It takes a village to raise a Pigovian tax…or does it take more? Prospects for devolved watershed management in developing countries


I. Coxhead

Type of Document:
Conference Proceeding or Document


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Abstract: After years of failed attempts at centralized control over watershed management (WSM), the conventional wisdom among the donor “community” and many LDC governments themselves has now turned decisively in favor of local approaches. In many parts of the developing world, this shift coincides with the decentralization of numerous other government functions.

Can local governments do a better job of WSM than central governments? Some advantages are clear; local administrations can be expected to have specialized knowledge of environmental and economic conditions, and therefore should also have the ability to fine-tune policy. But there are disadvantages as well. Of these, the main one is that jurisdictional boundaries typically do not internalize watershed processes, and the sources of environmental problems are spatially and sectorally diverse. There is scope for policies applied to one sector to cancel out the effects of policies applied in another. A related problem arises because the basin-wide costs of abatement of a particular pollution problem are likely to vary across sectors and across spatial units, raising questions about the most economically efficient mix of policies. Moreover, local jurisdictions, especially those in relatively poor upland areas of developing countries, may face secondary constraints related to their capacity to conduct analysis, make and implement policy, and raise funds.

Most contributions to the small analytical literature in this area find that environmental linkages make it very difficult in practice to design decentralized WSM policies, or that “nature ‘trumps’ most of the conventional arguments for devolution”. Can local governments design and impose Pigovian (i.e., socially optimal) environmental policies? What can projects and other external interventions do to assist them? The Goal of this paper is to explore these issues from an analytical perspective, drawing on lessons from recent Sanrem experience in Southeast Asia.

Table of Contents:

1. Introduction 2. Issues in the design of institutions and policies 3. Watershed management in the Upper Manupali basin. 4. What projects and other external agencies can do 5. Conclusions References

Additional Bibliographic Information

Paper presented at the SANREM CRSP Research Scientific Synthesis Conference, Athens, GA, 28-30 November 2001

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