The Institutional Economics of Water Saleth Dinar 2004

The Institutional Economics of Water Saleth Dinar 2004 An impressive World bank affiliated document looking at the physical, social, economic and, importantly, institutional, aspects of the state of the Earth's water. Lots of citations, especially to this exciting looking North guy.

One major aspect of first part of first chapter is illustrating the diminishing returns of investment in water stability. A sign of Peak Water.

p12: because they are so good about breaking down troublesome dichotomies like private and public, their own use of the terms can get a little confusing.

p20. Regression is used for everything. They also disclose their 'methodolical foundations': the institutional ecology principle, 'ex-ante approach, subjective theory of institutional change, and the 'institutional decomposition and analysis framework.

"there are formal instituions and informal institutions; macro-level and micro-level institutions; procedural and behavioral institutions. ceremonial and instrumental instutitions (Bush 1987) Schotter (11981) has collectivist and organic."

For more distinctions Kiser and Ostrom 1982 has constittuional choice rules, colelctive choice rules and operational choice rules.

Can I find a balanced perspective on "institutional thickening"?

quotes

• "Simon observes that 'it is because individual humans beings are limited in knowledge, foresight, skill and time that organizations are useful instruments for the achievment of human purposes' (1957: 199)']]]

citations

• much "crude" and "conceptually difficult" research linking GDP to water stability. Citation in paper on p6
• "Likewise, the existence of dense social networks of social relations and other noneconomic institutions can also be used to build useful economic institutions" (Polanyi 1957, Granovetter 1985)
• wierd: institutions via rational choice: Twight 1992 and Boyer and Hollingsworth 1997a 442-3)
• Douglas 1986 on informal instuttions, relflecting their environemtns "social reflection of arrangements found in nature" could be awesome or empty.

hints about North

• he looks at how "institutional evolution" meets interference from rent-seeking by the politically powerful.

"*Thus, there is a two-way relationship between knowledge and institutions, and, in this sense, knowledge and institutions are viewed as substituties. In view of this substitutability, Coase (1960) states that institutions ar not needed in a world of perfect knowledge and full information ... Institutions are, therefore, a substutute of accureate information because they provide a basis for making reasonably sound decisions by ensuring the behavior of others (North 1990a:6, 27)" p.24

• • excellent
• "Institutions influence economic performance through their effects on the cost of exchange (transaction costs) and production (transformation costs) (North 1990a 5-6). Since efficiently functioning institutions minimize uncertainty, they facilitate exchange directly by providing information and indirectly by reducing transaction costs
• "North and Thomas (1973) argue that cahnges in relative prices provide incentive for the creation of efficient institutions. Hoever, North(198`1) abandons the view that institutions evolve into efficient forms and refines the explanation for the persistence of inefficient institutions. The explanation starts the with distinction between institutions and organizations and shows how the interaction between them hapes the direction of institutional change. Although the explanation seems to hinge on rent-seeking behavior (strategic transactions in Figure 2.1), it goes much deeper. It incorporates the role of the link-in effects and teh attendant network externalities emerging from the symbitioc relationship between institutions and organizations in reinforcing the ongoing path and resisting any shift to a new path of institutional change (North 1990a; 7-8).
• "The inevitability of subjectie and incomplete processing of infomration allows ideology, bias and ignorance to play a major role in human choices. According to Noth1990a; 26), 'institutions alter the price paid for one's own convictions and hence, play a crucial role in the extent to which nonwealth-maximizing motivations influence choices'".p41 For the first sentence, I would like that to read as bias and ignorance being good things, since all that is synonymous with 'heuristics' which have an important role to play. For the secon, the North quote, I like how it could be rad as an arg for or against institutions. Very good sentence.
• wierd quote:"These institutions functions enable the state to reduce the transaction cost per unit of exchange (North 1986; 236). This scale economy effect makes the state a more efficient mechanism than other governance arrangements for lowering the overall transaction costs of both market and nonmarket institutions (Eggertsson 1996a;9). In addition to the maintenance roles, the state also has a more active role as the supplier of institutional change, such as research nad information systems, bu suporting the indentification evaluation, and dissemination of institutional best practive and success stories from around the world. . Moreover, given the coercive and persuadive powers of modern states, they can also play mediating and facilitative roles, particularly in avoiding dead ends and in defending societal values (North 1981 and 1990a).

As anyone can see, an amazing diverse and alsmost schizophrenic diversity of information has been attributed to North and particularly, to North 1990a.