ECOLEC-05140; No of Pages 8

Ecological Economics xxx (2015) xxx–xxx

Contents lists available at ScienceDirect

Ecological Economics

journal homepage: www.elsevier.com/locate/ecolecon

From market failures to collective action dilemmas: Reframing

environmental governance challenges in Latin America and beyond

Roldan Muradian a,⁎, Juan Camilo Cardenas b

Universidade Federal Fluminense, Brazil
Universidad de los Andes, Colombia

a r t i c l e i n f o a b s t r a c t

Available online xxxx This introductory article to the special section “Collective Action and the Governance of the Commons in Latin
America” has two main objectives. Firstly, to contrast two analytical frameworks for understanding and address-
ing environmental problems, namely market environmentalism and the institutional framework. We call for
adopting a vision that conceives environmental problems basically as collective action dilemmas, instead of mar-
ket failures. Secondly, to discuss current trends in experimental approaches to the study of collective action and
summarize the main contributions of the special section to the growing literature in this field.
© 2015 Published by Elsevier B.V.

1. Introduction
The importance of studying collective action and the governance of
common-pool resources in Latin America could not be greater. The re-
gion is one of richest in terms of freshwater, with significant inequalities
though: abundant sources in key subregions and scarcity threatening
human livelihoods in others. The expansion of urban life continues to
increase the demand for the resource along with a greater need for irri-
gation in export-oriented agro-industrial projects. The immense wealth
of biodiversity hosted by the region also contrasts with expanding pres-
sures on ecosystems from deforestation and land conversion due to the
world's rising demand for food and biofuel, driven especially by eco-
nomic growth in Asian countries. Decades of good intentions for
correcting high rates of environmental degradation through the market
or the state have failed. The capacity of the governments to stop these
threats remains limited, and the markets have let down societies in
their capacities to correctly assign prices to valuable resources like fish-
eries, timber, freshwater or biodiversity, or to internalize the costs im-
posed to society from the depletion of key ecosystems' services due to
agriculture, cattle ranching, or from timber and mining extraction.
Some progress has been achieved nevertheless in the region in other
domains. For instance, “Latin America now has a highest percentage of
terrestrial areas formally protected than any other region of the
world” (Leisher et al., 2013) and 19 countries in the region have desig-
nated almost 1800 terrestrial protected areas that average more than
one tenth of their territory. However, the yearly rate of land degradation
of these protected areas, according to these authors, went from 0.04% in
⁎ Corresponding author.
E-mail address: roldanmuradian@gmail.com (R. Muradian).
2004 to 0.10% in 2009, with roughly one million hectares that suffered
land and forest degradation in those years.
The role of collective action in this context can be crucial. Most of the
watersheds, coastal and inland fisheries, and forested conservation
areas are inhabited or surrounded by small rural communities that in-
teract with these ecosystems on a daily basis regardless of the particular
property rights arrangements. Those interactions are embedded in a
classical problem of collective action: individual use and access to the
ecosystems imply an external cost or benefit to others in the communi-
ty, and therefore the individual benefits and costs derived from the con-
servation and use are not fully taken by each user, but by the group of
users as a whole. Either because no clear individual property rights
exist or cannot exist, or because these lands are declared national
parks or communal land within indigenous or afro-descendent forms
of ownership and management, much of the fate of these ecosystems
depends on the local arrangements within the groups that have access,
use and own (property) rights over them. Assigning individual private
property rights over aquifers, forests, watersheds, freshwater and coast-
al fisheries is very often either unfeasible or illegal due to land or water
use regulations, or implausible physical delimitations of the resource
physical boundaries. These are the reasons why local arrangements for
solving the collective action dilemma of these resources become critical.
Furthermore, the reemergence and empowerment of an indigenous
movement in the Latin American region through constitutional reforms
and social pressure have brought up the resurgence of collective action
ideas that were abandoned or ignored for much of the last centuries. The
boost that the indigenous movement received from the OIT Convention
169, initiated in 1989, along with national level legal reforms has creat-
ed a new political environment for alternative ideas about communal
management of resources and indeed the role of the environment in

http://dx.doi.org/10.1016/j.ecolecon.2015.10.001
0921-8009/© 2015 Published by Elsevier B.V.

Please cite this article as: Muradian, R., Cardenas, J.C., From market failures to collective action dilemmas: Reframing environmental governance
challenges in Latin America and beyond, Ecol. Econ. (2015), http://dx.doi.org/10.1016/j.ecolecon.2015.10.001
2
the models of development. Besides, the renaissance of collective forms
of work, mostly in the land,1 and the rethinking of concepts of well-
being and development (e.g. the concept of “buen vivir”: good living),
away from conventional measurements of material income such as
GDP per capita, have enriched the debate over the role of local institu-
tions and different forms of solving collective action dilemmas in the
management of the natural base in Latin America.
Cities and rural populations in Latin America face today major chal-
lenges regarding the use of resources and the effects of environmental
degradation due to multiple economic forces. Urbanization continues
to bring people to cities. This process will require greater construction
and raw materials, infrastructure and supplies of freshwater. The recent
boom in commodities due to increasing demand from other regions in
the world and internal demand from growing economies has increased
pressure on land for agriculture and livestock feed. The commodities
boom also brought external investors eager to reap the rents from
extractive industries in oil and minerals, creating tensions between gov-
ernments thirsty for fresh cash revenues, environmental and indige-
nous movements defending the protection of key ecosystems and
private actors eager to exploit these resource rich areas. However,
such booms are short-lived, and the region is currently suffering the
consequences of a sharp bust in the price of most primary export prod-
ucts. Similar tensions have also emerged from the expansion of trans-
portation and hydroelectric generation infrastructures that imply
artificial changes in watershed regimes and radical land use changes
in forested areas that were once protected against the incoming of col-
onization through roads. In sum, driven by China's demand for natural
resources, the past decade in Latin America (particularly in resource-
rich countries) has been characterized by very high rates of economic
growth, declining inequality in most of the countries but also by rising
pressures and threats on ecosystems, including those under common
or public management regimes (Rival et al., 2015).
The purpose of this special section entitled “Collective Action and the
Governance of the Commons in Latin America” is to bring a series of em-
pirical (and more specifically experimental) studies conducted in the
region to better understand some of the key questions and challenges
related to social dilemmas in the management of natural resources
and explore the role that the scholarship in collective action can play
in opening academic and policy-making debates about the sustainable
use of the rich array of ecosystems in the region, from the Andes to
the major rivers and coasts in the Caribbean, Atlantic and the Pacific.
In the next section, we discuss the concept of “analytical frameworks”,
and more particularly to what extent it is a useful heuristic tool for rais-
ing awareness about the way we perceive environmental problems, and
we figure out policy options to tackle them. In Section 3 we plead for a
shift from the current emphasis on market failures to an institutional an-
alytical framework (stressing the notion of collective action) for under-
standing and addressing environmental problems. In Section 4 we
summarize the main contributions of this special section.
The call for a new approach in the design of policies brings the atten-
tion to the pivotal work of Elinor Ostrom who called for avoiding pana-
ceas and instead work with a craftsmanship approach with each
problem and its particular conditions. Her work permeated several of
the articles in this special issue, and therefore we believe this effort
should be regarded also as homage to her legacy. Not only she widened
the analytical framework for studying and evaluating environmental di-
lemmas and policies, but she also contributed enormously by expanding
the methods and tools available to deal with the greater complexities
that the richer approach called for here imply. Interestingly, the work
of Elinor Ostrom permeated these policy discussions much later in the
Latin American region, if compared to other latitudes, probably because
1
The CEPAL (2014) reports a list of mechanisms for organizing collective work such as
“Minga, RantiRanti, Priostasgos Cargos, Compadrazgos, MarkakTayta, Ayni, Minka, Jayna o
Phayna, Anxata, Jaqqhata, Yanapa, Sataqawi and Manq'xaruña” in the Andean indigenous
cultures.
Please cite this article as: Muradian, R., Cardenas, J.C., From market failures to collective action dilemmas: Reframing environmental governance
challenges in Latin America and beyond, Ecol. Econ. (2015), http://dx.doi.org/10.1016/j.ecolecon.2015.10.001
of the prevalence of market-based policies that were reining the envi-
ronmental policy arena during the end of the twentieth century. In
fact, her seminal book, “Governing the Commons” was only translated
to Spanish a decade after its original publication in 1990. This special
issue, however, is the result of work conducted by a new generation of
researchers that have taken these broader ideas, including the use of ex-
periments, which Ostrom herself embraced during the mid 1990s.
2. Analytical Frameworks in Environmental Governance
Referring to the way scientists deal with the empirical evidence, in
his seminal book entitled “Science, Faith and Society”, Michael Polanyi
(1946: 14) stated that “objective experience cannot compel a decision
about alternative interpretations. The decision can be found only by a pro-
cess of arbitration”. Such arbitration, he argued, is determined to a great
extent by the “premises of science”, defined as the “fundamental guesses
of science concerning the nature of things”. Polanyi argued that no explicit
rules exists “by which a scientific proposition can be obtained by observa-
tional data”. From this perspective, the processes of discovery and
verification are conditioned by an “intuition of the relation between ob-
servation and reality”. Hence, M. Polanyi acknowledged not only a
moral element in the foundation of science, but also the importance of
alternative representations of realities in determining how scientists in-
terpret the problems they deal with. Few years later, Schumpeter
(1949) dedicated his presidential address to the annual meeting of the
American Economic Association to discuss the role of ideology in eco-
nomics, and he ironically stated that the majority of economists admit
the presence of ideological bias, though, “they find it only in others and
never in themselves”. Schumpeter argued that ideological propositions
were not intentional lies, but “truthful statements about what a man
thinks he sees”. Using a similar argumentation line to Polanyi's, for
Schumpeter the perception of a set of related phenomena is a “pre-
scientific act”, but such perceptions (determined by a vision or intuition)
play a critical role in the way the scientific work is carried out. According
to him, the influence of ideology was inescapable in science, since
“though we proceed slowly because of ideologies, we might not proceed
at all without them” (Idem).
More recently, Bromley (1990) has adopted a similar interpretation
of ideology, as a “shared system of meaning and comprehension”, or a
“structure within which information is supplied and processed, directions
are given and justification for certain behavior is provided”. According to
him, this interpretation is very close to the scientific paradigms, as de-
fined by Thomas Kuhn (1962). Bromley states that “indeed the very act
of acquiring training in a particular scientific discipline is to understand
and accept its ideology”, according to the definition mentioned above.
Such notion of training is indeed aligned with how Polanyi (1946) con-
ceived the transmission of scientific know-how. One of Polanyi's key
propositions is that “the premises underlying a major intellectual process
are never formulated and transmitted in the forms of definitive precepts”.
Training is seen then as the art of transmitting these “essential visions”
shaping the ways problems are chosen or scientists react to new clues.
The transmission of analytical frameworks (see below) constitutes
thus a fundamental part of formal training in science.
Building on the contributions mentioned above, here we make use of
the term “analytical framework” to refer to the set of premises and as-
sumptions that shape the way we conceive a problem and therefore
the set of possible solutions to it. We think that such framework deter-
mines to a large extent the way a problem is perceived, including how it
is conceptualized and formalized. An important element of “perceiving”
a problem is the adopted system of causal relations for explaining its or-
igin and justifying its existence. The interpretation of the causes of a
problem greatly influences how solutions are figured out, by means of
limiting the set of possible options and favoring some options over
others. Any problem is a social construct. This means that its very
“existence” and the way it is framed are formed through social process-
es, and in particularly through a shared belief system. Alternative

(pre)analytical frameworks might exist for addressing the same phe-
nomenon or situation. The choice of the framework becomes then a
key step, since it influences significantly the “analysis” of problems
and it restricts greatly the policy options (solutions to them). In that
sense, the preference for a particular framework is a “pre-analytical”
choice of paramount importance, since the subsequent analytical exer-
cises dealing with understanding the problem and drawing policy
prescriptions are to a large extent pre-determined by such choice. How-
ever, an explicit discussion about these frameworks has been rather ab-
sent in environmental governance, in part because the adoption of a
specific analytical framework tends to undermine taking a self-critical
stand.
An analytical framework is a heuristic cognitive structure, aiming to
emphasize the importance of fundamental premises and assumptions
in science and policy design. In that sense, it is similar to the notion of
“mental models”, another metaphor stressing the key role of “internal
interpretations of external reality” (Jones et al., 2011). These concepts
deal with cognitive structures mediating the way we process informa-
tion about the world. Cognitive structures are embedded in moral and
political stances, and are heavily value-laden. They constitute a system
of beliefs, which by definition is particularly resistant to change. The
adoption of an analytical framework is indeed an unavoidable choice,
since the cognitive structure it embodies is necessary for gathering
and interpreting information from the external world. Hence, we do
not conceive the choice of the analytical framework as an “ideological
bias” hampering the achievement of an “objective” observation of the
world, but rather as an “inevitable” lens mediating our perception of
it. The choice of an analytical framework is thus the most critical step
in addressing environmental problems and socio-environmental con-
flicts. We also stress here the notion of socio-environmental conflicts
because any environmental problem involves a conflict between social
groups, either over access to benefits from ecosystems or the distribu-
tion of environmental burdens. The resolution of such problems there-
fore requires concerted action between those actors.
During the last decade, “market environmentalism” has gained con-
siderable leverage as analytical framework influencing both environ-
mental science and policy, after decades of state-run policies guided
by command and control tools and top-down mechanisms. From the
perspective of market-environmentalism, environmental problems are
basically conceived as the consequence of “market failures”. That is, ei-
ther as negative (pollution) or positive (ecosystem services) externali-
ties, not sufficiently taken into consideration in the decisions of
economic agents. Solutions therefore should involve the internalization
of these usually “free of charge” social costs. Gómez-Baggethun and
Muradian (2015) discuss in depth the analytical framework characteriz-
ing market environmentalism, as well as the evolution of its influence
across academic and policy arenas across time and its boundaries of ap-
plication. In the rest of this section we summarize the reasons why the
leverage of such framework has considerably increased during past de-
cades and we compare its basic premises and assumptions with the
ones characterizing an alternative framework, namely the institutional
vision to understand and address environmental problems.
One of the key elements of analytical frameworks is their ability to
be propagated across time in particular epistemological communities.
This is mainly done through formal training. As stated above, academic
training consists not only in the acquisition of technical skills but also in
the transmission of key premises and assumptions. In such process of
transmission, fundamental premises, core assumption and key proposi-
tions composing the core of analytical frameworks remain rather im-
mutable along long periods of time. Such belief system is received by
the new members of the community as conventional wisdom. In
every field of specialization, the bulk of further development is built
upon these “given” fundamentals, which are hardly questioned. In the
field of economics, during the past decades there have been a continu-
ous process of consolidation of the so-called neoclassical paradigm, at
the expense of other approaches. The neoclassical approach has
Please cite this article as: Muradian, R., Cardenas, J.C., From market failures to collective action dilemmas: Reframing environmental governance
challenges in Latin America and beyond, Ecol. Econ. (2015), http://dx.doi.org/10.1016/j.ecolecon.2015.10.001
3
gradually become the mainstream in economics as an academic endeav-
or. This means that most departments of economics at contemporary
universities tend to be dominated by scholars from this stream of
thought, and therefore training programs at the undergraduate and grad-
uate levels tend to propagate the analytical framework associated with it.
Though in the aftermath of the global economic crisis the dominance of
this paradigm has been seriously questioned, the influence of the neoclas-
sical economics school is still very significant in policy circles, not only in
the domain of macroeconomic policies, but also in the environmental
arena, where the basic premises of market environmentalism have per-
meated deeply (see for instance the Green Economy report, prepared by
UNEP for the Rio + 20 Summit). The dissemination of the neoclassical
framework (the academic base of market environmentalism) in environ-
mental policy can be thus partly explained by the role of formal training in
economics, and in general the great influence neoclassical economists
have gained among decision makers at the end of the 20th and the begin-
ning of the 21st centuries. In the environmental policy arena the shift was
clear. Market instruments such as pigouvian taxes, payments for
environmental services and tradeable permits for resource extraction or
for emissions became a very common set of tools that many multilateral
agencies and national governments turned to, and away from the state-
based policies of standards and command-and-control. Over this transi-
tion from state towards market-based mechanisms, the role of collective
action as a way of dealing with local or national environmental challenges
was barely seen as important. Essentially, this type of policies were
grounded on assumptions about a universal free-riding behavior of indi-
viduals that needed to be tamed by “getting the prices right” through
tradeable permits, subsidies or taxes. There was no room for self-
governance as an alternative for correcting the environmental social di-
lemmas present at local or national levels.
Beyond the rising academic influence of the neoclassical economic
school, at the end of the 1980s many Western countries experienced
an ideological shift, propelled by the Reagan and Thatcher administra-
tions. The set of policy prescriptions that were coined as “neo-liberal”
spread rapidly across geographical regions of the world, and their adop-
tion had long-lasting consequences in many spheres, including prefer-
ences for market-oriented policy options, private property rights and a
restricted role for the state. Such prescriptions are compatible with the
theoretical foundations of the market environmentalism, and definitively
were conducive to the adoption of this framework also in the field of
environmental policy. The terms “neoclassical” and “neo-liberal” should
not however be confused or used as synonyms. “Neo-liberal” refers to a
particular set of policy stances, closely related to the also called
“Washington Consensus”, while “neo-classical” refers to a school of
thought within economics mostly based on the marginalist approach
and methodological individualism, even though the term and its meaning
are subjects of debate and contestation (Colander, 2000; Lawson, 2013).
Another critical element in the successful dissemination of market
environmentalism has been the synergy with the ecosystem services
approach. Though the initial idea of the ecosystem services approach
was to stress human reliance on natural ecosystems for maintaining
livelihoods and the market economy, this construct is also very compat-
ible with the basic premises of market environmentalism. The main
sources of such compatibility is in one of the key features of the
approach, namely that it conceptualizes the benefits humans receive
from nature as a set of discrete “services” that actually can be delimited,
measured and eventually incorporated into markets (Millenium
Ecosystem Assessment, 2005). The ecosystem services framework as-
sumes that a major source of misallocation of resources (resulting in
the depletion of natural capital) has been to take ecosystem services
as “free-of-charge”. Economic agents should therefore redress this
“market failure” by means of, first, acknowledging and valuing such ser-
vices, and later, incorporating the costs of maintaining such services into
their decisions. Economic policy instruments are expected to be effec-
tive in inducing agents to internalize such costs by adjusting the prices
to reflect the true social costs.
4
The ecosystem services approach is based on the assumption that
most of the time markets for ecosystem services are “missing”, and
therefore it subscribes to the notion of externalities resulting from mar-
ket failures. The approach itself does not have a clear preference for
market-oriented solutions to environmental problems, but it stresses
that acknowledging the services ecosystems provide “free of charge”
to the economy would contribute to raise the societal concern for the
protection of such ecosystems. Estimating monetary values or allocating
prices are just some of the available options. However, demonstrating
the importance of ecosystems for the economy through the estimation
of the economic values of the services they provide has been one of
the dominant communication strategy of the approach (see for example
the TEEB report). Such valuations have been traditionally done within
the scope of neoclassical economics. That is, using the traditional valua-
tion tools of environmental economics.
Market environmentalism has then benefited enormously from the
emergence and thrive of the ecosystem services approach during the
past fifteen years or so. The rapid dissemination of this approach itself
can be also explained by a combination of factors. One of the most im-
portant has been the window of opportunity created by the decline of
integrated approaches to reconcile environmental conservation and
economic development, particularly in rural areas of developing coun-
tries, where biodiversity is concentrated (Muradian, 2013). The relative
decline of integrated conservation and development projects was due to
the accumulated empirical evidence about their difficulties in achieving
either environmental or economic goals, but above all because the ap-
proach seemed to have reached the end of its life-cycle. The paradigms
guiding the action of global environmental organizations seem to follow
cycles of innovation, thrive and decline, which actually have little to do
with the empirical insights, since the evidence about the effectiveness of
biodiversity policies is still scarce and scattered (Miteva et al., 2012).
The change of paradigm probably has more to do with strategies to deal
with mounting criticisms and as a search for renovation in order to set
new agendas, aiming at obtaining more public attention and resources.
Paradigm shifts in the field of global environmentalism tend to take
place in a swift way, basically due to the existing configuration of key
players. Global environmental non-governmental organizations actual-
ly play a key role in setting the international agenda of environmental
policy, particularly in the area of biodiversity conservation. Dissemina-
tion of ideas is quick in this sector because these organizations are
few, mobilize considerable amount of resources and are part of hierar-
chical structures (most NGOs in developing countries are dependent
on the resources these big organizations provide and therefore tend to
be followers of the agenda the latter set). In addition, other multilateral
organizations, such as the World Bank or UNEP, have also traditionally
exerted a great influence in shaping the international environmental
agenda, particularly with regards to policy approaches. All these organi-
zations have been very instrumental in the rapid dissemination of the
ecosystem services approach. Several research funding organizations
have been also openly supportive and active in promoting this ap-
proach, by means of narrowing the research agenda within its scope.
An example is the Ecosystems Services for Poverty Alleviation program,
ESPA, from the U.K., which has allocated about 40 million pounds “to
provide new knowledge demonstrating how ecosystem services can re-
duce poverty and enhance well-being for the world's poor”. Such a
funding scheme has a rapid and multiplying effect on the research and
policy agenda dealing with the relationship between biodiversity con-
servation and economic development, and in particular on the interna-
tional dissemination of the ecosystem services approach.
3. Shifting the Framing: From Market Failures to Collective Action
Dilemmas
Nonetheless, market environmentalism faces a number of important
limitations. The emergence and proper operation of markets require a
set of conditions: high degree of commoditization; a high degree of
Please cite this article as: Muradian, R., Cardenas, J.C., From market failures to collective action dilemmas: Reframing environmental governance
challenges in Latin America and beyond, Ecol. Econ. (2015), http://dx.doi.org/10.1016/j.ecolecon.2015.10.001
voluntariness and trade (exchange of rights) embedded in a price sys-
tem. As discussed elsewhere, essentially due to the public or club char-
acter of most ecosystem functions, markets face serious limitations as
instruments in the governance of ecosystem services (Muradian,
2013). This is the main reason why most of the so-called market-
based instruments for environmental governance are actually far from
being markets (meeting the conditions mentioned above). On the
ground, such instruments take very diverse forms, in a wide range of in-
stitutional arrangements (Muradian and Gómez-Baggethun, 2013). In
addition, market environmentalism lacks appropriate conceptual tools
to understand properly socio-environmental conflicts. Monetary com-
pensation is just one dimension of these complex social phenomena,
which can be hardly reduced to the logic of market transactions. Fur-
thermore, this framework does not incorporate important categories
to analyze social struggles about natural resources and environmental
burdens, such as power or social justice, nor it deals properly with dis-
tributional aspects. It has difficulties to incorporate the notions of fair-
ness or rights, since it tends to assume that social disputes can be
essentially solved through transfers of resources between social agents,
which nevertheless is not always the case. The conceptualization of en-
vironmental problems as market failures might hence generate a mis-
match between the cognitive and analytical framing for understanding
such problems and the appropriateness of solutions (policy options)
that tend to be derived from this framing to solve the problems at
stake. We think that inconsistencies can be lessened by shifting to a
framework that conceives environmental problems essentially as col-
lective action dilemmas. Last, but not the least, market environmental-
ism tends to consider environmental problems basically as technical
problems (as a matter of internalization of costs). Nonetheless, the res-
olution of many environmental problems goes beyond technicalities,
and involves changes in the realm of morality and behavior. For in-
stance, a key insight of experimental approaches to deal with collective
action situations is that very often agents can solve collective action di-
lemmas behaving in ways that are far from the Nash equilibrium
reached by self-oriented material payoffs maximizers. This means that
agents adapt to and solve social dilemmas by means of changing their
value systems (e.g. propensity to cooperate) or through group-based
mechanisms that induce socially efficient behaviors through social
norms and agreements, binding or not, that are enforced by the groups
endogenously, in ways that are not “rational” from the perspective of
neoclassical microeconomics.
As stated before, an alternative to market environmentalism is to
conceptualize environmental problems as collective action dilemmas.
This has several implications, in terms of both the analytical under-
standing of environmental problems and the design of policies to ad-
dress them. It is worth noting that collective action dilemmas do not
only apply to common property regimes (situations that most of the lit-
erature on collective action deals with). A collective action dilemma
arises at any situation that involves misalignment of interests between
agents and requires some degree of concerted action between them in
order to solve such misalignment. The notion of collective action should
not be therefore restricted to situations characterized by the existence
of a group of resource users in a common property regime. For instance,
private owners of land along a watershed face a collective action dilem-
ma in their misalignment of interests between, say, upstream and
downstream users. One of the main insights of the new institutional
economics is that there is a continuum of coordination mechanisms be-
tween agents: between the extremes of hierarchical (exclusively based
on authority) and market (exclusively based on competitive and anon-
ymous market exchanges) governance structures. In such continuum,
hybrid forms of governance combine hierarchical and market elements.
Conceptualizing environmental problems as a collective action dilemma
means basically to see them as a coordination challenge. Namely, as a
lack of alignment in the interest/action of social agents. When there is
information exchange and some forms of deliberation between these
agents, hybrid forms of governance are able to emerge. Collective action

dilemmas usually call for “hybrid” policy approaches. That is, to the
combination of hierarchical, community and market elements as a strat-
egy to solve coordination problems (Muradian and Rival, 2012).
At the core of the framework that conceives environmental problems
as collective action dilemmas lies the notion of “institutions”, generically
understood as the set of (formal and informal) rules and habits condition-
ing social and economic interactions in a given society (North, 1991). In-
stitutions also refer to the prevailing values among the social groups
involved, including moral considerations about justice and equity. By def-
inition, institutions are context and culture-dependent, and they condi-
tion to a great extent how economic and other types of transactions
take place, and therefore their social and environmental effects (Kral
et al., 2011). Within this framework, social agents are conceived as indi-
viduals with complex motivations (selfish interests but also with capacity
to cooperate, follow social norms, be altruist or reciprocal, and share con-
cerns for the common goods), whose behavior is conditioned by shared
norms and expectations. From this perspective, environmental degrada-
tion and socio-environmental conflicts are seen basically as a result of a
“governance deficit” (Haas, 2008). Namely, due to the occurrence of a
set of institutions that are not properly suited to solve the problems at
stake. Often, such situations encompass struggles over rules, which usual-
ly involve disputes over who decides and under which mechanisms for
decision making.
Hence, this framework gives a special significance to institutional
change as a source of solutions to environmental problems and con-
flicts. Changes in the set of rules, norms and habits are seen as key ele-
ments in solving “governance failures”. Societies however might be very
resistant to institutional change and it may take place at a very slow
pace (Rocco and Thurston, 2014.). From this standpoint, therefore,
socio-economic conflicts do not always hold a negative connotation,
since they can be also drivers of institutional transformations. Conflict
resolution often involves re-defining rights and the mechanisms for
decision making. This vision acknowledges that the resolution of
conflicts over access to natural resources or ecosystem services is
context-dependent. That is, it depends on the local configuration of
institutions and the possibilities of change. They are not seen then
as structural or unavoidable outcomes of economic development,
but as a result of a particular institutional arrangements, which
may vary greatly in being conducive either to conflict exacerbation
or resolution (Ostrom, 2005).
From an institutional perspective, the main contribution of the con-
cept of ecosystem services has been to make explicit relations between
different social actors, mediated by ecological functions and manage-
ment regimes of natural resources. The governance of ecosystem ser-
vices usually implies coordination and collaboration between such
agents. The concept of ecosystem services might facilitate the reconfig-
uration of social relations, in order to solve “governance deficits”
(Muradian and Rival, 2012). Participation and legitimacy are considered
as key concepts in the configuration and resolution of conflicts
(Biermann et al., 2010). The perceptions of the agents involved are
then critical elements in conditioning the way such agents interact be-
tween them and engage in social processes of decision making. Further-
more, since institutions are assumed to mediate the relationship
between economic growth and environmental degradation, this frame-
work is more optimistic about the possibilities to reconcile both of them,
as compared to the vision of radical political ecology, which sees an un-
solvable conflict between economic growth and market degradation.
From the institutional perspective, there are however not universal
recipes applicable to any situation, and the search for solutions relies
necessarily on the specific institutional setting shaping the situation.
Therefore, this vision is very suspicious of “panaceas” and one-fits-all
approaches (Ostrom, 2012). Solutions are not necessarily assumed to
belong to the “technical” sphere but are rather about “governance
shifts”. The latter refers to changes in rules (including the way decisions
are made) reflecting equity and justice concerns, and affecting the dis-
tribution of power, costs and benefits among the actors involved,
Please cite this article as: Muradian, R., Cardenas, J.C., From market failures to collective action dilemmas: Reframing environmental governance
challenges in Latin America and beyond, Ecol. Econ. (2015), http://dx.doi.org/10.1016/j.ecolecon.2015.10.001
5
Table 1
A comparison of two alternative framings for understanding and addressing environmen-
tal problems.
Market Institutional framework
environmentalism (collective action)
Keyword Externality Coordination failure
Core source of environmental Market failure Social dilemma
problems
Main policy principle Efficiency gains Efficiency gains and
procedural justice
Goal of policy options Internalization To solve the governance
(get the prices right) deficit (get the rules right)
Preferred policy tools Market-based Policy mixes (combination
instruments of hierarchical and market
instruments)
without disregarding the importance of social efficiency in the evalua-
tion criteria.
The institutional framework however is not excepted from limita-
tions. First, it can be easy trapped in the notion of “context-specificity”.
The relativism that this notion entails may actually undermine the
search of general patterns and regularities, which after all is one of the
ultimate goals of the academic work. An exaggeration of the relative
character of institutions might result then in the lack of a consistent sys-
tem of premises and propositions that could constitute the basis of a
solid theoretical structure to guide the design of concrete policy recom-
mendations. Secondly, for some critics, the institutional framework
lacks a convincing analysis of power and it is unable to address the ulti-
mate causes of exclusion and environmental degradation, rooted in
power structures very resistant to change and historical economic pro-
cesses entrenched in a biased distribution of rights and wealth. Progress
is therefore needed in combining institutional and political economy
analyses, in order to enhance its analytical power.
We have summarized in Table 1 the main insights on the compari-
son between the conceptualizations of environmental problems derived
from the perspectives of market environmentalism and the institutional
framework (collective action). In addition to the way they conceive the
nature of environmental problem and their causes (already outlined
above), these frameworks also differ in their preferred policy tools to
tackle them. While market environmentalism stresses the importance
of the economic valuation of environmental externalities, as a way to es-
timate possible efficiency gains and the possibilities of trade, the resolu-
tion of collective action problems usually requires deliberation for
setting policy goals (activities to be concerted) but also to agree about
the procedure through which decisions are taken. Besides efficiency
gains, the collective action framing pays considerable attention to pro-
cedural justice concerns. Legitimacy is a key element of collective deci-
sions since it conditions both the engagement of agents in concerted
actions and the possibility to exert authority (a critical coordination
mechanism). Market environmentalism assumes the internalization of
environmental externalities as the main goal of policy design. Emphasis
is then put on “getting the price right” by means of acknowledging the
costs of maintaining critical ecosystem services and incorporating into
decisions the costs of negative environmental effects of production or
consumption processes. Market environmentalism has therefore pref-
erence for policy instruments able to influence prices (market-based in-
struments). In the institutional framing, the core goal of policy design is
to solve the coordination problem between agents by means of institu-
tional change, and more specifically through changes in the set of
“rules” governing the situation. Such rules usually combine economic
(often in the form of incentives or sanctions) and hierarchical elements
(based on authority and command and control).
4. The Contribution of this Special Section
Due to the importance of multiple scales and the mix of policy in-
struments in the governance of ecosystem services, a very relevant
6
contemporary issue has to do with the interaction between collective
action settings and broader governance systems, through the enforce-
ment of “external” rules, including rewards (incentives) and punish-
ments (sanctions). In the domain of the management of natural
resources, it is a key to understand, for instance, the interaction between
regimes for the management of common pool resources and public pol-
icies at higher geographical levels, or the interaction between social
groups at different scales (such as relations between downstream and
upstream dwellers in watersheds). Several Latin American countries
have experimented with new approaches that combine external (pub-
lic) incentives with community-based management regimes. For exam-
ple, the national-level schemes for payments for ecosystem services in
Mexico and Ecuador involve conditional monetary transfers to commu-
nities (mostly indigenous), aiming to enhance the provision of environ-
mental public goods. The recently approved law on payments for
ecosystem services in Colombia aims to contribute to improve the
management of watersheds by means of providing economic incen-
tives to upstream landholders for the adoption of more water-
friendly land use practices. However, the evidence about the extent
to which these interventions can be effective in achieving their pol-
icy goals is still very limited and sources of uncertainty about their
effects are multiple.
The effects of the interaction between collective action settings and
broader governance regimes are very complex, due to the number of
factors involved in conditioning cooperative behavior. Therefore, uni-
versal patterns are very difficult to find. Despite the limitations they
might have for deriving valid generalizations applicable in real-life situ-
ations, experimental approaches can be very useful in giving insights
about such interaction. The special section we introduce here aims pre-
cisely to bring about new insights about the performance of collective
action in situations where resource users are embedded in broader so-
cial dynamics and governance structures. The papers by Alpizar and
Gsottbauer (in this issue) deal with the role of reputation as key psycho-
logical mediator in the interaction among social agents and between
them and public policies. Saldarriaga-Isaza et al. (in this issue) recreate
a “co-management” situation in dealing with a “public bad” (pollution)
while Pfaff et al. (in this issue) recreate a situation of water appropria-
tion in a watershed, in which they introduce resource scarcity within
an experiment in the field. Blanco et al. (in this issue) also set up an
experimental setting to assess the effects of different types of variations
in resource availability on cooperative behavior. Lastly, De Melo and
Piaggio (in this issue) address the effects of inter-group interaction on
cooperation.
In general, several experimental studies have shown that regulations
externally enforced can undermine collective action (Cardenas et al.,
2000). However, Saldarriaga-Isaza et al. (in this issue) have found that
external rules can enhance the contributions to the public good. As
well, some studies have shown that external rewards tend to be more
effective than punishments in contributing to collective action
(McCusker and Carnevale, 1995; Rand et al., 2009). Nevertheless,
Alpizar and Gsottbauer (in this issue) report that shame (a sort of social
sanction) is more effective than pride (social acknowledgement) in
steering collective action behavior. Mulder (2008) found similar results:
punishments being more effective than rewards in increasing coopera-
tion. Midler et al. (in this issue) systematize the mediators between ex-
ternal rewards and the behavioral responses of actors engaged in
collective action. Supporting the findings of other studies, one of their
contributions (see below) is that collective and individual rewards
have differentiated effects on the behavior of agents with regards to co-
operation. The theory underpinning these effects states that the conse-
quences of external rewards or sanctions depend on a number of
factors, including social preferences of individuals, such as their propen-
sity to cooperate, independently of the cooperative behavior of others
(Hayo and Vollan, 2012), emotional reactions to external interventions,
such as self-esteem, self-determination and guilt (d'Adda, 2011;
Ketelaar and Tung Au, 2003), the possibilities of free-riding, the
Please cite this article as: Muradian, R., Cardenas, J.C., From market failures to collective action dilemmas: Reframing environmental governance
challenges in Latin America and beyond, Ecol. Econ. (2015), http://dx.doi.org/10.1016/j.ecolecon.2015.10.001
possibility of communication (Cardenas, 2000; Cardenas et al., 2000),
the intensity of social ties, such as trust (Mulder et al., 2015), and the en-
forcement of social norms (Gelchich et al., 2013;). Frey and Stutzer
(2006) have systematized evidence showing that monetary incentives
can undermine pro-social behavior when they are perceived as a threat
to autonomy (seen as restrictive and controlling) and when they convey
the signal of mistrust of the involvement and competence of the agents
involved. Vollan (2008) also found that crowding-out effects on pro-
social behavior are dependent on a variety of factors, including the na-
ture of the external intervention (controlling vs. supportive), the degree
of self-determination of agents and the set of norms of trust and reci-
procity. However, crowding-in effects on pro-social motivations due
to external rewards have been also reported (Narloch et al., 2012;
Rode et al., in press). For a more general overview on the crowding-in
or out of incentives see Bowles and Polania (2012).
Furthermore, groups are usually diverse with regards to the compo-
sition of their members (particularly in terms of the degree of
conditional cooperativeness). Such heterogeneity is also a key factor
conditioning the effects of the interaction between collective action
and broader governance systems. The consequence of all these complex
interactions between variables is that it is extremely difficult to predict
what the effects of external interventions (rewards, punishments, new
rules) on collective action settings would be. Hence, when trying to in-
fluence collective action regimes, policy makers should first of all be
aware of this complexity (and therefore possible unexpected effects),
and secondly empirically test the assumptions on which their policy de-
sign is based upon.
Our special section is composed by articles dealing with collective
action situations in Latin America. All of them adopt an experimental
approach and share the fact that the participants in the experimental
settings are also involved in real-life social dilemmas. Such approach in-
volves a careful analysis of behavior in a controlled experimental envi-
ronment but embedded in an institutional framework of government
regulations and social norms in these communities. Social dilemmas in-
clude urban waste recycling, biodiversity conservation, pollution in arti-
sanal mining, fisheries and water management. They address therefore
some of the main problems faced by the Latin American region. Alpizar
and Gsottbauer recreate an experimental situation in which it is possi-
ble to assess the role of reputation (shame and pride) in conditioning
pro-environmental behavior (contribution to waste recycling efforts).
They found that punishment, in the form of identification of free-
riders, has a larger effect on collective action behavior, as compared to
singling out those players who contributed a lot. The authors argue
that these results can be used for policy design, by means of putting in
place a reputation system in the locations where recycling is to be en-
couraged. According to their results, identifying non-contributors
(though probably less socially acceptable) is likely to be more effective
in promoting pro-environmental behavior. These results suggest that
there might be trade-offs between social acceptability and effectiveness
of policies trying to influence contributions to the common good. Also
dealing with reputation and social punishment, the study by Gioia de
Melo and Matías Piaggio in this special section assesses the effect of
these elements in mixed (from different communities) and intra-
groups of fishers in Uruguay. Interestingly, and contrary to the results
of previous studies, they did not find in-group bias with respect to coop-
eration. They also found that the effect of diminishing extraction levels
was significantly higher in the mixed-group treatment. That is, fishers
are more sensitive to the threat of being punished when interacting
with subjects who are not of their own community. These three studies
add new experimental evidence showing that reputation-related be-
havior is critical in conditioning collective action. In addition, the find-
ings suggest that punishment and rewards have differentiated effects;
the contribution to the common good is tightly associated with status;
and the effects of social punishment are dependent, among other things,
on the composition of the groups in a way that is not always easy to
predict.

The contribution of Estelle Midler and her colleagues tackles a very
relevant issue for current environmental governance, namely how do
economic incentives affect the motivations of agents involved in collec-
tive action situations. Taking as case study the conservation of local
agro-biodiversity (quinoa) in the highlands of Peru, they compared
the effects of individual and collective rewards on collective action per-
formance. They found that individual rewards triggered higher levels of
contribution to the common pool, while collective rewards reduced it.
The latter can occur as collective rewards increase the possibility to
free-ride. The contribution of Carlos Saldarriaga-Isaza and colleagues
deals with collective action to address a “public bad” (pollution). In
line with the insights commented above about the role of high-status
individuals in experimental collective action situations, they found
that leaders can be very influential in the behavior of other players,
when communication is allowed. They also report that exclusion was
ineffective as a treatment to enhance collaboration, while co-
management (inducement by an external agent) was able to have a
substantial effect on the individual contributions to the acquisition of
a cleaner technology (to solve the pollution problem). Collective action
alone (without external effects) though was not able to solve the social
dilemma in this case. Hence, this paper shows that external interven-
tions may enhance the performance of collective action. In a complex
experimental setting, recreating a watershed, in their contribution to
this special section, Alexander Pfaff and colleagues deal with an also
complex behavioral issue. Namely, the long-lasting impact on collabora-
tive behavior of having faced scarcity in the past. An issue that is partic-
ularly relevant in water-stressed areas. They show evidence supporting
the proposition that high early scarcity induces durable selfishness,
undermining future prospects of collective action. Esther Blanco and
colleagues also simulate scarcity in a common pool resource. They
found evidence supporting the proposition that in strong scarcity situa-
tions users of common pool resources experience a substantial decline
in their willingness to cooperate, making collective action substantially
harder. This evidence suggests that environmental change resulting in
higher resource scarcity might create vicious cycles of low cooperation
and resource degradation. Lastly, the experimental setting developed
by Santis and Chavez also simulates different levels of abundance of
the resource (fishes) and different combinations of formal and informal
enforcement mechanisms of rules. They found that a combination of
formal and informal enforcement mechanisms is more effective in re-
ducing extraction levels (compared to the application of any of them
separately), particularly in a scenario of high scarcity of resources. This
finding then calls for exploring complementarities between public pol-
icies and collective action.
While the articles composing this special section address some spe-
cific critical aspects conditioning cooperative behavior in collective ac-
tion situations, by stressing in this introductory article the notion of
analytical framework we wanted to avoid that the discussion remains
restricted to the possibilities and limitations of alternative instruments
in environmental governance, the set of specific rules shaping collective
action or the role of the conditions of the resources in shaping
cooperation. We think that it is important to take a step back and to un-
derstand how “pre-analytical” choices steer the way we “frame” envi-
ronmental problems, while also restricting the set of policy options
(envisaged solutions) to them. The adoption of an analytical framework
is not only the choice of a particular set of (technical) policy instru-
ments, but above all it reveals (and embodies) values and moral choices.
We think that the notion of analytical framework can indeed be very
helpful in facilitating the discussion about the basic premises on which
research and practice rely. It stresses the idea that choices are not about
alternative policy options but about world visions. One of the most im-
portant implications of the choice of an analytical framework is that it
determines the very nature of the problem at stake. The very influential
article of Garret Hardin (1968) “The Tragedy of the Commons” is mainly
known for discussing the danger of open access to natural resources.
However, the paper also dealt with the description of a special type of
Please cite this article as: Muradian, R., Cardenas, J.C., From market failures to collective action dilemmas: Reframing environmental governance
challenges in Latin America and beyond, Ecol. Econ. (2015), http://dx.doi.org/10.1016/j.ecolecon.2015.10.001
7
problems, which he called: “no technical solution problems”, whose so-
lutions are in the realm of “values and morality” (not in the technical or
technological sphere). Hardin mentioned the cold war as one of the ex-
amples of this type of problems, since at the time no technical option
was envisioned as a way out of the race for the development of ever
more lethal weapons by the U.S. and the Soviet Union. We could ask
whether environmental problems and socio-environmental conflicts
also belong to this type of problems. The answer to this question
nevertheless depends on the adopted analytical framework. For market
environmentalism, environmental problems basically arise from a (mis)-
allocation of costs, and therefore they are essentially seen as technical is-
sues, whose solutions require state or market interventions aiming to
affect relative prices, in order to achieve an optimal allocation. For the in-
stitutional framework nonetheless, and for collective action dilemmas in
particular, environmental problems and socio-environmental conflicts
belong to the realm of values and morality, and therefore solutions are
not restricted to the technical arena. This shows how when addressing
environmental problems or socio-environmental conflicts the issue at
stake is not so much about choosing between alternative “solutions” but
about choosing between alternative value systems and making value
judgments.
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