Institutional interaction and participative decision-making in development programmes: a study of their importance in effective natural resource management

Abstract

The impact of institutions on economic development has been a subject of considerable interest in recent years. It is now being widely acknowledged that apart from the standard factors such as capital, labour and technology, institutions matter substantially in determining performance and the outcomes of development. The effect of good institutions is to reduce transaction costs and favour co-operative solution, in which cumulative experiences and collective learning are best utilised. Natural resource management is complex and good institutional arrangements are urgently needed in it. Research and experience indicates that the major difficulty in natural resource management is not physical or technical but one of poor institutional development and design. This becomes crucial for combining scientific approaches, with community participation and ownership, which is frequently a must for effective natural resource management. Literature review has suggested some key features for effective institutions. Good interaction is one of the key features. The research examines the extent and nature of the interaction within various institutional structures created for implementing various watershed development programmes (a major initiative through which natural resource management is pursued in India).Interaction brings in various forces together and promotes cooperative solutions which reduce the transaction cost. The research uses the concepts of new institutional economics and management theories of governance and organisational design. The literature and preliminary field observations are used to develop a conceptual framework which can help understand and explain the need for institutional interaction, its dynamics and its role in achievement of institutional performance. The research then undertakes an in-depth examination of interaction across 30 local watershed development institutions under different watershed programmes in 3 districts of Andhra Pradesh covering 406 households. The data are analysed to examine the nature of the interaction through institutional structures and processes towards the achievement of critical rationalities such as technical, environmental, economic, social, organisational, and financial. The data are used to model and examine the relationship of these factors to several dimensions of performance.

Quantity and quality of interaction are found to be important and vary across institutions and watershed development programmes. The results indicate that an active general body has positive impact on institutional performance. In addition the frequency of user group meetings and attendance in managing committee meeting bear positive relationship with performance. Interactions for technical, environmental, social, and organisational rationalities are positively related to institutional performance. But, interactions for achieving political rationality showed negative relationship with the performance. Also, open membership in institution, mandatory meetings of institutional constituents, involvement of technical experts, social mobilisation, involvement of weaker sections, cooperative decision making, good leadership, and effective coordination bear positive relationship with performance. The research is expected to inform the better design of institutions in natural resource management, particularly watershed development. The large numbers of watershed institutions have poor performance, and many of them become defunct or passive after the completion of the watershed programme. Our research highlights the importance of institutional interaction and may help in better framing of guidelines, institutional objectives and bye laws at national, state and village level. Thus, it may help the government and development practitioners to improve the design of watershed development institutions for better impact on production, livelihoods and poverty alleviation. The research is also a contribution to literature on new institutional economics and ways to better design institutions for institutional interaction and performance.