Institutions and Environment Essay

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Institutions are socially constructed relationships that form the foundations of societies. They shape contemporary environment-society interactions by framing the behavioral opportunities and expectations of individuals and organizations. Institutions explain, for example, when it is acceptable to take whales for human consumption and when it is not. They dictate how much of an ecosystem can be transformed for, say, a housing development, and still maintain its status as an ecosystem. Institutions can be formal (laws) or informal (the 50-year tradition of science, natural or economic, as an adjudicator of environmental policy decisions). They can be created by political fiat, or evolve over time through experience (such as private property rights). Thus they include the laws that are codified through the courts (common law), laws developed by administrative agencies and legislative bodies, (statutory law and regulations), or they can be comprised of organizational entities. The state is an institution. There are also private institutions, such as the International Standards Organization (ISO), which acts as a certification and oversight agency for firms who seek to have higher worker safety and environmental protection standards.

As mechanisms that mediate our daily life, institutions are highly contingent. The European Union is clearly different from the United States, and Massachusetts differs from Oklahoma. Moreover, different states may view the same institution differently. Massachusetts and Oklahoma, for example, may interpret the role and intent of the Endangered Species Act differently in their efforts to protect redtail hawks. This contingent nature of institutions has more conceptual implications for environment-society analysis.

Institutions are important analytical entry points for environmental analysis because they can reveal the embeddedness of a society’s most tacit assumptions about environment/society relationships (such as the relationship between climate change and industrialism) as well as provide a key for understanding historical change and explain differences among institutional practices.

The earliest work on institutions comes from the neoclassical economic tradition, particularly the work of Thorstein Veblen. It was his research into the “conspicuous consumption” of American elites in the 1890s that led him to come out against the neoclassical orthodoxy and suggest institutions, not individuals, could best explain economic activity – an important break from traditional social and later environmental analysis. Until Veblen, neoclassical economists had largely focused their analyses on optimal structures of exchange.

Optimal Structures of Exchange

In the conventional sense, optimal structures of exchange are those market conditions that enable individuals to generate the most wealth from finite resources. In terms of the environment, wealth maximization typically comes when the environment is a factor of production, such as a primary commodity like timber, gold ore, or land that is transformed for agriculture or housing. If, through the institution of property, an individual has knowledge of possible land use, and what the responsibilities to adjacent landowners are, then a decision that maximizes the value in the land can be made. The important tacit assumption for institutional analysis is the social origins of the institution of property remains unexamined. Institutions are not understood as socially constructed. Rather, they are formulaic relationships between trans-historical economic agents that define clear, rational guidelines.

The institutionalist position, in contrast, positions institutions and people in a historical context. Institutions, then, “are patterns that evolve over time and form the necessary background for any intelligible action at all,” according to T. Barnes. The cultural elements involved in the theoretical scheme, elements that are of the nature of institutions, human relations governed by use and wont, are not subject to inquiry, but are taken for granted as preexisting in a finished, typical form and as making up a normal and definite economic situation, in terms of which human intercourse is carried on.

For Veblen, institutions are those tacit “noneconomic” relationships or “settled habits of thought” that neoclassical economists take for granted in their mathematical models of supply and demand. As Rostein put it in 1977, mathematical functions squash flat difference, making nonmarket institutions appear as “fictitious or ephemeral in nature” rather than the concrete and enduring phenomena that institutionalists consider them to be. Institutions thus provide the rationale for activities that seem “radical” such as mountaintop removal in coal country in the eastern United States, or compulsive corporate buy-back legislation in Germany, and those that appear prosaic, such as the use of pesticides on the American lawn. They are the crystallization of certain habits, customs, and instincts that form the basis of our environmental relationships.

Counter-Orthodox Approaches

Despite the work of the institutionalists throughout the 20th century, the concepts of rationalization, equilibrium, and maximization remained dominant in economics. By the 1990s, though, resurgence in counter-orthodox approaches emerged, including a renewed interest in institutions-most recently, the revival of indeterminate analysis of the institutionalists in economics. In contrast to the early institutionalists who had theoretical and epistemological concerns, the scholarship of this coterie of resurgent institutionalists gyrates around traditional economic concepts such a property, price, and firm relations.

An understanding of neoclassical debates and approach to institutions is crucial for students of environment/society analysis. Neoclassical economics has been so dominant in Western public policy and institutions that many subsequent environmental analysts have responded to the limitations of the neoclassical philosophy and approach. Neoclassical economic thinking has been institutionalized in Western environmental policy and practice. Risk assessment, toxic substance policy, wetlands protection, and Western water allocation practices are all founded on various neoclassical institutions such as private property, maximization, and wealth generation. While social-environmental analyses exist largely outside the neoclassical approach, they do bear Veblen’s mantle that institutions, whatever their form, are socially constructed and have empirically observable economic implications.

In the 1960s, the geographer Gilbert White was increasingly concerned with the use of America’s publicly owned natural resources, especially for what he called the widening gap between knowledge and practice. White recognized that from economic perspectives, efficiency criteria for public investment had been advanced in recent years. Yet, White observes, “These improved methods of weighing various resource allocations nevertheless leave much to be desired in explaining present allocations and in indicating the conditions in which wiser allocations might be achieved.” For White, the poor allocation decisions needed an explanation and a policy response.

In his analysis, White focused on the individual natural resource managers in public institutions. For White, then, resources were identified by their “human assessment of possible use.” These assessments were codified in various laws, from the General Mining Law of 1864 to the 1960 Multiple Purpose Forest Act. But resource managers are not omniscient economic agents. This is significant in terms of an institutional analysis because, for White, resource managers have a limited knowledge (a “practical range of choice”) of the options they have for making resource allocation decisions. Because managers are restricted in their knowledge, they mediate the optimal structure of exchange. Thus, regardless of the institutional goal of efficiency, in practice, the knowledge of actors involved in allocation decisions affects the final policy outcome.

Same Goal, Different Basis

Another important form of institutional analysis from an environment-society perspective is the way different institutions with ostensibly the same substantive goals can alter natural resource allocations. Analysis of water allocation regimes in the Great Plains region of the United States examined the differences between the form of common law (through the concept of “reasonable use”) and the statutory law in the allocation of stressed resources. Previous work examined the substantive institutional changes, such as shifts from common law approaches to improving air quality, and statutory approaches serving the same end. In contrast, their form and function analysis revealed that these institutions have distinct ideological underpinnings, even when seeking to promote the same goal.

They also examined how reasonable use differs in terms of function. In the case of common law, the courts adjudicate claims on a case-by-case basis, thereby ensuring the rights of individuals. Statutory law, in contrast, establishes concrete rules that are administered by expert agencies. One farmer could take, for example, three acre-feet of water per year and no more. In theory, the administrative function would apply the same rule to all users. In each case, what is “reasonable” has different implications for individual rights and despite their similar interest in local community stability.

Ideology has shaped the final focus of environmental institutional analysis. A contemporary view of institutions that comes from post-structuralist and network theory posits that institutions are not just containers of historical perspectives and actions; rather, they focus on the dynamic and contingent role of actors in shaping institutional responses. In particular, this view focuses on the social construction of networks and the ability of individuals to use these networks to contingently create meanings.

This view allows for analyses beyond range of choice, to the realms of power, gender, and science. One study of the Kumbhalgarh Wildlife Sanctuary in India shows, for example, that the state does not act at the exclusion of local people; rather it “seizes and reproduces locally powerful knowledges and enforces management through alliances with locally powerful groups.” In another case, examination of the institutional construction of nature in Montana’s gold mining laws shows how the agency of nonstate actors, discourses of the environment, and even the agency of nature has implications for the taking of certain resources for human use.


  1. M. Aokim, Toward a Comparative Institutional Analysis (MIT, 2001);
  2. T. Barnes, The Logics of Dislocation (Guilford, 1996);
  3. T. Eggertsson, Economic Behavior and Institutions (Cambridge University Press, 1990);
  4. J. Emel and Elizabeth Brooks, “Changes in Form and Function of Property Rights Institutions under Threatened Resource Scarcity,” Annals of the Association of American Geographers (v.78/2, 1988);
  5. G. Hodgson, The Evolution of Institutional Economics (Routledge, 2002);
  6. R. Krueger, “Relocating Regulation in Montana’s Gold Mining Industry,” Environment and Planning (v.34, 2002);
  7. P. Mirowski, Against Mechanism: Protecting Economics from Science (Rowan and Littlefield, 1998);
  8. D. North, Institutions, Institutional Change, and Economic Performance (Cambridge University Press, 1990);
  9. P. Robbins, “The Practical Politics of Knowing: State Environmental Knowledge and Local Political Economy,” Economic Geography (76/2, 2000);
  10. A.Rostein, “Innis: The Alchemy of Fur and Wheat,” Journal of Canadian Studies (v.12, 2002);
  11. T. Veblen, “The Limitations of Marginal Utility,” Journal of Political Economy (v.17, 1909);
  12. G. White, “The Choice of Use in Resource Management,” Natural Resources Journal (v.1, 1961).

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