MONITORING SYSTEMS FOR MANAGING NATURAL RESOURCES: ECONOMICS, INDICATORS AND ENVIRONMENTAL EXTERNALITIES IN A COSTA RICAN WATERSHED

The worsening degradation of natural resources urgently requires the adoption ofmore sustainable management practices. This need has led to growing interest andinvestment in monitoring systems for tracking the condition of natural resources.Although grounded in concepts of sustainability, the application of monitoring systemshas progressed little beyond the identification and measurement of large numbers ofpotentially interesting indicators. Most monitoring activities are also passive and do notlead to the changes needed to rectify the problems they identify. Too often monitoringbecomes an end in itself and an expensive claim on public funds. This study is concernedwith the design of monitoring systems that have direct relevance for the management ofnatural resources. We call these Policy Relevant Monitoring Systems (PRMS). Suchsystems have several key characteristics. They provide: a) a decision framework forselecting resource problems to monitor that offer potentially large social payoffs relativeto the costs of monitoring, b) timely, including early warning information on emergingproblems, c) a means of identifying the causes of an emerging problem, d) an analyticalframework for identifying options for corrective action, e) an institutional framework forachieving ownership among key stakeholders (the resource users and those affected bythe resource use) and agreement about emerging problems, the corrective actions to take,and effective implementation, and f) a built-in mechanism for learning from pastexperience to improve the performance of the monitoring system over time. The designand implementation of a PRMS is complicated in reality by the presence of multipleresource users with often conflicting interests, and by the presence of environmentalexternalities. The approach is developed and illustrated through detailed examination ofthe Arenal-Tempisque watershed in Costa Rica. This watershed exhibits classic multipleuser and externality problems: deforestation by dairy and cattle farmers in the upperwatershed leads to soil erosion and siltation of the various reservoirs that feed animportant hydro-electric power generation system, and agro-chemical use by irrigatedfarmers has adverse impacts on a highly valued wetlands park and on wildlife and fishingin the lower reaches of the watershed.