Countervailing Power and Missing Institutions

Abstract

Providing resource security for one group of stakeholders frequently entails loss of a certain degree of resource security for another group of stakeholders. The competing interests of winners and losers, and the ‘public good’ nature of many resource uses, makes it challenging to provide resource security in a benign and equitable manner. Power relations are key in determining compensation outcomes, and in particular the importance of countervailing power, in the absence of autonomous institutions with regulatory authority. When one group has overwhelming market power, or political power or a combination of the two, that group’s interest will drive the outcome, regardless of the technical principles of compensation. The article demonstrates through examples how the dynamics of countervailing power works in the national context and in the global context. It also highlights the usefulness of autonomous institutions with jurisdiction over resource security issues. Institutions can protect the interest of stakeholders who do not have either economic power or political power.