The Complexities of Decentralization in a Globalizing World

Stefanie Engel () and Charles Palmer
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Stefanie Engel: IED Institute for Environmental Decisions, ETH Zurich

No 09-08, IED Working paper from IED Institute for Environmental Decisions, ETH Zurich

Abstract: In many developing countries, decentralization programmes for natural resource management aim to induce incentives for sustainable resource management at the local level. The effectiveness of such programmes has, however, suffered from weak property rights to the resource and by the presence of externalities. Growing economic integration among countries has exacerbated these problems by increasing the exposure of local user groups to commercial actors interested in resource extraction. In this paper, the interplay of decentralization and globalization in affecting environmental outcomes and community welfare is analysed through a game-theoretic model of community-firm interactions. The results highlight the complexities of policy design. First, by raising the extractive value of the resource, globalization may lead to communities negotiating resource extraction agreements with firms. Second, with a lack of effective state enforcement of community resource rights, communities may be unable to assume de facto ownership over the resource, while commercial actors succeed in exploiting resources without community consent. No single policy option provides a panacea to counteracting these negative effects. Instead, a mix of policies, combining incentive payments along with the provision of more secure property rights and poverty alleviation is shown to have the potential to improve both environmental outcomes and community welfare.

Keywords: Bargaining; decentralization; globalization; natural resources; poverty; property rights; self-enforcement (search for similar items in EconPapers)
Pages: 22 pages
Date: 2009-09
New Economics Papers: this item is included in nep-ene and nep-env
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Citations: View citations in EconPapers (9)

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Journal Article: Complexities of Decentralization in a Globalizing World (2011)
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