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Institutional Compatibility Analysis for Resource Use Sustainability

Final Report Summary - ICARUS (Institutional compatibility analysis for resource use sustainability)

The ICARUS applies new institutional economics (NIE) to evaluate the role of institutions on the sustainability of agriculture and rural areas. The 'agriculture-society transactions' (ASTs) has been identified as the unit of analysis of this research. According to the NIE approach, the sustainability of a transaction is measured in terms of value creation and the way this value creation is shared by the 'contracting' parties (i.e. agriculture and society). We used these concepts to find a methodology to compare, in terms of sustainability, different outcomes of different institutional settings under which ASTs are worked out. This approach also clarified the fundamental role of institutions in conditioning ASTs sustainable outcomes and it provides a useful framework to better recognise the right level of policy interventions. One basic point to study the sustainable use of resource in agriculture is paying attention to the institutional dimension of sustainability too. But, how could we depict the role of institutions in relation to sustainability? To answer to this question we decided to build up a theoretical framework which analyses the role of institutions in conditioning sustainable resource allocation within AST. To explain this we used and adapted the scheme of Williamson (2000) as revisited by Slangen et al. (2008). In this framework we recognise sustainable resource use as the outcome of a decision-making process (level V) conditioned by the other four institutional levels. More specifically if we define a typical combination of social embeddedness (level I), institutional environment (level II) and governance structure (level III) with the name of 'institutional setting', we can argue that these institutional settings lead to the actual incentive structures (level IV) which influence the resource allocation and exchange (transactional) process which take place in society (level V).

Given its aim and this theoretical background, the ICARUS project work plan was structured in 5 tasks:

(i) Task 1 has been related to set up the theoretical framework.
(ii) Task 2 relates to policy analysis of the 'new' rural development measures.
(iii) Task 3 has been focused on the identification of different institutional settings in the European Union.
(iv) Task 4 has been dedicated to the analysis of farm behaviour with a specific focus on family farms.
(v) Finally, task 5 has been developed in order to implement more empirical-oriented analyses such as regional case studies.

The main findings of the project in each task are synthesised with the relative milestones represented either by already published papers or working papers under submission to refereed journal or presented at international conferences. The project has provided different conceptual and methodological insights and its approach is suitable to be applied also in different time horizon (sustainability when), for different purposes (sustainability why), with different criteria of evaluation (sustainability how), for different levels of sectorial / territorial aggregation (sustainability where) and for different types of stakeholders (sustainability for whom). Moreover, the project provides a useful source of knowledge on the conceptualisation of sustainable agriculture in a social scientific perspective. This point highlights the need to look at the linkages between the process of institutional formation and sustainable resource uses in the agricultural sector. The project clearly indicates that further researches need to be considered to develop the theoretical model and to test it by applying different methodological approaches.


- Slangen L. H. G., Loucks, L., Slangen A., (2008): Institutional Economics and Economic Organisation Theory, Wageningen, Wageningen Academic Publishers.
- Williamson O. E. (2000): The new institutional economics: taking stock, looking ahead, Journal of Economic Literature, 38, pp. 595-613.