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Ecological Economics
journal homepage: www.elsevier.com/locate/ecolecon
Analysis
Department of Economics, Universidad Nacional de Colombia Sede Medelln, Calle 59A No. 63-20, Bloque 43, Medelln, Colombia
Department of Computing and Decision Sciences, Universidad Nacional de Colombia Sede Medelln, Carrera 80 No. 65-223, Bloque M8A, Medelln, Colombia
Department of Geosciences and the Environment, Universidad Nacional de Colombia Sede Medelln, Carrera 80 No. 65-223, Bloque M3, Medelln, Colombia
a r t i c l e
i n f o
Article history:
Received 29 August 2014
Received in revised form 30 December 2014
Accepted 4 February 2015
Available online 24 February 2015
Keywords:
Small-scale gold mining
Public-good dilemma
Collective action
Behavioral simulation model
Economic experiment
a b s t r a c t
There is a rising global concern about mercury use in small-scale gold mining because of its harmful effects on
ecosystems and human health. Associative entrepreneurship has been promoted as a way of accessing alternative
techniques to address this concern. By associative entrepreneurship, in this paper we mean the creation of local
associations between small-scale gold miners in order to acquire more environmentally-friendly technologies.
We built a behavioral simulation model to assess the feasibility of associative entrepreneurship in the context
of the public-good dilemma that gold mining communities face. The model construction is based on results
from eld economic experiments, and properly replicates the observed behavioral patterns; thus, it reveals
that sustained collective action is possible when miners completely understand the social dilemma they face,
but that self-organization is not possible. Features such as reciprocity and temptation to free ride partially explain
why self-organization fails. In such a case, external intervention has a key role in promoting programs that improve the understanding of the social dilemma faced by artisanal and small-scale gold miners.
2015 Elsevier B.V. All rights reserved.
1. Introduction
In the design and implementation of support policies for communities involved in artisanal and small-scale gold mining (ASGM), several
scholars have stressed the importance of having a good understanding
of the social dynamics of these communities (Hilson, 2006; Sinding,
2005; Spiegel, 2009). Poor performance of some projects aimed at regularizing and providing assistance to ASGM has been said to be, in
part, due to an insufcient understanding of the dynamics of target
communities (Hilson, 2007).
Communities involved in ASGM face a social dilemma that is found in
the way gold is recovered. In the gold recovery (ore beneciation) process, a miner usually employs the apparently cheapest and traditionally
available technique mercury amalgamation to gain the maximum
short-run benet for himself. However, the entire community is worse
off than if a cleaner and more productive technology were used. This social dilemma can be classied as a public-good dilemma and it concerns
the control of pollution resulting from this process.1
In a public-good dilemma people nd it costly to contribute to the
provision of the public good and prefer others to pay for its provision in Corresponding author.
E-mail addresses: casaldarriagai@unal.edu.co (A. Saldarriaga-Isaza),
saarango@unal.edu.co (S. Arango), civilleg@unal.edu.co (C. Villegas-Palacio).
1
Public-good and common-pool resource dilemmas are similar in that there is no exclusion in the access to the resource or good. They differ in the degree of rivalry; in
public-goods this is much lower or simply do not exist.
http://dx.doi.org/10.1016/j.ecolecon.2015.02.002
0921-8009/ 2015 Elsevier B.V. All rights reserved.
99
Students
Miners
Baseline (control)
Exclusion
Co-management
Exclusion & co-management
50
45
45
45
10
30
20
25
100
Nash Strategy
-
Relative
Contribution
Group's
Cooperation +
Group's +
Reputation
-
+
B
+
Difference
R3
Group's
Contribution
+
Free-riding
-
Awareness of the
Dilemma
Payoff
(Relative Contribution)
/ (Relative Payoff)
-
+
Temtaption to
Free-ride
+
Trust
Threshold
R2
Individual
Contribution
+
+
+
+
Relative Payoff
-
Profit
Maximization
R1
Reciprocity
+
Desired Payoff
Profit Maximizing
Effect
Willingness to
Cooperate
Awarness of
Dilemma Effect +
Willingness to Cooperate
1.4
1.2
1.4
1.2
0.8
0.6
0.4
0.8
0.2
0.6
0
0
0.5
1.5
-1
-0.5
0.5
(i - T)/T
Trust in them
Prot Maximizaon
1.55
1.26
1.24
1.45
1.22
1.35
1.2
1.18
1.25
1.16
1.14
1.15
0.53
0.58
0.63
0.68
0.73
0.78
0.83
0.1
0.2
0.3
0.4
0.5
0.6
Description
Boundary adequacy
Structure verication
Parameter conrmation
Dimensional consistency
Extreme conditions
Sensitivity analysis
was the same for both students and miners. Table 1 reports the number
of subjects by treatment in both subject pools.
In the baseline experiment, each of the ve participants of a group
had to choose how much (ci) of his endowment (E) of 25 tokens, to contribute within a group account which in the context of the study refers
to each miner's investment in cleaner technologies. This endowment
was assigned at the beginning of each of the 17 periods of the game. If
T (60 tokens) was not reached in the round, the individual's payoff
was his own endowment. However, when the summation of the group's
contributions was equal to or greater than the cost of the alternative
technology T, everyone in the group received a reward of 24 tokens,
which represents the benets of both an improved environmental quality (R) and higher productivity (), benets that were not excludable in
this base case.2 Individual's payoff (Ui) in the base case is summarized in
the following function:
n
X
If
ci b T; then U i E;
i1
If
n
X
1
ci T; then U i Eci R :
i1
We invite the reader to see Saldarriaga-Isaza (2013) for a complete description of the
economic experiment.
3
See Sterman (2000) for a further explanation.
101
that even when a player trusts other subjects, an extremely high temptation to free-ride should lead him to decide to contribute nothing. At
the same time, in the formulation, each variable that has effects on the
individual contribution variable can depend nonlinearly on other variables (Sterman, 2000), as shown below. This decision for the individual
i is formulated as follows:
Contributioni Reference contribution Willingness to cooperatei
Temptation to free ridei Profit maximizing effect i
=Social dilemma awarenessi :
2
In the reciprocity loop (R1), we follow Ostrom (1998, p. 14) who denes reciprocity as the norms individuals learn from socialization and
life's experiences. In this loop, individual's contribution (ci) increases
group's contribution (i); i.e., the total investment of the group or community in a cleaner technology which positively affects group's cooperation. The latter is dened as the total amount of donations in the group
minus the symmetric free-riding equilibrium, which in this game is to
contribute zero tokens (Cadsby and Maynes, 1999). In other words, the
higher the amount of contributions to the common fund, the more the
group cooperates. In practice, the investment that each miner does in
cleaner techniques benets everyone in the mining community. By the
same token, it may positively affect the willingness of each miner to
reduce mercury pollution by investing on a cleaner technology.
Additionally, for each individual i, the group's reputation for cooperating
is affected by past actions (contributions) of the group. This variable is
modeled as exponential smoothing process, and is formulated considering others' contributions (j i) in the past, together with a normal
(average) level of contribution by others that in this case is assumed to
be an equitable donation:
0
group s reputationit
i j
102
Tokens
14
12
10
8
6
4
2
0
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
Period
75
70
65
60
55
Miners
50
Students
45
40
35
9
11
Period
13
15
17
Fig. 5. Average group contributions in the baseline of the framed experiments with miners and students.
reaching the threshold and therefore of obtaining prots from the group
account. However, as the ratio of average perceived payoff to the maximum payoff rises, the effect disappears and the player would contribute
approximately the same level of tokens in the next period of the game.
As time goes by, it is also expected that each player learns about the
dilemma in which he is involved. In the awareness loop, the player gains
awareness of the public-good dilemma for higher values of the ratio of
Table 3
Characteristics of students and miners in the simulation.
Player
Initial level of
free-riding
Willingness
to cooperate
Temptation
to free ride
Prot
maximization
Students
A
Medium
B
Medium
C
Low
D
High
E
Medium
High
Medium
Low
Medium
Medium
Common
High
Low
Medium
Common
Low
Low
Low
Common
Common
Common
Common
Common
Common
Common
Miners
A
B
C
D
E
High
Medium
High
Medium
High
High
Common
Common
Common
Common
Mediuma
Common
Common
Common
Common
Lowb
Low
Low
Low
Low
a
b
Initial level
of trust
High
Medium
Medium
Medium
Medium
Students
75
70
65
60
55
50
45
40
35
30
Experiment
Simulaon
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
Period
Miners
Group Contribuons (Tokens)
103
70
65
60
55
50
45
40
35
30
Experiment
Simulaon
1
8 9 10 11 12 13 14 15 16 17
Period
70
18
Individual Contribuons
(Tokens)
Fig. 6. Comparison of model behavior and average group contributions in the control treatment of the economic experiments (pooled data).
65
60
55
50
45
Miners
40
Students
35
16
14
12
10
8
Miners
Students
4
1
9
Period
11
13
15
17
9
11
Period
13
15
17
ci
model behavior are commonly applied to assess the adequacy of the behavior generated by the structure of the model (Forrester and Senge,
1980; Morecroft, 2007). In this sub-section we present and discuss the
results of the tests we applied to our behavioral model.
Max:Payoff
When this ratio takes high values (close to 0.6), the player recognizes that by contributing few tokens relative to what other players contribute (ci/ci is low) is not being protable enough; i.e., Payoff
Max.Payoff is low. This perception causes the individual to increase
the contribution to the common fund. The social dilemma awareness,
however, is better distinguished when the difference between the perceived payoff and the maximum payoff is wide (i.e., when the ratio is
lower than 0.7). The learning effect decreases at an accelerated rate as
the perceived payoff gets closer to the maximum possible payoff.
Most of the factors just described are nonlinear functions represented in Fig. 3. The reference contribution in Eq. (4) is a parameter that was
set at 12. This is the intermediate value between a completely selsh
donation level (0 tokens) and the maximum level the individual may
donate (25 tokens).
3.1. Validation of the Model5
All models are wrong, but some are useful (Box and Draper, 1987,
p. 424). In general, we cannot expect that a single system dynamics
model replicates reality; however, models and their simplications are
useful to learn about complex dynamic systems (Sterman, 2000). In
general, the validation of a system dynamics model involves both structure and behavior (Barlas, 1996; Qudrat-Ullah and Seong, 2010), in
which model validity is essentially seen as a condence-building process (Forrester and Senge, 1980) that involves a variety of tests to assess the quality of both the model and the model building process
(Morecroft, 2007, p. 377). Besides tests for model structure, tests of
5
The model, built in Powersim Studio, and its complete description are available upon
request.
104
Eect of Co-management
11
9
7
5
3
1
0
0.2
0.4
0.6
0.8
105
80
70
60
50
Co-management
Baseline
40
30
20
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
Period
Fig. 9. Model behavior for co-management treatment.
the awareness loop that starts having effects from period 9. The function
accelerates the rate at which each individual becomes aware of the
public-good dilemma. As shown in Fig. 8, the effect of co-management
is especially high when the ratio of relative contribution to relative payoff is low. In other words, when an individual himself does not perceive
the dilemma, communication with an external party and with other
group members triggers the individual's awareness of the dilemma.
The general behavioral pattern obtained from the simulation model
under this treatment is portrayed in Fig. 9.
Spiegel (2009) points out the links that exist between technological
development, environmental health awareness, and trust-building in
ASGM. From the sensitivity analysis of the previous section, we see
that high initial levels of trust lead to cooperation, no matter the cooperative trait of the subject (see Fig. A.1 in the Appendix A). Moreover,
our simulations show that the experimental results are partially
explained by medium or low levels of trust that individuals have at
the beginning of the game (see Table 3 above). Therefore, from a policy
viewpoint, it is important to improve the channels of communication in
these communities. Better communication leads to a strengthening of
the levels of trust, commitment, and social capital which, according to
Zeffane et al. (2011), are key elements within any organization. More
trust and commitment, combined with the support of external agencies
that increase education and provide technical assistance, guide ASGM
communities to improve the gold recovery process that, in the longrun, may translate into greater well-being.
Finally, another mechanism that was tested in the experiments of
Saldarriaga-Isaza (2013) is the exclusion from the private benets that
a miner may obtain from the alternative technology if the miner does
not contribute to the purchase of the technology. These private benets
correspond to the higher efciency or greater productivity in the gold
recovery process if the alternative technology is obtained and used.
This kind of economic incentive did not have any effect on the behavior
miners showed in the experiment. However, by doing some simulations
we can discern a certain design of the economic incentive in order to
make it effective in terms of the objectives of the policy.
In the exclusion treatment of the experiment, the level of minimum
contribution to avoid exclusion was chosen to be simply above zero.
These results change if we consider a tougher minimum individual contribution in this exclusion case; e.g., a donation level that is at least as
high as the cost-sharing contribution of 12 tokens. If we keep the characteristics of miners that were shown in Table 3, the simulation results
show that by making this coercive requirement after period 8, contributions tend to increase such that in almost all of the second stage of the
game the threshold is reached, although with total contributions that
are welfare-decreasing (above 60), as shown in Fig. 10. We should
106
80
70
60
50
40
30
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
Period
Fig. 10. Simulation of the effect of a tougher economic incentive.
note that we did not obtain a signicant effect when we increased the
amount of the private benets. Therefore, there is room for further research about the role of economic incentives in cooperation in ASGM.
Acknowledgments
We acknowledge the nancial support from Universidad Nacional
de Colombia to carry out this work. We thank Pablo Londoo for his
very helpful and efcient research assistance. We are grateful to Yris
Olaya and two anonymous referees for their insightful and constructive
for comments.
Appendix A
Function
Individual Contributions
0.6
0.4
0.2
0
0
0.5
1.5
Trust in them
0.6
0.4
0.2
0
0
0.5
1.5
Trust in them
0.6
0.4
0.2
0
0
0.5
1.5
Trust in them
0.4
0.2
0
0
0.5
1.5
Trust in them
107
108
Concave function
Convex function
1.6
1.6
1.4
1.4
1.2
1.2
0.8
0.8
0.6
0.6
0.4
0.4
-1
-0.5
0.5
-1
-0.5
0.5
(i - T)/T
(i - T)/T
Individual Contributions
Individual Contributions
20
18
16
Tokens
14
12
10
8
6
Others
Players A & B
Others
Player A
2
0
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
13
14
15
16
17
Period
Group Contributions
Total Contri buti ons (Tokens )
Group Contributions
80
70
60
50
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
80
70
60
50
01
02
03
04
Period
05
06
07
08
09
10
11
12
Period
Fig. A.2. Sensitivity analysis of temptation to free ride function.
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