Starting in 2000, the NSW Government used a regional governance process to develop water management plans throughout the State. Under the process, the Minister appointed a range of stakeholders such as water users, conservation interests, indigenous interests, and natural resource management agencies to each committee, which then had to make difficult management and policy choices regarding the sustainable use of water. Several committees often worked in the same catchment, each focusing on a slightly different part of the entire water resource.
One factor that affects the ability of these types of committees to operate is the institutional arrangements, or rules of operation and policies, under which they must work. Based on data from interviews and documents, this paper interprets how different participants behaved under certain sets of rules using game theory. The paper concludes by suggesting that game theory is helpful in explaining stakeholder behaviour. As such, its application may guide the development of robust operational rules prior to creating such regional governance processes.
Key words: Governance, Game theory, Water
Regional governance is a process incr easingly used by Aust ral ian governments in developing common pool resource policies and management guidelines (Bellamy & Johnson 2000; Jennings & Moore 2000). For example, representative democratic forms of regional governance, where participants are appointed to a committee based on their ability to represent a particular stakeholder group, have been used to formulate forestry, fishery and water policies (Lane 2003; Lane, McDonald & Morrison 2004). Governments favour these sorts of processes because, when well designed, they utilise local knowledge, encourage democracy, engender support, take into account values, resolve conflict and create conditions for fair and just policy outcomes (Jennings & Moore 2000; Lane, McDonald & Morrison 2004; Webler, Tuler & Krueger 2001;).
While policy makers and their advisors are enthusiastically embracing regional governance processes, there ar e many warnings that they need careful consideration. Essex, Gilig, Yarwood, Smithers & Wilson (2005) suggest the tendency to simply involve key actors in a new structure marginalises the wider community. It is also apparent that the rules for each process need to be developed according to the context (Edwards & Steins 1999; Webler, Tuler & Krueger 2001). In terms of representative processes, participants could be selected from a random sample of the group, by government, through a process of group selection, or by self-appointment (Catt & Murphy 2003). Problems are likely to arise if there is failure to distinguish the nature and purpose of the involvement by these stakeholder groups, the reason for which they should be included, and the best means for identifying their representatives (Catt & Murphy 2003).
Often, the challenge for designers is to ensure that despite cooperative, competitive, and individualistic goals being present, co-operative goals must dominate for the participants (Johnson & Johnson 1999). Representative processes are often used to resolve difficult policy and management choices regarding the most effective and efficient use of a scarce resource. Usually, conflict among the various competing needs has grown, while the resource base has become smaller. Yet, cooperation by all stakeholders is essential if the common pool resource is to be sustained (Kollock 1998). It is often difficult for a participant to cooperate when it is deductively rational for him or her to over exploit the resource for short-term gain. Indeed, participants may perceive they can obtain their goal only if other participants fail (Johnson & Johnson 1999). If it was possible to predict stakeholder behaviour under different types of arrangements, it may be possible to choose the arrangements that would encourage fair and just decision making in each particular context. …