Dissertation abstract: Three essays on the determinants of behavior in the commons-experimental evidence from fishing communities in Colombia

This dissertation presents the results of a series of common pool experiments conducted in three regions of rural Colombia with individuals who face a social dilemma in their everyday lives that is similar to what was presented in the experiment. The research objectives are to develop an empirical characterization of how individual behavior deviates from purely self-interested Nash behavior and to further our understanding of the effects of alternative institutions to promote more conservative choices in common pool experiments.Groups of five subjects participated in a 20-period common pool resource game framed as a harvest decision from a fishery. Every group first played 10 rounds of a baseline limited access common pool resource game and then 10 additional rounds under one of five institutions: face-to-face communication, one of two external regulations, and communication combined with one of the two regulations. The two external regulations consisted of an individual harvest quota that was set at the efficient outcome, but differ with respect to the level of enforcement. A total of 420 individuals participated in the experiments, with individual earnings averaging slightly more than a day’s wages. The results are presented in three essays.The first essay, What Motivates Common Pool Resource Users?, develops and tests several models of pure Nash strategies of individuals who extract from a common pool resource when they are motivated by combinations of self-interest, altruism, reciprocity, inequity aversion or conformity. The results suggest that a model which balances self-interest with a strong preference for conformity best describes average strategies. The data are inconsistent with a model of pure self-interest, as well as models that combine self-interest with individual preferences for altruism, reciprocity and inequity aversion.The second essay, Communication and Regulation to Conserve Common Pool Resources, tests for interaction effects between formal regulations imposed on a community to conserve a local natural resource and non-binding verbal agreements to do the same. The results indicate that formal regulations and informal communication are mutually reinforcing in some instances, but this result is not robust across regions or regulations. Therefore, the hypothesis of a complementary relationship of formal and informal control of local natural resources cannot be supported in general; instead the effects are likely to be community-specific. There is some evidence to suggest that these effects are correlated with the relative importance of formal regulations versus informal community efforts in the community.The third essay, Within and Between Group Variation in Individual Strategies in Common Pools, analyzes the relative effects of groups and individuals within groups in explaining variation in individual harvest decisions for particular institutions, and uses a hierarchical linear model to examine how these sources of variation may vary across institutions. Communication serves to effectively coordinate individual strategies within groups, but these coordinated strategies vary considerably among groups. In contrast, externally-imposed regulatory schemes (as well as unregulated limited access) produce significant variation in the individual strategies within groups, but these strategies are roughly replicated across groups so that there is little between-group variation.     

From the Holocene to the Anthropocene: A historical framework for land cover change in southwestern South America in the past 15,000 years

The main forest transitions that took place in south-central Chile from the end of the last glaciation to the present are reviewed here with the aim of identifying the main climatic and socio-economic drivers of land cover change. The first great transition, driven primarily by global warming, is the postglacial expansion of forests, with human populations from about 15,000 cal. yr. BP, restricted to coastlines and river basins and localized impact of forest fire. Charcoal evidence of fire increased in south-central Chile and in global records from about 12,000 to 6000 cal. yr. BP, which could be attributed at least partly to people. The subsequent expansion of agriculture led to much clearing of forests and the spread of weeds and other indicators of open habitats. The Spanish colonial period in America may have been followed by a transient expansion of forest cover into abandoned land, as indigenous population declined rapidly due to disease and slaughter. The 18th and 19th centuries brought about extensive loss of forests due to the massive impact of lumber extraction for mining operations both in central Chile and in western North America. Two centuries of intensive deforestation, coupled to grazing by cattle and extremely variable rainfall had long-lasting effects on forest cover in south-central Chile, which persist until today. The transition from a preindustrial to an industrial society brought about the “golden age” of timber harvest, assisted by mobile sawmills and railway transportation since the late 1800s. These advances led to the exhaustion of native commercial timber by the late 20th century in south-central Chile. In North America, harvestable stands were exhausted in New England and the Midwest around 1920. Settlement of the independent territories in the late 1800s and early 1900s implied vast burning and clearing of land and mounting soil erosion. Industrial forestry, based on government-subsidized massive plantations of short-rotation exotic trees, developed in the late 20th century, in connection with postindustrial displacement of exploitative activities from developed to third-world nations. In the last two decades, economic globalization and free trade promoted the expansion of new crops and further decline of woodlands, despite modest increases in forest cover. These patterns are repeated in many Latin American countries. To prevent further depletion of native forest resources and to provide an insurance against climate change, in the 21st century developing nations should aim at: (1) relocating subsidies from fiber farms to restoring diverse forest cover, (2) promoting ecosystem management of diverse forest and crops within landscapes, and (3) fostering diverse cultural relationships between people and their land.     

How far from harmonization are sanitary,phytosanitary and quality-related standards? An exporter’s perception approach

Harmonization of trade regulations and standards is perhaps the most contentious issue regarding export markets due to the impacts that it can have on trade. We determine the extent of harmonization as perceived by exporters with respect to the major Sanitary and Phytosanitary Standards (SPSs) and quality measures which Chile faces in 16 international fresh fruit markets. The methodology combined qualitative and quantitative techniques. First, the most relevant safety and quality standards and regulations were identified and ranked. Second, a representative sample of exporters was interviewed to assess their perceptions regarding the level of stringency across markets and time for selected regulations. Perceptions were ranked on a likert scale and based on this scale a stringency index was constructed. The results show that Chile faces regulations which can be grouped into the following categories: (i) phytosanitary measures; (ii) tolerance limits for pesticide residues and contaminants; (iii) hygiene requirements; (iv) labeling, marking and packaging; (v) product and process standards; and (vi) registration procedures and other import requirements. The number of regulations varied among countries, ranging from 13 to 3 out of the 14 considered in the study. The most stringent country among the sample as perceived by exporters was México, whereas the least stringent was Saudi Arabia. Additionally, exporters agreed that stringency has increased over time with an average of 15% between 2005 and 2009.     

The Impact of the Multinational in the Development: An Ethical Challenge

Multinational enterprises have continued their increase during the last decades. What these companies do and how they do, determines not only the economic development of countries, but also their social and cultural development. This enormous power implies responsibility and new challenges.If we also take into account the role of multinational enterprises in what has been called sustainable development, we see that their importance is still more decisive.In order to guide the performances of multinational enterprises that operate in developing countries, several supranational organizations like the ILO, the OECD, the EU and the UN have elaborated some recommendations to unify criteria and to set out some minimum standards to favor an integral development of these countries. In this document we present three of those with the greatest impact and we analyze them from the approach of an ethical sustainable human development.     

What motivates common pool resource users? Experimental evidence from the field

This paper develops and tests several models of pure Nash strategies of individuals who extract from a common pool resource when they are motivated by a combination of self-interest and preferences for altruism, reciprocity, inequity aversion, or conformity. Using data from experiments conducted in three regions of Colombia that depend critically on a local fishery, we test whether an econometric summary of the subjects’ pure Nash strategies is consistent with one or more of these models. We find that a model that balances self-interest with a strong preference for conformity best describes average strategies.     

Accounting for Risk and Stability in Technology Adoption

The reasons for sluggish adoption of long‐run agricultural systems are not well understood. Researchers have identified risk and uneven cash flows as two likely culprits, yet the literature has done little to investigate their impacts simultaneously. We explore the unique influence of risk, risk preference, stability, and stability preferences on the adoption of long‐run investments. We developed risk‐stability‐segregated expected utility (RSSEU) to disentangle risk from stability and then compute the impacts of risk, stability, and preferences over a range of values found in previous studies. Results clearly demonstrate that adoption decisions are influenced differentially by risk and stability. An unstable income can overwhelm the risk effect or visa versa, depending on a person's preferences for risk and stability. Disentangling risk and stability could be very important if economists are to understand how decisions are made. For example, we found that the impact of risk on individual behavior is very low when the expected income flow is unstable. In this case, policies that smooth expected income over time will be more effective than ones that reduce risk. In contrast, risky technologies with a stable income path are more appropriately addressed with instruments like insurance or facilitating futures markets. Les raisons de la lente adoption des systèmes agricoles à long terme ne sont pas bien comprises. Selon certains chercheurs, le risque et les flux de trésorerie irréguliers sont deux facteurs probables; toutefois peu de travaux se sont penchés sur leur impact simultané. Nous avons exploré l'influence du risque, des préférences pour le risque, de la stabilité et des préférences pour la stabilité sur l'adoption d'investissements à long terme. Nous avons élaboré une espérance d'utilité distincte risque‐stabilité(risk‐stability‐segregated expected utility) pour dégager le risque de la stabilité et pour calculer l'impact du risque, de la stabilité et des préférences à partir d'une série de valeurs tirées d’études antérieures. Les résultats ont clairement montré que les décisions d'adoption sont influencées différemment par le risque et la stabilité. Un revenu instable peut accabler l'effet du risque ou vice versa, selon les préférences d'une personne pour le risque et pour la stabilité. Si les économistes veulent comprendre de quelles façons les décisions sont prises, il serait important de dégager le risque de la stabilité. Par exemple, nous avons observé que l'impact du risque sur le comportement individuel est très faible lorsque les flux de revenus sont instables. Dans ce cas, les politiques qui adoucissent les revenus prévus au fil du temps seront plus efficaces que celles qui diminuent le risque. En revanche, des instruments tels que les assurances et les marchés à termes sont des moyens plus efficaces lorsque les technologies comportent des risques et que les revenus sont stables.     

Economic reforms and labour markets: policy issues and lessons from Chile

Over the last twenty years sweeping reforms have deeply transformed the labour market in Chile. A visible outcome has been the reduction of Chile's rate of unemployment from 'European' to 'US' levels. Even though the political context makes this experiment special, are there economic lessons to be learnt? This paper concentrates on reforms to job security, on the decentralization of the wage bargaining process, and on the reduction in payroll taxes. It concludes that the reduction of payroll taxes (within the context of the social security reform), and the decentralization of bargaining increased labour market flexibility and contributed to the reduction of unemployment. On the other side, the analysis suggests that the reform on job security had no significant effect on the aggregate rate of unemployment.