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DEPT. OF AGRIC:- AND APPLED ECONOMICS
DEPARTMENT OF AGRICULTURAL AND
RESOURCE ECONOMICS
BERKELEY
CALIFORNIA AGRICULTURAL EXPERIMENT STATION
University ofCalifornia
7
Division of Agricultural Sciences
UNIVERSITY OF CALIFORNIA
372 75Y
55
C
4,/la- 333
Working Paper No. 333
PROJECT DESIGN AND EVALUATION USING ECONOMIC
AND COEVOLUTIONARY CRITERIA
by
Richard B. Norgaard and John A. Dixon
•
California Agricultural Experiment Station
Giannini Foundation of Agricultural Economics
September 1984
14.
PROJECT DESIGN AND EVALUATION USING
ECONOMIC AND COEVOLUTIONARY CRITERIA
Richard B. Norgaard
Associate Professor
Agriculiural and Resource Economics
AUniversity of California, Berkeley
and
*
John A. Dixon
Research Associate
Institute
• East-West Center
Honoth 1 u Hawaii
September 1984
DEVELOPMENT PROJECT DESIGN AND EVALUATION USING.
- ECONOMIC AND COEVOLUTIONARY CRITERIA
by
Richard B. Norgaard and John A. Dixon
INTRODUCTION.
Most
economic analyses of development projects could be done
better.
Better decisions would no doubt be made if the economic analyses that are made
ware more frequently heeded.
And yet if development planning were completely
economically rational,* all but the most naive economists still would expect a
„.
fair_
projer ts to_Lail_am:Lthe-uast _majority to
perfect after the fact.
comprehensive,
most
irhperfect
predicted
project
social
And
yet
than
Even the
integrated rural development project is designed• around
subject to environmental unertainties, and
by social and economic factors beyond the project which cannot
be
with much accuracy.
Most
technical
less
The future cannot be forseen Or controlled.
technical information,
influenced
prove
development planning could be done better.
and
environmental factors could* be
better
coordination and national-level planning,
and
understood.
all
but
Through
the variation over time in
economic factors external to specific projects could be
if development planning were technically
nationally,
With more research,
thorough
and
reduced.
coordinated
the most naive planners would still expect projects
-fail or prove imperfect over time.
fli.44.119011.4 Magai1.411.61,
to
After
the
fact,
the
reasons development projects do
not
perform
as
planned is usually fairly obvious. .Brazil's planned colonization projects in
the
Amazon may have succeeded if they could have been designed around
_information
Aswan
about the soils and appropriate agricultural
Dam
technologies.
project could have been more successful if the planners
thoroughly
pursued the interrelations between
better
irrigation,
had
The
more
agricultural
en-
vironments and technologies, and health. (Need Asian counterpart here)*
Mexico's plans for development based on petroleum and petroleum-generated
foreign
exchange could have been better phased if the softening of
prices
could have been forseen.
avoided
Developing countries generally
petroleum
could
have
the debt crisis if they had known in advance that the quadrupling
in
petroleum prices Would reduce their debt repayment capacity, that recession i
Europe and the U.S.
would reduce demand for their exports,
rates would subsequently rise.
the
Changing energy costs,
and that interest
the debt crisis,
related
economic turmoil disrupted the best planned Projects.
Failure
and imperfection ex post are due to three interrelated
First,
our
Second,
sciences,
both
natural and social,
the best of our sciences,
are
including economics,
trivances dependent on ceteris paribus assumptions.
themselves
and
reasons.
imperfect.
are mechanistic con-
Conceivably, changes best
modeled by any given science could be linked to the models of other
sciences.
But
both
this
cessively
module
linking approach to systems analysis has
dependent
very cumbersome.
istic
process.
on ad hoc asumptions about linkages and
proven
ex-
computationally
Third, development is an evolutionary rather than a mechanFactors
unforseeable ways.
evolve new qualities and
relationships
change
in
The accuracy of even an all -encompassing, perfectly linked
set of mechanistic models necessarily decays as economic, social, and environmental systems coevolve over time.
Mechanistic
models of economic development lead directly t
predictions
and prescriptions. Models of growth as efficient resource utilization
accumulation, .infant _industry -protection,
or
market
expansion
capital
naturally
suggest net present value maximization, saving and investment policies
_tariffs,
and export* subsidies.
Though the tautologies 'between
predictions,.. .and ,prescriptions ,are typically blatant,
import
assumptions,
the accuracy of
the
predictions and the soundness of the prescriptions can at least to some extent
be empirically tested. And yet such testing has neither verified nor falsified
.any
particular theories.
anistic
No higher theory exists for determining which mech-
model .is appropriate at any given time. The philosophy if
substance of rational positivism -- the idea that the world can be
explained
not
the
rationally
and explanations can be positively tested against reality
-- gives
neoclassical economics scientific credence.
,
•
Nevertheless, sole reliance on the mechanistic approaches of planning and
economics
is
inherently
contradictory with both the
imperfections
in
our
knowledge and the evolutionary nature of the real world. The contradiction is
politically
manifest in an odd consortium of critics of development planning.
Classical liberals believe individual initiative under unfettered markets best
respond to an evolving world. Environmentalists are reacting to the dispropor•
tionate
regional
share
of
interests
unexpected environmental
problems.
and academics is concerned with the
A
new
coalition
of
unresponsiveness
of
centralized planning. Together, this consortium asserts considerable influence
on
the pol tics and administration of planning.
process has been modified and improved,
In response,
the
planning
yet the contradiction remains between
the mechanistic tools of planning and economics and the evolutionary nature of
reality.
This
paper
explores the nature of
the
contradictions,
documents
why
neither practical nor even conceptual resolutions may .ever develop; and argues
for the use of multiple criteria, both economic and coevolutionary, in project
design and evaluation
-a'
STATE OF THE *ART.
Development is an organic process.
Many factors interact and affect the
•
whole.
they
Development
also have an impact on both the social and environmental
these impacts,
more,
mic,
decisions most directly affect the economic system,
in turn,
systems.
All
interact and influence each of the systems. Further-
the interactions do not mechanistically lead to an equilibrium.
social,
but
and environmental systems coevolve over time.
Econo-
And development
decisions influence the course of the coevolutionary process.
Classical economists developed the market model and emphasized theinteractions between social and economic systems.
With the formalization of market
relationships into mathematical models at the turn of the century,
mics
profession
divided into two general schools
of
thought.
the econo-
Neoclassical
economists continued to formalize market phenomena and developed formal models
of economic .growth as a process of investment and capital
stitutionalists,
the
accumulation.
second and smaller school, continued to emphasize
Inthe
interactions between the social and economic system and also began to describe
development as an evolutionary process.
subsystem
For institutionalists,
dominated by the larger system of institutions.
alists; lievelopment
is
For
markets are a
institution-
a "circular and cumulative process' where
the
well
defined categories of neoclassical economics--- labor, capital ; resources, and
technology.-- undergo qualitative change (Myrdal, 1957, chapter 2).
analysis was developed in the United States in the 1930s by
Benefit-cost
projects of the federal government.
resource
the benefits of a propsed water project should exceed its
this
beginning,
welfare
economics
Interagency
principles of benefit-cost analysis were
and
River
first codified in
Basin Committee,
the 'Green
costs.
From
derived
from
Federal
Book" (U.S.
benefit-cost
The principles of
1950).
states
The legislation simply
that
the
water
on
economists in response to a legal requirement imposed
neoclassical
were elaborated and extended during the 1958s and 1960s through use,
analysis
interagency agreement, and conceptual advances developed at Harvard University
•
and Resources -for the Future (Eckstein;
Water
Krutilla and Ecksteing; 1958).
of water facilities were well understood,
aspects
well
known
and
technical
The
hydrologic conditions were
the primary interaction with
the demand for irrigated agricultural land,
through
point.
projects provided a good starting
development
fairly
1958;
the
occured
economy
a demand which
appeared
insatiable as complementary new technologies and inputs evolved.
Beginning
in the 1960s,
benefit-cost analysis'was applied to a
broader
recreation
manage-
array
of decisions encompassing water pollution control,
ment$
income distribution,
Krutilia,
analysis
and
1968;
Kneese,
and regional equity (Freeman,
1968;
Weisbrod, 1968).
was widely used by major banks,
national
planning agencies.
Today,
1979;
Haveman and
By the 1970s, benefit-cost
international development
funderss
benefit-cost analysis frames
structure and process of almost all institutions designed to promote
the
ecandmic
development (Little and Mirrleess 1974).
•
Most
They
costs
agencies estimated benefits and costs for but one possible
assumed factors exogenous to the project -- the
rate s
energy
and the prices of internationally traded commodities, for example
were known for the future.
,,,,d0..t.tir,W4
interest
future.
When an analysis is limited to economic phenomena
Ifer410SWEINIUPPIVOSIMOVISIVAIIEVM.V.1.714WaswzgutismuswimaMmommuavvitataiwaawArim.,..m.gAimpwww&wm?extrgr,,,,,,,,,
the
sensitivity of benefits and costs to alternative values of factors exter•
nal to the analysis can be relatively easily assessed by repeating the
sis .assuming alternative values of the exogenous-factors.
sis
does not eliminate the uncertainty of the future,
analy-
Sensitivity analy-
but it does facilitate
• ways of designing projects to be less sensitive to perceived uncertain
ties.
Mos
analyses
are limited to on-sites
marketable benefits
and
costs.
Some analyses may extend to off-site and non-marketable benefits and costs.
A
•••
typology
indicating
the
likelihood of inclusion of
impacts is presented in Figure 1.
social
Meister
benefits
and
initial
and
secondary
Techniques for measuring environmental and
costs are thoroughly presented
in
Hufschmidt,
James,
Bower s and Dixon (1983).
FIGURE I. The Location and Nature of Various Project Inputs, Outputs,and
Environmental Quality Effects
Location of Goods, Services, and Environmental Qnality Effects
•
On-Site
Off-Site
4p. 4.3
tr.1
Pc$
O 44
o
0 41
e-4
00
0
•O M
0
0
O -A
•>
O W
Cf)
Marketed
. Usually Included
2. 1.1%,. be Included
-
Non-Marketed ,
1
3. Seldom Included
4. Usually Ignored
Our
understanding of the development process has also been influenced by
anthropological,
ecological
political science,
and sociological paradigms.
Yet our methodology for project design and evaluation is neither as sophisticated nor as pluralistic as our knowledge of the development
beyond
the .typolooky, of Figure 1,
process.
the model of Figure 2 incorporates more
the richness of our understanding of development processes.
.„
FIGURE 2. An Integrated Systems Model of Eoonornice Social, and
•
Ecological Interactions
•;;;.." '." 7
*---*
-
Economy
Society
Economic
Effects of
Effects of
System
Economic
Economic
Phenomena on
Phenomena on
Social System
Ecological. System
Effects of
4.1
0
Ca
0
r-1
0
Social Phenomena
.Social
System
Ecology
Effects of
Social Phenomena
on Economic
on Ecological
System
System
(i)Effects of
(i)
Effects of
Ecological
Ecological
Phenomena on
Phenomena on
Economic System
Social System
Ecological
System
of
Figure 2 presents
a 3 x 3 matrix which might be thought of as a condensed input-output
•
Going
table. Marketable and non-marketable goods, services, and effects are combined
in
order
to
emphasize the locations of the interactions within and
the economic, social
and environmental systems.
between
The diagonal boxes represent
interactions within economic, social, and environmental systems while the.offdiagonal
boxes represent interactions between
these
benefit-cost analyses stay within the first box,
systems.
Conventional
focusing on economic
inter-
actions.
Extended
decisions
on the social and environmental systems represented by boxes 2 and
3.
Currently,
benefit-cost
analyses
consider the initial
impacts
the most sophisticated analyses are now based on input-output
models to capture the interactions in box I augmented by sectors in the
representing
of
flows
of
pollutants to the e
- nvironment,
a linkage
to
model
box
3
(Hufschmidt, et al 1983, chap 8). These models do not explicitly consider the
interactions
within the environmental system or the impacts of
mental conditions on the social and economic systems.
cost
analysis
new
environ-
Thus extended
benefit-
to date can be characterized as including those effects
along
the top row of Figure 2.
III.
AN INTEGRATED SYSTEMS APPROACH TO DESIGN AND EVALUATION.
Project design and evaluation could,
to
at least conceptually,
include the full range of interactions suggested by. Figure 2.
be extended
To
begin,
imagine an ideal world in which economic analysts and planners knew all of the
functional
relationships within and between economic,
mental systems.
social,
and
environ-
Furthermore, assume these functional relationships exhibited
, the mathematical properties of stable
mechanistic systems such that any given
set of exogenous conditions determines a unique equilibrium for the integrated
system.
system,
The
decision to undertake a project,
determines
a
conceptually exogenous to the
new equilibrium for the system..
Project
design
and
•.
evaluation
then would consist of comparing the current conditions
with
under the predicted new equilibrium.
incorporated
compa•rison
of
evaluation
as
the
paths generated by stepwise interactions
of
the
relationships suggested in Figure 2.
to
the
Time and the dynamics of development can
with Figure 2 by thinking* of design and
development
those
The ideal described.here is an expansion
social and environmental realms of the Newtonian world
view
already
embedded in neoclassical economics.
Projects
involving
linkages
between social and natural
systems
would
especially benefit from the integrated analysis suggested by
Figure 2. A small
investment
where
in
a plant for the assembly of electronic components
in
a
city
such .activities already abound, on the otherhand, .probably
could
adequately
example,
analyzed
the
by
development
AliMstrAte_ both_ the
approach
a narrow
benefit-cost
analysis.
of a watershed in a tropical
A. hypothetical
country, will
potenttal_b_enc,_fits_of_the integrated
be
systems
help
analysis
and the practical difficulties of actually implementing such
a
full
analysis.
Consider
the development of a watershed to generate hydroelectric power,
provide downstream flood protection,
Either
a major dam and
and irrigate new and existing farmlands.
reservoir can be constructed now, a smaller dam and
reservoir now and more later, or the river can be left relatively
undisturbed.
•
Roads will be built and new settlers will come into the watershed
as part of
both planned and spontaneous developments. A conventional benefi
t-cost analysis
would examine the power, flood control,
costs
of dam construction and of
extended
the
operation,
and irrigation benefits and the
maintenance,
repair.
analysis (as in Figure 1) might include additional factors such
effect of dams and reservoirs on fisheries
changes
and
in
species habitat in the watershed s
silt deposition
and the effects
of
An
as
downstream,
increased
population above the dam on the
expected reservoir life.
In an integrated systems fra
mework
incorporate
dynamics
another round of effects.
into the region.
as in Figure 2),
a•
Land ownership institutions will
change with
ments will become supplanted by
labor markets.
upon
the
production,
and
changes. in
impacts
Labor exchange
the
agree-
These changes will induce new
consumption patterns which ulti
mately have an
the success or failure of var
ious aspects of the
initial
would
The project will introduce new
social
introduction of settlers with
a different background.
work,
the analysis
of the dam on siltation and
the
project.
fishery
how people use the environment
which will have
impact
Similarily,
will
induce
further
environ-.
mental implications that may aff
ect the economic success of the
project;
While it is possible to concei
ve .of the advantages of knowing
and incorporating the effects of all of
the possible feedbacks between
the economy,
society, and environment, it
is difficult to conceive of what
those feedbacks
actually might be or how they
might interact to a new equilibri
um. It is
idealistic to think that the rel
ationships, even the key relations
hips jf they
could somehow be identified, cou
ld be quantified.
Even if the relationships
could be quantified, the model
also would have to be mathematical
ly tractable
to be useful for optimizing projec
t design. Should there be one larg
e dam or
two smaller ones?
Should the project strive for mos
tly intensive agriculture
or a mix of the existing swidden
system, an agroforestry program,
and a little
intensive agriculture? Simulatin
g and evaluating all reasonable poss
ibilities
-- tracing the interactive effect
s of alternative project designs thro
ugh the .
economic, social, and environm
ental systems -- would be a horren
dous task.
Additional analyses to test the sen
sitivity of the results to values
of factors exogenous t
the model -- such as interest rat
es and the prices of
internationally traded commoditi
es -- would add to the already impo
ssible
decision-makers informally ponder t e same interactio
ns.
formal analyses are supplemented with less forma
l, sometimes only
judgements
written
intuitive,
f interactive effects between the systems which
are presented
discussions
of .a project's pros and cons.
Decision-makers
economic analyses with formal studies based on
other scientific
informal
Most
advice,
and
their own judgement.
To some extent,
combine
perspectives,
these
sources
compensate for the interactions missed in the narro
wer economic analyses.
too large of an extent,
interactions
decisions.
interest to those who make or
can
affect
formal model of Figure 2 could be used to pursue,
and link formal non-economic and informal knowledge.
lead to more complete and balanced assessments.
valuable
To
however, non-economic analyses tend to address those
of special
The
in
project
organize,
Such an approach
might
Thus we maintain Figure 2 is
as_a conceptual framework even though it is an unrea
listic:basis for
an analytical model.
While the integrated systems approach suggested by
Figure 2 could concep-,
tually 'structure an analysis, it nonetheless also
has its own conceptual
limitations.
First, the real world need not exhibit the ideal prope
rties of a
tractable model.
more
The integrated system, if it could be specified, may
have
than one equilibrium solution when solved simultaneously.
circumstances; real
different
dynamics
impacts
world
are
Under
outcomesAepend on the order and speed
felt within and between the
systems.
of adjustment and the additional factors which affec
t
in
these
which
Modeling
the
the
dynamics
would add yet another order of magnitude of complexity
to the model.
Second,
and
more importantly,
the model suggests that project evaluation consists of
comparing equilibrium positions,
development
or paths,
with and without the project.
is characterized as an evolutionary process where positive
If
feed-
backs produce continual change s
predicting and prescribing -- is contradictory. - Growth as "circular and
for
cummulative
causation"
indicates that development is facilitated by
identi-
instigating, and augmenting "good' positive feedbacks while eliminating
-fying
.or
the use of equilibrium models -- so tractable
reducing
"bad" positive feedbacks.
These computational
and
conceptual
limitations lead us to the coevolutionary framework for thinking about project
design and evaluation criteria.
IV. THE COEVOLUTIONARY DEVELOPMENT MODEL.
acknowledge that development is an evolutionary process is to acknow-
To
the computational and conceptual limitations
ledge
thinking.
atomistic-mechanistic
model suggested by Figure 2 presumes that systems can be
The
a
of
predetermined set of mechanistic
scribed
by
defined
atomistic factors.
relationship-
between
well
Change either occurs because an exogenous factor
and shifts the system to a new equilibrium or because the system
.changes
trajectory, at any point in time.
Neither the qualities of the factors in the
These assumptions
system or •the relationships between them change over time.
with the characterization of evolutionary systems where new
while clearly less tractable,
the development process where new knowledge,
components
The evolutionary
and relationships emerge while old ones change or fade away.
model of systems,
has
like a rocket on
the dynamic property of being in a determinable position,
clash
de-
is especially descriptive of
institutions,, and
technologies,
relationships with the environment emanate over time (Popper s
1957;
Scriven s
1959).
Variation,
factors
prove
mutation
or
innovation,
in the evolutionary process.
more fit.
In turn,
and natural selection are the
Change occurs as
new
species -- or more generally,
12
key
characteristics
components in
the
system
-- with
components-.
biological
characteristics apply new selective
the
evolutionary interactions between two
other
on
In
are
species
so closely intertwined that the evolution of each species is .mostly
by
the evolution of the other.
reflect each other.
manner
pressure
As components change, the relationships between them change.
systems,
sometimes
affected
new
Species which "coevolvel
this
in
Coevolutionary explanations have been given
for
the shape of the beaks of hummingbirds and of the flowers they feed upon, for
the
behavior of bees and the distribution of flowering plants,
chemical
and the
bio-
defenses of plants and the immunities of their insect prey (Ehrlich
and Raven; 1964; Baker and Hurd, 1968).
The
concept
feedback
I984a
of coevolution can be broadened to
processes
and
b).
between social and ecological
the
ongoing
systems (Norgaard,
1981,
The coevolutionary model of development thus directly
links
social -----affd-eWagical----ph-erromerra.-system.
encompass
Man's-adtivities
The ecological system's responses,
modify
the
ecological
in turn, provide cause for indi-
vidual action and social organization.
The gains of development arise through
•
the process of positive feedbacks between the systems; through the coevoiutiOn
of social and ecological systems in a manner favorable to people.
This
cultural
view of the development process explains the correlations found
ecologists
systems (Harris1 1979;
Terry
3.
between
the characteristics of
Netting;
1977;
Rambo,
social
and
1983; and Rappaport
by
ecological
1968).
A
Rambo (1983) has developed an effective illustration provided in Figure
His 'systems
coevolutionary
model of human ecology' is very similar to
development.
The
illustration
suggests the
interactions within both the social and environmental systems.
model
of
complexity
of
our
It also high-
lights the flows of energy, materials, and information between the systems and
from outside the systems.
In addition, the interactive processes of selection
13
em Interactions
SCURCE: A. Terry Rambo, "Conceptual Approaches to Human Ecology,"
East-West Environment and Policy Institute, Researh Report
No. 14, June 1983, p. 26.
and adaptation between t
two systems is central to the illustration.
proven especially valuable for explaining
past.
An
have most
interdependence
ecosystems.
and
Indonesia.
tion
As
social
used coevolutionary models to document the
traditional
Geertz (1963),
agricultura
Wilkinson
between
cultures
however,
and
agricul tura]
their
has applied the model to help
transformation
economists,
the
Boserup
into
(1965
and
the
twentieth
1981),
explain
century
in
(1977)
and
Simon
(1973) have argued that development consists of social• reorganiza-
to overcome environmental constraints.
Norgaard (1931 and
1984c)
has
described the failure of the Brazilian colonization efforts and the success of
the
Japanese
in
the Amazon in a coevolutionary framework.
The
following
concise description of ecosystem and institutional modification in U.S.
agri-
culture is illustrative.
7
Agriculture in the United States was 'once a small-scale, labor-intensive,
polycultural,
ecological
and
system.
•energy-intensive,
agricultural
implement
near-subsistence
interaction
between
the
The systems coevolved to a large-scale
monocultural,
interaction
commercia
social
mechanized
farming interaction.
is maintained by a highly complex system
and agrochemical industries,
and
This
of
a highly developed marketing
and
new
farm-
system,
and government institutions to generate and disseminate knowledge, develop new
inputs,
tional
regulate markets, absorb risk, subsidize capital
effects of adjustments,
limit the distribu-
and control environmental and health impacts.
The various sociosystem elements in part evolved in reaction to the ecosystems
responses to human activities.
While monocultural systems brought increasing
returns to scale with mechanization,
borne
their instability and the increased risk
by a farmer' with a single crop encouraged the use of agrochemicals
of risk-spreading institutions.
and
Similarly, ecosystem responses to agrochemi-
cals
led
well
as new research programs in agricultural experiment
to new institutions •to regulate pesticides and water, pollution
stations.
as
Equally
important, the institutional responses typically encouraged further changes in
similar directions.
the
Crop insurance and regulated markets, for example, reduce
risks of monocultural production and make it
more
attractive.
Today's
agricultural systems have soil features, weed dynamics, and insect-crop interactions that reflect coevolution with the sociosystem,
institutions
tural
reflect the vulnerability of soil under present
tural practices to wind and water erosion,
tions
while today's agricul-
to chemical control s
agricul-
the adaptations of insect
popula-
and the susceptibility of monocultural systems to
variations in weather.
This
description of U.S.
agricultural development highlights how
institutional
innovations
environmental
changes stemming from earlier
forces
and
stem from the unplanned,
social consequences of
_
institutional changes.
Market
play an important short-run role in the description,
prescriptions
major
but
predictions
stemming from economic and planning models play
an
inci-
dental role relative to phenomena which were neither predicted nor prescribed.
And
this is entirely appropriate, for U.S.
planned.
Individual
agricultural development was not
farmers made independent decisions.
Even the
tional
schema
mailner
rather than in the context of a philosophy and theory of
development.
within which individuals made decisions evolved in an
Unplanned
instituad
hoc
agricultural
evolution characterizes the most successful develop-
ment story ever told.
Like mechanistic models, evolutionary models of economic development have
analogous
inherent tautologies between their
prescriptions.
The
random
assumpt ions,
predictions,
innovation and natural selection
that
and
describe
evolutionary development become prescriptions much the same as capital accumu-
lation
growth.
of
model
both the assumption and prescription of the
is
capital
Questions such as what sort of innovation
pressure require another level of theory for an answer.
tionary
accumulation
selective
and
evolu-
Nevertheless
views do suggest that diversity in both social and ecological systems
••
that innovation is important,
is necessary,
hastened through monitoring and learning systems
ecosystems should be protected.
be
that natural selection might
and that the productivity of
These and related criteria which
facilitate
if not instigate coevolutionary development are considered further in the n.,?xt
section.
V. CRITERIA FOR REALIZING COEVOLUTIONARY POTENTIAL
•.
coevolutionary
Though
scribed,
--
to
development
paths cannot be
predicted
or
pre-
projects with coevolutionary development potential can be identified
he f6flowir6-criferla stem directly
-
som6----e
coevolutionary
They do not contradict economic reasoning.
perspective.
deed,
economic reasoning can lead,
given
the complications emphasized by the
coevolutionary
from
the
I
though less directly, to similar criteria
./
coevolutionary
perspective.
The
stresses these complications and hence
•
The followleads directly to a primary emphasis on the respective criteria.
perspective
however,
ing criteria both interact and overlap,
a reflection of the organic nature of
development and the holism of the coevolutionary perspective.
SUSTAIN
SYSTEM
PRODUCTIVITY AND
DIVERSITY.
Coevolutionary
potential
•
exists
in
erosion,
the
interaction of viable social and
groundwater pollution,
environmental
transformations
ecological
species extinction,
permanently reduce
systems.
and other
coevolutionary
Soil
irreversible
potential.
Similarly, because .coevolution requires ongoing changes and adjustments as one
,V:4771
•
211,179,
system interacts with and affect the next,
a diverse social system will
more
likely have the appropriate patterns or models to facilitate the institutional
and
organizational
accomodations
best
to
capture
coevolutionary
potential necessarily
entails
ecosystem
suited
development benefits.
Capturing
coevolutionary
social system transformation.
and
But transformations which reduce the producti-
vity and diversity of social and ecological systems should be avoided.
lutionary potential can be maintained by proceeding in small steps,
Coevo-
retaining
a variety of ecosystems and institutional and organizational systems, learning
along the way,
and avoiding irreversible decisions.
to moderate transformations,
are preferable.
-- be
it
Projects entailing small
both in geographic area and institutional scope,
Continuation of the same sort of transformation to uniformity
the conversion of tropical rainforest to pasture;
near self-sustaining,
agriculture;
or
of small
subsistence agriculture to energy-intensive
community
control
to centralized bureaucratic
scale,
commercial
control
--
Excessively rigid social systems such as plantation style agriculture
or
*should be avoided to maintain diversity.
centrally
planned
agriculture have proven unresponsive when faced
conditions and opportunities.
social
tury,
Numerous,
system responsiveness.
in
diverse, independent actors increase
and in California today is attributed in
to Chinese businessmen,
and to
computer experts and small venture capitalists respectively.
ance
maintains
new
Rapid development in England in the 19th cen-
Malaysia in this century,
part to an independent yeomanry,
with
independent
Cultural
toler-
institutional and organizational diversity and knowledge
technologies unique to particular cultural systems.
Cultural revolutions des-
troy diversity and can set back coevolutionary development by decades.
•
18
and
-
START
SMALL, TRY MANY POSSIBILITIES.
It is not clear in
coevolutionary potential might best be captured.
experiments and natural selection.
extent
the
advance
how
Evolution stems from random
Variety is essential for evolution and to
process can be accelerated by increasing the
frequency
of
potentially better fit innovations. Thus small, diverse experimental projects
have
more coevolutionary potential than a large project,
large project merely repeats past efforts.
may have more expected economic benefits,
an
if
especially
the
A large project that is succesful
but large project failures can doom
entire development effort.. Experimentation with small projects
increases
the opportunity to learn how to design a successful large project.
LEARN
taring,
FROM EXPERIENCE.
learning,
learning,
Natura
selection can be hastened through moni-
and information dissemination systems.
poor projects can be modified or abandoned before they economically
sodUl a d environmental.cata-strophes.
by
project
project
By monitoring and
participants
itself (Korten,
Experience
can be shared with others .and extended
1980).
beyond
Learning should not be limited to
that can be explained by Western science.
acquired
the
knowledge
The experiential learning of indi-
viduals and communities should be respected, retained, and transmitted whether
or not it can be 'explained by the formal models of science (Susman and Evered,
1978).
Projects
with internal learning systems and opportunities for exper-
iential
learning are preferable to projects .that run,
and can only
run,
on
current formal knowledge.
These
nature
to
latter
two criteria have oft
been
The
deterministic
of mechanistic models of development engenders a confidence that leads
large scale efforts and major blunders.
failure
ignored.
of
both
The conception,
the agricultural colonization and cattle
Brazilian Amazon were on a grand scale.
19
execution,
projects
in
and
the
The indeterminateness of the coevolu-
tionary model*engenders doubt which carried to its extreme could
be completely
inhibiting.
Together,
the two views lead to the pragmatic resolution: start
small, try many things, and learn from doing.
FLEXIBILITY.
Coevolutionary potential can also be maintained over
through projects which are flexible.
time.
will
time
Both needs and opportunities change over
Projects which can change with these changes in needs and opportun
ities
be more beneficial over the long run even though their net present
value
is lower for any given projection of the future.
'fixed
A large irrigation
in concrete to a well dilineated service area,
superior
to a series of smaller,
farmers. The latter,
however,
system,
may appear economically
unlined channels delivering water to
local
may be much more effective in providing water
when and where it is needed and in responding to floods and
droughts.
systems
maintenance,
repair
are
also notorious for problems
caused
between
with
in part by greater distance,
operation
physically and
project managers and water users (Bottral,
1981).
Fixed
and . .
institutionally,
The
flexibility
criteria, therefore, not only favors a heterogenous mix of small projects, but
projects
which
can easily be changed over time.
,A
Neither
experiential 'nor
formal learning is of much value if projects have no flexibility over time.
REDUCE
realized
VULNERABILITY.
in
relatively
Coevolutionary
stable
potential
environments.
can
Ecological
be
more
easily
interaction
is
greatest in the stable climate of the tropical rainforest, least in the highly
variable
climates of the polar regions.
developed
change.
the
in
social
environments that
Similarly,
have
not
culture is most
experienced
highly
catastrophic
History is also replete with examples of where major disturbances to
social system have resulted in environmental system degradation and
versa.
By analogy,
ecological
systems
vice
positive feedbacks within and between social systems and
will
more likely develop and be maintained in
a
stable
social and natural environment.
Economic variation can be reduced by eschew-
ing dependence on inputs characterized by inelastic and/or
unstable supply and
products with inelastic and/or unstable demand.
because
Projects which are abandoned*
of input price increases or output price decreases no longer
.. provide
positive
feedbacks to those other projects with which they
other projects also become vulnerable.
Similarly,
coevolved,
institutions evolve
time
in .support of economic activities but do not disolve or
adjust
when
an economic activity becomes less significant.
tional
lags
signals
to
both
the
in terms of manpower wasted ahd
economy,
hence
The costs
incorrect
can be avoided by reducing
the
of
over
rapidly
institu-
institutional
vulnerability
of
development projects and p1 ans.
Vulnerability,
of
course,
undertaking small projects,
can
is
reduced through
maintaining
and learning from experience.
diversity,
But vulnerability
be. _further reduced thrpm_gc105er_allention to the nature of inputs
outputs.
The
and
Amazonian economy and social system crashed when the price
latex fell precipitously in the beginning of this century,
Ivory Coast have suffered from fluctuating cocoa prices,
of
the nations of the
•••''
and the increase' in
petroleum prices and interest rates during the 1978s have
affected all. Diversification
would have ameliorated these shocks,
but diversificition to
pro-
jects that still rely on petroleum, other inputs in inelastic
and/or uncertain
supply,
and projects with products in inelastic and/or uncertain demand
would
only have been partially effective.
AVOID BIG PLANS.
the
most
Let interrelationships coevolve.
Do not pretend that
appropriate interconnectedness can be planned from
Predetermined
the
beginning.
interconnectedness reduces the opportunities to respond to .ex-
periential learning and new opportunities that arise in an evolut
ionary world.
Unforieen
opportunities will not very likely fit the plan.
21
Thus
relatively
independent projects have mor
e coevolutionary potential
than those locked into
a major development plan.
Planned growth poles, for
example -- from Pahang
Tenggara in Malaysia to Pol
amazonia in Brazil -- have
been notably unsuccessf I because planned interc
onnectedness was inappropriat
e while spontaneous '
opportunities were ignored.
It should be reiterated that
these criteria do not contra
dict neoclassical economic reasoning. Giv
en the complexities emphazise
d, economic reasoning
leads to similar criteria.
Indeed, the criteria seem to
be purely commonsense. And this is precisely
the point. The emphasis on
mechanistic thinking
scientific has led to the exc
lusion of a whole realm of
commonsense, a
.realm . that has been consequen
tly underemphasized in develo
pment planning and
project design and evalation
.
The coevolutionary model gives
a conceptual
basis for this realm. How the
two realms of thinking might
be used together in.
project desigia d evaluatio
n, however„must-still be pur
sued.
. ECONOMID-COEVOLUTIONARY PRO
JECT EVALUATION.
Projects which meet the criter
ia of the previous section hav
e more coevolutionary development potent
ial than projects which do not
. Degrees of potential, however, are difficult
to measure. Flexibility is dif
ficult to defined
t alone to quantify.
How flexibility might be weight
ed relative to the
maintenance of natural sys
tem productivity, assuming the
latter could be
quantified is unclear.
The coevolutionary development
potential of a project
will ultimately have to be rel
ated in an ad hoc fashion.
Nevertheless,
the process.f estimating the pot
ential for coevolutionary
potential of projects could -be
undertaken systematically.
a .scale could be established.
For each criteria,
Prior to judging projects,, a
weighting system
22
between
criteria could be established.
Experts could then be asked to
projects- on the established scales for each criteria.
defend
their
rankings,
share information,
rank
The eperts could then
and derive new rankings until
consensus is reached or the range of uncertainty is well defined. This Delphi
technique
approach has been successfully used in placing values
relative
or
weights on environmental goods and services and distributional objectives.
There
to
appear
traditional
be three approaches to handling the
conflict
economic criteria and coevolutionary criteria.
between'
The first
to elaborate on conventional economic analysis to include more
would
more of the social and ecological interactions inherent in the
tact
and
coevolutionary
This -approach, as suggested by Figure 1, typically has been pursued by
view.
economists when the narrowness of economic analysis has been challenged. While
major improvements have been over traditional benefit-cost analysis
never
and
it
will
adequately handle the full range of interactions indicated by Figures 2
There
3.
is a- limit •to how much can be quantified and entered
into
a
single calculation.
The
and
second approach would be to start with the coevolutionary
attempt to more fully elaborate and quantify its economic
magnitudes
of
cators
the strengths of feedbacks in the social system
of
pelling
the transformation of
and,
related
to
(Davis,
a
the
the 'environment.
and
Marxists,
forces
The
indipro-
structuralists,
and others have used neoclassical economic analysis in this
manners to help explain the
lesser extent,
1977;
aspects.
economic rents: to different activities might be used as
institutionalists
and
framework
Schmid,
forces affecting
the forces behind
environmental
197x and we need others).
social
relations
transformations
While such an approach has
strengths of neoclassical analysis to predict and prescribe
respect to efficiency are lost.
with
The insights neoclassical economics provides
into opportunity costs are especially valuable to planners.
Both the
Pluralism is the third approach and the alternative we.prefer.
neoclassical
planning
and
the
coevolutionary
Neither
decisions.
perspectives
perspective
provide
one
is correct nor can either
sufficiently modified to capture all of the strengths of the
into
insights
be
Because
other.
neoclassical criteria for efficiency are rooted 01 an atomistic-mechanistic
world view and the coevolutionary criteria are rooted in a holistic-evolutionary world view, criteria from each approaches tend to compensate for the weaknesses of the other in a complementary fashion.
For these reasons, we propose
a two-dimensional ranking system.
As an example,
consider, the development of a watershed once again.
Ima-
or no dams at
all;
.gine choosing between a large dam, several smaller dams,
alternative
between
mixes
of heavy,
light and
cottage
industry;
between
differeiTt combinations oT-Url-innurbe-b-land---agroforestry - forestry for timber
pasture,
production
to
and intensive agriculture; and between a central agency
coordinate development and decentralized agencies.
plan as a particular combination of economic activities,
mations,
and institutional developments over time.
Define a
development
ecological transfoi-determine
For each plan
the net present value and the coevolutionary development potential. The plans
could
then be plotted as in Figure 4 on coordinates representing net
present
value and coevolutionary potential.
Plan A might consist of the large dam, heavy industry, intensive agriculture, And
highest
the
central development bureaucracy.
expected • net present value but negative
potential.
This combination
coevolutionary
has
the
development
Coevolutionary development potential is low because the success of
the plan depends on imported inputs whose supply is uncertain, because much of
the environment has been transformed extensively and irreversibly, and because
24
••••••
•
•••••••
••••••••
•••••••
_
"•••
••
1
0
_ COCVO it,Cti0V1Gr•De
the
centralized
be
rn Cy% •
pl
0 eci4
i
bureaucracy is less responsive to experiential learning
new, opportunities.
might
ef
rationally
By strictly economic criteria,
Plan A is the
selected if the planning agency puts little
best
and
and
weight .on
coevolutionary development potential.
Plan L is at the other extreme.
Expected net present value is
while coevolutionary development potential is very high.
negative
This plan might have
considerable area in experimental agroforestry programs buttressed by research
and
experiential
learning systems,
one small dam with the
25
opportunity
for
and cottage industry.
another to follow,
is negative,
Though predicted net present value
the plan offers considerable flexibility:
.are maintained,
environmental options
and institutional barriers
there are opportunities to learn,
. to experimentation with new social relations are minimal.
lutionary
development
potential criteria,
By strictly coevo-
Plan L is the best and
might
be
selected if little weight is put on economic evaluation.
There are numerous plans in between the two extremes.
combinations of net present value and
development potential;
and
each
6, H,
Plans CI F
coevolutionary
they are on the possibility frontier. . Plans B; D, E,
I are interior to the possibility frontier and are clearly inferior.
of these latter plans,
and .H
predicted
another plan can be found with higher
Plans
net present value and/or coevolutionary development potential.
For
F, 6,
are of special interest in that they have both positive predicted •,net
-
present value and positive coevolutionary development potential.
VI. CONCLUSIONS.
Development
project
design and evaluation has progressed
substantially
since benefit-cost analysis was initially mandated nearly half a7century
Yet
many
criteria
projects
a
of
effect.
The
economic
other
Design and evaluation by economic criteria are based on
future outcomes based in turn on economic models
of
cause
the
preand
atomistic-mechanistic nature of these models facilitates predic-
tion and prescription.
But tractability is obtained at the cost of
the evolutionary nature of the world.
importance
of being able to respond,
26
ignoring
Predictions are 'deterministic based on
unchanging components and relationships.
the
or
priori still perform poorly or outright fail a posteriori by
same criteria.
dictions
that are well designed by efficiency
ago.
Similarly, prescriptions demphasize
both technologically and
institu-
••••;•
to changing 'factors and interactions.
tionally,
Either formal or ad hoc ad-
justments can be made to atomistic-mechanistic models, to make them more evolutIonary, but they lose tractability much faster than they approach reality.
•The coevolutionary model presents an interesting alternative that
sizes
the very characteristics of social and environmental systems
classical
economic model ignores.
tractability.
Nevertheless
maintaining
the
neo-
predictive.
prescriptive criteria stem directly from the co-
evolutionary model of development.
on
But it does so at the cost of
empha-
In a coevolutionary world, success depends
diversity and flexibility, sustaining
system
productivity,
using monitoring and experiential learning systems, and avoiding vulnerability
a d
fixed
plans.
These criteria need not conflict with those
of
economic
reasoning supplemented by common sense responses to particular situations
but
they do not stem directly from conventional economic models.
_
Neither the neoclassical economic or the coevolutionary development
is
correct.
offset
Both have strengths and weaknesses which can only partially
through
elaboration of their basic models.
And thus we argue
pluralistic
approach
search
information on development strategies and
for
alternative
view
for
to planning -- for the use of multiple criteria in
the
be
consideration
the
of
projects, for open debate amongst planners and constituents over
the insights from the two perspectives
and ultimately for. good judgement.
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