Environmental Engineering Reference
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aspects of the highly valued prospect or outcome by the decision maker. In the second
stage of evaluation, when the household decides on its type of investments, it may
take more risks if the risky project has a high enough decision weight in comparison
to the less risky alternative. Decision weighting is related to the probability of an
uncertain project bearing fruition, but it also includes the subjective desirability of
the outcome, a property that alters less readily in the mind than the more objective
probability of success. The point being that taking on more risks is understandable
if there is a substantial chance that such investments will lead to the recuperation
of particular erstwhile losses. Consequently, a strong desire to retrieve a valued past
state as a primary response to trauma and loss may occasionally lead to increased
risk taking after experiences of violence. Clearly, there will be some heterogeneity
in individual responses to violence; not all traumatised individuals will become risk
takers. Subjective perceptions regarding violence are endogenous to the lingering effect
of actual past experiences. In decision-making involving the future, these perceptions
may impact more on current individual preferences and choice. Individual households
may not just be passively coping with the events around them, but can actively react
to these events in order to re-shape their future.
The points enumerated thus far in this section pertain to individuals and house-
holds. For the study of local conflict, however, the knowledge of local conditions
also matters, and these will differ from national level averages and institutions. Local
institutions that are of importance are not the national quality of governance and demo-
cratic functioning, but instead local politics and social capital, especially the extent
of bridging social capital (if any) between antagonists. Furthermore, local economic
conditions are crucial to the conflict, and these include group inequalities, poverty
profiles, and the abundance or scarcity of agricultural inputs (resources). Above all,
what is salient to a local conflict is whether different ethnicities compete over the
same resource, or whether they participate in complementary economic activities. For
example, conflict risk is much greater when different ethnicities are engaged in the
same activity, say agriculture, than when one group are principally farmers and the
other retail traders.
Another point of interest in the analysis of local conflict is decentralised gov-
ernance, particularly fiscal federalism (Murshed 2010). Fiscal federalism devolves
government expenditure decisions and/or revenue raising powers to sub-national enti-
ties. The revenue aspect may be important, particularly for regions with natural
resources as is the case in Indonesia or Nigeria, because it appeases local discon-
tent about regionally generated revenues being siphoned off to central government.
Other regional governments may be better able to raise local revenues or even conduct
their own borrowing. Decentralisation may also increase the utility of regions able to
make their own decisions about local public expenditure. It is therefore important to
distinguish between the revenue and expenditure side of fiscal decentralisation and its
relation to conflict.
On the expenditure side, a citizen is normally indifferent to which layer of govern-
ment provides public goods, as long as provision is adequate. Citizens may care about
the type of provision in some instances, say about what languages are taught in school,
which might vary over different education authorities. Thus, expenditure priorities are
subject to political processes. Consequently, it may matter which executive authority
(regional or national) or what legislature (regional or national) legislates on spending
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