Institutional Innovations for Environmental Governance when Monitoring is Limited: the Case of Small-scale Gold Mining
Abstract: Small-scale mining is an important economic option for many rural poor in the developing world. It involves tradeoffs, however, in terms of equity as well as both health and environmental impacts. Management that balances gains with negative side effects is a challenge given limited governance, as the current formal rules for mining are inadequate for the conditions of small-scale gold mining. Thus, we explore alternative institutional governance arrangements for small-scale gold mining to mitigate its negative effects by improving monitoring's effectiveness based on how miners: (1) commercialize their gold production; and (2) partake in local public goods. As producers, miners sell 'up the value chain' to buyers who are larger and thus may well be easier for the state to monitor and thus to regulate. The larger actors, in turn, could induce environmental compliance from small miners by sharing more surplus in bargaining in exchange for shifts in miner behavior that lessen larger actors' regulatory liabilities. As consumers, small-scale miners value public goods such as improved property rights and local infrastructure. Therefore, they might be willing to monitor each other's individual compliance if the level of public goods provided rises with total regional compliance. Our proposed method for exploring potential new institutions is artefactual field experiments complemented by qualitative field work on gold mining in two field sites within Colombia.
