On the use of group performance and rights for environmental protection and resource management

Abstract

Environmental and natural resource (ENR) policies that focus on group outcomes are common but have received relatively less attention from economists than policies based on individual behavior. Existing research tends to focus on particular contexts, such as water or air quality, fisheries, or land use. This paper discusses unifying themes of group performance policies, along with their advantages and disadvantages. We discuss a range of specific policy instruments, including group-based taxes, subsidies, and fixed penalties. We show how, in principle, group-based policies can be designed to achieve efficient provision of group-level environmental performance; however, in some cases, group policies can lead to suboptimal outcomes. We discuss the incentives for collaboration that can arise when regulators impose group performance policies, and the role that it can play in promoting efficient outcomes. We argue that the success of group-based policies will depend both on how the policy is designed (i.e., the external rewards and penalties) and on how the group operates. This implies potential complementarities between “top-down” regulatory interventions based on group performance and “bottom-up” within-group incentives for self-governance. Our discussion suggests that group performance policies should play a more prominent role in the suite of policy instruments considered by scholars and policymakers concerned with ENR management.