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The Nile Basin

Yale University Press

Chapter One

WHERE DOES COLLECTIVE ACTION COME FROM?

The empirical puzzle that I examine in this book is that of ten, nominally sovereign, states in the Nile basin that share, to widely varying degrees, the water resources of the basin but that have not developed any comprehensive set of rules and understandings that regulate that sharing. These are, in the terms of water law, the riparian states and will be referred to henceforth as the riparians. They thus face a collective action problem, but there is no consensus among them on how much of a problem it really is. Moreover, the water resources themselves have been only partially appropriated by the riparians through use rights. Only two of the riparians (Egypt and the Sudan) have given formal, reciprocal acknowledgment of their rights, while the other eight riparians recognize neither the Egypto-Sudanese claims nor any other riparian claims. All the riparians periodically extol the virtues of cooperation and coordination in water use, and international funding agencies assure the riparians that cooperation will yield important net benefits, albeit unevenly. How likely is it thatwe will see enhanced cooperation in the Nile basin, and what best explains progress, or its absence, toward greater cooperation among the Nile riparians?

Those questions reflect merely some of the enduring puzzles with which political economists and virtually all social scientists have grappled across the centuries. The master puzzle is the collective action problem. How is it that a set of actors with divergent interests coordinate their actions to achieve common purposes in those areas where their interests converge? A derivative puzzle is the means by which this coordination is brought about and sustained voluntarily. From that puzzle comes the third: how do institutions that foster voluntary cooperation develop and endure? Finally, we face the puzzle of how nominally sovereign actors voluntarily establish procedures jointly to manage and exploit common pool and common property resources. All these terms require more detailed elaboration.

The standard explanations of collective action, or its absence, tend to fall within four explanatory frameworks:

Community, whereby the norms and expectations of a defined group exert such pressure on any individual in that group that she or he "voluntarily" contributes to the public good. Emile Durkheim is the standard bearer of this understanding.

Market, whereby the rational and uncoordinated actions of individuals contribute to the provision of the public good. Adam Smith is the foremost proponent of this school of thought.

Contract, whereby rational actors negotiate an agreement that yields the highest returns for all parties to the contract. John Locke is the leading theorist of contractual solutions to collective action problems.

Hierarchy, whereby solutions to collective action problems are imposed and enforced by dominant powers for whom the benefits of collective action are greater than the costs. Thomas Hobbes is most closely associated with hierarchical solutions (Lichbach, 1996:22-25).

In all forms of economic, social, and political life those who seek to promote collective action simultaneously try to devise formulae to reduce monitoring and its attendant transaction costs and to increase voluntary compliance. Communities may be of the organic variety, emerging slowly and spontaneously, held together by religion, blood, or patriotism. Such groups act collectively because members fear loss of respect if they shirk group duties and gain prestige if they perform well. For some the fear of God is sufficient motivation to adhere to group goals, whereas for others fear of ostracism and expulsion is equally effective.

Other communities are formed by compact and contract. A necessary condition is that each member shares, nominally, in the stated goals of the community. Although membership is voluntary, each member must nonetheless follow the stated procedures of the organization, support it through dues, and risk expulsion if she fails in either respect. Such groups may range from a high school stamp club to the American Medical Association to the North Atlantic Treaty Organization.

Collective action theory, as propounded by Mancur Olson (1971) and others, is better at explaining noncooperation (defection) than it is at explaining collective action itself. It is logical that if an individual can benefit from the provision of a public good, let us say cooperative action that produces net benefits for the participants, without sharing in the costs, then she will free-ride. If defection is not effectively sanctioned, more participants will free-ride until the public good is no longer provided.

Yet we know that collective action is not rare. It is difficult to initiate and difficult to sustain, but solutions have been found. While the explanation of defection and free riding is simple and powerful, the formal explanations for collective action are logically unsatisfactory, or, as Lichbach puts it, "incomplete" (1996:207). For example, contracted cooperation in the absence of a hierarchical authority may not be enforceable or sustainable. Markets that function with low transaction costs may require communities to monitor them. Hegemonic powers may likewise need communities in order to reduce the costs of authoritarian solutions to collective action problems. No single variable offers a complete, logical explanation of collective action. Moreover, each explanation contains a kind of infinite regress within it. Communitarian solutions, for instance, raise the question of the origins of the community itself. Each explanation tends to presuppose a prior successful collective action that itself needs explaining.

Cooperation and coordination bear costs to the beneficiaries of collective action, and because different actors benefit differently from cooperation, some will bear heavier costs than others. Douglass North (1990) and many others have emphasized the role of institutions in eliciting voluntary compliance, reducing monitoring costs, and evening out the costs of collective action. North's understanding of institutions is conceptually broad and includes formal rules and explicit norms, informal understandings, and expectations about others' behavior based on experience. It is important to note that voluntary and coercive solutions are relative concepts. Even the most voluntaristic solutions require monitoring and the application of sanctions against defectors.

Well-functioning institutions provide a framework for relatively voluntary solutions to collective action problems sustained over time. In that sense there is little to distinguish institutional solutions from the establishment of a regime. A regime consists in "sets of principles, norms, rules and decision-making procedures around which actors' expectations converge" (Krasner, 1983b:2). However, regimes tend to come about through the determined actions of a preponderant power, sometimes referred to as a hegemon, that imposes institutional solutions. Those parties to a collective enterprise who stand to benefit the most may have an incentive to enforce adherence to collective goals (see Olson, 1971:30-31; Hardin, 1982:73-75).

An imposed or hierarchical solution does not rely on voluntary compliance and will entail relatively high monitoring costs for the power that establishes the regime. The monitoring is necessary to prevent cheating or outright defection on the part of the weaker and less motivated parties to the collective regime. These costs may outweigh the benefits of the collective action to the dominant power. Classic examples are landlords who have to employ many armed retainers to make sure sharecroppers deliver their contracted shares of total produce; the cost of the retainers may exceed the value of the additional produce obtained by monitoring. A country may spend more on employing inspectors to pursue tax dodgers than the net gain in tax revenues resulting from the pursuit. Commercial contracts may be enforceable only through lengthy legal investigation and court action, thereby nullifying the profits the contract was intended to generate.

Those who carry out transactions within a mature set of institutionalized arrangements know what to expect, how to conduct themselves, and, whatever the relative degrees of coercion and voluntary compliance, most actors can assume that most other actors will uphold their obligations. Therefore, those concerned with solutions to specific collective action problems should concentrate on institutional design (see Ostrom, 1992). That, in turn, will entail far more than rules, sanctions, and formal organizations, although they will be necessary, but in addition a system of incentives and payoffs that will make the collective action sustainable over time. When a collective action problem is solved over time because of a recognized system of institutional arrangements and incentives (and disincentives), then we may speak of the establishment of a regime.

The creation of institutions is itself a collective action problem (Bates, 1988), and, in parallel fashion, there is no logically complete explanation of the emergence of institutions and regimes. The process of institution and regime formation is sui generis and often based on post hoc analyses. With hindsight we can explain the process, but we may not know of all the would-be institutions and regimes that never made it. We can learn from historical processes lessons that we can then apply in consciously trying to craft new regimes. Note that if there is a "we" trying to craft institutions and regimes, this creates another collective action begging for explanation.

In one of the most sophisticated attempts to answer this question, Robert Bates has analyzed the creation of the International Coffee Agreement and the International Coffee Organization (ICO), 1962-89 (see Bates, 1997). The collective action problem was to coordinate the international marketing strategies of the major coffee producer-exporters, primarily Brazil and Colombia, so as to maximize their export earnings. Part of the challenge was to deny the "public good" of higher prices to producing nations that ignored or did not adhere to the production quotas set up by the agreement. The solution to the collective action problem could not be achieved by the major producers alone; the only effective weapon at their disposal against defection was to dump coffee on international markets, thereby driving down prices in an effort to punish those who marketed above quota. But that weapon was two-edged because the major producers would themselves experience substantial losses in export revenues. Consequently, another set of actors, the consumers, had to be brought into the solution in order for the cartel to work. The consumers were represented by the large roasting firms that bought the coffee and marketed it in the major consuming nations. These firms were strategically placed to police producers, refusing to buy coffee from those who did not adhere to quotas (p. 152).

The final piece to the solution was the willingness of the U.S. administration and Congress to accept higher prices for U.S. consumers of coffee than would have prevailed in the absence of an effective cartel. This willingness stemmed from Cold War concerns to stabilize the economies of the poor nations of Latin America which were exposed, so it was feared, to the revolutionary winds blowing from Cuba. U.S. support for the ICO was the functional equivalent of financial aid, but one that did not require annual appropriations and which was mainly invisible to taxpayers and to consumers. It is no surprise that the ICO collapsed at the end of the Cold War.

To answer the question where did this institution come from, Bates stresses the interaction of evolving economic interests and institutions: "Changes in the domestic political structure of Colombia and Brazil freed their governments to collude at the international level. Changes in the structure of political institutions strengthened their governments' capacity to capture, subdue, and prey upon their coffee industries. Interest groups thus do not determine policies. Rather, policies are the result of political processes in which groups gain, or lose, power, depending upon the structure of domestic political institutions" (Bates, 1997:119, emphasis added). We may conclude that international institutions come from a complex, interactive process rooted in domestic interests and institutions. In the instance of the ICO, we know what happened and more or less why and how. But if we were to ask what regime, if any, is likely to emerge after the collapse of the ICO, could we find a parsimonious, theoretically satisfactory answer in what we know of existing economic interests and institutions in the major coffee-producing nations, and in the nature of the post-Cold War world?

The collapse of regimes and institutions, and what replaces them, is a facet of the master puzzle particularly relevant to this study. (The Nile basin was once governed by a hegemonic authority, Great Britain, which imposed a regime, but I will hold that discussion for Chapter 3.) Another recent example of a collapsed hydrological regime is to be found in Central Asia. When Nikita Khrushchev identified the Central Asian republics of the USSR as the locus for the Soviet Union's agricultural future, Moscow took over planning the use of water resources in the two major river systems of the region, the Amu Darya and the Syr Darya. The major focus of agricultural expansion through irrigation was in Uzbekistan and secondarily in Turkmenistan. The three upstream republics of Kazakhstan, Kyrgyzstan, and Tajikistan were to be the sites of water storage, hydropower, and flood control works. Agricultural value-added would accrue mainly to Uzbekistan and Turkmenistan. The regional division of labor and water was authoritatively handed down by Moscow despite the theoretic autonomy of the five republics. This was a hegemonic solution to regime maintenance. There was no question of voluntary compliance as Moscow controlled the investment resources, the party, and coercive force. It is now the case that all five republics are independent, sovereign states. They are relatively free to define their national interests. They have no experience of negotiating with one another over water issues (see Micklin, 1991; O'Hara, 2000:429). The hegemonic regime has been replaced by no regime at all (although the World Bank has been trying to help create one; see Boisson de Chazournes, 1998).

As we shall see in Chapter 3, two regimes, the British and the Cold War, have collapsed in the Nile basin. Will it require a hegemon to impose a new regime, or is a more voluntaristic process possible?

There is much empirical evidence to sustain the proposition that voluntary compliance with international institutions and regimes is not only possible, it is already the norm, Scholars such as Michael Taylor (1990) and Abram Chayes and Antonia Chayes (1995) rightly point out that the "realist school" has advanced a tautology when it posits that a state will respect a treaty only when it is in its interest to do so (1995:3).

(Continues...)

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Excerpted from The Nile Basin by John Waterbury Copyright © 2002 by Yale University. Excerpted by permission.
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