Heterogeneity and the Provision of Governance for Common-Pool Resources

This paper provides an initial analysis of the governance provision problem for common-pool resources characterized by appropriation cost heterogeneities. Provision first requires the selection of a governance structure that lowers overall appropriation and allocates individual appropriation rights. The likelihood of successful implementation is then increased when appropriators make sunk, CPR-specific investments in monitoring and enforcement. Heterogeneity complicates efficient governance structures; appropriation rights allocations cannot minimize both implementation costs and heterogeneous appropriation costs. Some additional instrument, such as marketable appropriation rights or transfer payment schemes, are needed to minimize both forms of provision cost. The analysis identifies a voting rule tradeoff in which the form of provision cost depends on the form of voting rule used by appropriator groups attempting self-governance.