Transaction costs, collective action and adaptation in managing complex social-ecological systems

Abstract

With the escalating uncertainties and surprises faced in responding to environmental and natural resource challenges has come growing recognition of the need to manage such issues as social-ecological systems and value the capacities that enable adaptation to these changes. Adaptations in environmental management often involve complex, including wicked, problems of collective action. Institutions introduced to reduce the transaction costs of solving these problems do not come for free. A cost effectiveness framework designed to provide a comprehensive and logical structure for economic evaluation of path dependent institutional choices in this context, and a procedure for boundedly rational empirical application of the framework, are proposed and illustrated in this article - including for the choice between water buy-back and infrastructure upgrade programmes for accumulating the 'environmental water' needed to sustain the ecosystems of Australia's Murray–Darling Basin. Also outlined is a research strategy designed to help identify the heuristics needed for application of this procedure.