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5. PROGRAM STRATEGIES FOR CATALYZING THE SUPPLY OF LOCAL INSTITUTIONS


This chapter, considers approaches used by programs for catalyzing the formation of local institutions for the collective management of natural resources. This chapter starts by summarizing general truths about why people come together for collective action and how local organizational capacity can be strengthened. It then describes the use of participatory micro-planning to manage the effects of externalities and competition for scarce resources amongst appropriators. The chapter then discusses program strategies for providing incentives to motivate resource appropriators and maintaining the impetus for collective action.

5.1 USING POSITIVE-SUM APPROACHES TO STRENGTHENING LOCAL ORGANIZATIONAL CAPACITY (LOC)

All societies, no matter how heterogeneous, have some base level of LOC. Often, however, this may be differentiated according to religious, ethnic or gender groupings. For example, individuals who share common religious beliefs often come together on a regular basis for prayer. Religious festivals, marriages and other social events are occasions when individuals share responsibilities for organization and management of festivities. In rural India, although village societies are often deeply divided along caste lines, within each caste, there is usually a high degree of solidarity and shared attitudes, values and beliefs. In other words, there is a “latent” organizational and management capacity. The challenge for a natural resource management program is to catalyze this latent LOC, broaden it to include all resource users, and direct it towards individual and collective benefit.

There is now considerable empirical evidence to indicate that Local Organizational Capacity is most effectively strengthened through the implementation of a subproject which results in increases in productivity and well-being of the participants. Uphoff (1997) eloquently describes the reasons for this when he identifies two distinct purposes for which people at local levels can come together to act collectively to contribute to their own development:

(a) To improve their productivity and well-being by self-help measures. This would include clearing new fields, maintaining irrigation channels, preventing crop or livestock diseases, installing community water supplies, protecting against soil erosion, etc. This is more positive-sum in its orientation, i.e. creating new values for all participants through mobilization and utilization of resources that would otherwise be differently used.

(b) To advance their interests through advocacy. This would include making claims on government for more services or subsidies, seeking better (or no) enforcement of laws, proposing policies that would be more favorable, creating alliances to put more pressure on outside agencies, etc. This is zero-sum i.e. it is redistributive.

A number of programs have effectively used positive-sum approaches to building LOC. The AKRSPs in India and Pakistan, Indo-German Watershed Development Program (IGWDP), Doon Valley Integrated Watershed Management Project, Sadguru Water and Development Foundation (SWDF) the USAID funded program in Gal Oya (Sri Lanka), and the Northeast Rural Development Program (NRDP), to name a few. Common to all these projects is that individuals are required to organize themselves into a group with the explicit purpose of prioritizing and implementing a subproject. The subproject investment is usually one which results in positive improvements in productivity or well-being of the participating individuals. For example, an irrigation channel, feeder road, check dam, forestry project, electricity, etc. In other words, the individuals are aware that the institution is being created for the explicit purpose of prioritizing and implementing a subproject which will ultimately result in positive-sum benefits for all those participating. This engenders a powerful incentive for individuals to overcome disagreements and organize themselves for collective benefit.

5.2 MOTIVATING COMMUNITIES USING APPROPRIATE “ENTRY POINT” ACTIVITIES

Entry point activities are those subproject interventions that are first identified by villagers during the initial awareness raising carried out by the external implementing agency. Empirically, it is known that often it is easier to organize individuals around productive activities than around social activities (World Bank, 1987). In keeping with the strategy for building local organizational capacity, the entry point activities need to be positive-sum. Experience from a number of programs suggests that using entry points that are not specifically related to management of natural resources can also be effective in catalyzing the formation of a local institution. The assumption is that, once the local level institutional framework is in place, subsequent activities that are directly related to sustainable management of natural resources can be more effectively planned and implemented.

In AKRSP (Pakistan), Primary Productive Infrastructure (PPI) subprojects are effective entry point activities that act as a catalyst for the organization of villagers. It is made clear to villagers that only one subproject will have matching grants from the program. Ideally, it should therefore have positive financial and/or economic returns in order to increase incomes that can be used for funding other subprojects or purchasing services. In reality, the majority of PPI subprojects identified by village institutions were construction or rehabilitation of irrigation channels, feeder roads, or bridges. Similarly, in AKRSP(I) and Sadguru Water and Development Foundation (SWDF), entry point subprojects usually have positive financial and/or economic returns. Where physical and environmental resources were conducive, it was found that many of the first subproject interventions identified by villagers tended to be water related. For example, acquifer recharge structures, soil and water conservation, and check dams on streams with associated lift irrigation schemes. These were found to provide prompt returns to investment in an environment which is semi-arid with low rainfall. When water related subprojects were not physically or environmentally feasible, then social forestry, energy conservation activities and wasteland development were found to be prioritized. (see interim evaluations conducted by World Bank, 1987, 1990, 1996, and European Commission, 1995).

The Doon Valley Integrated Watershed Development project in India occasionally used non-productive entry point activities to catalyze group formation (Datta and Virgo, 1997). During the initial rapport with villagers, before the watershed planning process started, priority activities would emerge from the villagers. These entry point activities included training of the villagers in health care, establishing hand-pumps for drinking water and adult literacy education. These activities were not envisaged as being part of the project budget during appraisal because they did not directly relate to the project goals of reducing environmental degradation through micro watershed management. Nevertheless, they served the purpose of providing immediate results to prioritized needs of the villagers thereby galvanizing the spirit of collective action. Other interventions such as schools and health centers were also identified by villagers during the rapport stage. However, these would have required a long-term commitment of funding on the part of the project and also coordination with various other government departments. Therefore they were not considered eligible as entry point activities as they substantially diverted from the project objectives. The Doon Valley project has demonstrated that non-productive entry point activities can also provide useful incentives for rapid group formation and demonstration of the benefits of collective action.

5.3 SUBPROJECT BENEFITS MUST ACCRUE QUICKLY AND LOCALLY

Apart from using positive-sum approaches to strengthening LOC, empirically, it is also apparent that some of the most successful local management initiatives have occurred where there are immediate benefits obtainable by local groups. In cases where local people have had to wait for several years before benefits accrue, the interest has waned and collective management arrangements have ceased. Greater success has also been achieved where there are ready markets available for the products. This also increases the value added to the labor involved in protecting the resource (Hobley and Shah, 1997).

This has an implication for the type of subproject which is first implemented by a newly formed group. That is to say, it should be one where visible benefits accrue relatively quickly to the majority of the members of the group. One of the reasons why there are many examples of successful collective management of irrigation systems is that the benefits of irrigation are relatively immediate following completion of construction activities (see Uphoff, 1986, for examples). The benefits are also relatively evenly distributed if the collective management systems are functioning properly. Other types of NRM subproject interventions can also result in quick and equitable benefits for resource protectors. For example, in AKRSP(I), social forestry subprojects implemented on protected common land were found to yield immediate benefits in terms of the fodder produced. This was harvested and sold, or used to stall feed livestock. In a semi-arid environment with fodder scarcity, these benefits provided sufficient incentive to continue protection until the trees could be coppiced or timber harvested. Soil conservation works were also found to yield relatively quick benefits, especially in areas that were already suffering a high degree of soil erosion, for example, through gully erosion.

5.3.1 Local level approval mechanisms for subproject proposals

An implication of the requirement for quick accrual of benefits is that the delay between subproject identification and implementation must also be relatively brief. Once people are motivated to form an institution for collective action, the momentum needs to be maintained through to subproject completion. Long delays can allow local elites to sabotage the process of group formation. Moreover, there is an opportunity cost of participating in all collective action in terms of the time spent attending meetings, attending training sessions, and so on. If there are excessive delays in initiating implementation of a subproject, individuals will not be able to see a return on the time they invest; they will seek to maximize the returns on their time by opting out of the meetings and utilizing their time in other productive actions.

One of the comparative advantages that NGO programs have is that they have relatively fast appraisal and approval mechanisms for subprojects. Government programs that have managed to achieve similar results have either relied upon small project teams which act in a similar and unbureaucratic manner as NGOs. Alternatively, they have evolved decentralized approval mechanisms that transfer authority and control for subproject approval to local bodies or institutions.

In the AKRSPs for example, the time lag between formation of a village institution, identification of a subproject, and initiation of implementation activities is about two months. In the case of the government run Doon Valley project, the time lag is three months. In contrast, the National Watershed Development Program (NWDP) in India has a time lag of six months and, in some cases, two years before implementation starts. This is despite the fact that decisions are taken at the level of District Rural Development Agencies. The delays in subproject approval are one of the main factors contributing to poor track record of the program in scaling-up geographical coverage and in forming robust local institutions.[11]

The Municipal Funds program in Mexico and the NRDP in Brazil both employ decentralized mechanisms for appraisal and approval of subprojects (see Esmail and Piriou-Sall, 1997 and Esmail and McLean, forthcoming). In essence, the mechanisms consist of Community Associations that prioritize subprojects. These are submitted to specially constituted Municipal Development Committees (MDCs) consisting of a broad range of stakeholders such as Municipal Legislative Assembly members, NGOs, churches, and government departments; representatives from CAs are also included. The MDCs review all subprojects put forward by CAs and prioritize them according to approval criteria specified by the program. In the case of Brazil, once the subproject is approved, funds are transferred directly from the State Technical units to the CA.[12] Admittedly, the subprojects are primarily economic infrastructure (e.g. rural electricity and water supply) and community managed productive subprojects such as manioc mills, tractors and rice processing. Nevertheless, the mechanisms used are effective at reducing the time delay between subproject identification, approval and implementation. Furthermore, they increase allocative efficiencies by involving beneficiaries and other stakeholders in the approval process. Chapter 0 will discuss in more detail the structures and mechanisms used by these programs.

5.4 STRUCTURING FINANCIAL INCENTIVES FOR ADOPTION OF NRM TECHNOLOGIES AND INSTITUTION FORMATION

Programs seeking to improve the management of natural resources face the dilemma of constructing appropriate financing arrangements and subsidies for micro-level subprojects. The macro-level policy environment, as discussed previously in this paper, will undoubtedly affect the type of financing arrangement. However, because of the complexity of natural resource management products and levels of poverty amongst resource appropriators, an enabling policy environment on its own may not be a sufficient incentive for the adoption of sustainable resource management technologies by individuals and communities. Programs will invariably have to incorporate appropriate financial inducements to encourage the adoption of improved resource management technologies and also stimulate the formation of institutions for collection action.

As a starting point it is beneficial to reiterate the arguments used in section 0 to justify the use of public funds for resource management investments that are, in principle, financially viable. The costs and benefits of a resource management activity, whether on private property, common property, or both, have implications for society as a whole and also for individual resource users. For example, agricultural production or deforestation may lead to siltation of reservoirs and rivers which represents a real cost to society. Individual resource users, however, are likely to consider only the costs and benefits that actually accrue to them from the decisions they make about how to use their resources. They would tend to value the costs and benefits without any attempt to adjust for external effects. This implies that, even though society may be interested in retarding the degradation of a resource, conservation measures will not be adopted by resource users unless the individual net benefits are greater than the costs.

Therefore, one would assume that, if an NRM investment has a positive Net Present Value (NPV), then that activity should be voluntarily adopted. However, there are numerous examples of cost-benefit analysis conducted for resource management technologies (calculated at the level of households and using prices actually faced by resource users), that show positive NPVs but which have resulted in limited voluntary adoption.[13] This is partly attributable to lack of liquidity; resource appropriators do not have access to credit for financing such investments. It is also related to the difficulty in calculating real discount rates affecting resource appropriators choice of actions which results in inaccurate cost-benefit assessments. Moreover, techniques for cost-benefit analysis are unable to capture the magnitude of decisions that resource users take into account which are associated with agroecological and economic characteristics of the environment in which they operate. For example, many decisions are constrained by tenure insecurity, liquidity problems, the need to meet consumption needs, access to credit, and so on. In addition, decisions are characterized by risk and uncertainty of climate, fluctuating market demand, etc. Moreover, the poor tend to be risk averse and therefore resistant to new technologies. In practice, data on most of these factors are imperfect, or not available. Consequently, subprojects with positive NPVs and/or Internal Rates of Return greater than the assumed discount rate may be over-estimating the private returns which could explain why they are not voluntarily adopted and financed by resource appropriators.

Measuring rates of return is further complicated because the costs and benefits associated with many resource management activities are asymmetric. A classic example of asymmetric incentives is that of an irrigation system with a head-end and a tail-end; farmers at the head-end theoretically receive more water than tailenders, unless appropriate collective management rules are defined for mutual benefit.[14] Lutz, Pagiola and Reiche (1994) provide an example of how incentives for soil conservation can vary considerably even within narrowly defined agroecological zones: farmers on different slopes experience different rates of erosion; they face different costs of conservation (the optimal spacing of terraces and diversion ditches being a function of slope); and, the net benefit accruing to an individual’s action is a function of others adopting similar technologies (this is one rationalization for promoting collective action). Similar asymmetries can be found in other NRM activities such as watershed management, social forestry, rangeland management, and so on. The distribution of asymmetric costs and benefits therefore affects the choice of financial instruments and whether subsidies are required to induce resource appropriators to adopt new technologies.

Public programs seeking to stimulate the adoption of improved technologies and foster collective management of resources are required to design financial incentives in an environment of considerable uncertainty. In essence, two types of subproject financing devices are available: (1) small-scale credit which may be subsidized, or not; and (2) matching grants wherein beneficiaries contribute a portion of the cost of a subproject and the remaining is a grant (or one-off financial subsidy).

Obviously, if the nature of an NRM good is predominantly public, then individual loans would not be feasible. If it is not possible to clearly define the nature the good, then the following aspects need to be considered before deciding on whether individual loans may be feasible. The decision is not simply a matter of determining financial costs and benefits of representative subprojects. A wider range of factors that affect the viability of a credit option must be considered. The factors can be summarized as follows:

P = ((W +, I -, D +, C -, M -, S +, R ±, d -, T -, G -, F +, A -)

Wherein, the probability for the success of using credit (P) to finance subprojects is a function of: wealth of target population (W); inequality of income distribution (I); population density (D); climatic instability (C); market risk (M); social cohesion (S); real interest rate of loan (R); real discount rate of resource users (d); capital cost of technology (T); gestation period before returns start accruing to individuals (G); the financial profitability relative to the economic returns (F); and, costs of administering a rural credit program (A).

Probability of “success” of credit (P) refers to likelihood of resource users choosing to enter into a loan agreement and the probability of timely repayment. The wealth (W) of the target population (or poverty) will affect the ability of people to payback the loan; poorer beneficiaries are more averse to using loans and less likely to payback because of other consumption imperatives. If the inequality of income distribution (I) amongst the target population is high, loans will tend to be adopted by wealthier households while poorer households will be less inclined to participate; perverse incentives will be created for disadvantaged resource appropriators to free-ride on the actions of wealthier individuals. Greater population density (D) leads to intensification of cultivation systems, increased output from agriculture which, in turn, gives rise to increased non-agricultural activity (Boserup, 1965). Under high population densities, sources of household incomes are therefore more diversified and the risk attached to using loans is reduced because repayment is not wholly dependent on agricultural productivity. High climatic instability (C) (for example, in semi-arid drought prone, or, flood prone areas), reduces the disposition of individuals to use loans for resource investments whose productivity is contingent on climatic factors. Market risk (M) is faced by all resource appropriators; assured commercial viability of resource products encourages investment in improving resource productivity. Successful small-scale credit programs often rely upon peer pressure to ensure repayment; the greater the social cohesion (S) amongst individuals within a community, the higher the propensity for programs to draw upon such interactions to motivate repayment of loans. The real interest rate of the loan (R) takes into account the inflation rate prevalent in the economy; inflation reduces the real burden of interest payments to borrowers whilst reducing the real return to borrowers. The real discount rate of resource appropriators (d) includes factors associated with security of land tenure, property rights, physical and economic vulnerability; higher discount rates reduce the willingness of individuals to use loans for investments whose returns accrue in the future. The capital cost of technology used for resource management (T) and the gestation period before returns start accruing to individuals (G) both negatively affect the inclination of individuals to adopt loans; high capital cost investments (for example, irrigation and acquifer recharge structures) require individuals to obtain larger loans and, therefore, undertake higher risk. If returns are not tangible and visible in the short-term, individuals will be less likely to enter into loan agreements. High financial profitability relative to economic returns (F) of the subproject will favor credit adoption by individuals. The costs associated with managing a rural credit program (A) will be determined by the presence, or absence, of credible rural finance institutions. Costs are also determined by the type of institution administering the credit program and whether it is public, private, cooperative or NGO. Limited evidence indicates that average operating costs, as a percentage of total loans, range between 4 percent for the BAAC in Thailand to 60 percent for the Zambuko Trust in Zimbabwe (Cuevas, 1997).

If P = 0.8 then use a

If P is less than 0.8, then the probability of success for using a credit program to finance resource management subprojects in less than 80 percent. In this scenario, a significant proportion of appropriators will probably not adopt loans for resource management investments, resulting in high internal inefficiencies. Furthermore, there is a probability that a high proportion of borrowers would default on loan repayment. The outcome would be that the present value of costs associated with managing a credit program in this environment will be large compared to the actual amounts disbursed. In this case, it is preferential to use a program based on matching grants (a) for subproject financing, administered through local institutions for collective action.

The percentage (x) of the matching grant for subproject investments provided by the program to local institutions. It is a function of a number of factors:

x = ¦(W-, I +, d +, b-, m+, S-, T+, F -), where x = (a/z) 100

(z) represents the total subproject cost. (W) represents the wealth of target population. (I) represents the extent of income inequality; the requirement to involve all resource appropriators in the management activity means that poorer households will need sufficient financial incentive to participate. Resource users will not contribute finance or hard work unless their own discounted flows of future expected net benefits (d) is larger then their share of costs. If high demand (ß) exists for the resource technology, individuals should, theoretically, be willing to contribute more towards capital costs. For example, where resources have become highly degraded, appropriators may be more willing to contribute more in an effort to prevent further deterioration in their incomes. High intensity of existing labor inputs (µ) in productive activities limits the potential for individuals to contribute additional labor “in-kind” towards the costs of implementing a subproject; opportunity costs of labor are higher in areas of existing high labor intensity. Higher levels of social cohesion (S) enable institutions to broker arrangements whereby most resource appropriators participate in a subproject and maximize contributions Furthermore, high social cohesion can enable poorer households to negotiate with wealthier appropriators to provide lower contributions towards capital costs. If the capital cost (T) of a subproject is high, the percentage of contributions from beneficiaries as a proportion of the absolute capital cost will inevitably be lower. Individuals would be willing to contribute more if the subproject has a high financial profitability relative to economic returns (F).

In practice, calculating the probability of successful use of credit and also the percentage of matching grants is extremely difficult; we do not understand sufficiently the interplay of economic, environmental, and social factors that influence incentives for natural resource management (Barbier and Bishop, 1995). Moreover, data on most of the factors are not available, or their measurement is beset by controversy. Evidently, designing financial incentives is not a hard science. Programs therefore have to design incentives in the context of considerable uncertainty. Box 5 summarize some general advice to program designers. However, piloting programs to test the effectiveness of the financial incentives is an obvious and critical requirement given the level of uncertainty.

Box 5. General Assumptions and Cautionary Advice Regarding the Use of Financial Subsidies

If the economic returns to a subproject are higher than the financial returns, one can assume that some level of subsidy is justified; the social returns being greater than the private returns.

If subsidies are used in contexts where the financial returns are equal to, or higher, than economic returns, there is a chance of creating market distortions.

If the financial returns are high, but the profile of revenues is skewed so that returns do not accrue till some years after investment (e.g. forestry, coffee and rubber plantations), a subsidy used in the early years to encourage adoption can be justified.

Over generous subsidies may create false positive demand (even where beneficiaries contribute in the form of labor or cash). This may jeopardize future maintenance of the investment by beneficiaries.

Poorly structured subsidies may also create perverse incentives that contradict sustainable resource management goals. For example, in Costa Rica, reforestation credit encouraged farmers to deforest their land to become eligible for the subsidized credit (Lutz, Pagiola and Reiche, 1994).

Structuring subsidies so that poor resource appropriators have reduced contributions (or do not contribute at all) may reduce their bargaining power to assert and defend rights to flow of benefits.

Subsidies used without tied commitments for repayment, user fees, or maintenance, may create perverse incentives for greater rent seeking by beneficiaries (Ostrom, 1995).

Subsidies based on percentage cost-sharing of subprojects creates an unknown liability for government. This can be avoided by basing these on per capita amounts, or fixing a ceiling for government contributions with excess being met by beneficiaries (see Garn, 1997).

5.5 USING CATALYTIC AGENTS TO FACILITATE THE FORMATION OF LOCAL INSTITUTIONS

Setting in place enabling policies is not sufficient to result in the spontaneous and voluntary formation of institutions for collective management of natural resources. Despite the presence of base levels of local organizational capacity, experience from many programs demonstrates that the complex nature of natural resource management goods necessitates, at least in the initial stages, external intervention to catalyze local institution formation. Often, there are long held conflicts within communities, or between communities, that must be resolved so that all resource users can willingly participate in the institution in order to avoid free-rider problems. Put simply, mediation by external agents seeks to shift discourse way from a concentration on the historical roots of conflict towards a forward-looking discourse on the potential of collective decision-making. In this way, external intervention can assist in engendering trust between individuals. Most programs have found the task of motivating individuals and communities particularly difficult during the early months (or years) of implementation. However, once some positive results have been achieved, and potential benefits of collective action demonstrated, the successes can be used to motivate other individuals and communities to resolve conflicts and demand goods and services from the program.

5.6 PARTICIPATORY PROCESS FOR FORMING LOCAL INSTITUTIONS

Participatory approaches to organizing individuals (stakeholders) to influence and share control over development initiatives, and the decisions and resources which affect them, have their origins in the principles put forward by Paolo Freire (Freire, 1972). Through intensive face-to-face approaches with individuals over a period of time, a “critical consciousness” emerges amongst the individuals of the wider social, economic, political and environmental conditions facing rural communities. Individuals are further empowered through a process of building the capacity of stakeholder institutions; strengthening the financial and legal status of stakeholder institutions; hand-over and self-management by stakeholders.[15]

Narayan (1997) provides an excellent distinction between extension outreach mechanisms and empowerment outreach approaches (see box 6); eight features that differ along a continuum are identified. In essence, the different approaches are related to the ultimate purpose of outreach. Extension approaches are appropriate for information dissemination, creation of demand and use of service inputs. Empowerment approaches, on the other hand, are appropriate when organizing communities to form an institution, and building capacity for self-management. Empowerment is a process by which individuals ultimately gain control and authority over the resources they manage and also the far-reaching development process.

Box 6 Difference Between Extension and Empowerment Outreach Mechanisms

Approach

Extension Approach

Empowerment

Purpose

Information dissemination, delivery of inputs, demand creation, advocacy

Local capacity building; strengthening existing groups to achieve self management.

Nature of Task

Supply of inputs, education

Coordinated action over a prolonged period of time.

Role of Field Agents

Channel of information and inputs

Facilitator, catalyst, organizer, liaise with technical agencies.

Control over Decisions

Control stays with agency

Parameters established by agency; decisions made and owned by community through process of negotiation.

Role of Information

Since information dissemination is a primary function, use of media, social marketing

Organizations of goal oriented groups takes precedence; technical information introduced as needed.

Accountability of Field Agent

To agency

To clients, community groups

Characteristics, skills of Field Agents

Technical specialist, information specialists, male or female

Community organizing, facilitating, with limited technical know-how, male or female, high on social acceptability

Outcomes

Use of inputs, increase demand of services, effectiveness, efficiency

Empowered groups managing services, they did not manage before; group cohesion cooperation, empowerment, effectiveness, efficiency

source: Narayan, 1997

With particular reference to natural resource management, the process of forming institutions inevitably requires the initial formation of groups and organizations. The process of evolution from a group to an institution takes time. Institutions are complexes of norms and behaviors that persist over time by serving collectively valued purposes. Organizations, on the other hand, are structures of recognized and accepted roles. Groups are more informal structures than organizations but they share a common characteristic in that they are collections of individuals that share common interests, recognized roles, and responsibilities. Box 7 is a synthesis of a range of participatory approaches for the initial formation of groups or organizations. This only details the process until initiating implementation of an entry point subproject. Obviously, the evolution of an institution will require continued organizing and capacity building inputs.

5.7 PARTICIPATORY MICRO-LEVEL PLANNING TO MANAGE LOCAL COMPETITION FOR SCARCE RESOURCES

Empirical evidence from successful NRM programs indicates that there are greater potentials for success when competition between appropriators for scarce resources is managed at the micro-catchment level (World Bank, 1997a). For example, micro-watershed development programs seek to organize individuals in a catchment area of 500 to 1500 ha which often corresponds to the administrative boundary of a village or community. Within such a micro-catchment area, resource boundaries and their associated appropriators can be easily identified. Conflicts between appropriators are also easier to resolve because individuals have some influence over each other by virtue of the fact that they reside in the same village and therefore regularly interact. Furthermore, at this level of planning, it is possible to seek individual agreements on the management of common pool resources and facilitate the appropriate size of institutional mechanisms to manage and protect those resources. Common pool resource issues which extend over more than one village can usually be tackled more effectively after immediate priorities within villages have been addressed.

Micro-level planning of program interventions can be achieved through the use Participatory Rural Appraisal (PRA). This consists of a range of techniques evolved from a series of multi-disciplinary approaches to learning about local-level conditions and local peoples’ perspectives, including Rapid Rural Appraisal and Agroecosystem Analysis (see McCracken and Narayan, 1997, for an overview of the techniques and also examples of their use). Through semi-structured interviewing and mapping exercises with individuals, households, focus groups, and community meetings, indigenous knowledge is amalgamated with the external knowledge of catalytic agencies. PRA techniques have been effectively used by AKRSP(I), Doon Valley project and PNGT to distinguish resource boundaries and appropriators, as well as identify options for subproject interventions. Particularly useful products of a PRA exercise are the production of maps and diagrams depicting detailed physical and social characteristics of communities such as location of acquifers, soil depth, erosion status, location of vulnerable households, etc. These are used to design specific subproject interventions. For example, the location of acquire recharge structures, contour bunds, appropriate tree species that meet local consumption needs and environmental goals, seedling spacing, and so on. In many countries, soil and land-use maps either do not exist, or are out of date and do not reflect the current status of physical resources. PRA techniques offer a low cost alternative to expensive physical surveys and also have the added advantage of incorporating indigenous knowledge about the local environment.

To sum up this chapter. A program seeking to catalyze the formation of local institutions for the collective management of natural resources needs to adopt a strategy based upon using positive sum approaches to strengthening LOC. This requires that appropriate entry point subprojects are identified that address a priority need of resource appropriators and that are productive. It must also, as far as possible, provide equitable benefits in order to encourage the majority of appropriators to participate in the institution and avoid the temptation to free-ride on the actions of others. The benefits of subprojects need to start accruing relatively quickly to maintain participation of appropriators and demonstrate the productive value of collective action. This, in turn, requires decentralized approval mechanisms to minimize delays and build LOC. The complex nature NRM goods means that appropriate financial incentives and financing instruments are critical for the adoption of new technologies and the formation of collective action institutions. The type of financial incentive needs to take into account a vast array of factors. Catalytic agencies are required to organize individuals into institutions for collective action. Their use of participatory micro-level planning techniques can assist in identifying appropriate entry-point activities and resolve potential conflicts that might undermine the viability of natural resource management.

Box 7. Participatory Approaches to Catalyzing the Formation of Groups for Collective Action

The programs analyzed as part of this study used a variety participatory approaches to catalyzing individuals to form a group or organization. The following is a synthesis of the approaches used. The sequence is not cast in stone and some activities may be carried out concurrently.

Selection of village. External agency selection of village based on review of secondary data.

Using traditional institutions. Existing formal or informal institutions in village are used to acquire access and legitimacy for external agency’s community organizers.

Information-sharing and raising awareness. Community organizers initiate a semi-structured dialogue with individuals (and groups of individuals) to inform them about program goals, objectives, incentives offered, terms of participation (beneficiary contributions towards capital costs of the subproject, responsibilities for operation and maintenance, etc.), and potential benefits for beneficiaries.

Micro-level planning. Participatory Rural Appraisal (PRA)-based techniques are used to identify resource system boundaries, resource users, individual land holdings, social and economic status of households, and options for entry point activities. This process seeks to weave together indigenous knowledge and wisdom from external learning and experiences.

Strengthening rapport. Initial prioritization of entry point options by groups of individuals through negotiation with external agency.

Prioritization of non-project activities. These are activities that often emerge as priorities but which are outside the scope of the project e.g. schools, health centers, etc. They are submitted to the appropriate government line department for inclusion in other programs.

Institution formation. These can be small user groups or self-help groups based on common interest. Eligible members are defined, a Management Committee is democratically elected, constitutional rules for the institution agreed, mechanisms to resolve conflicts agreed, and the institution is legally registered (wherever possible).

Final prioritization of entry point subproject. Members of institution prioritize from the options produced earlier and agree to make cash contributions towards capital cost prior to implementation, or in-kind contributions of labor during implementation. Rules governing resource use associated with subproject, user charges, monitoring arrangements, and creation of maintenance fund (with revenue generating mechanism) are finalized.

Building management capacity of institution. Management Committee identifies and contracts appropriate technical assistance to design subproject; organize implementation arrangements, local procurement of goods, members work schedules, and supervision of implementation.

Implementation initiated. Implementation of the prioritized subproject is initiated by the institution using members labor or hired externally.

Based on the experiences of Doon Valley project, the shortest length of time for the formation of a group for micro-watershed management (after initial contact) is two to three months. On average the community organizers interact with the villagers once a fortnight during this period (Datta and Virgo, 1997). Obviously, the evolution of a group to an institution will require continued organizing and capacity building inputs.


[11] Despite the presence of decentralized mechanisms, the delays in subproject approval in the NWDP are due to other reasons. In particular, the individuals constituting the Approval Committee of the DRDA are primarily from government line departments. They are not used to appraising proposals received from villagers that rely upon participatory planning and mapping. These proposals are considered to be “unscientific” and are therefore sent to the relevant government department for a more detailed proposal to designed. (see Esmail, 1997 for further details on the implementation problems of the NWDP).
[12] Over the last five years, the NRDP in Brazil has evolved more decentralized mechanisms for subproject approval and funding. Three mechanisms along a continuum are currently used: (1) Prioritized subproject proposals are submitted directly from CAs to State Technical Units. The Technical units would appraise and approve the subprojects according to program criteria and release funds directly to the CAs; (2) A Municipal Development Council would prioritize subprojects from Community Associations and submit the list to the State Technical Units. A second round of appraisal occurs at this level including a verification visit to the community to determine if the subproject is viable and the beneficiaries are eligible; (3) The most decentralized mechanism is where the Municipal Development Council is allocated an annual budget by the State Technical Units. They prioritize, approve ad disburse funds directly to CAs based on pre-assigned criteria and taking into account other local factors. In theory, the latter mechanism is allocatively the most efficient because it allows MDCs to assess community priorities against actual need. (Esmail and McLean, 1997, provide a more detailed assessment of the NRDP mechanisms for promoting effective decentralized institutions).
[13] See, for example Lutz, Pagiola and Reiche (1994) for soil conservation; European Commission (1995) for micro-watershed management; and, Current, Lutz and Scherr (1995) for agroforestry.
[14] Ostrom (1995) provides an excellent description of such an irrigation system wherein the incentives for collective management are asymmetric. Ostrom considers various scenarios affecting incentives for collective action: physical construction of the irrigation system (i.e. lined canals, or not); resources required for maintenance (i.e. amount of labor); and, rules governing appropriation. Under each scenario, headenders and tailender receive different benefits thereby explaining why some water users associations are effective, and others not.
[15] There are many other types of participatory mechanisms. The World Bank (1994) report on participation in the Bank differentiates six mechanisms: information sharing, consultative mechanisms, joint assessments, shared decision-making, collaborative mechanisms and empowering mechanisms. These are listed in order from those in which stakeholders have least influence to those in which they have the greatest influence.

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