Environmental Engineering Reference
In-Depth Information
Player 2
I
~I
10
-2
I
*
10
9
Player 1
9
0
~I
*
-2
0
Figure 10.10
Adaptation of an assurance structure game for erosion
restoration/prevention investments in common pool scenarios
members of the community are represented as player 1 and player 2 respec-
tively, each having two possible strategies: to invest (I) or not to invest (~I)
in restoration/prevention practices. If both players invest in the improve-
ment of the CPR, there will be a joint benei t of 20. However, when maxi-
mizing individual payof s, the resulting equilibrium is no one contributing
to the investment (~I, ~I), thereby deriving a joint benei t of zero.
Consider now that the technology is such that it is convenient to con-
tribute only if the other player is to contribute. As seen in the past section,
these situations can be modelled by an assurance structure game for which
there are two possible equilibria. That is, when a player takes the initiative
to invest (I), the best the other player can do is go and help him or her (I),
since by doing so her or his payof s will increase. However, if nobody takes
the initiative, there will be no investment (~I). The result, thus, is either
investment by both parties (I,I) or non-investment by both parties (~I,~I)
as illustrated in Figure 10.10.
As seen in the previous section, there are institutional alternatives by
which resource users can organize and arrange for the collective gain
to be achieved, transaction costs permitting. The question that remains
is the ef ectiveness of village governance. If communal institutions are
weak, should there be a role for third parties, such as the government or
NGOs entering into co-management arrangements for the fostering of
such agreements? Among the ways in which the fostering of agreements
could be ef ected are providing the initial money for realizing investments,
improving information to stakeholders on the benei ts that can be derived
from agreements and/or reducing the transaction costs of enforcing
agreements.
