Monday, July 14, 2008

Jurisdictional Optimality

First off, I think I've figured out how to connect to the internet
through a bluetooth connection to my cell phone. Finding a GSM cell
phone with bluetooth capabilities was a bit of an adventure in and of
itself--I wound up with a nifty (and questionable) Motorola Razr labeled
"Cingular," which I can use with my Telefonika "Movistar" or my "Tigo"
GSM chip. Tigo offers pay-by-the-minute internet connections, and I'm
able to thread the internet through the cell phone into the laptop. I
know it _can_ work, because I got it to work for about a minute this
afternoon. Since then, something's been up with the Tigo network, and I
can't get on. But hopefully, I'll be able to connect soon, and post
these blog postings--a pretty good stack of them by now.

Buying the phone, by the way, was awesome. It involved haggling in a
market with a very helpful indigenous woman in traditional dress,
questionable packaging, the smell of rotten fruit... the works. I'm a
terrible haggler, but I still managed to get her from 1700 to 1100
Quetzales (still a lot of money, but if it works...) I asked to see the
box, which she had (somewhat amazingly), though it looked like it had
made a couple trips on the roof of a bus with the pigs and potatoes. It
even came with a charger, a USB cable, and a CD-ROM. And a couple of
"bonus" pictures of videos and photos taken with the phone's camera of
Guatemalan guys and gals

All right, so here's the (not so) brilliant theoretical speculation for
the week...

I've been thinking a lot about the differences between Uspantán and
Santa Catarina Barahona--both seem to have relatively well-functioning
muni. governments, even though there are some pretty compelling reasons
(like the overall level of corruption in Guatemalan politics) to think
that they shouldn't work that well.

But Uspantán has really poor forestry-related outcomes, both
qualitatively and quantitatively, including only one municipal employee
in forestry (who doesn't seem to do much...), a very small percentage of
the budget spent in forestry, and a pretty rapid rate of deforestation.

The biggest difference is size--Uspantán is huge, but I think it's more
than just the size-to-resource ratio that's making this work.

I think there's a rational choice story to tell here about optimal
jurisdictional size.

There's some work that's been done in American politics, and I believe,
some in Comparative as well, that examines the effects of multi-purpose
jurisdictions (like municipalities) compared to single-purpose
jurisdictions (like school districts and water districts). There's also
some work in American Politics that theorizes about the nature of the
optimal jurisdictional size. What I have in mind is Ferejohn and
Weingast's _Can the States be Trusted?_, which basically argues that,
for each policy area, there is an optimal jurisdictional size and shape,
and therefore, some tasks are best handled at the (centralized) level of
the state (that is, the country), some are best handled at the level of
the region (states in the U.S.), and some are best handled at lower
levels--like towns, school districts, counties, parishes, and water
districts.

One of the ideas expressed by the contributors to the book, which is an
edited volume (Maybe McKinnon and Nechyba?), argues that one of the
tricks to setting jurisdictional size is making jurisdictions (states or
cities or whatever) of a size so that the individuals who bear the costs
of pursuing a particular policy (the costs of infrastructure
development, presumably, or the costs of enforcement, or whatever) also
are the same people that experience the benefits. It's not fair to have
all the people in a huge jurisdiction paying for benefits (like urban
sidewalks and streetlights) that only a relatively small number of
people can enjoy on a regular basis.

What they don't get into in the book is _why_ sub-optimal jurisdictional
sizes are not only an _ethical_ problem, but also a practical problem.
This is where my idea comes in.

Say, for the sake of argument, there exist two jurisdictions. The first
of these is relatively small--about 10 square kilometers, and is all
within the same municipal watershed, and isn't easily subdivided into
smaller neighborhoods or villages. In general, illegal cutting of trees
in this jurisdiction (let's just call this place, for the sake of
argument, Santa Catarina) might benefit the people doing the cutting,
but if they are from outside the jurisdiction, the local government has
no reason to care about their benefits (they can't vote for or against
the mayor, after all), and if they are from inside the jurisdiction,
they will also share the costs of the cutting. Maybe in this place,
illegal cutting might lead to watershed degradation, or maybe it might
just reduce the amount of wood that will be available in the future for
exploitation. In a place like this, the costs of enforcement are borne
by the same people who experience the benefits of (a) a reliable water
supply, and (b) sustainable forestry practices over the long term.

The second jurisdiction, called Uspántan, however, is much bigger (about
750 square kilometers), and takes a lot longer to get around (probably
about a nine hour drive, from tip to tip). It also encompasses a large
number of smaller, easily definable units (villages, or "Aldeas"), and a
number of small, local watersheds. In addition, although there are
forest properties which are owned privately, there are also properties
which are owned by the aldeas as communities, but all of the enforcement
takes place at the level of the municipality and higher (there are, for
example, national police in Guatemala).

In this second municipality, people have a strong incentive to manage
their local forests sustainably, and in a way which will preserve local
ecosystems (including watersheds). However, people in one aldea have
relatively weak incentives to care about effective enforcement in the
municipality as a whole (they really only have a reason to care about
the local area), and in fact, a fairly large number of people may enjoy
some significant benefits from cutting illegally in other areas--they
cut somebody else's trees, and enjoy all the economic benefits of
selling the lumber, while experiencing none of the costs, or at least
none of the costs from the cutting they do themselves (they may
experience the costs of the whole arrangement).

Further, officials at the local level may experience fairly strong
(though difficult-to-observe) pressure from individuals who benefit from
a weak enforcement regime--the people cutting illegally may pressure the
mayor and other local political figures _not_ to enforce rules very
strictly, because they stand to lose a lot from effective enforcement.

It also isn't hard to imagine that these dynamics would be encouraged by
Guatemala's electoral laws, which facilitate the persistence of a large
number of parties and factions, while requiring a mayor only receive a
plurality of votes at the local level. Due to the large numbers of
parties/factions involved, Mayors may only receive a 15% or 20% share of
the vote at the local level, but still be the highest vote-getter.
Under these circumstances, it would make sense for politicians to pursue
more clientilist or particularist electoral strategies, rather than
pursuing strategies aimed at the median voter.

If I'm right, two things should be true:
1. Larger municipalities should experience poorer forestry-related
outcomes, including outcomes in policy choices such as percentage of
budget expended in forestry, and number of employees in forestry
enforcement and monitoring.
2. This effect should not be washed out by a variable (forestry
officials per square km.) designed to capture resource scarcity relative
to size.

There is a problem, though, which is endogeneity, which might wash out
these effects, statistically, now that I think about it. I'm going to
have to give that one some thought.

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