DISSERTATION SERIES No. 9 Can Decentralization Save Bolivia’s Forests? An Institutional Analysis of Municipal Forest Governance Krister P. Andersson Center for the Study of Institutions, Population and Environmental Change Indiana University CAN DECENTRALIZATION SAVE BOLIVIA’S FORESTS? AN INSTITUTIONAL ANALYSIS OF MUNICIPAL FOREST GOVERNANCE Krister P. Andersson Submitted to the faculty of the University Graduate School in partial fulfillment of the requirements for the degree Doctor of Philosophy in the School of Public and Environmental Affairs and Department of Political Science, Indiana University August, 2002 © 2002 Krister P. Andersson ALL RIGHTS RESERVED ii To my parents, Jan and Gullvi Andersson iii iv TABLE OF CONTENTS Acknowledgments xi Abstract xiii CHAPTER 1 Has decentralization improved the conditions for good governance of Bolivia’s forests? 1. Introduction 1 1.1. Why Bolivia? 3 1.2. Structure of the Study 4 2. A Historical Perspective of Forest Governance in Bolivia 7 3. Contextual Factors Influencing Forest Governance in Bolivia 8 3.1. Biophysical Characteristics 9 3.2. Forest User Attributes 11 3.3. Institutional Aspects of Forest Use in the Bolivian Lowlands 15 3.3.1. Centralist Government and Political Instability 15 3.3.2. The Cultural Legacy of Agricultural Bias 16 3.3.3. The Collapse of Centralized, Coercive Governance 17 3.3.4. The Second-Generation Reforms 18 4. Open-Access Common-Pool Resource Problems in Forestry 20 4.1. What is the role of governmental authorities in solving CPR problems? 22 4.2. Can Bolivian forest users self-regulate the open-access regime? 23 4.2.1. Forest Tenure Security As a Collective Good 23 5. Conclusion 26 CHAPTER 2 Is the municipal mandate in Bolivia’s forestry regime conducive for local problem solving? 1. Introduction 27 2. Background: Municipal Governance of Civic Affairs 29 3. Forest Governance in Bolivia: The Old and New Regimes 32 3.1. Short-Term Forest Concessions 33 3.2. Uncertain Property Rights 33 3.3. Volume-Based Logging Fees 33 3.4. Inequitable Distribution of Benefits 34 3.5. Weak Enforcement Mechanisms 34 3.6. Weak Incentives for Sustainable Practices 34 3.7. Political Manipulation of Sector Decisions 35 4. Decentralization of Forestry-Sector Competencies 35 4.1. The New Regime Actors and Their Powers 37 4.2. The Municipal Mandate 37 4.3. Financial Means to Perform 37 5. Is the municipal mandate conducive for collective-action facilitation? 41 6. Municipal Governments’ Competence Related to Tenure 42 6.1. The Possibilities of the Decentralization Reforms 43 6.1.1. Leading the Participatory Planning Process 44 6.1.2. Facilitating Conflict Resolution 45 6.1.3. Creating Municipal Forest Reserves 45 6.1.4. Assisting User Groups with Management Plans 45 v 6.1.5. Inspecting Forestry Operations 46 6.1.6. Assisting Users to Deal with Bureaucracies 46 6.1.7. Carrying Out Technical Assessment for Land Clearings 46 6.1.8. Creating and Maintaining Urban and Rural Property Cadastres 47 6.1.9. Disseminating Information 47 7. Conclusions 48 CHAPTER 3 Under what conditions can municipal forest governance succeed? 1. Introduction 50 2. Institutional Analysis of Municipal Forest Governance 52 2.1. Using the IAD Framework to Specify Hypotheses 52 2.2. Defining the Desirable Outcomes 54 2.3. Barriers to Desirable Outcomes: Motivational and Informational Problems 56 3. Dealing with Motivational Problems in Municiapal Forest Governance 57 3.1. Potential Financial Gains 58 3.2. Central Government Pressure 59 3.3. Constituent Demands 59 3.4. Interest Groups 60 4. Creating Accountability Mechanisms to Address Motivational Problems 60 5. Dealing with Informational Problems inside Municipal Governments 62 5.1. Learning about Local Context 64 5.2. Conditions Conducive for Learning 65 6. Designing the Empirical Inquiry 67 6.1. Research Design and Hypotheses 67 6.2. Hypotheses 68 7. Field Methods 70 8. Conclusion 72 CHAPTER 4 What motivates municipal governments? Uncovering the Institutional Incentives for Municipal Governance of Forest Resources 1. Introduction 73 2. Background 74 3. The Conditions for Successful Municipal Governance of Forests 76 4. Motivation Problems in Municipal Governance 79 5. The Approach of the Empirical Inquiry 79 5.1. Is the random sample representative? 80 5.2. The Dependent Variable 81 5.3. The Independent Variables 82 5.4. Analytical Methods 84 6. Are municipalities motivated to provide forestry-related services? 84 6.1. Central Government Funding 84 6.2. Central Government Coercion 86 6.3. Demands from NGOs and Externally Funded Projects 87 6.4. Demands from the Electorate 87 7. Conclusion 88 vi CHAPTER 5 Explaining the Mixed Success of Municipal Governance of Forest Resources: Overcoming Local Information Barriers 1. Introduction 89 2. Background 90 3. Informational Problems 91 3.1. Information about the Performance of Public Officials 92 3.2. Information about the Local Circumstances 93 3.3. Information about What Other Organizations Are Doing and Learning 93 4. Empirical Analysis 94 4.1. Dependent Variable 94 4.2. Independent Variables 94 4.2.1. Conditions for Downward Accountability 95 4.2.2. Conditions for Municipal Staff to Learn about Local Conditions 95 4.2.3. The Conditions for Coordination and Horizontal Learning 96 5. Empirical Methods 97 6. Empirical Findings: Explaining Successful Municipal Governance 98 6.1 The Conditions for Holding Municipal Officials Accountable 98 6.2 The Conditions for Learning about Local Circumstances 99 6.3 The Conditions for Inter-Organizational Coordination 100 7. Discussion of Findings 101 8. Conclusion 103 CHAPTER 6 Can the new regime of formal property rights make forest management a more attractive land-use option for rural smallholders? 1. Introduction 104 1.1. Structure of the Chapter 106 1.2. Definitions 107 2. Background 107 2.1. Empirical Evidence of Forest Tenure Insecurity 109 3. Property Rights and Incentives for Forest Management 111 4. Bolivia’s Formal Forest Property Rights Regime 113 4.1. The Main Actors of the New Forest Property Rights Regime 117 5. Incentives, Tenure Security, and Property Rights 119 6. The Empirical Inquiry 123 6.1. Selection of Case Study Sites 123 6.2. Case Study Methods 125 6.3. Results 127 6.3.1. Does the introduction of de jure alienation rights make forest management more profitable? 127 6.3.2. The Significance of Municipal Governance in Smallholders’ Land-Use Decision Making 131 6.4. Qualitative Hypothesis Testing 132 7. Conclusions 135 vii CHAPTER 7 Can decentralization save Bolivia’s forests? Putting Municipal Forest Governance into a Spatially Explicit Perspective 1. Introduction 138 1.1. Structure of the Chapter 141 1.2. Definitions 141 2. Background 141 3. Direct and Underlying Drivers of Deforestation in Bolivia 143 3.1. Direct Drivers in Bolivia 144 3.2. Underlying Drivers in Bolivia 145 3.3. Public Policy As an Underlying Driver to Deforestation 146 3.4. Public Policy As a Solution to Unauthorized Deforestation Problems 147 4. Methods 148 4.1. Dependent Variable 148 4.1.1. Unauthorized Deforestation Index 148 4.2. Independent Variables 152 4.3. Control Variables 153 5. Results 154 6. Discussion of Results 156 7. Conclusions: Can decentralization save Bolivia’s forests? 158 CHAPTER 8 Conclusions 161 1. Summary of Main Findings 163 1.1. What motivates municipal governments to take forestry action? 164 1.2. What makes municipal forest governance effective? 165 1.3. Can the decentralized regime make forest management more attractive? 167 1.4. Can good municipal governance produce improved forest conditions? 169 2. Implications of the Study 171 2.1. Implications for Municipal Governance Actors 172 2.2. Implications for National Forestry Policy 173 2.3. Implications for Future Research 174 References Cited 176 viii FIGURES Figure 3.1. A Framework for Institutional Analysis 53 Figure 3.2. The Four Interrelated Action Arenas of Municipal Forest Governance 54 Figure 3.3. Casual Mechanisms of the Research Design 69 Figure 4.1. Forestry Service Provision in the Lowlands 81 Figure 4.2. Probabilities of Municipal Provision of Forestry-Related Services under Different Incentive Structures 87 Figure 5.1. Probabilities for Achieving Successful Municipal Governance 99 Figure 6.1. Simplified Causal Flow for Rules, Rights, Incentives, and Outcomes 122 Figure 7.1. Designated Land Areas for Exclusive Forest Use According to the Land-Use Plan for Santa Cruz, Bolivia 149 Figure 7.2: Authorized and Unauthorized Deforestation in Santa Cruz, Bolivia, 1993–2000 151 TABLES Table 1.1. Land Tenure and Forest Access Rights in the Lowlands 13 Table 1.2. Forest User Group Characteristics 14 Table 1.3. Supportive Tasks for Self-Governance Compared to the Municipalities’ Official Mandate 25 Table 2.1. Fiscal Transfers to Rural Municipalities in the Cochabamba 31 Table 2.2. Comparing Old and New Forestry Regimes at the Constitutional Level 36 Table 2.3. Forest Governance Competences after the Decentralization Reforms 38 Table 2.4. Distribution of Government Revenues from Forest Management Activities 39 Table 2.5. Main Formal Competencies of Municipal Governments in the Forestry Sector 40 Table 2.6. Possible Contribution of Municipal Governance to Secure Property Rights for Smallholders 42 Table 3.1. Supportive Municipal Tasks for Self-Governance Compared to the Municipalities’ Official Mandate 66 Table 4.1. Formal Municipal Government Mandates in the Forestry Sector According to the 1996 Forestry Law and Subsequent Regulations 75 Table 4.2. Differences of Means Tests for Lowland Municipalities in Bolivia 80 Table 4.3. Survey Results from Lowland Municipalities 85 Table 4.4. Logit Regression Results (n = 50, r2 = .78) 86 Table 5.1. The Effect of Information Sharing by Municipal Governments on Resource Users’ Ratings of Municipal Forestry-Sector Services (N=33) 98 Table 6.1. Results on Grassroots Perceptions on Most Serious Obstacles to Better Forestry Practices 109 Table 6.2.