1. Division of Resource Economics 10.06.2016 / 40 Institutional Resource Economics V: Examples from the CEESA Project Konrad Hagedorn Humboldt University Berlin Division of Resource Economics Philippstrasse 13, 10099 Berlin, Germany Phone: + 49-30-2093 6305, Fax: + 49-30-2093 6497 E-mail: k.hagedorn@agrar.hu-berlin.de www.agrar.hu-berlin.de/wisola/fg/ress/ DAAD Workshop on: “Developing Multi-level and Decentralized Implementation Capacity for Natural Resource Management and Environmental Policies: a contribution to polycentric governance in an emerging democracy“, Kiev, September 7-11, 2009 1

2. Division of Resource Economics 10.06.2016 / 40 Four Main Relevant Factors 1.„Revolution“: fundamental transition of economic and political institutions and governance structures 2.Simultaneously starting: transition towards sustainability – from „cowboy economy“ to „spaceship earth“ (Boulding) 3.Socialist legacy regarding the state of natural resources and the environment and its governance 4.EU accession as a special driver towards improved institutions and policies for environmental protection and sustainable resource use How did the CEECs respond to these challenges? 2

3. Division of Resource Economics 08. Juni 2009 Socialist Legacy Regarding Sustainability 3 High input of chemicals and fertilizers, large-scale farming changed landscapes Loss of traditional grassland habitats, less biodiversity, increased soil degradation Large livestock units with slurry systems polluted water and soil But also vast areas of nature and low input agriculture survived, e.g. in mountainous areas After 1990: spontaneous extensification - decreasing inputs, land abandonment, less animals 3

4. Division of Resource Economics 08. Juni 2009 Fertilizer input per ha agricultural land Source: EEA (2007). Europe‘s Environment. Forth Assessment, p. 297 4

5. Division of Resource Economics 10.06.2016 / 40 Is „Twofold Transformation“feasible? (One of the main research questions in CEESA) I.Conventional agrarian and rural institutions, e.g. land rights and markets: Western European countries could serve as successful examples –– institutional and organisational solutions could more or less be replicated I.Institutions for sustainable resource use and environment: western agriculture itself is still in an experimental phase –– institutional transplantation may fail Achieving sustainability when political and economic systems are in a process of change is different: Initial window of opportunity was sometimes used Later lack of capacity and consensus dominated Could the EU (and other international actors) help to overcome these difficulties by harmonization strategies? 5

6. Division of Resource Economics 10.06.2016 / 40 Implementing the Nitrate Directive 1 (CEESA case study results) Poland: Implementation delayed, requested transitional phase of 8 years, 4 years approved by the EU Vulnerable zones declared “unnecessary” Nonegotiation on specific implementation issues Position-based negotiations: diplomatic acrobatics No solution to lack of coordination between local and central authorities and relevant ministries 6 6

7. Division of Resource Economics 10.06.2016 / 40 Implementing the Nitrate Directive 2 (CEESA case study results) Lithuania: Water protection law and water protection areas already exist since 1970/1972 Main element of Nitrate Directive – regulating stocking density of livestock - implemented 2001 Jointly by Agricultural and Environmental Ministry Definition of entire country as a vulnerable zone Implementation capacity by advisory services 7 7

8. Division of Resource Economics 10.06.2016 / 40 Implementing the Nitrate Directive 3 (CEESA case study results) Slovakia: Water protection law and water protection area established in the Seventieth (in Corn Island) New water act 2002 implementing the Nitrate Directive – regulation of fertilizer input, manure storage capacity, number of animals per ha, etc. Continuity of enforcement mechanisms as agricultural structures more or less unchanged Well functioning monitoring network since 1960s 8 8

9. Division of Resource Economics 10.06.2016 / 40 Agri-environmental Programmes and Biodiversity 1 (CEESA case study results) Czech Republic Maintaining extensive farming and protected landscapes after livestock density had become insufficient to maintain species-rich grassland Agri-environmental programs & LFA payments Lacking cooperation between ministries of agriculture and environment and conservation Coordination based on cooperation by land managers and active NGO, not regulatory control 9

10. Division of Resource Economics 10.06.2016 / 40 Agri-environmental Programmes and Biodiversity 2 (CEESA case study results) Slovenia Designing agri-environmental scheme in a protected landscape area for maintaining biodiversity by traditional grazing systems Support policies for LFA exist since 1975 Pilot Agri-environmental Programme in 2001 Local population involved in the set-up of park Long tradition in environmental planning in SL 10

11. Division of Resource Economics 10.06.2016 / 40 Agri-environmental Programmes and Biodiversity 3 (CEESA case study results) Hungary Designing agri-environmental scheme for maintaining biodiversity by traditional grazing Agri-environmental program top-down, prescriptive approach, no LFA support State-owned land leased to famers under strict environmental management conditions Enforcement difficult due to lacking cooperation between authorities and farmers Insufficient participation of local population 11

12. Division of Resource Economics 10.06.2016 / 40 Agri-environmental measures 12

13. Division of Resource Economics 08. Juni 2009 Habitat Directive in 2006 13

14. Division of Resource Economics 10.06.2016 / 40 Water institutions: Irrigation & Drainage 1 (CEESA case study results) Bulgaria Collapse of irrigation system (Theesfeld, Penov) Problem of physical fit: socialist irrigation system inappropriate for the fragmented farm structures Irrigation canals not maintained, water use efficiency declined, exploitation of water system Lack of social capital, World Bank WUAs failed 14

15. Division of Resource Economics 10.06.2016 / 40 Water institutions: Irrigation & Drainage 2 (CEESA case study results) Latvia Frequent collapse of drainage system (Busmanis) Problem of physical fit: drainage system was built irrespectively of land ownership borders Boarders revived and also fragmented farm structures and land abandonment after transition Decay of drainage systems - soil acidification 15

16. Division of Resource Economics 10.06.2016 / 40 Relevance of Properties of Transactions 1 High incentive intensity for private property rights which give access to high individual benefits and cause low costs As governance structures for using private property rights (markets, contracts, standards) are driven by private interests, they arise easier than for non-private property rights. Transactions of excludable goods exposed to rivalry are directly visible, easy monitoring: private goods, private property rights 16

17. Division of Resource Economics 10.06.2016 / 40 Relevance of Properties of Transactions 2 Governance structures for environmental regulation are costly and difficult to craft Transactions of non-excludable goods with or without rivalry are less visible, monitoring costly: public goods or CPR with complex PR Low incentive intensity for non-private property rights because individual benefits and distribution of costs insecure 17

18. Division of Resource Economics 10.06.2016 / 40 Relevance of Properties of Transactions 3 Transition causes problems of physical fit and requires reinvestment, often to be based on collective action (see Bulgaria and Latvia) Sustainable use of CPRs is often linked to physical infrastructure – irrigation and drainage Private property rights - less obstacles against implementation and enforcement than public rights; more attractive and sooner effective 18

19. Division of Resource Economics 10.06.2016 / 40 Relevance of Characteristics of Actors 1 Values and attitudes are not primarily oriented towards sustainability. Mental models of citizens and politicians are still integrating these aspects. Developing a culture of decentralisation, participation and polycentricity is time- consuming. Resource-related organisations like water use systems will still undergo fundamental transformation, but this will take time (see traditions in Slovenia and Slovakia) Cooperation has a bad image in transition countries, but many strategies for sustainable resource use require cooperation (e.g., WUAs) 19

20. Division of Resource Economics 10.06.2016 / 40 Relevance of Characteristics of Actors 2 Transformation Trap? As motivation to design institutions and policies for sustainability is decreased by “spontaneous extensification”, they seem to be unnecessary = Short-term Transformation Trap? Property rights on ecological attributes are often duties causing negative income effects, for example, reduced nitrogen inputs. This provokes political lobbying activities (see Poland)! ‘Other problems’ such as low incomes, declining social security, lack of political stability, threats to social peace, ethnic unrest, etc. are considered more important than environmental matters. 20

21. Division of Resource Economics 10.06.2016 / 40 Politics of EU Environmental Integration Susan Baker: Interacting elites NMS become part of “Eurocratic tradition” CEECs: centralised structures, weak civil society EU harmonization prevents own concepts 21 Diahanna Post: Deception gap Formal transposition of EU legislation „Potemkin harmonisation“ (Wade Jacoby) Janus-faced: satisfying domestic clients vs. pacifying EU administrators

22. Division of Resource Economics 10.06.2016 / 40 References Baker, S. (2004). The Environmental Dimensions of Transition Central and South-Eastern Europe 2004, (Editor Imogen Gladman), Europa Publications, London, 53-62 Baker, S., and Jehlicka, P., eds., (1998). Dilemmas of Transition: The Environment Democracy and Economic Reform in East and Central Europe, London: Frank Cass.. Diahanna Post (2002). Closing the Deception Gap: Accession to the European Union and Environmental Standards in East Central Europe. UCIAS Edt. Vol. 1, Art. 5, Dynamics of Regulatory Change: How Globalization Affects National Regulatory Policies http://repositories.cdlib.org/uciaspubs/editedvolumes/1/5. Gatzweiler, F. (2003). Synopsis of the Central and Eastern European Sustainable Agriculture Project (CEESA). In: Gatzweiler, F. and Hagedorn, K. (eds.) Institutional Change in Central and Eastern European Agriculture and Environment, Vol. 4, Food and Agriculture Organisation of the United Nations (FAO) and Humboldt University of Berlin. 22

23. Division of Resource Economics 10.06.2016 / 40 References Gatzweiler, F.; Sipiläinen, T.; Bäckman, S. and Zellei, A. (2001). Analysing Institutions, Policies, & Farming Systems for Sustainable Agriculture in Central and Eastern European Countries in Transition. CEESA Discussion Paper No. 2, Humboldt University of Berlin, Dept. of Agricultural Economics and Social Science, Chair of Resource Economics, Berlin. Karaczun, Z.; Lowe, P. and Zellei, A. (2003). The Challenge of the Nitrate Directive to the New EU Member States: Comparative Analysis of Poland, Lithuania and Slovakia. In: Gatzweiler, F. and Hagedorn, K. (eds.) Institutional Change in Central and Eastern European Agriculture and Environment, Vol. 2, Food and Agriculture Organisation of the United Nations (FAO) and Humboldt University of Berlin Penov, I. (2002). The Use of Irrigation Water During Transition in Bulgaria's Plovdiv Region. CEESA Discussion Paper No. 7, Humboldt University of Berlin, Dept. of Agricultural Economics and Social Science, Chair of Resource Economics, Berlin. Penov, I.; Theesfeld, I. and Gatzweiler, F. (2003). Irrigation and Water Regulation Systems in Transition: The Case of Bulgaria in Comparison with Latvia, East Germany and Romania. In: Gatzweiler, F. and Hagedorn, K. (eds.) Institutional Change in Central and Eastern European Agriculture and Environment, Vol. 3, Food and Agriculture Organisation of the United Nations (FAO) and Humboldt University of Berlin 23

24. Division of Resource Economics 10.06.2016 / 40 References Gatzweiler, F.; Sipiläinen, T.; Bäckman, S. and Zellei, A. (2001). Analysing Institutions, Policies, & Farming Systems for Sustainable Agriculture in Central and Eastern European Countries in Transition. CEESA Discussion Paper No. 2, Humboldt University of Berlin, Dept. of Agricultural Economics and Social Science, Chair of Resource Economics, Berlin. Karaczun, Z.; Lowe, P. and Zellei, A. (2003). The Challenge of the Nitrate Directive to the New EU Member States: Comparative Analysis of Poland, Lithuania and Slovakia. In: Gatzweiler, F. and Hagedorn, K. (eds.) Institutional Change in Central and Eastern European Agriculture and Environment, Vol. 2, Food and Agriculture Organisation of the United Nations (FAO) and Humboldt University of Berlin Penov, I. (2002). The Use of Irrigation Water During Transition in Bulgaria's Plovdiv Region. CEESA Discussion Paper No. 7, Humboldt University of Berlin, Dept. of Agricultural Economics and Social Science, Chair of Resource Economics, Berlin. Penov, I.; Theesfeld, I. and Gatzweiler, F. (2003). Irrigation and Water Regulation Systems in Transition: The Case of Bulgaria in Comparison with Latvia, East Germany and Romania. In: Gatzweiler, F. and Hagedorn, K. (eds.) Institutional Change in Central and Eastern European Agriculture and Environment, Vol. 3, Food and Agriculture Organisation of the United Nations (FAO) and Humboldt University of Berlin 24

25. Division of Resource Economics 10.06.2016 / 40 References Prazan, J.; Ratinger, T.; Krumalova, V.; Lowe, P. and Zellei, A. (2003). Maintaining High Nature Value Landscapes in an Enlarged Europe: Comparative Analysis of Czech Republic, Hungary and Slovenia. In: Gatzweiler, F. and Hagedorn, K. (eds.) Institutional Change in Central and Eastern European Agriculture and Environment, Vol. 1, Food and Agriculture Organisation of the United Nations (FAO) and Humboldt University of Berlin. Ratinger, T. and Krumalova, V. (2002). Provision of Environmental Goods on Potentially Abandoned Land – The White Carpathians Protected Landscape Area. CEESA Discussion Paper No. 6, Humboldt University of Berlin, Dept. of Agricultural Economics and Social Science, Chair of Resource Economics, Berlin, http://www.ceesa.de.http://www.ceesa.de Ratinger, T., Krumalova, V. and Prazan, J. (2004). Institutional Options for the Conservation of Biodiversity: Evidence from the Czech Republic. CEESA Discussion Paper No. 20, Humboldt University of Berlin, Dept. of Agricultural Economics and Social Science, Chair of Resource Economics, Berlin, http://www.ceesa.de.http://www.ceesa.de 25

26. Division of Resource Economics 10.06.2016 / 40 References Theesfeld, I. (2001). Constraints for Collective Action in Bulgaria’s Irrigation Sector. CEESA Discussion Paper No.5, Humboldt University of Berlin, Dept. of Agricultural Economics and Social Science, Chair of Resource Economics, Berlin. Toma, L. (2003). Policy Recommendations for Pursuing a Sustainable Agriculture in a Small Rural Community in Romania, CEESA Discussion Paper No. 13, Humboldt University of Berlin, Chair of Resource Economics, Dept. of Agricultural Economics and Social Science, Berlin. Udovc, A. and Barbic, A. (2003). Protection of the Environment and Biodiversity for Sustainable Future of Rural Areas: The case of Planned Regional Park Trnovski Gozd, Slovenia, CEESA Discussion Paper No. 14, Humboldt University of Berlin, Dept. of Agricultural Economics and Social Science, Chair of Resource Economics, Berlin. Wasilewski, A. and Krukowski, K. (2002). Land Conversion for Suburban Housing: A Study of Urbanization around Warsaw and Olsztyn, Poland. CEESA Discussion Paper No. 8, Humboldt University of Berlin, Dept. of Agricultural Economics and Social Science, Chair of Resource Economics, Berlin. 26

27. Division of Resource Economics 10.06.2016 / 40 References Zellei, A. (2001). Challenges for Agri-Environmental Policies in CEE Countries. CEESA Discussion Paper No. 3, Humboldt University of Berlin, Dept. of Agricultural Economics and Social Science, Chair of Resource Economics, Berlin. Zellei, Anett, Matthew Gorton and Philip Lowe (2005). Agri-environmental Policy Systems in Transition and Preparation for EU Membership. Land Use Policy 22 (3): 225-234. 27

28. Division of Resource Economics 10.06.2016 / 40 THANK YOU for your attention! --------------------------- Institutional Resource Economics V: Examples from the CEESA Project 28