Alternative methodological approaches to natural resource policy analysis: an illustration of an institutional approach to land use policy analysis

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Virginia Polytechnic Institute and State University

Policy economists are increasingly called upon to participate in the institutional design of natural resource policies, predict interpret impacts of alternative the direction of future policy policies, and formulations. However, many of the forces influential in the current reformulation of these policies extend beyond the exchange oriented scope of the traditional mainstream methodological perspective of contemporary economics. In particular, the inability of mainstream economics to analytically incorporate concepts of institutional change, as well as the analytical limitations imposed by its predictive epistemological basis suggest the need for an alternative analytical framework for use in policy analysis.

This study explores the potential contribution of an alternative, institutional approach to policy analysis. Certain properties of the institutional approach identified in this study, including its nonpredictive epistemological orientation, focus on institutions as the unit of observation, reliance on behavioral analysis, and ability to incorporate a wider array of disciplinary perspectives are evaluated with respect to their contribution to policy analysis. The primary analytical technique of institutional economics, development of a pattern model, is analyzed in some detail and compared with traditional mainstream analytics.

An illustration of an institutional approach to policy analysis is developed to examine policy considerations raised by the farmland retention issue. A pattern model is constructed to provide the framework for the institutional analysis. Primary components of the model, the policy environment and the actors within that environment, structure the qualitative and quantitative analysis. The pattern model is designed to increase policy economists' understanding of issues fundamental to the development of natural resource policies, e.g., Why is a particular policy chosen from the menu of possible policy options?, What motivates individuals to participate in a policy?, What is the process underlying policy formulation?, and, What is the institutional evolution of a policy?

The conclusions to the study are two-part: first, conclusions and policy recommendations are offered for the specific case of the farmland retention issue. Second, for the more general case of natural resource policy analysis, an evaluation of the potential analytical contributions of an institutional approach or a blend of approaches is offered.