Institutions Needed for More than Growth

• Author: Christian Eigen-Zucchi/Gunnar S. Eskeland/Zmarak Shalizi
• Pages: 42-43

By facilitating the management of environmental and social assets, institutions underpin sustainable development

Page 42

In Recent decades, China was faced with severe air pollution that was causing health problems for millions, Cameroon was confronted with deforestation that was undercutting local communities' livelihoods and imperiling biodiversity, and Malaysia was saddled with ethnic and socioeconomic conflict that was tearing the nation apart. In all three cases, the problem was to bring parties together in a way that balanced dispersed interests and enabled long-term commitments. Institutions can do just that.

The World Bank's World Development Report 2003: Sustainable Development in a Dynamic World argues that often appropriate policies are known but not implemented because of distributional issues and institutional weakness. What is needed, it says, is for policymakers to focus on institutions (rules and organizations, informal and formal) to get the government, nongovernmental organizations (NGOs), and the private sector to manage a broad portfolio of assets-not just human and physical capital but also environmental assets (such as freshwater and fish stocks) and social assets (such as trust). If social groups feel secure, and have a stake in the future, they will take a long-term perspective, establishing a link between poverty reduction and institutions for sustainable development.

Environmental sustainability

When it comes to managing forests, water resources, fisheries, and the air we breathe, national policymakers must contend with well-known coordination problems involving spillover effects and public goods. The following three cases show how competent institutions pick up signals (information, feedback, anticipation of future problems), balance interests (transparency, voice, forums for negotiation), and execute agreed-on decisions (commitment and enforcement mechanisms).

Picking up signals. In recent years, China has moved aggressively to curb air pollution, which was causing chronic health problems for millions of people, with thousands dying prematurely each year. Its chosen weapon has been transparency-notably, information disclosure programs about cities' and firms' environmental performance. In these programs, information is generated to facilitate the participation of civil society, political leaders, and the private sector. Such...