Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
• 378.794 • G43455 WP-333 Working Paper Series • WAITE MEMORIAL 900K COLLECTION. • 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. BIBLIOGRAPHY . Baker, H. G. and P. D. Herd. 1968. IntrafloralEcology. Annual Review of Entomology. 13:385-414. .Boserup s E. 1965. The Conditions of Agricultural Growth: The Economics of Agrarian Change under Population Pressure. Chicago. Aldine. 1981. Population and Technological Change: A Study of Long Term Trends. Chicago. University of Chicago Press. Bottral A. 1981. Action Research Towards Improved Water Distribution. Agricultural Administration Unit, Overseas Development Institute. Network Paper 1/81/2. Eckstein, 0. 1958. Water Resource Development: The Economics of Evaluation . Cambridge, Mass. Harvard University Press. Project Ehrlich, P. R. and P. H. Raven. 1964. Butterflys and Plants: A Study of Coevolution. Evolution. 18:586-608. Freeman, A. M. III. 1979. The Benefits of Environmental Improvement: Theory, and Practice. Baltimore. Johns Hopkins University Press. Geertz, C. 1963. Agricultural Involution: The Processes ôfEcoloqical Change, in Indonesia.. Berkeley'. University of California Press. Harris, M. 1979. Cultural Materialism: The Strugq,le for a Science of Culture. New York. Random House. .Haveman, R. A. and J. V. Krutilla. 1968. Unemployment l Idle Capacity, and the Evaluation of Public Expenditures. Baltimore. Johns Hopkins University Press. Hufscmidt, ti, D. E. James, A. D.. Meister, B. T. Bower, and J. A. Dixon. 1983. Environment, Natural Systems, and Development: An Economic Valuation Guide. Baltimore. Johns Hopkins University Press. Kneese, A. V. and B. T. Bower. 1968. Managing Water Quality: Economics TeChnology, and Institutions. Baltimore. Johns Hopkins University Press. Korten, D. C. 1980. Community Organization and Rural Development: A Learning Process Approach. Public Administration Review. 40(SeptemberiOctober):480-511. Krutilla, J. and 0. Eckstein. 1958. Multiple Purpose River Devet2pmen Studies in Applied Economic Analysis. Baltimore. Johns Hopkins. Little, I. M. D. and J. A. Mirrlees. 1974. Project Appraisal and Design for Developing Countries. New York. Basic Books. Myrdal s G. 1957. Economic _Theory and Underdeveloped Regions. London. Gerald Duckworth. 28 /0) Netting, R. McC. 1977. Cultural Ecology. Menlo Park. Cummings. Norgaard, R. B. 1981. Sociosystem and Ecosystem Coevolution in the Amazon. Journal of Environmental Economics and Management. 8(September):238-54. 1984a. Coevolutionary Agricultural Development. Economic Development and Cultural Change. 32(April):525-46. 1984b. Coevolutionary Development Potential. Land Economics: 60(May):160-73. 1984c. The Bureaucratic Jungle: 'Ordem e Progresso' in the Brazilian Amazon. Paper presented at Stanford-Berkeley Joint Latin American Studies Faculty Seminar, Berkeley Faculty Club. April 5. Popper K. 1957. The Poverty of Historicism. New York. Harper and Row. Rambo, T. 1983. Conceptual Approaches to Human Ecology. Research Report 14. East-West Environment and Policy Institute. Honolulu. Rappaport. R. A. 1968. Picis for the Ancestors: Ritual in the Eco ow of a New Guinea People. New Haven. Yale University Press. Scriven s M. 1959. Explanation and Prediction in Evolutionary Theory. Science. 130 (August. 28):477-82. Susman s 6.1. and R. D. Evered. 1978. An Assessment of the Scientific Merits of Action Research. Administrative Science Quarterly. 23(December):582- U.S. Federal Interagency River Basin Committee s Subcommittee on Benefits and Costs. .1950. Proposed Practices for Economic Analysis of River Basin Projects. Washington, D.C. Weisbrod s B.A. 1968. Income Redistribution Effects and Benefit-Cost Analysis. In: S. B. Chase; Jr. (ed). Problems in Public Expenditure Analysis. Washington; D.C. Brookings Institution. 29