Natural resource management is, by nature, a collective action problem that requires incentives and cooperation of all levels of government, private and public actors. National governments alone are not better equipped to cope with deforestation compared to broad coalitions of stakeholders.

22 April 2021 | In 2009, Elinor Ostrom became the first woman and political scientist to win the Nobel Prize in Economics. She was awarded the prize “for her analysis of the economic governance, especially the commons.” Ostrom has based her work on empirical observation, which brings a timeless quality to her work — something that grand theories often lack. Her publications continue to inspire me and hold lessons worth sharing with others that look for ways to successfully reduce deforestation and address climate change.

Ostrom offers more optimism about human nature than most of her colleagues. Her starting point is not to assume that people are rational—always calculating to optimize their benefits—but to observe how communities manage common resources – grazing lands, fish stocks, forests. She studied irrigation systems in Nepal, pastoralists in Mongolia, and forest management systems in Bolivia and Bangladesh, carefully analyzing human-environment interactions and identifying conditions in which communities successfully and sustainably manage resources, including cases where central government controls are weak or absent.

Guidance on how to manage resources sustainably is needed today more than ever. Tropical deforestation increased 12 percent between 2019 and 2020, despite a decade and a half of intense debate on how to create incentives to reduce deforestation and degradation (REDD+) and numerous initiatives to protect tropical forests. Maybe it is time to revisit some of Ostrom’s findings and see what they offer for REDD+ implementation.

Tropical deforestation as a collective action problem

Tropical deforestation, like climate change, is a problem that is caused by a multitude of agents and countless local governance failures, and misplaced incentives. It is driven by a global hunger for commodities, as well as a lack of institutions and state presence in many tropical forest regions which compounds the challenge of poverty and an absence of development alternatives.

The mix of global and local drivers of deforestation makes deforestation a classic collective action problem. No country or group of actors can address deforestation alone. Local benefits of forest conservation — such as providing food, fodder, and other livelihoods needs for indigenous peoples and forest-dependent rural communities — are less attractive to governments than the immediate returns that may come from deforesting such lands. And the global benefit, such as protecting terrestrial carbon stores and ecosystems, shows no short-term, or local returns, at all.

Are we expecting too much of national governments?

It is this absence of local and national returns that REDD+ sought to address. REDD+ was conceived as a global compact under which richer nations would support tropical forests through results-based or market-linked payments for reducing deforestation. While pledged funds from developed to developing countries continue to fall short of what is needed, several countries and companies just announced a new public-private finance initiative, the Lowering Emissions by Accelerating Forest finance (LEAF) Coalition that aims to mobilize at least US$1 billion to protect tropical forests through jurisdictional REDD+. With more funds available, national governments reacting to the incentive of future market payments may increase efforts to halt deforestation.

However, while governments have the regulatory powers to adopt policy, they alone may not be able to make the difference and significantly reduce deforestation in the required time frames. REDD+, if considered a purely national incentive mechanism, overburdens national governments with the responsibility to solve the problem of deforestation in their territories. National policies are, no doubt, essential to improve forest governance and establish the regulatory context for conservation. However, incentives to deforest do not magically disappear once a policy to protect forests has been adopted by a government. Governmental policies rely to a great extent on the ability and willingness of affected people and communities to cooperate, implement and comply with a policy. This is particularly true in countries that have limited national and local authority. If people see a benefit in complying with a policy, the costs of enforcement are much lower than in cases where they seek to evade the policy. It is therefore essential that not only governments deal with an externality – such as climate change or deforestation – but that local communities, farmers, and private enterprises are enlisted and feel empowered to contribute to addressing the problem.

The assumption that governments are the sole agents to solve large collective action problems tends to remove authority from local institutions and people to tackle local problems. At the same time, it overwhelms national governments that are distant from the problem they are seeking to solve. Capitals are often hundreds of miles from the forest frontier, and government officials have limited control over places where a mix of lawlessness, weak governance, and hunger for land eats into tropical forests. Uniform policies that are insufficiently adapted to diverse local circumstances often fail to impress local actors. As Ostrom emphasizes, one important lesson from empirical research is that recommending a single governance unit – such as a national government – to solve a collective action problem needs to be seriously rethought.

Any measure has to build local ownership and involve local actors

This holds important lessons for REDD+: successful efforts empower local actors and build on existing social capital and leadership. Involving local institutions – such as park services or local environmental bureaus – from the start, including in the design of projects, programs and policies are essential. Trust means to work with known actors that have a history of honoring agreements. This also means that local groups have to be included in the incentive framework, including the monitoring of success.

There are various ways to do so. A government agency may engage local actors through, for example, a payment-for-ecosystem services (PES) program. An example of a successful PES program is Ecuador’s Socio Bosque system, which offers payments to owners of land with native forests to guarantee its protection over the medium to long-term; to date, conservation agreements have been signed that cover 630,000 hectares. Banks and investors may offer green credit lines to farmers that commit to protecting forests. For example, the boutique investment firm Sustainable Investment Management Ltd offers credits to farmers in the Brazilian Cerrado that commit to environmental, zero-deforestation, and labor standards. Well-designed REDD+ projects can also play a role in halting deforestation through sponsoring community development programs, such as introducing agroforestry systems, increasing employment linked to sustainable forest management, and putting in place capacity building and training programs. The greater the understanding of conditions on the ground, the greater the likelihood that efforts to reduce deforestation will succeed. This includes respecting local land and forest rights, strengthening local institutions, such as park services, and cooperating with community organizations and trusted non-governmental organizations with a local presence.

Enlisting all levels of governance to support conservation

As important as local solutions are, they will not be sufficient. Local institutions may be best able to diagnose the problem and enlist those actors that are essential to conserving forests. Deforestation is directly or indirectly driven by population pressures, changing consumer preferences, and international commodity markets and the globalization of commodity trade means that distant markets put pressure on tropical ecosystems, in particular where markets are integrated. This means REDD+ can only be successful if all levels of policy – international, national, regional, and local – and all types of actors – government, private, community, and individuals – contribute to the solution.

Recognizing these problems, Ostrom, later in her career, started to apply her understanding of local management of resources to global collective action problems, such as climate change. She saw global challenges as the cumulative result of actions taken by individuals, families, small groups, private firms, and local, regional, and national governments. Consequently, she posited that these problems can only be addressed through multilayered solutions and involve all levels of governance: international frameworks, national governments, local public and private institutions.

Governments are on the hook to implement government policies, strengthen forest governance and align financial flows with the Paris Agreement. International partners have to support tropical forest countries through results-based payments -such as LEAF- but also with upfront finance to enable the adoption of policies and putting in place local conservation incentives. Demand-side actors have to put in place safeguards to reduce the imported deforestation, send price signals that support sustainability, and support local agricultural extension. Investors should support deforestation-free agriculture and forest, and invest in PES and REDD+ projects and programs. Local actors should be empowered to define and implement conservation measures.

Multi-layered (or polycentric) approaches require experimentation at multiple levels and learning through a multitude of initiatives. They have the added advantage that failure at one level or by one set of actors does not lead to the collapse of the system. In the case of deforestation, the lack of performance by one actor – be it a government or a company, a local institution or an international donor – or initiative should be absorbed by the multitude of other actors and initiatives. Testing multiple approaches also allows comparing success, which leads to learning and a refined set of actions.

In sum, Ostrom’s writing remains highly policy-relevant. She reminds us to ensure that the right actors are involved in defining solutions to collective-action problems. This means that national governments, while never to be left off the hook, are not alone equipped to cope with collective action problems that have large-scale outcomes. Devising successful approaches to complex environmental problems is a grand challenge and reliance on one scale to solve such problems is naïve. Stopping deforestation is a challenge that requires a “big tent”, not a government-only solution.

Photo: By © Holger Motzkau 2010, Wikipedia/Wikimedia Commons (cc-by-sa-3.0), CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=10997825