Polycentric Institutions: Blending Local and Global Knowledge

1. Polycentric Institutions: Blending Local and Global Knowledge Elinor Ostrom Indiana University

2. The Past Half Century - Many Efforts to Jump Start Development Processes Many Panacea�s Recommended Centralize to insure building one nation Invest in physical infrastructure Create Integrated Rural Developments Sell off State Owned Enterprises Decentralize to reduce public sector

3. After Large Sums of Development Assistance Many authoritarian regimes Multiple civil wars or armed rebellions Reduction of food sufficiency in some countries Poverty has remained constant or worsened in many countries Some notable successes, but not the average

4. Policies Based on Recommendations by Social Scientists Need serious re-thinking of our foundations Tend to think too often in dichotomies market versus state centralization versus decentralization Recent theoretical and empirical research forms a foundation for better policy advice

5. The Importance of the Global Development Network An ongoing forum for discussion about important institutional issues Given scholars from multiple countries and disciplines, one can: Analyze more complex problems Develop ways of blending local and global knowledge Help to design more effective policies

6. Let�s Focus on Natural Resources Policies to nationalize all forests in developing countries during 1960�s to 1990�s Led to counter-productive outcomes National governments unable to exercise their ownership rights Recent policies to �hand-over� irrigation systems and forests Lack a firm theoretical or empirical foundation Led to further resource deterioration

7. Why? Tragedy of the Commons Theory dominated early policy analysis Led to failed centralization policies Evidence that users could self-organize (with firm ownership, autonomy, and sufficient time) misunderstood A large gap between policy and recent empirical research on common-pool resources

8. Experiments in the Lab and in the Field Provide Strong Evidence Without communication, �tragedy of commons theory� is supported With communication (and with other institutional mechanisms) the theory is not supported much higher levels of cooperation than predicted a demonstrated capacity to self-organize without external enforcers

9. Field Experiments in Colombia Conducted by Cardenas � prize winning paper at last year�s conference Same general patterns as lab experiments in the U.S., Canada, and Europe More variance � some groups much less likely to cooperate especially when greater heterogeneity of assets present

10. How Do Local Users Self-Organize to Draw on Local Knowledge? Consensus now exists about: the attributes of a resource the attributes of users Affecting costs and benefits of self-organization.

11. Self-organization More Likely When Resource Is: Scarce but not exhausted Moderately predictable Moderate sized Generates reliable information Local knowledge can be quite reliable in such settings

12. Attributes of Users Conducive to Self-organization View resource as highly salient Have a low discount rate Developed trust and reciprocity Have autonomy to determine some rules Have prior organizational experience (social capital) and local leaders Share common understanding about resource

13. Theoretical and Empirical Debates over: Size of group Heterogeneity of groups Neither seem to have as strong an effect as previously thought. Depends on ingenuity of users to devise institutions to deal effective with size and heterogeneity

14. Theoretical Synthesis of Empirical Findings Self-governance is costly time and effort to devise new rules and organization cost of monitoring and enforcement These costs must be LOWER than benefits to be derived Attributes of resource and users affect both benefits and costs

15. Self-Organization Occurs When Benefits > Costs for: Local, minimal winning coalition may be based on consensus may be a majority may be a single local leader

16. Rules Devised by Self-Organized Regimes Differ in important ways from current text book remedies Frequently do not regulate quantity Regulate time, space, and technology Rules tend to encourage growth of trust and reciprocity Rules based on unique aspects of a local resource

17. Importance of Larger Regimes Can provide needed scientific knowledge to complement local knowledge Attributes affect by larger regime Without secure ownership rights, users will have high discount rates If resource already degraded, benefits of organization will not occur for long time

18. Larger Regimes Can Facilitate Local Self-organization by Providing: accurate information, conflict resolution arenas, effective technical assistance, mechanisms to back up local monitoring and sanctioning efforts.

19. Donor Assisted Hand-Over Projects Not based on empirically grounded theory Return mostly degraded resources -- where are the benefits? Retain government ownership -- where is the autonomy? Where are the long-term interests? Expect users to perform rapidly what government agencies have failed to do

20. Failure of �Hand-over� Projects Not a good test of capabilities of local users Too simplistic a view of how best to organize local governance One layer views of the world -- either centralized or decentralized -- not an adequate foundation for democratic institutions.

21. Autonomous Local Resource Governance Regimes Can Achieve: better tailored rules using local knowledge lower enforcement costs increase in trust and reciprocity lowered risk through redundancy

22. Limits of Fully Decentralized Systems: Failure to organize in some localities Local tyrannies Stagnation Inappropriate discrimination Limited access to scientific information Conflict among groups Inability to cope with large-scale problems

23. Importance of Polycentric Systems Governance systems that exist at multiple levels with some autonomy at each level Retains many benefits of local level systems Adds overlapping units to help overcome limits Frequently ill-labeled as chaotic and inefficient in academic literature

24. Polycentric Systems are Complex Adaptive Systems Social scientists face a major challenge to understand complex adaptive systems (CAS) to develop policies to improve the performance of CAS to integrate theories at multiple levels of analysis to use agent-based models to complement game theory to critique use of simple panaceas

25. Understanding Complexity The challenge for social science for the next millennium When can complexity be simplified and performance improved When does simplification reduce Essential redundancy Institutional robustness

26. Global Development Network Will play a key role in this essential work Thank you for inviting me to share some of my reflections on the relationship between local and global knowledge