Transaction Costs and the Perceived Effectiveness of Complex Institutional Systems

This article studies factors affecting how policy actors perceive the effectiveness of political institutions involved in complex water governance systems. The ecology of games framework argues that participants are more likely to perceive institutions as effective when the benefits of solving collective action problems outweigh the transaction costs of developing political contracts within these institutions. The authors hypothesize that transaction costs are a function of conflict, type of participation, political knowledge, scientific knowledge, and actor resources. Survey results suggest that the importance of these different sources of transaction costs varies across study sites in the Tampa Bay watershed in Florida, the Sacramento-San Joaquin River delta in California, and the Parana River delta in Argentina. Based on the observed differences, some initial ideas are sketched about the evolution of complex governance systems from fairly simple and informal rules and networks to well-established tapestries of many formal institutions.