112 UTAFTTI (New Series) Vol. 1 No 2, 1994 Regional Integration and Environment: A Case of PTA Flora Mndeme Musonda' 1. Introduction The Preferential Trade Area for Eastern and Southern African States (PTA) is a part of an integral part of the economic co-operation arrangement of the African continent. It was established as a strategy for the generation of sustainable economic development of post-colonial Africa. The group comprises about 20 countries many of which border each other. The aims and objectives of the PTA as stated in Article 3 of the organizations treaty includes, among others, ...to promote co-operation and development in all fields of economic activity, particularly in the fields of trade, customs, industry, transport, communications, agriculture, natural resources and monetary affairs with the aim of raising the standard of living of its peoples, of fostering closer relations among its member states, and to contribute to the progress and development of the African continent. PTA also aims to govern such matters as may be necessary to further the aims of the Preferential Trading Area. Environment matters are important and are best tackled on regional basis than when left to individual countries alone. This is because there is abundant externalities which exists in the field of environment which, if left to an individual country, will be difficult to tackle. Much of the thinking today has emphasized the fact that it is impossible to separate economic development from environment issues. Poverty, for example, is both a cause and aftermath of global environmental problems. It is thus vital that when we address the matters pertaining to environmental problems we take a broader perspective that involves details like poverty. Poverty in Africa 1 University of Zambia/PTA Lusaka Regional Integnttion and the Environment: tINI Cae of PTA 113 cannot be solved individually by eacb country, but rather it is regional integration, co-operation and combined efforts that can assist the continent in solving these problems. This paper addresses the important issue of environmeutal problems in East and Southern Africa. We show why some questions of the environment should be, and can only be, resolved at the regional context. In this case we take the PT A as an example of how any regional cooperation can be a suitable forum for discussing and solving environmental problems. After the introduction, section two discusses in details some issues of the environment. Section three is concerned with the environment resource and private property. Here we differentiate environment with other utility enhancing commodities. Section four discusses the PT A objectives as concerning the managing of the environment. Here we also look at the characteristics of the PT A countries. Section five looks at the concerns of different member states of the PT A on regional issues of environment which affects them. Section six gives conclusion and policy implications. 2. Some Important Issues of the Environment Environmental issues includes numerous variables which are all important. These can include shared lakes and rivers, forests, land, roads, etc. Although we shall discuss the issues in isolation, there is a need of underscoring that the environmental variables are interconnected. Deforestation destroys natural habitats and also increases run-off which accelerates soil erosion and siltation of rivers and lakes. This makes ecological and environmental issues highly interdependent and they need to be taken together in our decisions so as to strike a balance between environment and economic development. The environment is also linked to many social and political factors. Rapid population growth which has a significant effects on the environment is, for example, connected with the status of women. Environmental problems of ecological dimensions do not respect political boundaries - water pollution moves through shared lakes, rivers and seas. The atmosphere carries pollutants over vast distances. Chemical run-off from lanns, hazardous emissions from factories, and polluted watef'released from power plants transgress national frontiers. Ecological and. economic i.nrerdependence ~refore challenges the very'llatu:i:e of'national sovereig.oty. We share common interest in this earth which. can.' be 'l1dJieYed t:Immgh '.regional co-opeJ'!ltion in.the development and 114 Flora Mndeme Musonda management of the parts of the planet that transcend national jurisdictions. Energy sources are divided into renewable and non-renewable. Examples of renewable sources are wood, plants, dung, falling water, geothermal, solar, tidal, wind, and wave energy. Non-renewable sources include natural gas, oil, coal, peat, and conventional nuclear power. Each energy type has its own economic, health, and environmental costs, benefits and risks. Meeting energy needs in developing countries is not only difficult but the choice is also limited by available resources. It is advised that future development should consider the availability of energy sources that are dependable, safe, and environmental friendly. Otherwise the development and use of energy sources can pose several environmental problems. These include, climatic change, especially global warming through the "greenhouse effect" caused by gases emitted to the atmosphere; urban industrial air pollution caused by atmospheric pollutants from the combustion of fossil fuels; acidification of the environment from the same causes; risks associated with the use of nuclear energy, including nuclear reactors; etc. The relationship between economic development and environmental issues is yet to be given the priority it deserves, and indeed the acknowledgement that these problems are to be best solved by international efforts and therefore regional bodies are not fully realized. The pressures on the environment is a result of unsustainable development. The PTA countries — which include some of the poorest countries in the world ~ are very vulnerable to the continued degradation of the environment which is an important cornerstone to their economies. 3. Environmental Resources and Private Property The institutions of private property have evolved together with other economic institutions so that the economic system is well-attuned to securing the efficient use of things that are owned. Adam Smith attests in the 'invisible hands' that competitive markets guide resources into uses in which they will produce the things consumers want most. This applies to resources that are privately owned, and to commodities that are individually consumed. If any resource is not privately owned, or if a consumer wants a commodity that he/she cannot procure and use individually, then the invisible hand does not work. However, ordinary economic institutions do not provide incentives for furnishing such resources in the environment because many important resources Regional Integration and the Environment: the Case of PTA 115 are not privately owned, and consequently they lack the protection and guidance that a private owner normally provides. The resources that make up the environment are unsuitable for private ownership because of their uniqueness. In many cases they lack the "excludability property", that is, it is not practical to exclude or prevent people from benefiting from these resources, either because of the physical impossibility, or because controlling access would be quite expensive or cumbersome, or because limiting access would be socially unacceptable. This is the case with the atmosphere, with most public roads, waters, beaches, forests, etc. Another peculiarity of environmental resources is the likelihood of there being enormous economies in the joint consumption or use of the resource as contrasted with individual use. Most resources in the environment are used in common by substantial numbers of people. The difficulty that this common use creates is that users may interfere witll each other, thus reducing the serviceability of the resource to them. Typical examples are road congestions and the use of the atmosphere and waters for discharging waste products. Environmental protection has also income distribution implications. The poor and the wealthy will assign different degrees of priority to environmental protection. For example, a proposed establishment of a factory which is a potential environmental polluter wiil produce different reactions from each class. The rich might consider the environmental hazards, while the poor ones would most probably think of the potential job creation. In addition to the differences in demand for environmental quality, distributive elements also come into play when one considers how the costs of environmental protection are likely to be distributed among individuals with differing incomes. By ignoring the distributive effects of an environmental policy, we may either unintentionally IIarm certain groups in society, or undermine the progralDllle politically. It is true that such a progrannne has both pro-poor and pro-rich elements. In most cases, however, without specific redistributive measures as part of an environmental policy, we can expect programmes of environmental improvements to be typically pro-rich in their redistributive effects. Programmes for environmental improvement promote ilie interest of higher income groups more than those of the poor, and in some cases may increase the degree of inequality in the distribution of real income. Low-income families are more likely to feel that basic needs, such as better food and housing, constitute more pressing concerns than cleaner air and water. Moreover, where new 116 Flora Mndeme Musonda environmental programmes threaten jobs, redistributive effects may weigh particularly heavily on certain individuals. In international environmental issues, the public discussion of programmes for the protection of the environment has emphasized their international implications. Two issues are important here: first, the effects upon the competitive position in international trade of the country undertaking the programme; and second, the transportation across national boundaries, not of commodities desired by the recipient nation, but of pollutants which are difficult to prevent. Joint programmes for the control of pollution, for example, are difficult to achieve. As such a victim nation cannot do much to protect itself in the absence of effective collective measures. 3.1 The Problems of the Commons Environmental problems can be likened to the problems of the commons. Political philosophers and economists have underscored the fact that if citizens respond only to private incentives, public goods will be underprovided and public resources overutilised. The problem of the commons is illustrated in Appendix 1 to signify the environmental problems we have today. A rational farmer taken individually, seeks to maximize his gain by adding extra cattle. Individually the farmer receives positive utility if he can sell the additional cattle. But the strategy has a negative component which is a function of the additional overgrazing created by one more cattle. But because the negative utility is shared by all, individually the effect is not fully felt, and all farmers may decide to add cattle which in the long run results in ruin. Many of the environmental problems, including the pollution of oceans, rivers, lakes, and misuse of national parks under the example. 3.2 Prisoner's Dilemma Environmental issues can also fall in the prisoner's dilemma game of resource allocation. Environmental problems and their solutions call for inter-temporal choices, i.e., to consume now at the expense of environmental degradation, or to postpone consumption in the quest for environmental balance when the problem has been detected. To illustrate this we consider two countries A and B which exploit a common Regionsllntegration snd the Environmtilllt: the c._ of PTA 117 resource, for example, a lake. Neither of the two countries has a control on this lake, and as a result the lake.has been over:fisb.ed. The suggestion is given to the two countries that if they stop fishing in two years period the 1m will restore the level of fish resource, and thus a long-run survival of the fishing industry. The two countries have two options: to ban the fishing for two years, or to continue overfishing. One of the country can decide to ban the fishing while the other country continue; both can ban fishing for two years, or both can decide to continue with fishing. The return that either country receive by pursuing its policy depend on the choice the other makes, and so we can say the utilities are interdependent. We present the four possible combination of policy choices and posslole payoffS below. Chokes Payoff ("000 US$) Country A Country B A allows B the policy of 10 50 overfIshing. B allows A the policy of 50 10 ovemshing. Both A and B do not 30 30 ,I agree to limit fishing '! Both A and B agf' limit fishing 40 40 I If both agree to limit fishing they get a profit of US$ 40.000 each. If they do lIot adopt the new policy they will each receive US$ 30,000. If only one country adopts the new policy while the other one remains with the old policy of overfisbing, the country which adopts the new policy gets US$ 10,000 while the other which does not adopt the new policy gets US$ 50,000. This example illustrates the conflict of individual maximization as compared to bilateral maximization. If both limit fishing this is not the equilibrium taken individually since if A limits fishing, B's optimal choice is to impose no restriction, and thus B's payoffS increases from US$ 40,000 to 50,000. The 118 Flora Mndems MlISOINM mutual adoption of the rew policy even if agreed by both can be upset by either country. While the two countries can enter into a treaty to restrict fishing, any country has the iIicentive to break the treaty, and thus other enforcement methods are required since individual maximization is not global maximization. 4. PT A ObjectiTts in Managing the Environment Many PTA member states have started implementing Structural Adjustment Programmes (SAPs) with the support of the World Bank and the International Monetary Fund (IMF). Adjustment programmes envisage achieving three pdncipal objectives: one, attaining macro-economic balance; two, allocating resources more efficiently; and three, mobilizing more concessionaI resources over the long term to raise the rate of economic growth and living standards. The need for structural adjustment arises in the sub-region because economic indicators show that in the past 20 years, there have been serious fiscal and financial disequilibrium. Some of the macro-economic imbalances that have characterized the economy of the subregion are: (a) Foreign exchange shortages, and unsustainable budget deficits. (b) Debt servicing which consumes more than half of many of the countries' export earnings. (c) The adoption of inappropriate fiscal and monetary policies that have promoted inefficiency in management and administration of government budget. (d) Low levels of interest rates and high inflation rates. (e) Parastatal organizations which depend on government 1>1lbventlonand fails to deliver adequate services. (f) Low level of food production which has not matched the rate of population growth leading to malnutrition in some cases. (g) Poor real GDP per capita growth, which in some countries was negative. As we can note from Table I, the GDP per capita growth in the PT A countries has fluctuated over the years shown. Burundi, for example, shows a falling trend from US$ 236 in 1982 to only US$ 197 in 1990. Similarly, Tanzania gives-a falling rate from US$ 317 in 1982 to that ofUSS 100 in 1990. Zambia Regional Integration and the Environment: the Case of PTA 119 is another country in the group of falling rates from that of US$ 635 in 1982 to US$ 385 in 1990. Table 1: GDP per capita at current market prites (US dollars) ComllIy 1981 983 1984 1985 1986 1987 1988 1989 1990 Angola 708 731 644 662 604 722 682 746 1141 Burundi 136 252 219 249 257 227 215 207 197 Comoros 288 280 268 285 408 493 520 400 496 Djibouti 1113 1127 1130 835 828 850 868 878 893 Ethiopia 109 115 113 110 118 119 120 121 119 Kenya 358 320 318 304 345 366 375 356 360 Lesolho 246 235 211 168 174 231 267 289 323 Malawi 179 180 170 153 155 150 163 187 211 Mauritius 1078 1090 1040 1076 1463 1831 2069 1916 2306 Moz'que 192 174 189 246 294 100 84 68 99 Rwanda 257 264 269 281 309 331 347 319 326 Somalia 156 143 152 162 166 178 176 179 144 Sudan 367 355 426 305 410 429 376 667 1026 Swaziland 842 8611 768 523 661 784 lI37 716 lI21 Tanzania 317 310 275 318 217 153 139 114 100 Uganda 130 159 185 232 238 259 286 266 218 Zambia 535 527 418 331 BlI 2115 484 557 3115 Zimbabwe 913 7911 635 539 578 620 652 644 670 TotalPTA 304 293 283 272 282 279 282 312 352 ource: TA Develo p ment Re p ort I ~n;. These are but a few examples ill the group with falling rates. However, there exist also good perfomlers who indeed improves the overall group perti)mlam;e from US$' 3(Win'l982tto:USS332iblil990. 'Jbc;'Sood performm:e include countries like Lesotho. Angola. Comoros. Mauritius. Sudan, S\Yll7.l"l-nd.among several others . .. . ,. - -- "', , , PopuJa. TuIaI ........... ...... IiIIIImIlll ....... COIIIiby GDP Toad" .. lion ' US$ EIpQI1a iIIpods .,. . 1991: . 11A .. ~ Yl'A • Debl, ,I>. 19lIO ~,._ . i 1990 I_ '1991 , ;('000) . ' .' .. .. •.. mC= AllIe" 10011 9413 3091 IWI. 0.00 6.40 11S2 .. , Il8nIDdi . 5470 UIS ,: lOt U7 ! do 24.09 &50 . . . i COIIIO_ 47Sot75 174. 21 la i O.IM 2.43 117 .••.--_ .... Djiboali 427 3)8 Sot 376 2S.1O 11.73 145 .. ' . Bbi!Jpla S1113, 4891 387 l1l4 29.27 9.n 3116 ,. JCmya 24368 10844 1324 1129 2S1.4 65.5& 4810 . lASOdIo 1771 "I 5& 103 0.32 2.22 3n Malawi 851M 1622 443 545 34.71 36.66 1366 Mauritius 1074 1774 1120 1445 7.Sot 19.62 739 -- ...;, Moz'que 15784 2125 390 ,899 5.79 85.01 4053 Rw~da 7113 1359 203 213 13.77 33.75 692 Somalia 62114 801 106 . 197 0.67 36.03 1922 .. Sudan 25191 7779 35tl 1419 0.70 38.26 9156 I ...,. - .. Swaziland 789 816 327 77 27.13 6.08 251 , , 'TaQUnia 27)00 6597 38S 1090 17.95 37.30 5294 ~ ~} Uganda 173S8 2396 171 464 2.14 100.08 . 2301 .-.-.... - Zambia 8122 4348 10li1 106t.l 40.82 86.63 4184 .. " __ .h' ,_, ~ - -.-" ' .. Zimbabwe 9809 8408 i lSotI 1411 " m.6, SO.76 2449 FrAu a 221033 65688 11086 15063 662.35 662.35 49619 WIIok Source: PTA De elopmcntKeport 1982.- 'Hl. Regional Integration and the Environment: the Case of PTA 121 Other basic indicators as given in Table 2, shows that these countries differ a great deal in terms of population, ranging for example from 27.3m people for Tanzania in 1990 to .427m people for Djibouti. Iritra PTA trade also varies, showing quite low figures for some countries, and large for others including Kenya and Zimbabwe. The external debt (outstanding disbursed) figure is interesting as it shows that many of these countries are highly indebted. That many PTA member states have adopted structural adjustment programmes essentially implies moving more towards market determined economic systems. Liberalization of markets is one of the policy variable given large emphasis under SAPs, and in that respect trade in general is supposed to be expanded. The expansion of trade in the region is (or should be) supported by internal investment, and therefore increased production in the countries concerned which is largely based on the private sector. It is this competitive liberalization in the region and die importance of the private sector which increases the need for regional cooperation in environmental management. One can foresee a situation where technology transfer in the region is carried out without proper supervision from the nation counties, as indeed the frenzy for investment is recorded. It is more likely in such circumstances for technologies which add more to pollution to enter the region uncoordinated. It is also quite possible that with the advocacy of export promotion much of the resources shall be overutilised. This includes, for example, wood-related products, fish, etc., in addition to other natural resources based exports. The PTA countries have resolved that they will all work towards a common environmental management policy to preserve the sub-region eco-systems. The PTA strategy is to prevent, arrest and reverse effects of environmental degradation and industrial pollution, declining biodiversity, and loss of genetic diversity. PTA member states believe that an essential element of its development strategy is to co-operate fully in the management of its environment for present and future generations. New sub-regional arrangements are especially encouraged among PTA countries to discuss trans-boundary environmental and conservation policies, and measures needed to develop capabilities for addressing these environmental problems adequately. The key areas of focus in the management of the environment and efficiency improvement are to prevent, arrest and reverse the effects of defpresjtatipn, erosion, deterioration of coastal waters, declining biodiversity, ana loss of general diversity, polluted soil, water and air. It is also recognized that rapid urbanization has several environmental and social impacts, one of which is the 122 Flora Mndeme Musonda need for clean drinking water. PT A intends to assist national authorities in developing technologies to ensure the availability of clean drinking water. More than two-thirds of the population in the PT A region live in the rural areas, depending on agriculture, livestock farming, fishing or forestry for their subsistence. Population growth and the exploitation of rural areas, consequently, are directly linked. PTA aims to adapt agricultural systems (technology, marketing, processing) which do not exceed the carrying capacity of the environment. These initiatives should guarantee food security in the sub- region. The extinction of species hand in hand with an irreplaceable loss of genetic information. The strategy will develop abilities to anticipate and prevent further depletion of its scarce resources. The aim is to develop a special strategy for two of its important renewable resources: Forests and Marine resources, through the formulation of a Regional Conservation Strategy (RCS) The preparation of a RCS involves govenmlent agencies, non-governmental organizations, private interests, and the community at large in the analysis and evaluation of its natural resource base and assessment of priority actions. Taking into account the growth trends of many countries in the sub-region, it is apparent that mea.,ures to reduce, control and prevent industrial pollution must be greatly strengthened. This includes a rapid increase in pollution and resource degradation. There is a need to incorporate improvements in resource and environmental management being achieved in industrialized countries which will avoid the need for expensive clean-ups. Such technologies can reduce the ultimate costs and stretch scarce resources. Environmental measures are often thought to dampen investment, growth, jobs, competitiveness and trade, while driving up inflation. However, this is not always true. An DECD survey undertaken in a number of industrialized countries concluded that expenditures on environmental measures over the two decades had a positive effect on growth and employment. For the PT A, therefore, there is the need to broaden the technological base through the diffusion of information, strengthening institutional capabilities, and evaluating existing technologies in the PT A with a view to assessing their impact on the environment. The key element for controlling industrial pollution in the PT A sub-region includes: I. Establishing a series of environmental control regulations, incentives Reg;onallntegTation and the Environment: the Case of PTA 123 and standards, leading eventually to the adoption of a common code on the protection of the environment. PT A aims to develop and consequently apply, basic common principles and guidelines concerning environmental protection and resource use, particularly with respect to foreign trade and investments. Prior to major investments, environmental impact analyses must be carried out. For existing industries and tran.,port equipment, technologies must have to be developed with the aim of reducing pollution. PTA member states should adapt a Polluter Pays Principle (PPP), and should set strict limits on the importing of technologies which cause pollution or have dangerous effects on the environment. On the other hand, PT A intends to compensate the added cost of enviromnental protection measure to industries through a system of market-based incentives. 2. Developing sub-regional capabilities in assessing environmental impacts and industrial hazards. 3. Creating greater awareness for industrial managers on the consequences of pollution and the precautions which must be taken; and prohibition of the dumping of wastes, including toxic waste by industrialized nations in the suh-regions. 4. Esrablishing an information network for the delivery of information to memher states on the consequences of industrial pollution and available technological options. Sub-regional legal institutions will also be strengthened to enable them to effectively deal with environmental issues and cases as they arise, including penalties for the infringement of environmef\~al protection laws and regulations. To achieve the goal of a regionally integrated and harmonized environmental policy, the PT A member states believe that the existing sub-regional structures for the envirOlllilent should be strengthened. Furthermore, these structures should be made responsible and accountablt: for ensuring that PT A progranunes encourage and support the sustainable development policies and prdctices in the sub-region. An enlightened PTA environmental policy should integrate environmental issues in its macro-economic trade, agricultural, industrial, energy and other sectoral progmmmes. Capital expertise is required to establish measures which protect the environment. The PT A member states will seek 124 Flora Mndems Musonda support for its role in African environmental protection from the international community, particularly the United Nations Environment Programme (UNEP), since environmental. protection is a global concern in which the PTA can only playa sub-regional role. 5. IndividuaJ PTA Countries Concern for Environment PT A staff conducted a detailed study in most of the PT A countries belonging to this sub-regional on the issue of the environment. Following the thrust of this paper we shall try to revisit some of the issues raised individually and assess their commonality or convergence. This will educate us to what is regarded as pressing issues to be solved on regional basis. The topics addressed in the study included forests and woodland, land and soil resources, water resources and fisheries, energy, bio-diversity and tourism, industry, infrastructure and mining, hazardous and non-toxic wastes, health and other issues, institutions and training, and public awareness and education. The study further reviewed the key environmental actions in different PT A countries. Let us bring out what each country regarded as important cross-border priorities and concern. 5.1 Angola On forest and woodlands, the country showed concern on the migration of people from neighbouring countries which was expected to increase pressure on forests and woodlands. The resultant instability in settlement patterns led to unprecedented migration to urban areas and large concentrations of people along coastal zones. On water resources and fisheries, the country indicated that there was a need of better use of shared international waters. The country also showed concerns over the share of marine resources with Zaire. On energy, it indicated a need for interconnection of power grid with Namibia, including joint development of hydro-power on Cunene River in the South. On bio-diversity and tourism, Angola indicated the problem of poaching and illegal felling of trees by neighbouring countries. On industry, infrastructure and mining, it indicated cross-border air pollution and dumping of industrial waste from neighbouring countries. Concerning hazardous and non-toxic wastes, the country indicated that there was no conditions or regulations for the protection of coastal waters from international dumping of toxic wastes. Angola recognizes the need for a regional environmental institutional. network. Regional Integration ilnd the Environment: the CilSfI of PTA 125 5.2 Burundi The country showed interest in the possibility of cooperation with Tanzania and Zaire on sustained use of Te$>urces of lake Tanganyika. The major constraints to the implementation of environmental action plans in Burundi are limited financial, technical and human resources, in particular specialists in various fidds of environmental programmes. 5.3 Ethiopia On land and soil resources, Ethiopia raised concern about cross-border smuggling of cattle for sale out of Ethiopia. On water resources and fisheries, concern is on the management of the water resources of the Blue Nile. Concern in Egypt, Sudan and Ethiopia was on the long-term water resource capacity of Nile, and also on the upstream and downstream impacts of major dams. On energy, concern is shown on the scope for exporting hydr~lectric power. On bio-diversity and tourism, Ethiopia is concerned with the wildlife meat being traded to SPLA over Sudanese border and some poaching of elephant for sale through Djibouti/Somalia routes. The country also expressed a need for improved cross-border communications with Sudan and Kenya for the development of tourism. 5.4 Kenya The country has indicated concern about patterns of regional climate and causes of drought on the part of land and soil resources. On water resources and fisheries, concern is about pollution and fish stock degradation in Lake Victoria, while there is also a growing concern about the sharing of water resources, e.g., Lake Rudolph with Ethiopia. Concern is also about cross-border pollution of seas, lakes and rivers. On bi~versity, knya has shown concern about the proposal to downgrade elephant to CITES, and about cross-border wildlife management and control of poaching. Concern is also shown about cross-border security of tourists in National Parks, e.g., Masai Mara. 5.5 Lesotho The priority of the country on water resources and fisheries is on sustained use and maintenance of quality levels on international rivers. The dependency on South Africa for imported energy is also of concern. On bi~versity, the concern is on the reduction in the trade of live animals across neighbouring borders. 126 Flora Mndeme Musonda ~.,(jj M&wI\ On water resources and fisheries, concern is shown on the use of Zambezi River resources with Zambia, Angola, Namibia, Zimbabwe, Mozambique; and the use of lake Malawi resources for water, fishing and transport with Tanzani 0 for G < Gmax but v(G) = 0 for G > Gmax. Also, since the first few cattle have plenty of room to graze, adding one more does little harm to those already grazing, but when so many cattle are grazing that they are all just barely surviving. then adding one more dramatically harms the rest. During the spring, the farmers simultaneously choose how many cattle to own. If we assume that cattle are continuously divisible, a strategy for farmer i is the choice of a number of cattle to graze on the pasture 8i. Assuming that the strategy space is (0. ex) covers all the choices that could possibly be of interest to the farmer, [0, Gmax) would also suffice. The payoff to farmer from i from grazing gi cattle when the numbers of cattle grazed by the other farmers are: (gl, .... ,gi-1.gi + 1.....gn) is gi v(gl+ .... +gi-1+ gi + gi+1 + ..... +gn) - cgi. Thus if (gl* ..... gn*) is to be a Nash equilibrium then, for each i. gi* must maximize the above expression given that the other farmers choose (g 1 *, .... gi- 1*. gi+1*,oo.gn*). The first-order condition for this optimization problem is: v(gi+g* +giv'(gi+g*-i) -C = 0, where g*-i denotes g*} .... +g*i+1 ... +g*n. Regional Integration and the Environment: the Case of PTA 133 Substituting gi* into the earlier expression, summing over all n farmers' first- order conditions, and then dividing by n yields v(G*) + 1/n CTv'(G) - C = 0. Where G* denotes #*/ + +g*n* In contrast, ;the social optimum, denoted by G**, solves Mm Gv(G) - Gc, O,Gx the first-order condition for which is v(CT) + G"v YGO - C = O. Comparing 1 to 2 shows that G* G** too many cattle are grazed in the Nash equilibrium, compared to the social optimum. The first-order conditions reflects the incentives faced by a farmer who is already grazing gi cattle but is considering adding one more. The value of the additional cattle is v(gi + g*-i) and its cost is C. The harm to the farmer's existing cattle is v'(gi + g'i) per cattle, or giv'(gi +g'-i) in total. The common resource is overutilised because each farmer considers only his her own incentives, not the effect of his actions on the other farmers, hence the presence of