Evaluation of the effects of institutional failure on the eco-efficiency of charcoal producers in the Congo basin: the case of Cameroon.

International Journal of Research and Innovation in Social Science (IJRISS) | Volume VI, Issue II, February 2022 | ISSN 2454–6186

Evaluation of the effects of institutional failure on the eco-efficiency of charcoal producers in the Congo basin: the case of Cameroon.

Moustapha Mounmemi¹, Georges Kobou², Nourou Mohammadou^3
1Faculty of Economics and Management, University of Maroua, Cameroon
²Faculty of Economics and Management, University of Yaoundé II, Cameroon
³Faculty of Economics and Management, University of Ngaoundéré, Cameroon

Abstract:
The objective of this paper is to assess the effects of institutional failure on the level of eco-efficiency of charcoal producers in Cameroon. The study covers 232 randomly selected producers in two socio-ecological zones in Cameroon. To analyse the data, we used a stochastic production technology and a quadratic regression model to assess the level of eco-efficiency and the effects of institutional failure on it, respectively. The result of these analyses is that bribes capturing institutional failure have negative effects (-0,0044877) on eco-efficiency indices, but when bribes exceed 49,533 FCFA, their effects become significantly positive (0 ,0000453) on eco-efficiency indices. Therefore, any policy aimed at improving sustainability in charcoal production in the region must take into account the levels of institutional constraints associated with each socio-ecological zone.

Keywords: Evaluation, Institutional failure, eco-efficiency, charcoal, Congo Basin, Cameroon

1. Introduction

Charcoal is a common property resource. One of the major problems associated with the sustainable management of such a resource is the ‘tragedy of the commons. This assumption by Hardin (1968) has become the underlying theoretical framework for analyzing models of natural resource allocation. The environmental economics literature identifies three institutional models: public ownership, private ownership and community ownership (Holland and Sene, 2010; Le Meur, 2010). However, each of these institutional models has a controversial theoretical basis.
Indeed, institutions are not acceptable in economics outside the market. According to the assumptions underlying general equilibrium theory, it is inconceivable to dictate rules in economics. The market is the only mode of coordination of individual behaviour (Mckenzie, 1981, Arrow and Debreu, 1954). This coordination takes place through price mechanisms, which ensure the general equilibrium of the economic system. This mode of coordination promoted by general equilibrium theory is based on Walras’ ‘auctioneer’ and the principle of the ‘invisible hand ‘. But for some disequilibrium theorists, such as Keynes (1936), Clower (1975), Leijonhuvud (1968), the general equilibrium model of the Arrow-Debreu universe seems more theoretical than practical. The economic system is fraught with uncertainty. Economic agents have bounded rationality (Ayres and Gertner, 1992; Simon, 1951). In addition, some economic activities, such as charcoal mining, generate greenhouse gases whose costs are borne by the community. And these costs are not taken into account by market regulation mechanisms. Hence the “market failure” hypothesis (Meade, 1973).
In the context of market failure, public regulation seems to be the best mode of sustainable natural resource management (Arrow, 1985; Pigou, 1938). However, public intervention is seen as a political tool for interest groups that can undermine collective welfare (Shleifer and Vishny, 1993). Moreover, public regulation is sub-optimal in the Pareto sense of the ‘Coase theorem’ (Coase, 1992). Rather, it is a two-way problem . Furthermore, Coase (1960) argues that sustainable management of natural resources can be achieved through price mechanisms, even in the presence of negative externalities . To do this, property rights over the resource must be defined. Rights that can be exchanged on a competitive market system. Coase thus gives back to market mechanisms the attributes that were theirs in the general equilibrium model of the Arrow and Debreu universe (1954). Through these new attributes, the neoclassical channel once again becomes the theoretical framework par excellence for analysing and solving environmental problems (Cropper and Qates, 1992; Fisher and Peterson, 1971).

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