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6. Policy options and instruments

6.1 General economic and social policies
6.2 Policies relating to agricultural and rural development
6.3 Policies relating to markets and property rights
6.4 Policies aimed at establishing democratic and participatory processes
6.5 Policies focussed specifically on natural resource use and environmental protection

Policies that affect sustainability are of five types (FAO n.d., 48-9):

· General economic and social policies intended to influence overall economic growth, trade, price levels, employment, investment and population, attained chiefly by utilizing monetary and fiscal instruments.

· Policies relating to agricultural and rural development. Policies of this type are usually intended to influence such factors as the agricultural resource base, agricultural production, consumption of agricultural products, agricultural price levels and variability, rural incomes and the quality of food. They are usually implemented via instruments such as taxes and subsidies, direct government production and provision of services, and direct control through regulation.

· Policies relating to markets, including the establishment of market institutions and rules, and circumscription of property rights.

· Policies aimed at establishing a democratic and participatory process designed to involve all interested groups in decision making and implementing SARD.

· Policies designed specifically to influence natural resource use and protect the environment. These policies utilize: (i) command and control (effected, for example, by prohibiting or limiting certain resource uses or establishing limits on emissions, with penalties for non-compliance); (ii) economic incentives such as taxes and subsidies; and (iii) persuasive measures such as education and advertising.

The first four categories above are not primarily intended to achieve SARD, and are adopted to accomplish other goals. Yet all are essential for SARD. Therefore, the challenge in policy making is to integrate sustainability and environmental considerations into mainstream policy making both within the agricultural sector and generally.

In the following sub-sections, these five main categories are discussed in more detail.

6.1 General economic and social policies

6.1.1 Fiscal and monetary policies
6.1.2 Trade and exchange rate polices
6.1.3 Labour and employment policies
6.1.4 Investment and foreign aid
6.1.5 Population policies
6.1.6 Incomes and equity policies

6.1.1 Fiscal and monetary policies

Fiscal policies include government expenditure, taxes and subsidies. Direct impacts on SARD arise from expenditure on such things as agricultural research and extension, and public works in rural areas. Taxes, on the other hand, may be targeted to help regulate resource use, such as resource rent taxes or taxes on polluters. Some specific examples of targeted expenditures and taxes are discussed under later sub-headings.

Many governments, especially in industrialized countries, raise the majority of their taxes from progressive income taxes. If net incomes of workers are to rise with general economic growth, labour costs to employers must rise more steeply to cover the extra tax. Faced with a higher wages bill, firms will find it profitable to substitute other, less heavily taxed natural resources for labour. Clearly, such a taxation system will lead to a too high utilization of natural resources, renewable or otherwise, relative to labour. Biasing the taxation system more strongly towards resource taxes should help promote more sustainable development. In the many developing countries where income taxes are not that pervasive, the issue will be less the tradeoff between income and natural resource taxation than between the latter and other forms of taxation.

More generally, in the short to medium term, prudent fiscal management is important for SARD. The reason is that, without it, economic instability may be created that is likely to discourage private investment, and frequent budget crises may disrupt the provision of important public services. In the longer term, a too large public sector, with high rates of taxation and high government spending, may 'crowd out' development in private sector activities, of which agriculture is usually one. Also in the longer term, the way the government allocates expenditure among sectors and activities, and the way taxes are levied differentially on various sources of income, activities and assets, influences both the sectoral make-up of GDP and the distribution of income. Thus, governments that allocate resources mainly to the urban areas, and tax agriculture, directly or indirectly, will discourage SARD, whether wittingly or not (Markandya and Richardson 1994).

Monetary policies can affect inflation, interest rates, and credit supply. The effect of inflation on SARD is likely to be complex and not easily predicted. However, measures to limit inflation, such as price controls placed on basic items like food, will obviously damage the agricultural sector and so are likely to discourage SARD. Moreover, inflation leads to economic distortions that, in the main, are also likely to be inconsistent with the attainment of SARD.

The general view about the relationship between interest rates and SARD is that low rates are preferable to encourage resource owners to make investments in resource conservation measures that yield benefits only in the longer term. However, if low interest rates are achieved by artificially holding down rates, the result may be 'financial repression', meaning that the development of the financial sector will be inhibited. This will discourage formal savings and so will limit the funds that financial institutions can lend as credit. Rural people are often 'at the end of the line' for the delivery of credit by formal financial institutions. As a result, the rate of rural investment tends to be slowed, with negative implications for SARD.

6.1.2 Trade and exchange rate polices

This group of policies includes taxes on imports and exports and controls on trade. Such policies tend to reduce the domestic producer prices for export products and to push up the domestic prices on imported items. These impacts will affect commodities and sectors differentially, and it is impossible to say for sure what the effect on SARD will be. However, in so far as export taxes are imposed on agricultural products, rural incomes will suffer. The damage may happen directly and also through the effects on prices of domestically produced food as producers switch away from production for export. Because SARD is partly about sustainable rural livelihoods, interventions that reduce rural incomes also damage sustainability. Import duties on agricultural inputs, or restrictions on their importation, are likely to have a similar effect, except in the case of inputs such as agricultural chemicals that cause serious environmental and human health risks.

In a global setting, a more open foreign trade framework, with fewer taxes and restrictions on imports and exports, is usually held to be good for sustainable development. The case for free trade is that it will allow production to take place in accord with the economic principle of comparative advantage. That in turn would mean that less resources and other inputs would be needed in aggregate to attain a given level of production, which should be good for everyone and for the environment. However, as discussed above in sub-section 4.1, free trade, while generally having the expected benefits on economic growth and efficiency, may have negative effects on equity, at least at first. The environment too may suffer if, for example, free trade makes it possible for rich countries to export some of their pollution problems to poor countries.

So far as exchange rate policy is concerned, some countries, concerned about the impact of negative external balances on their international purchasing power, have sought to maintain a high official exchange rate by limiting imports. Experience and economic logic both suggest that such policies are likely to be unsuccessful in the longer run. However, while they are in place, they turn the domestic terms of trade against those sectors of the economy that produce tradeable goods, including agriculture. And the distortions induced can be massive, far outweighing any subsidies that may be offered to farmers such as bounties on fertilizers. Clearly, such distortions can be devastating for SARD.

6.1.3 Labour and employment policies

Wage policies normally cover only that part of the labour force that is unionized and in the formal sector. In many less developed countries, the proportion of the labour force in such employment is small, so that wage policies have limited impact on either overall wage levels or SARD. (The same may not be true for the industrialized countries.) However, wage policies may affect the allocation of labour between sectors. Moreover, if large differentials between urban and rural wages result, they may lead to an unwanted acceleration of rural-urban migration, with concomitant problems of urban congestion and pollution.

Also of concern is the issue of rural unemployment, whether overt or hidden, existing in some countries. In countries where social welfare programs are not well developed, under-employment or unemployment among rural or urban workers is a serious threat to sustainable livelihoods. While solutions may be sought in the medium to longer run by encouraging economic growth and the development of labour-intensive industries, in the short run, relief measures may be needed. 'Food for work' schemes may provide an opportunity to combine the relief of poverty with labour-intensive public works. Such works can be used to conserve or enhance the resource base, for example through afforestation programs or public works to control soil erosion.

Aspects of employment policy relating to human resource development are discussed later.

6.1.4 Investment and foreign aid

Given that the goal of sustainability policy is to transfer the equivalent of the current resource base to the next generation, investment policy is obviously crucial. In part, this is a matter of creating an environment that is 'friendly' towards private investors. Too many barriers for the entry of foreign investors will deter the international flow of capital, as will too strict rules on the repatriation of profits. Similarly, both economic instability and social unrest will deter all investors, foreign or local.

On the other hand, investments can be devastating for SARD if investors do not have to pay for negative externalities they cause (e.g. dams taking water from downstream users, wells lowering the water table for all). Clearly, measures need to be in place either to prevent such negative externalities, or to make investors pay for them.

The importance of avoiding interventions that cause financial repression and so deny would-be investors, especially those in rural areas, access to credit markets has already been discussed.

Because public funds are always limited, direct government investment should be allocated to areas where market failure leads to underinvestment. Such areas include investments in human capital (i.e. in people). Building human capital for sustainability is likely to require substantial government investments in health services, education and training. Similarly, public investments may be needed in open access resources such as many fisheries and some forests, as well as in state-owned resources such as rural infrastructure. (See Bromley and Cernea 1989 for a discussion of the different types of resource property regimes.) For SARD, an appropriate proportion of such improvements needs to be directed to rural areas where these services are typically very inferior to those in the cities.

Common property and open access resources important for SARD may include fisheries, forests, and water supplies. Some state property, such as public roads, also has open access characteristics. Because individual private investors are seldom able to capture for themselves all the benefits from investments in open access resources, there is often a need for intervention. Governments may need to step in either to undertake those investments that are socially profitable but privately unprofitable, or to create institutional arrangements whereby externalities are internalized to enable private investors to earn an appropriate return on their capital. Examples of the latter type of policy intervention include the privatization of water supply agencies and the letting of contracts for the construction and operation of toll roads.

Government investment decisions need to be based, so far as possible, on a careful assessment of the social benefit of each investment. The methods for undertaking such project appraisals are well known, and have been extended in recent years to try to take proper account of environmental impacts (Edwards-Jones 1996; World Bank 1991). However, as discussed earlier, performance measures based on discounted cash flow may need to be used as part of a multi-criteria analysis that also includes other aspects such as inter-generation equity (see section 8.5.3).

In less developed countries, where government funds are typically very limited, foreign aid, including concessional loans, may be used to help make good any shortfall in the level of public investment needed for SARD.

6.1.5 Population policies

The threat to SARD posed by population growth was indicated in section 3.1 above. It is clear that, at least in the long run, population growth must be slowed and perhaps reversed if sustainability is to be attained. Even in the shorter run, population growth presents challenges for many less developed countries. Substantial investments are needed in order to expand both food production and the provision of services such as education and health in line with the increasing numbers. Sustainable development is therefore made all the more difficult in such cases.

The trouble is that some of the more reliable birth control measures are not acceptable in all societies. This tends to make the whole subject of population policy a difficult one for policy makers. Yet there are other means of approaching the topic than by a head-on confrontation with sometimes strongly held ethical values.

Policies that improve the education of girls and the status of women, including the employment prospects for younger women, will usually lead to a reduction in fertility. Moreover, when the status of women rises, they are more likely to take more control of their own fertility, no longer relying on the decisions of their male partners, local health workers or religious leaders.

More generally, there is evidence that birth rates tend to fall as child mortality is reduced, urbanization spreads and living standards rise. The policy interventions to promote such outcomes are seldom contentious, and will slow population growth.

That said, it is held by many to be a desirable policy to make sure that no woman is denied access to the means to limit the frequency with which she conceives, regardless of religious or other taboos that dictate what methods are available to her to attain that end.

Population policy also extends to measures to affect the geographical distribution of people. Governments can influence the rate of migration to urban areas, chiefly by manipulating, wittingly or otherwise, rural-urban real income differentials. Policies to concentrate public investment and service provision in the cities will accelerate rural-urban migration, and vice-versa. Similarly, governments can adopt policy measures to try to influence the distribution of the rural population, for example through land settlement schemes such as the Indonesian transmigration programs.

6.1.6 Incomes and equity policies

The importance of taxation in affecting incentives to use resources in a more or less sustainable way has been discussed in 6.1.1 above. A second consideration in setting taxes, however, relates to the distribution of income and wealth. Taxing the rich and stripping them of some of their assets to meet the needs of the poor of this generation, or to invest for the benefit of poor people in the future, can obviously be one way of attaining the goal of sustainable development. Unfortunately, it is seldom politically feasible on any substantial scale! However, where wealth or income comes from economic rents that result from public investments, such as increased value or productivity of land due to public infrastructure construction, it may be more acceptable to tax away at least a part of those gains.

Policies can also be adopted that specifically target the poor, such as famine relief programs, food for work schemes, or provision of free or subsidized services. Most industrialized countries have extensive social welfare programs in place to help the disadvantaged, such as the sick, the old or the unemployed. Because such programs are very expensive, in most less developed countries they are of much more limited scope, or are even totally absent.

The argument for policies designed to achieve a more equitable distribution of income is not that the poor cause more resource degradation than the rich, and so must be helped out of their poverty. Indeed, the contrary is often the case, given the much higher levels of consumption of items such as fossil fuels in rich countries. Rather the aim is to make possible a reasonable standard of living for today's poor. Then they can have the means to provide a more sustainable future for their children, for example by providing them with good nutrition, sound health care and a good education.

6.2 Policies relating to agricultural and rural development

6.2.1 Rural infrastructure
6.2.2 Building human capital for the rural sector
6.2.3 Agricultural research and technology development
6.2.4 Agricultural prices
6.2.5 Stabilization and risk in agriculture
6.2.6 Direct government involvement
6.2.7 Sustainable rural livelihoods
6.2.8 Food and nutrition

While the general economic and social policies outlined above may be very important for SARD, they mostly fall outside the area of responsibility of agricultural professionals. The policy areas discussed next, on the other hand, relate specifically to the rural sector and will, in many cases, lie within the competence of ministries of agriculture.

6.2.1 Rural infrastructure

Rural infrastructure improvements contribute to SARD by improving the availability of services or other facilities that enhance the productivity of private rural capital. A tarmac road that lowers travel time and reduces vehicle running costs, also lowers the costs of marketing agricultural produce and reduces the delivered cost of farm and household requisites. Similarly, an irrigation system raises the productivity of farmland while a telephone system lowers transaction costs in agricultural marketing and improves efficiency by giving producers better access to price information.

While public investments in rural infrastructure are important for SARD, so is the provision of systems and funding for the maintenance of existing infrastructure. Without the latter, investments in infrastructure may be wasted or may yield lower benefits than they should. One of the most significant impacts on sustainable development of the crisis in Africa in the 1980s was the serious deterioration of all types of infrastructure because of lack of maintenance.

Because provision of infrastructure is usually expensive and because opportunities are many and funds restricted, major policy questions arise as to which infrastructure projects are to be given priority. In such a situation, proper investment appraisal is important. Such appraisals should obviously account for environmental impacts of the proposed project. In planning a new road, for instance, proper attention to alignment and to such design features as the control of storm-water run-off may add little to costs but may reduce the environmental harm considerably.

Given that the planning is done well, infrastructure improvements can promote SARD:

· by improving the terms of trade of producers in previously isolated areas;

· by permitting the new or more intensive use of previously too isolated land or other resources, so reducing pressure on other areas;

· by permitting previously isolated rural communities to benefit from better access to services such as health and education, and agricultural extension.

6.2.2 Building human capital for the rural sector

Human capital improvement is the aspect of SARD that can too often be neglected in the thinking of agriculturalists. Yet, as noted earlier, improvements in human capital have been the source of most of the gains in the productivity of agricultural land and labour in the past. Given that the land frontier has been reached in most countries, and that areas available for farming and forestry are likely to decline, policies to enhance rural human capital need to be given high priority.

The provision of universal education and health services in rural areas are two main ways of improving the agricultural human resource base. Usually, neither of these will be the responsibility of agricultural planners. However, the training of agriculturalists and the dissemination of agricultural knowledge to farmers and others is usually a matter in which agricultural ministries have some responsibility.

Policy interventions here, therefore, relate to the provision and operation of training facilities, and programs to extend that training into rural villages. The scope, organization and orientation of agricultural extension also need to be considered. The existing extension service may not be up to the task of promoting SARD. The skills of the personnel may need to be upgraded to provide them with better understanding of sustainable farming methods. Given the increasing recognition of the importance of people's participation in attaining SARD, those extension services that have been used to a 'top-down' approach may need to undergo dramatic reform.

The role of the mass media in promoting SARD should also be considered in reviewing policy. More sustainable farming practices may be promoted using media such as radio which, along with other promotional methods, may be a relatively cheap and effective way of changing attitudes and values about rural resource use.

6.2.3 Agricultural research and technology development

The contribution of improved technology to SARD has already been emphasized. Policy issues relate to how the development of such improved and sustainable technologies is to be encouraged. At issue in the public sector will be the level of funding for agricultural research and the allocation of those funds between research organizations, commodities, disciplines and projects. The merits of a farming systems approach versus a more traditional disciplinary division of activity needs to be examined. Whatever approach is taken, mechanisms for setting research priorities that are relevant and responsive to the needs and circumstances of rural producers need to be in place. The research done also needs to be reviewed regularly to ensure that funds are being used wisely and well, and that progress towards the intended goals is being attained.

Policy attention also needs to be given to the staffing of R&D efforts for SARD. That means determining the allocation of funding for agriculture faculties of universities and for agricultural colleges. It also raises the question of whether research training in various sub-disciplines is to be provided in-country or using overseas universities that may be better equipped for the task. In many less developed countries, the retention of trained research staff may be a problem, given the international mobility of good scientists. Measures such as bonds and incentive payments may need to be put in place to secure the proper staffing of research programs.

In addition to public sector R&D activity, policy initiatives to promote private sector efforts should also be considered. Instruments here include possible government support for private or corporate research organizations, perhaps by raising levies on agricultural sales. Attention also needs to be given to property rights legislation, such as patents laws and plant variety rights, in order to give innovators the opportunity to profit from their investments. Possible tax breaks for firms doing R&D may be another form of intervention that may generate social benefits and promote SARD.

The detailed consideration of such agricultural research policy and management issues as those broached above is outside the scope of these guidelines. The International Service for National Agricultural Research (ISNAR) is a centre within the CGIAR set up specifically to assist in such matters. ISNAR has published a number of relevant guides (e.g., Chissano 1994; Crosson and Anderson 1993).

6.2.4 Agricultural prices

Policies designed to raise the prices paid for agricultural produce may be implemented by restricting or taxing competing imports, by limiting production by quotas, or by direct subsidies. Producer prices may be driven down by restricting or taxing agricultural exports, by subsidizing imports, or by directly taxing sales.

In the past, at least, governments in less developed countries have typically sought to drive farm prices down to keep food prices low. Often, the aim was to benefit urban dwellers and to restrain the growth of urban wages. Governments in industrialized countries, on the other hand, have typically sought to push farm prices up to satisfy farm lobby groups. Recently, there has been increasing recognition that both types of distortion cause mis-allocation of resources and are therefore not conducive to SARD.

While any inefficiency in resource allocation can be damaging for SARD, there are some specific negative impacts of distorted agricultural prices. Low agricultural prices threaten SARD by discouraging the growth of farm production and by making it difficult for rural people to earn sustainable livelihoods. Investment in agricultural resources, such as land improvements, will be dampened under a low-price regime. High prices, on the other hand, lead to uneconomic use of inputs, some of which, such as chemicals, may be damaging to the environment. High prices may encourage the too intensive use of marginal lands. They may also prompt socially unprofitable and unsustainable but privately profitable investments, such as unsuitable clearing of forest and woodland, or draining of wetlands, for agricultural use.

6.2.5 Stabilization and risk in agriculture

There are two main areas of policy intervention in relation to risk in agriculture. The first is in hazard reduction. Major natural disasters, such as cyclones, severe floods, or fires, can have significant negative impacts on the resource base. Land may be irreversibly damaged by sudden erosion, land slips or inundation. Similarly, assets such as crops, trees, animals, and land-based improvements such as fences, terraces, irrigation works, roads and villages may be damaged or destroyed over large areas.

Policy makers need to give attention to justifiable measures to prevent or limit the impacts of such disasters. Instruments include the construction of protective works such as levee banks or fire breaks, and the establishment and maintenance of disaster warning systems.

The invasion of agricultural systems by serious pests, diseases or weeds is another potential hazard that can be minimized by proper quarantine measures and by having in place plans to control outbreaks before they spread.

Man-made disasters, such as wars and civil unrest, can produce damage at least on the same scale as many natural disasters. In these cases, both prevention and mitigation of consequences are obviously more difficult.

The second type of policy intervention is needed after a disaster, whether natural or man-made, has happened. For the damaged systems to recover with minimal threat to sustainability, governments (perhaps along with international agencies) may need to implement various forms of disaster relief. Relief measures adopted may include emergency food supply, provision of materials for replanting crops, supply of replacement breeding animals, and help with reconstruction.

6.2.6 Direct government involvement

Governments often engage directly (usually through government agencies set up for the purpose) in rural resource management, more often in forestry than in farming. They also often participate in agricultural input supply, provision of rural credit, and in marketing agricultural production.

In regard to all such participation, the policy question to be addressed is whether government agencies are as efficient and effective in the attainment of SARD as private enterprise would be. Governments are increasingly moving to privatize these types of functions in the belief that the answer to the question is in the negative. However, it is unwise to be too dogmatic on the issue. There may be cases where public ownership can be advantageous. For example, governments can typically get access to capital at lower rates than private businesses. Arguably, therefore, they are better placed than the private sector to make the long-term investments needed for sustainable production in, say, forestry. Thus, direct government participation in production and marketing in agriculture needs to be looked at on a case-by-case basis, and not judged in any doctrinaire fashion.

6.2.7 Sustainable rural livelihoods

Since SARD means sustainable rural livelihoods, now and in the future, policies are needed in many less developed countries (and in some industrialized ones) to deal with the persistent problem of rural poverty. Unfortunately, it is not easy to identify and implement appropriate remedial measures - if it were, the problem of poverty would have been solved long ago.

Sustainable reductions in poverty will surely require the integrated and effective implementation of a wide range of policy initiatives under all or most of the headings in this section of the guidelines. To illustrate what may be entailed, Box 7 contains one suggested list of the policy measures needed to assist the rural poor to attain sustainable livelihoods.


Adapted from Chamber and Conway 1992, pp. 31-33.

I. Enhancing capability:

The provision of enabling infrastructure and services including:

· education for livelihood-linked capability

· health, both preventive and curative to prevent permanent disability

· bigger and better baskets of choices for agriculture, and support for farmers' experiments

· transport, communications and information services (about rights, markets, prices, skills...)

· flexible credit for new small enterprises

II. Improving equity

Giving priority to the capabilities and access of the poorer, including minorities and women, via:

· redistribution of tangible assets, especially land, and land to the tiller

· secure rights to land, water, trees and other resources, and secure inheritance for children

· protection and management of common property resources and equitable rights of access for the poorer

· enhancing the intensity and productivity of resource use, and exploiting small-scale economic synergy

· rights and effective access to services, especially education, health and credit

· removing restrictions which impoverish and weaken the poor

III. Increasing social sustainability

Reducing vulnerability so that the poor do not become poorer by:

· establishing peace and equitable law and order

· disaster prevention

· counter-seasonal strategies to provide food, income and work for the poorer at bad times of the year

· prompt support in bad years, and high prices for tangible assets people sell in distress

· health Services that are accessible and effective in bad seasons, including treatment for accidents

· conditions for lowering fertility.

6.2.8 Food and nutrition

The provision of an adequate diet and satisfaction of nutritional needs for all are inseparable from SARD. As discussed in subsection 3.2, population growth and rising incomes will cause substantial increases in the demand for food. Moreover, progressive reductions in the numbers of poor people who often go hungry are necessary for sustainable development, to reduce suffering and to provide better opportunities for them to live healthy, productive and fulfilled lives.

Food and nutrition policy goals include security of food supply, safe and good quality food and adequate and healthy diets for everyone. To a large degree, these goals are consistent with the broader objectives for SARD. Sustainable agricultural production will mean increased food supplies and increased income-earning opportunities, leading to reductions in poverty and malnutrition. In some countries, however, specific measures to improve the food security of the poor and malnourished may be needed. The appropriate policy interventions here are the same as those mentioned in relation to the previous topic of sustainable livelihoods.

A focus on food security also means correcting any imbalance in the proportion of agricultural research and extension efforts directed to food crops, rather than to export or industrial crops. In the past, there has been a tendency in some countries to neglect roots, tubers, plantains, traditional legumes, oilseeds, vegetables and fruits, which are commonly eaten but which less frequently enter domestic and international trade. Promoting the increased production of some of these crops may lead to better human diets and more sustainable production systems. The reason is that such crops can provide alternatives to the intensive production of the main staples or export crops. More attention may also need to be given to post-harvest systems for all food crops that are affected by significant losses and quality degradation.

Measures to improve the quality and safety of food have direct beneficial effects on health and nutritional status. They include establishing and enforcing food laws, support for consumer organizations, and education to improve food quality, safety and preparation. Measures are needed to prevent the contamination of food with agro-chemicals, or by pests including micro-organisms, as are procedures to detect such contamination in locally produced or imported foods.

Widespread nutrition and diet education, delivered through formal schooling and the mass media, can promote good eating habits and healthy lifestyles, so reducing the incidence of nutrition-related diseases. Especially important for SARD are improvements in child nutrition to make sure that children grow up able to fulfil useful roles in the society of the future.

6.3 Policies relating to markets and property rights

6.3.1 Resource property rights
6.3.2 Institutional development

6.3.1 Resource property rights

The main property rights important for SARD are those relating to land and water (including inland and marine fishery resources).

Typically, most land is held in private or communal ownership, fisheries are in public or communal ownership, or are open access, and most water resources are in public ownership. Policy options in relation to these various types of property rights include:

· policies entailing reallocation of resource property rights between public, communal and private ownership;

· policies relating to the redistribution of privately owned resources among private individuals;

· policies that govern the utilization of open access, state and common property resources; and

· policies to establish and enforce procedures to encourage the efficient and sustainable use of resources.

All four types of policy interventions are likely to have impacts on sustainability, efficiency and equity. Moreover, particularly for the first two, where there is change of ownership, the full impacts of a particular policy may be difficult to predict and may not necessarily be positive for all three criteria. By their very nature, changes in property rights are likely to make some individuals better off and others worse off, meaning, as noted earlier, that such policies are often politically sensitive and divisive.

A change to property rights may be justified when present rights are leading to degradation of an open access or common property resource through over-use. The intervention may range from assistance with the creation or strengthening, of an organization of users which has the right to manage the resource, to privatization or nationalization of the property. While the modern tendency is more in favour of the former than the latter, case-by-case consideration of likely implications is required. In Burma and Nepal, forests previously in communal ownership were nationalized with the aim of limiting over-use. The result was an increase in illegal cutting of timber since the dispossessed communities no longer saw the forest as 'theirs', and government enforcement of cutting restrictions was weak. In South Asia, the transfer of irrigation tanks at the time of independence from the control of local rulers to village councils or other democratic bodies generally resulted in a decline in standards of maintenance.

Land settlement schemes are a particular case of the transfer of property rights from public to private ownership, although seldom is the full freehold title to the land given to the settlers. On the other hand, it is increasingly common for governments to sell off property rights, such as the privatization of water supply utilities in Britain.

Very inequitable access to resources may exist when a few individuals own disproportionate shares of a resource. Such situations may be incompatible with SARD and may require a reallocation of ownership. Dispossessed owners may or may not be compensated and, if compensated, may receive full or partial compensation. The most familiar example of policies of this kind is land reform carried out under such slogans as 'land to the tiller'. Experience shows that radical land reform is difficult to implement because of the power and influence of the land-owning class. Moreover, the benefits are often not as great as the proponents hope, at least in the short to medium term. However, these are not reasons for doing nothing when the existing ownership pattern is not sustainable.


Adapted from: Toulmin et al, 1992, quoted by Carey 1994.

Where existing land tenure arrangements are not conducive to SARD, revised legal frameworks can help in the establishment of the necessary conditions for what is called 'primary environmental care'. Primary environmental care fosters natural resource management by building on local skills, local resources and forms of cooperation, and participation to empower local communities. Legal revisions need to be directed to granting rights, access and security of tenure to farmers and pastoralists so as to foster responsibility and farsightedness, and the application of appropriate regulations to prevent pollution and resource degrading activities. A good example is the PNGTV in Burkina Faso.

Under this program, land tenure conditions have been established for widespread action at the local level. It follows the enactment of land tenure reform in 1984, to ensure fair access to land and resources and to encourage greater local involvement in managing and restoring degraded land.

The program is carried out in four stages and now involves about 380 villages, most of which are in the first two stages. First, a village-level committee is established after discussions and training. The committee works with program staff to define and demarcate the village boundaries. A resource inventory is then made. The last two stages involve negotiating and finalizing a contract between the government and the village committee about the investment level for better productivity and: management of village resources.

Problems that still need to be resolved include better allocation of formal powers in the village committees and ensuring representation in the committees of all land users, including migrant farmers and herders. In addition, more efficient ways to map, produce resource inventories, and plan land improvements must be found as the current procedure is still too lengthy.

Policies to improve the efficiency of use of public or open access property resources include the introduction or variation of prices charged to users, or the imposition of quotas on use. For instance, rights to use common grazing land, forests or fishery resources may be restricted to avoid over-use. In some cases, former curbs on use of common property may have broken down under pressures such as those resulting from population growth and increased commercialization. As a result, policy measures may be needed to strengthen former rationing institutions or to establish new ones. For example, limits may be set on the number of fishing operators in a given fishery and on the size and nature of each operator's catch.

Water policy issues relate mostly to the private utilization of public, open access or communal resources. Legal and institutional structures governing such utilization vary widely. These structures influence efficiency and sustain-ability of the use of the resources, including the degradation of the resource by contamination. As urban and industrial use of water grows, the management of water for multiple uses (including re-use) will grow in importance, as will the need for mechanisms to improve the efficiency of water allocation between users. Both realistic water pricing and the introduction, where practicable, of 'polluter pays' charges for water contamination appeal to many economists as 'win-win' policy reforms. They encourage the more sustainable use of a valuable resource and generate financial resources that can be invested in sustainable development, such as watershed management or the maintenance of water catchment infrastructure. However, in both cases, the distributional impacts of the new measures need to be considered carefully. Moreover, the near-impossibility of implementing an effective tax on pollution generated by many small-scale farmers limits the feasibility of applying the polluter pays principle in agriculture.

In a similar fashion, the tendency of many governments to charge loggers less than the full competitive value of the timber in public forests leads to forgone income for the public purse. Worse, it also causes inefficient and unsustainable use of the resource.

Property rights are likely to be a source of inefficiency if they do not provide for the transfer of the resources to those best able to use them. For example, in many countries the outright sale of land is prohibited, and in other cases renting land is illegal. Moreover, the lack of a transferable title to land may inhibit the users of that land from gaining access to formal credit. That will have negative implications for efficiency, and also possibly for sustainability if lack of equity capital precludes investments in land improvements. In such situations, tenure reforms more consistent with SARD might be designed.

Even when land is held in individual tenure, the security of that tenure may affect the care with which the land is conserved and used. If access is for a limited time only, as under some leasehold arrangements, there may be no incentive for the land-user to manage the resource with an eye to long-term productivity. The same may apply when the rules prohibit the inheritance of the property rights by the owner's surviving spouse or children.

Security and transferability of title can be of benefit for other forms of property such as rights of access to common property or state-owned resources like fisheries and irrigation water.

6.3.2 Institutional development

In this context, 'institutions' are defined as the rules, conventions and other elements that form the structural framework of social interaction. They establish the cooperative and competitive relationships that constitute a society and, more specifically, an economic order. Organizations are not the same as institutions under this definition, although an organization may be seen as part of the institutional framework.

There are many different types of institutions potentially important for SARD. They may be divided into community-based institutions and market-based institutions. Within the former are various types of cooperative arrangements and value systems that affect agricultural production and rural resource use. These include informal arrangements such as family ties and responsibilities, systems of rank and social status, shared values and beliefs, religious or other taboos, and peer group pressures. The scope for government policy intervention in these areas is obviously limited, but not negligible. Education and media campaigns can contribute to changed attitudes and values. 'Change agents', such as community leaders, can be 'cultivated' by government officials to pass on information and ideas about sustainable development to others in their communities. Similarly, local organizations such as religious establishments or women's groups may be encouraged by government to promote SARD in local communities.

More formal institutions may be established or manipulated by governments. Examples include laws and regulations governing the operation of cooperatives, political parties and lobby groups, land tenure systems, or rules for the operations of financial organizations such as banks and credit unions. Many of these more formal institutions are mentioned under other headings.

Market-related institutions are concerned with production, processing and marketing of agricultural commodities and with the management of agricultural resources. The category also extends to institutions ancillary to agriculture concerned with the delivery of related services.

Consistent with the notion that command and control systems generally do not perform as well as market-based ones, policies to encourage market development will generally be consistent with SARD. Effective intervention may include strengthening many market-related institutions by removing unnecessary regulations and restrictions on the development of business activity and by the establishment of an economic environment in which business entrepreneurship can prosper. Laws on fair trading may need to be improved, and curbs imposed on the power of monopolies. Provision of good market information systems and other measures to promote the development of small businesses in agricultural marketing will tend to benefit both agricultural producers and food consumers through lower marketing margins. Similarly, the appropriate framework may need to be created to facilitate the provision of finance for a growing rural business sector. Action may also be needed to foster the creation of a stock exchange, if none exists, in order to enable business owners to raise equity capital and spread business risks into the wider community. Despite the usual political sensitivity of such matters, consideration may need to be given to relaxing restrictive rules governing foreign investment in agricultural marketing and finance if local resources are inadequate.

6.4 Policies aimed at establishing democratic and participatory processes

6.4.1 Decentralization
6.4.2 People's participation and empowerment

6.4.1 Decentralization

Successful policy making for SARD requires that policy makers have a sound knowledge of the systems of production and resource use with which they are dealing. That usually means a need for a close familiarity with farm and rural household systems - something that may not be easy for urban-based policy makers. Since it is the farmers, foresters, fisherfolk and local people who ultimately have to decide what to do in managing rural resources sustainably, it is logical to involve them as fully as possible in decision making about SARD.

Central policy makers, directors of research and extension and the like cannot have sufficient intimate knowledge of all local circumstances to make top-down policy making work. The more decisions can be decentralized, and the more responsibilities can be delegated to local level, including to local communities, the better the system is likely to work. Of course, it would be irresponsible for important policy decisions to be delegated to local level if, at the same time, local people, organizations and governments were not provided with the training, resources and other support needed to carry out those responsibilities.

Decentralization, by itself, will not work unless clear lines of communication are established between the central authority and the local level. Information about local needs and circumstances must be communicated effectively from the local and provincial level to the centre, so that overall resource allocation decisions can be made sensibly. Also, procedures must be in place to identify where weaknesses at the local or provincial level are impeding progress, so that central authorities can take remedial action.

It follows that the important policy decisions are to determine how far it is practicable and wise to delegate both responsibility and funds to provincial, district and local bodies, including local community groups. Such delegation will require that appropriate ways of monitoring these delegated activities be set up and that effective ways of communicating between the levels are devised and used.

6.4.2 People's participation and empowerment

There is a large literature on people's participation in SARD and it is impossible to do justice to it all here. For the reasons given above, people's participation is an essential element of any successful SARD policy. Unfortunately, however, much of what is written about participation, while long on rhetoric, is short on practical guidelines for implementation.

The basic problem with a policy to promote people's participation is that many existing agricultural organizations, such as universities, research organizations, extension bodies and regulatory authorities, find it difficult to learn from, and work with, farmers and rural people. This is because 'they are characterized by restrictive bureaucracy and centralized hierarchical authority; their professionals are specialists and see only a narrow view of the world; and they have few systematic processes for getting feedback on performance' (Pretty 1995, p. 202). Pretty, among others, has advocated the need for a dramatic paradigm shift based on the definition of new roles for development organizations and professionals, with new concepts, values and behaviours. He does acknowledge, however, that such a revolution will not be easy to achieve.

Given the likely difficulty in achieving the advocated dramatic transformation in procedures for full and effective people's participation, a more pragmatic approach is taken here. A strategy that is evolutionary rather than revolutionary is outlined. It has several components that are discussed in turn.

First, a truly participatory approach requires reasonable development of democratic processes, including respect for human rights, and concern for the status of women, children and minorities. Moreover, participation requires freedom from the ravages of war and civil disturbance and reasonable standards of law and order and security.


Taken from Pretty 1995, p. 201.67

From the old professionalism

To the new professionalism

Assumptions about reality

Assumption of singular, tangible reality

Assumptions of multiple realities that are socially constructed

Scientific method

Reductionist and positivist; complex world split into independent variables and cause-effect relationships; researchers' perceptions are central

Holistic and post-positivist; local categories and perceptions are central; subject-object and methods-data distinctions are blurred

Strategy and context of inquiry

Investigators know what they want; pre-specified research plan or design. Information is extracted from controlled experiments; context is independent and controlled

Investigators do not know where research will lead; it is an open-ended learning process. Understanding and focus emerge through interaction; context of inquiry is fundamental

Who sets priorities?


Local people and professionals together

Relationship between all actors in the process

Professionals control and motivate clients from a distance; they do not trust people (farmers, rural people etc) who are simply the object of inquiry

Professionals enable and empower in close dialogue; they attempt to build trust through joint analyses and negotiation; understanding arises through this engagement, resulting in inevitable interactions between the investigator and the 'objects' of research

Mode of working

Single disciplinary - working alone

Multi-disciplinary - working in groups

Technology or services

Rejected technology or service assumed to be fault of local people or local conditions

Rejected technology or service is a failure

Career development

Careers are inwards and upwards - as practitioners get better, they are promoted and take on more administration

Careers include outward and downward movement; professionals stay in touch with action at all levels

The extent to which these preconditions are met obviously varies from country to country, and scope for intervention to bring them about when they are lacking may be limited.

Second, there is a need to develop skills and to change attitudes and values both in local communities and among agricultural professionals. SARD issues need to be integrated at all levels of formal and informal education and training. Moreover, according to some commentators, there is a need to 'transform the learning environment', to change rural organizations into 'learning organizations'. An indication of what these commentators have in mind can be gleaned from Box 9. It is less clear what policy measures are needed to effect such a transformation.


Adapted from Pretty 1995, p. 173

1. Passive participation. People participate by being told what is going to happen or has already happened. It is a unilateral announcement by administration or project management without any listening to people's responses. The information being shared belongs only to external professionals.

2. Participation in information giving. People participate in answering questions posed by investigators using questionnaire surveys or similar approaches. People do not have the opportunity to influence proceedings, as the findings are neither shared nor checked for accuracy.

3. Participation by consultation. People participate by being consulted and external agents listen to their views. These external agents define both problems and solutions, but may modify these in the light of people's responses. Such a consultative process does not concede any share in decision making and professionals are under no obligation to accept people's views.

4. Participation for material incentives. People participate by providing resources, for example labour, in return for food, cash or other material incentives. Much on-farm research falls into this category, as farmers provide the fields but are not involved in experimentation or the process of learning. Although often called participation, people have no stake in prolonging activities when the incentives end.

5. Functional participation. People participate by forming groups to meet predetermined objectives through the development or promotion of externally initiated social organizations. Such involvement is seldom at early stages of project cycles or planning, but rather after major decisions have been made. These institutions tend to be dependent on external initiators and facilitators, but may become self-dependent.

6. Interactive participation. People participate in joint analysis, which leads to action plans and the formation of new local institutions or the strengthening of existing ones. These groups take control over local decisions and so people have a stake in maintaining structures or practices,

7. Self-mobilization. People participate by taking initiatives to change systems, independent of external institutions. They develop contacts with external organizations for resources and technical advice they need, but retain control over how resources are used. Such self-initiated collective action may or may not challenge existing inequitable distributions of wealth and power.

Third, and related to the organizational transformation just mentioned, there is a need to make agricultural research, extension and support systems more sensitive to the needs and circumstances of their clients. A number of ways of conducting research and extension have been advocated, and some have been tested, based on a participatory approach. While there are often bureaucratic and other impediments to the successful implementation of such methods, a move at least a little way along the road will often be possible. It requires a policy decision in favour of following that route, then that decision to be put into effect, with the necessary reorientation of activities and approaches. Implementation will need to include providing staff with the appropriate training and incentives. In many cases, forging closer links between research and extension will be an important co-requisite for more successful overall engagement with client farmers and rural people.

Fourth, a policy decision to promote and work through local organizations, including NGOs, may circumvent some of the difficulties in transforming hidebound government organizations into people-sensitive entities. This is a matter of delegating both responsibilities and funds to these organizations, and of setting up suitable structures for coordination and consultation, monitoring and evaluation.

Finally, people's participation can be improved by making proper use of appropriate communication and information technology. The two-way flow of information between the rural people and local organizations on the one hand, and policy makers and planners on the other, needs to be as effective as possible. That means using a variety of channels of communication, from local and district meetings and consultations, through to the use of modern electronic media, where appropriate. Finding technological solutions to resource management problems may require local people to be given access, directly or through intermediaries, to relevant electronic or other databases containing information of local relevance. Such information may come from aerial photography or satellite imaging, or may be obtained from the locals themselves. Also relevant is information on prospective improved farming and resource management technologies that have been studied in other, similar environments.

6.5 Policies focussed specifically on natural resource use and environmental protection

6.5.1 Direct government action
6.5.2 Control instruments
6.5.3 Economic incentives

While many of the above policies will have significant impacts on rural resource use and the environment, there is a range of policy options that are directly focussed on these areas. These are considered next.

6.5.1 Direct government action

Where, perhaps because of market failure, there is rural resource degradation or contamination of the environment, governments can act directly to try to correct these problems. For instance, governments can fund and undertake land conservation or rehabilitation works. Such works will often be on public land, but may also be on private land, with or without the agreement of the land-holders, depending on the perceived seriousness of the externalities.

Similarly, governments may opt to bring unused land into use, or under-utilized land into more intensive use, in order to reduce pressure on existing farming areas. This is likely to require works to clear the land, perhaps to shape it, to construct required infrastructure, such as roads, communications systems, irrigation facilities and drainage systems. Many land settlement schemes are based on public investments of these kinds, and often include further public funding to allow the settlers to become established in the new environment.

Both land improvement and land settlement schemes need to be subject to careful prior appraisal, including both environmental impact assessments and social cost-benefit analysis. There are also questions to address about the extent of cost recovery for such works from beneficiaries (or polluters). If the beneficiaries are prosperous, there would seem to be no reason why they should not be required to pay a large share of the cost. However, where relatively poor small holders benefit, cost recovery may not be appropriate. Moreover, it may not prove possible to devise a cost-effective way of recovering the costs, especially when the beneficiaries are ill-defined and widely dispersed. How are taxes to be raised from the beneficiaries of measures to guarantee cleaner air, for example?

While governments may engage in measures to develop rural production, they also commonly invest in measures to conserve resources, for example by the establishment and management of conservation areas and national parks. Of particular importance for SARD are actions to conserve genetic diversity of useful and potentially useful genetic material. In the case of plants, genetic material may be conserved in such forms as tissue culture, seed banks, plant variety conservation plots, botanic gardens or flora reserves. Animal genetic material is more difficult to conserve. However, small herds or flocks of endangered breeds or species may be kept on research farms or in conservation farms, parks or zoos. Frozen sperm, ova or fertilized embryo may be stored for some time.

Governments may also elect to pay farmers or other agriculturalists to continue to farm endangered types of crop plants or animals, or to maintain flora or fauna reserves on their land.

6.5.2 Control instruments

The range of potential control instruments that governments can consider using is wide. It includes regulations, controls and bans on certain types of resource use or agricultural practices. For example, the use of certain chemicals, such as particular toxic sprays, may be prohibited or strictly controlled. Farmers may be penalized for undertaking certain practices thought to be environmentally damaging, such as burning of crop residues. Alternatively, they may be required, under threat of a penalty, to follow other practices, such as control of noxious pests or weeds.

The allocation of some resources may be controlled by governments or government agencies. For example, it is common for irrigators to be allotted quotas for the amount of water they can draw from a public irrigation system, from a river or from an underground source. Users of a forest resource may be restricted in the number and size of trees they can cut. Increasingly, quotas are being imposed on the size and composition of fish catches, or on the fishing gear that may be used.

As discussed earlier, it is one thing for governments to devise such rules and regulations, but it is not always easy to enforce them. For many individual resource users, the private benefit to be gained by breaking or 'bending' the rules may be considerable. Non-compliance may be on a serious scale. There is also the likelihood that some resource users, especially the more prosperous, will bribe officials to overlook breaches of the regulations. If such corruption becomes widespread, it may even undermine the whole process of orderly government. Moreover, because of the geographically dispersed nature of farming, forestry and, especially, fishing, checking on compliance is likely to be very difficult and expensive. While it is easy for governments to devise rules and regulations for the more sustainable use of rural and fisheries resources, these may not always work as well as the policy makers hope. Therefore, it may be best to look first at ways to encourage sustainability using economic incentives that are not so difficult to implement.

6.5.3 Economic incentives

According to Markandya (1994, p. 19):

There is a panoply of policy instruments that governments can use to implement an economic incentives approach to environmental management. Some are more applicable to natural resource management, others to environmental protection. Yet others are applicable to both (product and input pricing, taxes, performance bonds, etc). They are based on the same principles of 'getting the prices right' and making property rights clear, secure, and tradeable. Some operate through existing markets (e.g. product pricing), while others imitate the market or seek to create new markets (e.g. tradeable pollution permits). In many cases, such as forest policy and hazardous waste management, it is necessary to employ both sets of instruments to obtain cost-effective and efficient outcomes. An economic incentives package for forest policy would include, at the minimum, concession bidding, resource pricing, resource taxation (royalties), perhaps performance bonds, and investment incentives for replanting.

Markandya then provides a list of the main instruments and a brief description of each. Another, rather more comprehensive list and associated set of descriptions is provided by Panayotou (1994a). For lack of space, these descriptions are presented here in abbreviated form. Some of the listed measures have been mentioned in the discussion above, but others have not. Readers are referred to the original sources for further explanations:

· Tradeable resource shares - the allocation of a transferable right to a percentage share in an 'invisible' or 'uncertain' common property resource, such as a fishery.

· Individual tradeable quotas - the allocation of a transferable quota for a fixed amount of a common property resource.

· Tradeable development rights - the allocation of a right to develop a resource in another area in exchange for relinquishing the right to develop a similar resource in an area of special conservation value.

· Tradeable emission permits - permits that grant polluters the rights over air or water, those rights acquiring an economic value because of the option to sell them to others. An example is the manure permits granted to farmers in the Netherlands.

· Environmental taxes - taxes on environmentally damaging products such as petroleum products and pesticides, designed to provoke a reduction in the use of these products.

· Resource taxes - setting royalties, license fees or other charges on government owned or controlled resources at prices that reflect the true value of the resources.

· Effluent or emission taxes - the familiar 'polluter pays' principle, with charges ideally set in accord with the true cost of the environmental damage caused.

· User charges - setting charges for irrigation water, waste disposal or other services or inputs supplied by the public sector, mainly as a means of cost recovery, but also to reflect something approximating actual costs.

· Deposit refund schemes - presumptive charges on products intended to shift the responsibility for controlling pollution to producers or consumers. Examples are refundable deposits on pesticide containers or vehicle batteries.

· Environmental bonds - economic instruments that ensure adequate funds are available to restore environmental damage, useful, for example, in mining or logging operations.

· Subsidies - financial assistance to promote sustainable behaviour, for example by encouraging investment in resource conservation.

Markandya argues that all the instruments he lists have been used in one country or another, and policy makers concerned with SARD should be familiar with them. Not all are immediately relevant to agricultural and rural resource management, but many are. For instance, allocated water rights can be made tradeable. Moreover, in areas where water supply is uncertain, the tradeable rights might be based on a resource share, as used in some parts of Australia.

On the other hand, there have been difficulties in using some of the suggested measures. In developed countries, setting environmental taxes in such a way as to control pollution effectively and pricing government-owned resources to reflect their true values have both proved hard to implement. The feasibility of using such measures in less developed countries where administrative systems are less well developed is therefore questionable.

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