Taking Institutions Seriously:

1. Taking Institutions Seriously: Mark T. Imperial, Ph.D. Master of Public Administration Program University of North Carolina at Wilmington Wilmington, NC 28403 imperialm@uncw.edu Using the IAD Framework to Analyze Fisheries Policy Tracy Yandle, Ph.D. Department of Environmental Studies Emory University Atlanta, GA 30322 tyandle@emory.edu http://people.uncw.edu/imperialm/index.htm

2. Central Arguments • Fisheries literature basically argues that there are 4 general approaches • Bureaucracy-based, market-based, community-based, co-management • Mirrors the 4 approaches used in environment and natural resources • Little cross-fertilization of ideas and lack of knowledge accumulation • Lack of good comparative analysis • Problems with the institutional analysis • Improved fisheries management requires paying greater attention to institutional design and performance • IAD framework developed by Elinor Ostrom and her colleagues may be of some use, but others exist

3. Competing Approaches to Fisheries Management • Bureaucracy-Based (Leviathan) • Default position: centralized government control by regulating fishing activities • It tends to be widely criticized even though it remains a dominant approach • Market-Based (ITQs) • Involves setting a total allowable catch (TAC) and allocating it to fishers via individual tradable quotas (ITQs) • Improves economic efficiency and productivity • Resource economists often favor this approach • Has seen growing use since the 1980s around the world

4. Competing Approaches to Fisheries Management • Community-Based • More eclectic: goes by names such as folk management and self-governance • Focuses on fisheries communities regulating themselves • Few critiques of this approach and a tendency to “romance the commons” • Co-Management • In last decade it has emerged as its own approach and goes by names such as cooperative management or stakeholder group management • Hybrid arrangement that borrows aspects of the other three approaches • Emphasis is on shared management between government and user groups

5. Bureaucracy-Based Approaches • Emphasis • Stock protection and maintaining fisheries at sustainable levels using a standard set of rules • Competing objectives • Conservation, resource maintenance, administrative efficiency, accountability • Resource ownership • Property rights held by government • Policy Tools • Focus tends to be on the input side • Licenses, gear restrictions (trawls, mesh size, etc.), seasonal restrictions, closures, size limits, limited entry, TAC, etc.

6. Market-Based Approaches • Emphasis • Wealth generation for the fishing industry • Competing objectives • Market efficiency, productivity, resource maintenance, accountability • Resource ownership • Property rights allocated through ITQs to vessel owners/fishers • Policy Tools • Focus tends to be on the output size • Using ITQs to allocate either % of TAC or tonnage

7. Community-Based Approaches • Emphasis • Community control over a fishery • Competing objectives • Fisher control, community welfare, distributional equity, other social/cultural benefits, resource conservation • Resource ownership • Property rights held by a community or a group of individuals within a community • Policy Tools • Focus can be either on inputs or outputs • Gear limits, seasonal restrictions, location restrictions, rotating pressure, ownership of specified fishing grounds

8. Co-Management • Emphasis • Shared management between government and user groups • Competing objectives • Shared decision making, greater fisher control, better information gathering, resource maintenance, reduced government costs • Resource ownership • Varies: property rights are usually held by government with some rights delegated to user groups • Policy Tools • Focus is on either inputs or outputs • Tools are a combination of those used by the other three approaches

9. Different Definitions of Success • Bureaucracy-based approach • Rules limit the total catch such that the maximum sustained yield (MSY) is not exceeded • Market-based approach • Quota is set such that the MSY is not exceeded and the market operates to efficiently allocate the catch • Community-based approach • Community maintains the fishery at a socially and biologically viable level • Co-management • Government and user groups maintain fishery at a viable level at lower costs to government and fishers

10. Potential Positive Outcomes

11. Potential Negative Outcomes

12. Taking Institutions Seriously • Policy objectives can be reached in many different ways • But many analysts base their choices on the technical properties • Objective is to understand the comparative advantage of competing approaches given differing goals, values, and contextual factors • Instruments are not value neutral and often have distributional impacts • Performance often depends less on a policy’s formal properties and more on the political and administrative context it operates within • Institutional arrangements, rather than abstract theory, tends to shape policy results

13. What is institutional analysis? • Institutions • Enduring regularities of human action in situations shaped by rules, norms, and shared strategies as well as the physical world • Includes families, churches, governments, and most other forms of organization • Institutional analysis • Differs from other types of analysis because of its focus on rules • Rules • Prescriptions that forbid, permit, or require some action or outcome and the sanctions authorized if the rules are violated • Formal: laws, policies, regulations, etc. • Informal: social norms

14. What is Bad Institutional Analysis? • Bias for success stories • Too much “wisdom” literature that can be systematic but is not theoretical, based on empirical data, or uses frameworks • Need more theory seeking research that strives towards generalization • Faulty lesson drawing • Analyst blindly assumes an approach that works well in one setting will work in others • Need to identify the contextual factors that influence performance or transferability of an approach • Falling victim to cognitive bolstering • Exaggerate favorable consequences while minimizing negative ones • Fisheries analyst recites a long parade of horribles about other approaches to justify the one they advocate

15. What is Bad Institutional Analysis? • Single institutionalism mindset • Analyst focuses on examining the variation in performance of a single institutional arrangement • Ignores the possibility that another approach could achieve the same objective at less cost • Ignoring important transaction costs • Performing a truncated analysis that fails to consider the full range of transaction costs • Using limited criterion to assess institutional performance • Need to use a wide range of criterion • Failing to use conceptual frameworks to guide analysis • Need to focus on knowledge accumulation and systematic analysis

16. Action Arena • Is your unit of analysis • Includes the fishery and the community affected by the rules used to govern the fishery • Fishers, captains, vessel owners, buyers, processors, distributors, regulators, and the community that the individuals live in, including the individuals/organizations that provide services to the actors • Problem occurs when the analyst focuses on the relationship between the regulator and fishers thus ignoring other impacts

17. Contextual Setting • Physical Setting • Rules governing a resource must be compatible with the underlying physical setting and the nature of the resource being managed • Attributes of the Community (Culture) • Variables such as the norms of behavior, level of common understanding, homogeneity of individual resources, and the distribution of resources within the community • It also includes the political and socioeconomic environment • Existing Institutional Setting • Institutional change tends to be incremental and path dependent rather than totally reconstructive or destructive • Need to understand how the institutional arrangement works now to design effective changes

18. Transaction Costs • Information Costs • Ineffective blend of scientific and time and place information • Scientific: acquired by individuals through education or experience about the regularities of relationships between key variables rather than how they function in a specific context • Time & Place: Knowledge abut a particular physical and social setting • Coordination Costs • Those invested in negotiating, monitoring, and enforcing agreements • Strategic Costs • Result from asymmetries of information, power, or other resources that allow some to obtain benefits at the expense of others • Rent-seeking, free-riding, shirking, social loafing, corruption, collusion, turf-guarding

19. Assessing Overall Institutional Performance • Efficiency • Market: What effect does the institutional arrangement have on the market with respect to wealth generation or productivity? • Administrative: What are the administrative costs associated with this arrangement compared to others? • Equity • Fiscal equivalence: Do those who derive greater benefits pay more? • Redistributional: Is the program structured around differential abilities to pay? Equality of the process is also as important as the equality of results.

20. Assessing Overall Institutional Performance • Accountability: • Accountability is an important principle in any democratic society • Internal vs. external • Informal vs. formal • Adaptability • Unless institutional arrangements have the capacity to respond to their changing environment and new information, institutional performance will suffer • Adaptive management is often a preferred approach in managing natural resources

21. Institutional Performance vs. Policy Outcomes • Desired policy outcomes ≠ good institutional performance • You can have a bad policy coupled with good institutional performance and decimate a fisher in short order • You can have poor institutional performance but the policy is effective enough to maintain stocks at desired levels • Worst case: bad policy that destroys a fishery in the most inefficient way possible • Best case: an effective policy that achieves its results with low transaction costs and satisfies the outcome criteria of interest to decisionmakers

22. Summary & Conclusions • Developing a well-designed governance system is at least as important as conducting good science and designing effective policies • Fisheries analysts would be wise to recognize that no single form of organization is presumed to be “good” for all circumstances • Institutional analysis should also remain focused on trying to determine which institutional arrangement works best in particular settings • It involves much more than designing some theoretically optimal policy

23. Summary & Conclusions • Analyst job is to clarify and define problems and help decisionmakers identify appropriate goals, objectives, and values that they seek to understand • Understand how programs work in practice • Who benefits and loses • How the program changes incentive structures • How the program can be improved or discontinued • Is the program accomplishing what was intended in the way it was intended • Our hope is that better theory-driven/empirical research will provide better information for decisionmakers • Presumably this will improve our chances of developing more effective fisheries management programs

24. Questions?