Facultad de Minas Doctorado en Ingeniería – Sistemas e Informática The Tragedy of the Commons in Artisanal Gold Mining: Evaluation of Mechanisms of Cooperation with Simulation and Economic Experiments Carlos Adrián Saldarriaga Isaza This thesis is presented to Universidad Nacional de Colombia – Sede Medellín, in partial fulfillment of the requirements for the degree of Doctor of Engineering Supervisors Santiago Arango Aramburo Clara Inés Villegas Palacio Associate Professor Associate Professor Dept. of Computing and Decision Sciences Dept. of Geosciences and the Environment Universidad Nacional de Colombia-Sede Medellín Universidad Nacional de Colombia-Sede Medellín September 2013 Facultad de Minas Doctorado en Ingeniería – Sistemas e Informática La Tragedia de los Comunes en la Minería Aurífera Artesanal: Evaluación de Mecanismos de Cooperación con Simulación y Experimentos Económicos Carlos Adrián Saldarriaga Isaza Esta tesis se presenta a la Universidad Nacional de Colombia – Sede Medellín como cumplimiento parcial de los requisitos para optar al título de Doctor en Ingeniería Supervisores Santiago Arango Aramburo Clara Inés Villegas Palacio Profesor Asociado Associate Professor Dept. Ciencias de la Computación y de la Decisión Dept. Geociencias y Medio Ambiente Universidad Nacional de Colombia-Sede Medellín Universidad Nacional de Colombia-Sede Medellín Septiembre 2013 i Abstract This thesis is about how collective action –associative entrepreneurship– can be fostered in artisanal and small-scale gold mining. This kind of association is aimed at, among other things, allowing small-scale gold miners to gather the financial capital that is required to obtain the type of technologies that reduce mercury use in the gold recovery process, and therefore the harmful effects of mercury pollution of ecosystems and human health. Given the public-good dilemma that is faced by these individuals, I study possible institutional arrangements by which associative entrepreneurship may be encouraged. The methods to achieve this include the construction of a behavioral simulation model using System Dynamics. As part of both the model building and its validation process I make use of the results of economic experiments carried out both in the lab and the field. The results of the economic experiments do not reject the hypothesis which states that sustained collective action does not self-emerge as a solution to the public-good dilemma. In this thesis I analyze two institutional arrangements: co-management and exclusion from private benefits. Of these two, only co-management shows a statistically significant impact on the establishment of a permanent collective action. However, in the field experiment this effect of co-management is undermined when it is combined with exclusion from the private benefits. From the behavioral simulation model, it is shown that reciprocity, free-riding and profit maximization are the behavioral aspects that mainly drive decision-making when dealing with the public-good dilemma. With an external intervention such as co-management, individuals get more aware of the social dilemma they face and collective action is sustained over time. From a policy viewpoint these results suggest the importance of interventions programs such as education projects, training in alternative practices and technologies, and campaigns to foster social capital. Moreover, the experimental results cast doubt on the effectiveness of economic incentives to change some practices in the production process of gold. However, simulation results show that the implementation of stricter incentives could make miners to increase their commitment to sustain the entrepreneurial organization. Keywords: artisanal and small-scale gold mining; mercury pollution; behavioral simulation model; experimental economics; co-management; public-good dilemma; exclusion; collective action; common-pool resource. ii Resumen Esta tesis está relacionada con la manera en que se puede promover la acción colectiva – asociación empresarial– en la minería aurífera artesanal y de pequeña escala. Bajo este esquema de asociación se pretende, entre otros, reunir el capital financiero necesario para obtener el tipo de tecnologías que permiten reducir el uso de mercurio en el proceso de recuperación de oro, así como los efectos nocivos que la contaminación por mercurio produce en ecosistemas y la salud humana. Dado el dilema de tipo bien público que enfrentan estos individuos, se estudian posibles arreglos institucionales bajo los cuales se promueva la asociación empresarial. Los métodos utilizados incluyen la construcción de un modelo de simulación de comportamiento usando Dinámica de Sistemas. Como parte del proceso de construcción del modelo y su validación, se hace uso de los resultados de experimentos económicos realizados en el laboratorio y en el campo. Los resultados de los experimentos económicos no rechazan la hipótesis según la cual una acción colectiva que se mantenga en el tiempo no surge como una solución al dilema de tipo bien público. En la tesis se estudian dos arreglos institucionales: co-manejo y exclusión de los beneficios privados. De los dos, solamente co-manejo muestra un impacto estadísticamente significativo sobre el establecimiento de una acción colectiva permanente. Sin embargo, en el experimento de campo este efecto se debilita al combinar co-manejo con exclusión de los beneficios privados. Del modelo de simulación de comportamiento se observa que reciprocidad, oportunismo y la búsqueda de maximización de beneficios son los aspectos conductuales que explican la toma de decisiones al afrontar el dilema de tipo bien público. Con una intervención tal como co-manejo, los individuos adquieren una mayor percepción del dilema social que enfrentan y la acción colectiva se sostiene en el tiempo. Desde el punto de vista de política, los resultados sugieren la importancia de programas de intervención tales como proyectos educativos, entrenamiento en prácticas y tecnologías alternativas, y campañas para incrementar el capital social. Además, los resultados experimentales ponen en duda la efectividad de incentivos económicos diseñados para cambiar algunas prácticas en el proceso de producción de oro. Sin embargo, los resultados de simulación muestran que la implementación de un incentivo más estricto podría hacer que los mineros incrementen su compromiso con el sostenimiento de la organización empresarial. Palabras clave: minería aurífera artesanal y de pequeña escala; contaminación por mercurio; modelo de simulación de comportamiento; economía experimental; co-manejo; dilema de tipo bien público; exclusión; acción colectiva; recurso de uso común. iii To Laura and Antonio, my light for the long road ahead. To Luz Adriana, who has always believed in me. iv “Y empezamos de nuevo a entrar, tendidos de punta como lombrices. Pero alegres, deshojando cachos. Porque el oro emborracha. Se sube a la cabeza como el aguardiente.” Efe Gómez. “La tragedia del minero” (1940). “I am thankful to all those who said no. It’s because of them, I did it myself.” Albert Einstein. v Table of Contents Preface .............................................................................................................................................. 1 Chapter 1: Overview ........................................................................................................................ 3 1. Introduction ............................................................................................................................. 3 2. Research problem ................................................................................................................... 5 3. Hypotheses .............................................................................................................................. 7 4. Objectives ............................................................................................................................... 8 5. Chapters outline ...................................................................................................................... 8 6. Main contributions and conclusions ..................................................................................... 12 Chapter 2: The public good dilemma of a non-renewable common resource: A look at the facts of artisanal gold mining ................................................................ 18 1. Introduction ........................................................................................................................... 18 2. Commonalities of artisanal gold mining worldwide ............................................................. 20 3. Discussion ............................................................................................................................. 28 4. Conclusion ............................................................................................................................ 32 Chapter 3: Phasing out mercury through collective action in artisanal gold mining: Evidence from a framed field experiment ................................................................... 40 1. Introduction ........................................................................................................................... 40 2. Threshold public good games: an economic experiment for ASGM ................................... 44 3. Experimental procedure ........................................................................................................ 48 4. Results and discussion .......................................................................................................... 51 5. Conclusion ............................................................................................................................ 60 Appendix A ............................................................................................................................... 66 Appendix B ................................................................................................................................ 77 Chapter 4: Chipping in for a cleaner technology across subject pools: Evidence from a framed threshold public good game with students and miners ........ 78 1. Introduction ........................................................................................................................... 78 2. Experimental design ............................................................................................................. 81 3. Results ................................................................................................................................... 85 4. Discussion ............................................................................................................................. 91 5. Conclusion ............................................................................................................................ 93 Appendix C ................................................................................................................................ 97 vi Chapter 5: A behavioral model of collective action in artisanal and small-scale gold mining ...... 98 1. Introduction ........................................................................................................................... 98 2. Collective action and natural resources .............................................................................. 101 3. Modeling approach of decision making in ASGM ............................................................. 102 4. Policy analysis .................................................................................................................... 111 5. Discussion and concluding remarks ................................................................................... 115 Appendix D ............................................................................................................................. 121 Dissemination ............................................................................................................................... 123 vii Preface First and above all, I want to express my deepest gratitude to my supervisors Clara Villegas and Santiago Arango for believing in this project since its beginning. No matter they were at home or overseas, I could permanently count on them to solve my doubts and guide me along this lengthy but wonderful academic route. Working under their kind and outstanding supervision has highly enriched me personally and professionally. I would like to acknowledge the debt of gratitude I owe to all my supportive family. My parents’ unconditional love and the love they have for one another have been always inspiring. Ma’ and Pa’, Gracias!! Thanks also to Alejandro, Claudia, Dora, Gonzalo, Javier, Gonzalo A., don Liby, doña Gloria, Ana and Matilde. Your concern and state of expectancy for my work were always stimulating. I especially thank to Luz Adriana. Her love and company, no matter the distance, motivated me to work harder. The financial support of the Administrative Department of Science, Technology and Innovation of Colombia (COLCIENCIAS) and its program of scholarships for doctoral programs in Colombia, is acknowledged. This work was also partially carried out with the aid of a grant from Vicerrectoría de Investigación of Universidad Nacional de Colombia. I am indebted to professors of the evaluation committee of this thesis: Yris Olaya, Marcela Ibañez and Joep Sonnemans. Your questions, comments and time were key in this process. I am also very thankful to Luis Alfonso Velez, Renzo Ramírez, Oscar Zapata, Diana Ceballos, Alberto Cortés, Alberto Castrillón, Laura Moisá, Elizabeth Santamaría, Edison Henao, Gonzalo Manrique and Liliana Franco for understanding that life is made of ups and downs. And I have to thank to those who did not believe or were against this project. Their thoughts encouraged me to move ahead even more. Finally, I want to thank many people who introduced me to ideas and concepts of the mining sector and made possible the collection of primary and important secondary data: Alejandro Delgado (UNAL-Medellín); Victor Aguirre (Secretary of Mines, Gobernación de Antioquia); Oseas García, Jesús Rúa and Natalia Gonzalez (GMP-UNIDO); Hernando Henao (ASOMINA, Segovia); Dairon de la Vega (SENA, Segovia); Gustavo Vidales (Secretary of Mines and the Environment, Remedios); and mine administrators Darío Isaza (Mine La Picuda), Carlos Giraldo (Mine Pomo Piñal), Fernando Gómez (Mine Asoplayón), and Dionny Ramirez (Mine El Cogote). 1 Research assistance of the following people was also very important: Pablo Londoño, Manuela Gonzalez, Eliana Melo, Alejandro Saldarriaga and Jessica Arias. To them and all other people who in one way or another contributed to this project, muchas pero muchas gracias!!! Medellín, May 2013 2