he also observed that instead of community-owned wells, most
of the villagers prefer to have their own private well. Their reluctance for
joint investment can be understood in terms of the high transaction costs
of negotiating and enforcing a complete contract that outlines the obliga-
tions of each member under the dif erent possible contingencies that can
arise (Aggarwal, 2000).
Richards et al. (1999) undertook a participatory economic analysis of
community forestry in Nepal in an attempt to improve donor and project
understanding of the economic incentives faced by dif erent stakeholders,
and in particular local forest users. The case study particularly seeks to
contribute to ef orts to improve equity in the forest user groups and to
understand the role of recurrent annual transaction costs faced by com-
munity members. Transaction costs were simply measured in terms of the
opportunity costs of time spent in obligatory forest activities (planting,
protection, weeding and so on) and in various community meetings. They
found that transaction costs of resource management as a percentage of
total costs were signii cantly higher for the less forest-dependent commu-
nities than for more dependent forest user groups. The study concluded
that it is very important to include transaction costs in economic studies of
community-based resource management (Richards et al., 1999).
Empirical estimation of transaction costs is also documented in Kuperan
et al. (1998), who attempted to analyse a i sheries co-management system
in San Salvador Island in the Philippines. The transaction costs of i sheries
management were categorized into three major cost items: (1) informa-
tion costs, (2) collective i sheries decision-making costs and (3) collective
operational costs. They found that the dif erence in the total costs of
i sheries management between centralized government management and
co- management is signii cant; there is signii cant dif erence in the costs at
the dif erent stages of management. For the i rst two stages, which are the
stages of initiating a new management regime and community education,
the costs are higher for the co-management approach compared with the
centralized approach. Nonetheless, transaction costs are lower in the latter
