Civil society governance decisions: certification organization response to artisanal and small-scale gold mining
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Why do global governance organizations enter some economic sectors but not others? A simple model of material incentives suggests that similar organizations should make similar choices. Yet in the empirical realm of jewelry industry governance, similar organizations diverge in their response to artisanal and small-scale gold mining: certification organizations Fairtrade International and the Alliance for Responsible Mining have entered the sector, while the Rainforest Alliance has stayed out. To explain this puzzle and its implications for human development, the project proceeds in two steps. First, it enriches the simple model by taking a discursive institutional approach that traces the process by which norm entrepreneurs, organizational cultures, and network effects shape the sector entry decisions of organizations. Drawing on interview, document, and hyperlink data, the project argues that the interaction of norm entrepreneurs and organizational culture, more than network effects, explains sector entry decisions in the gold governance case. Second, the project uses the details of the certification standards to conduct a decision analysis that estimates their impact on human development. The analysis finds that certification organizations are likely to increase a miner’s income by 41%-79% over the status quo, which may lift some, though not all, miners out of poverty. It further finds that degree of environmental protection as well as which organization is best at providing it depends on the gold price and the governance context. At prices below $26,666, the Alliance is best and competition creates better or equal outcomes than monopolies. At prices above $26,666, however, Fairtrade is best, and competition creates perverse incentives for pollution reduction. This surprising finding suggests that in the realm of global governance, there can be too much of a good thing. The project argues that governance without governments can foster human development, but that better outcomes are possible in the gold mining case. It concludes by recommending that certification organizations do three things to maximize their positive impacts: 1) prevent de-certification, 2) cooperate rather than compete, and 3) aim to be irrelevant, because mining should be a transitory, not permanent, developing country livelihood.