Social design and sustainability of environmental resources: Learning from the field experiments

Sustainability has become a key issue in managing natural resources together with growing concern for capitalism, environment and resource problems. The paradigms of the economy, society, and natural environment are going through fundamental changes and human society is in the midst of great transition. The major agents of this transition could be from a market and institution like democracy. Therefore, one of the solutions for natural resource management could be through economic-incentive, in other words, market-based policy instrument. Market-based instruments, such as tradable permits are considered to capture feature of free-market environmentalism if they are well designed and implemented. A marketable permits system (MPS) has been deemed effective in laboratory experiments, however, little is known about how the MPS works in the field. As a first step, we evaluate the MPS efficiency of forest conservation by conducting framed field experiments in Nepal. Forestland demands are elicited from farmers, with which the experiments are carried out. The novelty lies in instituting a uniform price auction (UPA) under trader settings and in identifying the MPS efficiency for forest conservation in the field of developing nations. The results suggest that farmers with limited education understand UPA rules, reveal their forestland valuations and that the MPS is effective with 80% of efficiency. However, there are certain limitations with the free market as it creates externalities. Second, the market is better when no waste is created, but, it is not the case with current capitalism that is ongoing in the societies. It appears to be an important issue to find out externalities produced by the market and how market competition shapes peoples’ behavior and preference. Many literature in the past have shown that economic environment and institutions affect people behavior and preferences. Therefore, we want to see how current ongoing modernization of competitive societies, which we refer to as “capitalism,” might affect human nature to utilize natural resources that are provided in commons. To test our hypothesis, we design and implement a set of dynamic common pool resource games and experiments in the following two types of Nepalese areas: (i) rural (non-capitalistic) and (ii) urban (capitalistic) areas. We find that a proportion of prosocial individuals in urban areas are lower than that in rural areas, and urban residents deplete resources more quickly than rural residents. The composition of proself and prosocial individuals in a group and the degree of capitalism are crucial in that an increase in prosocial members in a group and the rural dummy positively affect resource sustainability by 65% and 63%, respectively. Overall, this paper shows that for some class of social problems market yields better performance, while on the other hand, when societies move toward more capitalistic environments, the sustainability of common pool resources tends to decrease with the changes in individual preferences, social norms, customs and views to others through human interactions. Third, to further analyze peoples’ real behavior we again conduct field experiments of the social value orientation and the generative behavior checklist in the two fields of Nepalese societies: (1) urban and (2) rural areas. Generativity as concern, and commitment to the next generation, is one important factor for sustainable development of a society. Generativity emerges through both prosocial and proself behaviors characterized by social preference, and is now hypothesized to decrease in some modern societies called “generativity crisis. ” However, little is known about how ongoing modernization of competitive societies, i.e., capitalism, and social preferences affect generativity. The analysis finds that prosociality and the rural-specific effect are the two major factors that positively affect people’s generativity, while a larger proportion of prosocial people are found in rural areas than in urban areas Finally, our results imply that individuals may be losing their coordination abilities while facing social dilemmas, therefore social design is necessary to ensure sustainability of human society. We are in need of new social institution or design that can govern and guide us to cooperate and coordinate.