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“The Biofuels Program”: Decreasing Rural Poverty and Environmental Deterioration Through Cooperative Land-Use Innovation

Abstract:

Collective action engagement can enable individuals to overcome self-interestedness and work toward shared goals but to “get the institutions right for cooperation” requires an understanding of how the particular set of market and nonmarket relationships really work for participants. In the context of the biodiesel value chain in Brazil, this paper uses a case study to explore how institutional arrangements need to evolve if they are to foster the productive and sustained inclusion of small farmers in collective action to promote sustainable innovation as a regional economic development strategy. The analysis suggest that collaborative arrangements between policy-makers, Petrobras and grass-root representatives acting as agents of farmers shaped the design of the program and provided political and economic incentives for its implementation. However, institutional and socio-technical innovation failed to take-off because during implementation. The number of farmers engaged with the program was only a half than forecasted and productivity was even lower. A primary source of disincentives was the lack of direct engagement of small-farmers in decision-making and the dominance of institutional and cultural arrangements excluding small farmers from linking mechanisms to engage with external agencies. This suggest the need for policy intervention to foster inclusive collaboration based on repeated interactions and community governance mechanisms building trust and common understanding about potential course of actions.