9

Issues and Prospects

A Logic Model for Assessing the Sustainability
of Canadian Oceans Management, Policy and
Governance
Murray A. Rudd*
Sir Wilfred Grenfell College, Memorial University, Corner Brook,
Newfoundland and Labrador, Canada
INTRODUCTION
Ecosystems around the world are under severe stress from ever increasing
human activity.
1
The stress is directly and indirectly manifested in a number
of ways, including the loss of biodiversity,
2
coastal degradation,
3
the collapse
* I have beneted greatly from discussions with colleagues at a number of semi-
nars, workshops, and conferences where material upon which this article is based has
been presented (Bedford Institute of Oceanography, Canadian Society for Ecological
Economics, Ocean Management Research Network, and the American Association
for the Advancement of Science). I have also received valuable input from colleagues
at Environment Canada and Fisheries and Oceans Canada during various policy
workshops. MAR is supported by the Canada Research Chairs program.
1. B.L. Turner, W.C. Clark, R.W. Kates, J.F. Richards, J. Tuchman Mathews
and W.B. Meyer, eds., The Earth as Transformed by Human Action: Global and Regional
Changes in the Biosphere over the Past 300 Years (Cambridge: Cambridge University Press,
1995); A. Goudie, The Human Impact on the Natural Environment: Past, Present and Future,
6th ed. (Oxford: Blackwell Publishing, 2005).
2. J. Cracraft, ed., The Living Planet in Crisis: Biodiversity Science and Policy (New
York: Columbia University Press, 1999); A. Wood, P. Stedman-Edwards and J. Mang,
eds., The Root Causes of Biodiversity Loss (London: World Wildlife Fund and Earthscan
Publications Ltd., 2000).
3. J.B.C. Jackson, M.X. Kirby, W.H. Berger, K.A. Bjorndal, L.W. Botsford,
B.J. Bourque, R.H. Bradbury, R. Cooke, J. Erlandson, J.A. Estes, T.P. Hughes,
S. Kidwell, C.B. Lange, H.S. Lenihan, J.M. Pandol, C.H. Peterson, R.S. Steneck,
M.J. Tegner and R.R. Warner, Historical Overshing and the Recent Collapse of
Coastal Ecosystems, Science 293 (2001): 629638; H.K. Lotze, H.S. Lenihan, B.J.
Bourque, R.H. Bradbury, R.G. Cooke, M.C. Kay, S.M. Kidwell, M.X. Kirby, C.H.
Peterson and J.B.C. Jackson, Depletion, Degradation, and Recovery Potential of
Estuaries and Coastal Seas, Science 312 (2006): 18061809.
Ocean Yearbook 24: 936.
9-36_CHIRCOP_F3.indd 9 4/12/2010 8:19:30 PM
10 Issues and Prospects
of sheries,
4
and adverse effects on coastal community and human health.
5

Effective oceans governance is needed if the degradation of our marine natural
capital, and the ecosystem services that it supplies to human societies,
6
is to be
halted and oceans managed in a more sustainable manner in the future.
Ocean ecosystems are complex and are used by myriad stakeholders
under diverse governance regimes. Even within single political jurisdictions,
different stakeholders may have vastly differing visions for the future and per-
ceptions of what constitutes threats to oceans and how sustainability is dened.
In the absence of truly effective governance systems, having substantial differ-
ences in values and preferences can, instead of healthy contestation, lead to
conicts that are economically wasteful and potentially dangerous.
7
For many
ocean resources, property rights are incomplete and resources are treated as
open access goods to be harvested and serially exploited before others have
the chance to do so.
8
In some systems, laws and regulationsoften originally
implemented in an ad hoc mannerhave become so complex that it can make
it difcult to reconcile inconsistent and conicting policies and management
4. J.A. Hutchings and J.D. Reynolds, Marine Fish Population Collapses:
Consequences for Recovery and Extinction Risk, BioScience 54 (2004): 297309; R.A.
Myers and B. Worm, Rapid Worldwide Depletion of Predatory Fish Communities,
Nature 423 (2003): 280283.
5. W.N. Adger, Social and Ecological Resilience: Are They Related?, Progress in
Human Geography 24 (2000): 347364; F. Berkes, R. Mahon, P. McConney, R. Pollnac,
R. Pomeroy, Managing Small-Scale Fisheries: Alternative Directions and Methods (Ottawa:
International Development Research Centre, 2001); A.H. Dolan, M. Taylor, B. Neis,
R. Ommer, J. Eyles, D. Schneider and B. Montevecchi, Restructuring and Health in
Canadian Coastal Communities, Ecohealth 2 (2005): 195208; M. Wiber, F. Berkes,
A. Charles and J. Kearney, Participatory Research Supporting Community-Based
Fishery Management, Marine Policy 28 (2004): 459468.
6. M.L. Martnez, A. Intralawan, G. Vzquez, O. Prez-Maqueo, P. Sutton
and R. Landgrave, The Coasts of Our World: Ecological, Economic and Social
Importance, Ecological Economics 63 (2007): 254272.
7. E. Bennett, A. Neiland, E. Anang, P. Bannerman, A.A. Rahman, S. Huq,
S. Bhuiya, M. Day, M. Fulford-Gardiner and W. Clerveaux, Towards a Better
Understanding of Conict Management in Tropical Fisheries: Evidence from Ghana,
Bangladesh and the Caribbean, Marine Policy 25 (2001): 365376; T.F. Homer-Dixon,
Environmental Scarcities and Violent Conict: Evidence from Cases, International
Security 19 (1994): 540.
8. F. Berkes, T.P. Hughes, R.S. Steneck, J.A. Wilson, D.R. Bellwood, B. Crona,
C. Folke, L.H. Gunderson, H.M. Leslie, J. Norberg, M. Nystrom, P. Olsson, H.
Osterblom, M. Scheffer and B. Worm, Globalization, Roving Bandits, and Marine
Resources, Science 311 (2006): 15571558; J.G. Butcher, The Closing of the Frontier: A
History of Marine Fisheries in Southeast Asia c. 18502000 (Singapore: Institute for Southeast
Asian Studies, 2004); D. Pauly, V. Christensen, J. Dalsgaard, R. Froese and F. Torres,
Jr., Fishing down marine food webs, Science 279 (1998): 860863.
9-36_CHIRCOP_F3.indd 10 4/12/2010 8:19:30 PM
Canadian Oceans Management, Policy and Governance 11
measures.
9
In other systems, there is substantial divergence between formal
rules and the informal social norms that are the de facto rules in use.
10
The physical, ecological, industrial, and institutional complexities of the
ocean environment combine to make it extremely challenging to identify gov-
ernance innovations, management interventions, and strategic investments
that might facilitate a move towards sustainability. From a policy and man-
agement perspective, we need to be able to address these complexities in a sys-
tematic way. Such systematic policy analysis requires strong transdisciplinary
logic models of ocean functions and governance so that a full range of invest-
ment options can be considered, the expected direct and indirect outcomes
of those interventions identied, and actual impacts monitored over time.
This is an essential element of the directed experimental approach of adaptive
management.
11
My focus in this article is on using and modifying the Institutional Analysis
and Development (IAD) framework, which was developed by Elinor and
Vincent Ostrom and colleagues at Indiana University,
12
to develop an inte-
grated platform for: (1) understanding and describing the ecological and socio-
economic state-of-the-world for ocean systems; (2) identifying and accounting
for marine ecosystem services and their resource ows; (3) designing and
comparing investment options and institutional interventions for sustainable
oceans management; and (4) identifying and implementing pragmatic, results-
based indicators for assessing ecosystem-based management performance. The
IAD framework can also be used for vertically linking human incentives and
9. E. Schlager, Model Specication and Policy Analysis: The Governance
of Coastal Fisheries (Ph.D. diss., Indiana University, 1990); M.C. Healey and
T. Hennessey, The Paradox of Fairness: The Impact of Escalating Complexity on
Fishery Management, Marine Policy 22 (1998): 109118; O.R. Young, Institutional
Uncertainties in International Fisheries Management, Fisheries Research 37 (1998):
211224.
10. See, for example, J.M. Acheson, The Lobster Gangs of Maine (Durham, NH:
University Press of New England, 1988); M.B. Mascia, Institutional Emergence,
Evolution, and Performance in Complex Common Pool Resources Systems: Marine
Protected Areas in the Wider Caribbean (Ph.D. diss., Duke University, 2000).
11. M.A. Rudd, An Institutional Framework for Designing and Monitoring
Ecosystem-Based Fisheries Management Policy Experiments, Ecological Economics 48
(2004): 109124; C. Walters, Challenges in Adaptive Management of Riparian and
Coastal Ecosystems, Conservation Ecology 1, no. 2 (1997): 1, available online: <http://
www.consecol.org/vol1/iss2/art1>.
12. E. Ostrom, An Agenda for the Study of Institutions, Public Choice 48 (1986):
325; E. Ostrom, Governing the Commons: The Evolution of Collective Action (Cambridge:
Cambridge University Press, 1990); E. Ostrom, Institutional Rational Choice: An
Assessment of the IAD Framework, in Theories of the Policy Process, ed. P. Sabatier
(Boulder, Colorado: Westview Press, 1999), 3571; E. Ostrom, Understanding Institutional
Diversity (Princeton: Princeton University Press, 2005); E. Ostrom and V. Ostrom,
The Quest for Meaning in Public Choice, American Journal of Economics and Sociology
63 (2004): 105147.
9-36_CHIRCOP_F3.indd 11 4/12/2010 8:19:30 PM
12 Issues and Prospects
decisions at multiple levels of analysis, from the day-to-day operational situ-
ations to high-level political situations, and for connecting separate systems
horizontally via market (i.e., commodity supply chains) and non-market (i.e.,
externality) linkages. When the state-of-the-world is contextualized in terms
of capital assets, the IAD framework facilitates the explicit consideration of
issues of substitutability between types of capital assets and can help frame and
operationalize the concept of environmental and socio-economic sustainability
for oceans management.
13
BACKGROUND
Capital Assets
Capital assets are comprised of any stock that has the capacity to provide a
ow of goods and/or services to human society, now and in the future, and
that can be combined with other goods and/or services and transformed into
valuable outputs.
14
Capital assets are not entirely used up in the production of
outputs but provide resource ows that people can use over time. A second
general characteristic of capital is that it requires investment, reecting sav-
ings or consumption foregone in one time period, to increase well-being in
the future. Without ongoing investment, capital assets are used up and their
capacity to produce sustainable resource ows diminishes.
Six kinds of capital assets are now widely recognized by academic research-
ers, policy analysts, and government decision-makers:
(1) Financial capital (hereafter denoted as K
f
) refers to the money, prop-
erty, and other nancial assets of households, rms, governments,
and civil society that can be further invested to build other capital
assets, purchase commodity inputs from outside the system, and gen-
erate cash ows needed for labour and consumables in production
processes;
(2) Natural capital (K
n
) refers to the part of the environment (air, water,
soil, and ecosystem) that provides people with (1) ecological func-
tions that support living systems, (2) products that can be consumed
(source services), (3) waste assimilation (sink services), and (4) non-
market amenities;
15
13. Rudd, see n. 11 above.
14. E.N. Castle, A Conceptual Framework for the Study of Rural Places,
American Journal of Agricultural Economics 80 (1998): 621631.
15. For current thinking on ecosystem services, see R.S. de Groot, M.A. Wilson
and R.M.J. Boumans, A Typology for the Classication, Description and Valuation
of Ecosystem Functions, Goods and Services, Ecological Economics 41 (2002): 393
9-36_CHIRCOP_F3.indd 12 4/12/2010 8:19:30 PM
Canadian Oceans Management, Policy and Governance 13
(3) Manufactured capital (K
m
) refers to human-produced goods (e.g., facili-
ties, infrastructure, equipment, and technology) that can be used to
produce further benets for their owners over time. Manufactured
capital is also sometimes referred to as produced or infrastructural
capital;
(4) Human capital (K
h
) refers to the health, knowledge, skills, training,
competencies, and other attributes embodied in individuals, that
facilitate the effective production of personal, social, and economic
well-being;
16
(5) Social capital (K
s
) refers to social networks and stocks of trust in
a society that facilitate mutually advantageous collective action by
increasing information ow, reducing uncertainty about the world
and the behavior of others, and increasing peoples propensity to
cooperate;
17
and
(6) Cultural capital (K
c
) is the set of beliefs or behaviors, which are pro-
duced and transmitted socially, that help shape the aptitude or incli-
nation of a group or society to behave in a certain way, and are
commonly referred to as heritage or tradition.
18
Because cultural
408; P. Ekins, S. Simon, L. Deutsch, C. Folke and R.S. de Groot, A Framework
for the Practical Application of the Concepts of Critical Natural Capital and Strong
Sustainability, Ecological Economics 44 (2003): 165185; Millennium Ecosystem
Assessment, Living Beyond Our Means: Natural Assets and Human Well-Being (Washington
D.C.: Island Press, 2005); J. Boyd and S. Banzhaf, What Are Ecosystem Services?
The Need for Standardized Environmental Accounting Units, Ecological Economics 63
(2007): 616626; B. Fisher, R.K. Turner and P. Morling, Dening and Classifying
Ecosystem Services for Decision Making, Ecological Economics 68 (2009): 643653.
16. J.F. Helliwell, ed., The Contribution of Human and Social Capital to Sustained
Economic Growth and Well-Being: International Symposium Report (Hull, Quebec: Human
Resources Development Canada and Organisation for Economic Co-operation and
Development, 2001).
17. A. Portes, Social Capital: Its Origin and Applications in Modern Sociology,
Annual Review of Sociology 24 (1998): 124; M.A. Rudd, Live long and prosper: collec-
tive action, social capital and social vision, Ecological Economics 34 (2000): 131144;
M. Woolcock, Social Capital and Economic Development: Toward a Theoretical
Synthesis and Policy Framework, Theory and Society 27 (1998): 151208.
18. P. Cochrane, Exploring Cultural Capital and Its Importance in Sustainable
Development, Ecological Economics 57 (2006): 318330. The concept of cultural capi-
tal has not yet received the same degree of scrutiny as other types of capital assets.
As a result, there are a number of different interpretations of cultural capital in the
literature, including one fairly narrow one that views it as artistic and cultural assets
(e.g., performing art companies, museum collections, heritage buildings, etc. . .). For
ocean policy purposes, some of the cultural values associated with coastal heritage
(e.g., historic communities, shipwrecks, traditional shing artifacts, etc.) may be very
important. Further clarication of cultural assets and the services they provide in an
oceans context is an area of research that needs further attention.
9-36_CHIRCOP_F3.indd 13 4/12/2010 8:19:30 PM
14 Issues and Prospects
change occurs very slowly, human and social capital can be viewed
as embedded within cultural capital.
Visions, Goals, and Objectives
People and organizations fundamentally frame their goals and objectives in
terms of capital assets. Quality of life and organizational performance can be
dened, in large part, by the state-of-the-world as dened in terms of the six
capital assets.
19
For some people, quality of life may be dened more in terms
of personal health and family relations (K
h
and K
s
). For others, accumula-
tion of nancial wealth (K
f
) to spend on manufactured capital (K
m
) (e.g., cars,
houses, and electronics) may be important. For others still, a healthy natural
environment (K
n
), rich social networks (K
s
) or the preservation of historically
important shing communities and artifacts (K
c
) could be the most important
aspects dening quality of life. There is a tremendous amount of variation in
how people dene quality of life and their willingness to give up one type of
asset to gain more of another. Decisions about trade-offs occur all the time,
ranging, for example, from simple day-to-day meal choices about whether to
consume wild versus farmed seafood, to life-altering decisions about emigra-
tion from rural coastal communities (where K
n
, K
c
, and K
s
may be abundant
but income generating and education opportunities may be limited) to urban
areas (with more potential for generating nancial wealth, K
f
, and with better
health care infrastructure, K
m
).
Ethics, values, culture, and mental models of the world help shape short-
term human preferences, long-term goals, as well as personal and societal
denitions of quality of life and sustainability.
20
While processes (e.g., fairness,
participatory decision-making processes) are also important, desirable social
processes tend to have direct impacts on, and are usually correlated with, capi-
tal asset accumulation and distribution (e.g., increased trust, equitable distribu-
tion of nancial capital, increased nancial wealth due to reduced governance,
and management costs in trusting societies).
What poses a threat or opportunity depends on the mental lter through
which people view the world. Threats occur when capital assets are eroded
and resource ows become constraining, preventing actors from undertaking
19. Rudd, see n. 11 above.
20. See for example, S.H. Schwartz, Universals in the Content and Structure
of Values: Theoretical Advances and Empirical Tests in 20 Countries, Advances
in Experimental Social Psychology 25 (1992): 165; R. Inglehart, Modernization and
Postmodernization: Cultural, Economic and Political Change in 43 Societies (Princeton: Princeton
University Press, 1997); P.C. Stern, T. Dietz, T. Abel, G.A. Guagnano and L. Kalof,
A Value-Belief-Norm Theory of Support for Social Movements: The Case of
Environmentalism, Human Ecology Review 6 (1999): 8197.
9-36_CHIRCOP_F3.indd 14 4/12/2010 8:19:30 PM
Canadian Oceans Management, Policy and Governance 15
activities that help them to achieve their objectives. They respond to threats by
drawing on their resources (i.e., money, social connections, personal time and
effort, technology) to undertake activities and produce outputs that they believe
will help them achieve their objectives, alleviating threats or taking advantage
of new opportunities. Peoples capacity to respond to perceived threats and
opportunities depends, of course, on their means, capacities, and socio-cultural
constraints: behavioral intent does not necessarily translate into action.
21
In the modern coastal context, development pressure brought on by a con-
centration of human population near coastlines has had tremendous impact
on terrestrial and adjacent marine ecosystems, species habitats, fauna and
ora, and socio-ecological resilience.
22
While the threats arising from popula-
tion-driven development are complex, they are, however, largely endogenous,
potentially manageable at the local or regional level by sound investments (e.g.,
restoration, remediation, and infrastructure) that conserve and restore impor-
tant ecosystem services, and by the implementation of adaptive policies that
account for the full costs and benets of future development choices.
Global climate change will act as an increasingly important coastal stres-
sor in the coming decades because of its impact on upland hydrological cycles,
causing substantial changes in the freshwater ows into coastal estuaries, and
on sea conditions, where sea level rise and extreme storm events will impact
coastal ecosystems.
23
Climate change, unlike development pressure, is exog-
enous at the regional governance scale, implying a need for local investments
that facilitate regional adaptation in the face of growing environmental stress.
In some cases, this may mean mitigating defensive expenditures, in other cases
it may mean adaptive strategies such as managed retreat from vulnerable
21. I. Ajzen, The Theory of Planned Behavior, Organizational Decision and
Human Decision Process 50 (1991): 179211; P.C. Stern, Toward a Coherent Theory
of Environmentally Signicant Behavior, Journal of Social Issues 56 (2000): 407424.
22. W.N. Adger, T.P. Hughes, C. Folke, S.R. Carpenter and J. Rockstrom,
Social-Ecological Resilience to Coastal Disasters, Science 309 (2005): 10361039;
Lotze et al., see n. 3 above; M.P. Weinstein, R.C. Baird, D.O. Conover, M. Gross,
J. Keulartz, D.K. Loomis, Z. Naveh, S.B. Peterson, D.J. Reed, E. Roe, R.L. Swanson,
J.A.A. Swart, J.M. Teal, R.E. Turner and H.J. van der Windt, Managing Coastal
Resources in the 21st Century, Frontiers in Ecology and the Environment 5 (2007): 4348.
23. J. Battin, M.W. Wiley, M.H. Ruckelshaus, R.N. Palmer, E. Korb, K.K. Bartz
and H. Imaki, Projected Impacts of Climate Change on Salmon Habitat Restoration,
Proceedings of the National Academy of Sciences 104 (2007): 67206725; J. Day, R. Christian,
D. Boesch, A. Yez-Arancibia, J. Morris, R. Twilley, L. Naylor, L. Schaffner and
C. Stevenson, Consequences of Climate Change on the Ecogeomorphology of
Coastal Wetlands, Estuaries and Coasts 31 (2008): 477491; P.H. Gleick, Climate
Change, Hydrology, and Water Resources, Review of Geophysics 27 (1987): 329344;
Intergovernmental Panel on Climate Change, Climate Change 2001: The Scientic Basis,
(Geneva: IPCC Secretariat, 2001); R.A. Park, M.S. Trehan, P.W. Mausel and R.C.
Howe, Coastal Wetlands in the Twenty-First century: Profound Alterations Due to
Rising Sea Level in Wetlands: Concerns and Successes, ed. D.W. Fisk (Bethesda, MD:
American Water Resources Association, 1989).
9-36_CHIRCOP_F3.indd 15 4/12/2010 8:19:30 PM
16 Issues and Prospects
coastlines,
24
while in others it may mean institutional innovation over time.
Note that all three strategies require some degree of up-front investment and
provide highly uncertain returns over extended time frames. This implies an
urgent need to identify robust strategies for coastal governance and manage-
ment that perform well over a wide range of climate change scenarios.
25
Institutions
Institutions are comprised of both formal rules and informal social norms
about what behaviors are required, permitted, or prohibited in a society.
26

Institutions specify nancial or social rewards for compliance with, and sanc-
tions for infractions of, rules or norms. As a result, they have a strong inu-
ence on human incentives, cooperation, and on the critical transaction costs
(gathering information, negotiating agreements, monitoring, and enforcement)
of ocean management.
The IAD framework provides a platform for explicitly classifying and
organizing rules and social norms. Rules specify behaviors that are required,
permitted, or forbidden and specify the sanction or incentive (payoff ) associ-
ated with rule compliance or contravention. All rules can be structured in
terms of the three types of behavior. Norms follow the same structure but do
not explicitly spell out sanctions or incentives even though there are implicit
payoffs associated with norm compliance or contravention. Seven different
types of rules can be differentiated:
(1) Boundary rules specifying whom is allowed to participate in activities
of interest (e.g., only licensed shers are allowed to sh with licensing
based on geographic proximity to the shing grounds and a mini-
mum level of historical use);
(2) Position rules that specify the role each participant plays (e.g., place-
holder rules that dene the eet to which a sher belongs);
24. See, for example, R.K. Turner, D. Burgess, D. Hadley, E. Coombes and
N. Jackson, A Cost-Benet Appraisal of Coastal Managed Realignment Policy,
Global Environmental Change 17 (2007): 397407.
25. See, for example, D.G. Groves and R.J. Lempert, A New Analytic Method
for Finding Policy-Relevant Scenarios, Global Environmental Change 17 (2007): 7385;
R.J. Lempert, D.G. Groves, S.W. Popper and S.C. Bankes, A General, Analytic
Method for Generating Robust Strategies and Narrative Scenarios, Management Science
52 (2006): 514528.
26. Ostrom, 2005, see n. 12 above; S.E.S. Crawford and E. Ostrom, A Grammar
of Institutions, The American Political Science Review 89 (1995): 582600.
9-36_CHIRCOP_F3.indd 16 4/12/2010 8:19:30 PM
Canadian Oceans Management, Policy and Governance 17
(3) Authority rules that specify what actions and activities are permitted,
required, or forbidden (e.g., when [seasons], where [zones], and how
[gear restrictions] licensed shers are permitted to sh);
(4) Information rules that specify reporting requirements (e.g., specied
levels of observer coverage and logbook submission requirements for
licensed shers);
(5) Aggregation rules that specify how individuals or organizations make
decisions (e.g., community quota group voting rules);
(6) Scope rules regarding what states of the world (i.e., outputs and out-
comes) are permitted, required, or forbidden (e.g., rules specifying
total allowable catch, daily bag limits, size restrictions, or bycatch
quotas); and
(7) Payoff rules that specify incentives or sanctions for certain behaviors
or outcomes (e.g., fuel subsidies, wage rates for salaried employees,
tariffs on input commodities).
Management PerformanceUsing Resources to Achieve Outcomes
In the private sector, there is a large literature on results-based management.
27

Governments and non-governmental organizations are also increasingly con-
sidering the outcomes and ultimate impacts of their activities and outputs. In
Canada, for example, the Treasury Board has formally adopted a Results-
Based Management and Accountability Framework (RMAF) that requires all
government departments to be increasingly accountable for their outcomes
rather than just their activities.
28
Activities are operations or work processes internal to an organization,
intended to produce specic outputs (see Figure 1). A number of actions, each
consisting of multiple sub-actions, may be needed as part of any particular
activity. Carrying out activities requires resources from within the system as
well as purchased commodities (goods and services) originating from other sys-
tems. Outputs are the direct products or services stemming from the activities
and delivered to a target group or market. Activities and outputs have direct
27. For example, see early formative publications by P.F. Drucker, R. Eccles,
J.A. Ness, T.G. Cucuzza, R. Simons, A. Dbvlla, R. Kaplan and D. Norton, Harvard
Business Review on Measuring Corporate Performance (Boston: Harvard Business School Press,
1998); R.S. Kaplan and D.P. Norton, The Strategy-Focused Organization (Boston: Harvard
Business School Press, 2000).
28. Treasury Board Secretariat, Guide for the Development of Results-Based Management
and Accountability Frameworks (Ottawa: Treasury Board Secretariat, 2001); Treasury Board
of Canada, Guidance for Strategic Approach to Results-Based Management and Accountability
Frameworks (Ottawa: Treasury Board of Canada, 2002).
9-36_CHIRCOP_F3.indd 17 4/12/2010 8:19:30 PM
18 Issues and Prospects
and indirect outcomes that impact, along with external factors, the state of
the various capital assets. For a sher, sh harvesting is their primary activity,
the volume of sh sold is an output, and the revenue they gain from those
sales is an outcome. For an oceans researcher, their research activities might
include data collection and analysis, teaching, and writing, while their outputs
could include articles, book chapters, and presentations. The outcomes of their
research are more difcult to measure but may help inform policy debates and
shift the thinking of decision-makers.
29
An actor (person, household, or organization) has direct management con-
trol over the inputs they use, the activities they undertake, and the products
(goods or services) that they produce. As such, actors have control over how
efciently they produce a given output and can inuence the cost of production
by carefully choosing their combination of inputs and/or improving their pro-
ductivity. Effectiveness is a measure of how outputs under management control
actually contribute to the achievement of broader goals that may be substan-
tially beyond direct management inuence. As the causal chain between the
output and nal impact becomes lengthier, external factors come more and
more into play.
DEVELOPMENT OF THE POLICY FRAMEWORK
Basic Operational Level Framework
The components of the overall framework can be synthesized into a basic
logic model for policy analysis, research, and monitoring (see Figure 2). For
now, we assume the analytical focus is only on day-to-day operational situa-
tions, where real world activities impact oceans and the people that depend on
ocean resources. Note that three other major analytical frameworksthe pres-
sure-state-response model, the sustainable livelihoods model, and the payback
modelcan be explicitly incorporated within this modied IAD framework.
30
29. R. Landry, M. Lamari and N. Amara, The Extent and Determinants of
Utilization of University Research in Government Agencies, Public Administration
Review 63(2003): 192205; D. Cohn, Academics and Public Policy: Informing Policy
Analysis and Policy Making, in Policy Analysis in Canada: The State of the Art, eds. L.
Dobuzinskis, M. Howlett and D. Laycock (Toronto: University of Toronto Press,
2007): 574597.
30. For examples of ocean- and environment-oriented pressure-state-response
models, see K.F.D. Hughey, R. Cullen, G.N. Kerr and A.J. Cook, Application of
the Pressure-State-Response Framework to Perceptions Reporting of the State of the
New Zealand Environment, Journal of Environmental Management 70 (2004): 8593; and
S.M. Garcia, D.J. Staples and J. Chesson, The FAO Guidelines for the Development
and Use of Indicators for Sustainable Development of Marine Capture Fisheries and
an Australian Example of Their Application, Ocean and Coastal Management 43 (2000):
53756. For background on the sustainable livelihood framework, see C. Ashley and
9-36_CHIRCOP_F3.indd 18 4/12/2010 8:19:30 PM
Canadian Oceans Management, Policy and Governance 19
Stocks of assets and/or resource ows can be used to describe and monitor the
state-of-the-world.
31
One way to describe capital assets in detail and develop
functional indicators of sustainability is to engage in an unpacking exercise, the
activity of breaking down high level concepts into terms of increasing specic-
ity until terms represent properties of capital assets that can be measured and
monitored.
32
A useful unpacking hierarchy for policy purposes views capital
assets as elements of the overall system, having attributes that can, in turn, be
D. Carney, Sustainable Livelihoods: Lessons from Early Experience (London: Department for
International Development, 1999); and A. Bebbington, Capitals and Capabilities: A
Framework for Analyzing Peasant Viability, Rural Livelihoods and Poverty, World
Development 27 (1999): 20212044. For further discussion on the integration of these two
with the IAD framework, see Rudd, 2004, n. 11 above. For general information on the
payback model, see M. Buxton and S. Hanney, Evaluating the NHS Research and
Development Programme: Will the Programme Give Value for Money?, Journal of
the Royal Society of Medicine 91, Supplement 35 (1998): 26; and S. Hanney, J. Grant, S.
Wooding and M. Buxton, Proposed Methods for Reviewing the Outcomes of Health
Research: The Impact of Funding by the UKs Arthritis Research Campaign, Health
Research Policy Systems (2004): 24.
31. L. Segnestam, Indicators of Environment and Sustainable Development (Washington,
D.C.: The World Bank, 2002); J.H. Spangenberg, S. Pfahl and K. Deller, Towards
Indicators for Institutional Sustainability: Lessons from an Analysis of Agenda 21,
Ecological Indicators 2 (2002): 6177; World Bank, Expanding the Measure of Wealth: Indicators
of Environmentally Sustainable Development (Washington, DC: World Bank, Environment
Department, 2001).
32. See, for example, G. Jamieson, R.N. OBoyle, J. Arbour, D. Cobb, S. Cour-
tenay, R. Gregory, C. Levings, J. Munro, I. Perry and H. Vandermeulen, Proceedings of
the National Workshop on Objectives and Indicators for Ecosystem-Based Management, Canadian
Science Advisory Secretariat Proceedings Series 2001/09 (Ottawa: Fisheries and
Oceans Canada, 2001); and R.N. OBoyle and P. Keizer, Proceedings of Three Workshops
to Investigate the Unpacking Process in Support of Ecosystem-Based Management: FebruaryJuly
2002, Canadian Science Advisory Secretariat Proceedings Series 2003/004 (Ottawa:
Fisheries and Oceans Canada, 2003).
FIG. 1.Causal linkages in the results-based logic model.
Source: Adapted from Treasury Board Secretariat of Canada.
9-36_CHIRCOP_F3.indd 19 4/12/2010 8:19:30 PM
20 Issues and Prospects
described by characteristics. Characteristics themselves can be described by indi-
cators that provide a single meaningful message (information) used to infer the
status of a characteristic of the system. There can be several different indicators
for any single characteristic of a capital asset.
One reason this particular unpacking hierarchy is useful is that a direct
correspondence can be drawn between human goals and objectives, and dif-
ferent levels in the hierarchy describing the capital assets. Goals relate to the
desired state-of-the-world, specied in quite general terms. Strategic or con-
ceptual objectives are still relatively abstract, relating to the general condition
of different attributes of capital assets. Operational objectives, on the other
hand, specify quantiable states of capital asset characteristics that manage-
ment is trying to achieve. Indicators have specic reference points or targets
assigned to them.
Describing the attributes and characteristics of natural capital can be a
complex task due to scientic uncertainty and because the structural com-
ponents of natural capital can contribute to multiple resource ows. In the
Canadian context, three strategic or conceptual objectives regarding natural
capital were emphasized in an unpacking exercise by Canadian scientists and
resource managers on marine ecosystem-based management: (1) conserve
enough ecosystem components so as to maintain the natural resilience of the
ecosystem; (2) conserve each component of the ecosystem so that it can play
FIG. 2.Basic logic model for policy design, analysis, and monitoring.
9-36_CHIRCOP_F3.indd 20 4/12/2010 8:19:31 PM
Canadian Oceans Management, Policy and Governance 21
its historic role in the foodweb; and (3) conserve the physical and chemical
components of the ecosystem.
33
Using the terminology outlined above, the rst strategic objective, con-
servation of enough ecosystem components (the stock) to maintain resilience
(the ow), was further broken down into operational objectives of maintaining
communities, species, and populations within bounds of natural variability.
The second strategic objective, conservation of ecosystem components so as
to maintain foodweb integrity, was broken down into operational objectives
of maintaining primary productivity, trophic structure, and mean generation
time. Operational objectives for the third strategic objective included conserv-
ing critical landscape and bottomscape features, water column properties,
water quality, and biota quality.
In Canada, where most of the effort to date has been directed towards
unpacking the ecological components of natural capital,
34
the rst socio-
economic unpacking workshop for the Eastern Scotian Shelf Integrated
Management (ESSIM) initiative occurred in late 2004.
35
Similar exercises
could be conducted for the other types of capital assets although, in practice, it
has been rare to date for systematic unpacking exercises to have been under-
taken.
Manufactured capital consists of equipment, facilities, infrastructure, and
technology. The ow of resources from manufactured capital can best be
thought of as technical capacity, essentially the maximum amount of output
that the existing stock of capital is capable of producing given full utilization
of other inputs and standard operating practices.
36
Unpacking exercises for
manufactured capital should generally be straightforward, although it may be
difcult and expensive to estimate technical capacity in some sectors due to
data constraints. In some cases, unpacking exercises will need to focus strictly
on physical assets (e.g., government patrol vessels, public infrastructure such
as public wharves, exploratory oil drilling platforms, etc.) rather than the ow
of technical capacity provided by those assets.
33. Jamieson et al., see n. 32 above.
34. It would be useful to revisit this unpacking exercise in light of the wide-
spread adoption of the ecosystem services paradigm since the Millennium Ecosystem
Assessment (MEA, see n. 15 above).
35. S. Coffen-Smout, D. Millar, G. Herbert and T. Hall, ed., Proceedings of the 3rd
Eastern Scotian Shelf Integrated Management (ESSIM) Forum Workshop, Halifax, Nova Scotia,
2223 February 2005, Canadian Manuscript Report of Fisheries and Aquatic Sciences
2719 (Ottawa: Fisheries and Oceans Canada, 2006).
36. See, for example, J.E. Kirkley, C.J. Morrison Paul and D.E. Squires,
Capacity and capacity utilization in common-pool resource industries, Environmental
and Resource Economics 22 (2002): 7197.
9-36_CHIRCOP_F3.indd 21 4/12/2010 8:19:31 PM
22 Issues and Prospects
Human time, labour, and effort are used in production processes. Apart
from the quantity of labour used, the efciency and effectiveness of transfor-
mation processes are affected by the stock of human capital that individuals
possess.
37
Individual-level attributes of human capital include physical health,
education, and skills. Akin to manufactured capital, it is possible to think of
the ow of resources arising from human capital as the human capacity for
productivity. Human capital is obviously important when considering indus-
trial productivity but is also important when considering the production of
goods and services outside the market sector. For instance, volunteer labor is
very important for the ongoing operation of many marine-oriented environ-
mental non-governmental organizations. Human capital can be depleted (e.g.,
volunteer burnout) with excess workload and without adequate investment in
informal social rewards, resulting in declines in personal motivation and com-
mitment in volunteers.
The stock of social capital (social networks, trust) provides a ow of
resources that can be used in ocean management initiatives to increase pro-
ductivity and reduce conict by increasing peoples propensity to cooperate
with each other.
38
There have been rapid advances in the empirical assessment
of social capital in recent years.
39
Statistics Canada has adopted some up-to-
date practices and conducted surveys on social engagement (General Social
Survey 2003, Cycle 17), as well as ongoing demographic surveys that provide
extensive, ne-scale baseline data on human and some aspects of social capi-
tal in Canadian coastal and rural communities.
40
Even though our collective
understanding of what social capital is, and the many ways in which it works,
has increased greatly over the past decade, there are still important questions
to be answered surrounding its value to society (i.e., how much nancial wealth
individuals and societies are willing to forego in exchange for building com-
munity resilience and trust levels).
Financial capital is relatively straightforward conceptually, consisting of
the money, property, and other monetary assets that households, rms, gov-
ernments, and civil society organizations possess. The stock of nancial assets
provides a ow of interest or other returns on investment that can be used to
purchase inputs for production processes or undertake investments that will
enhance the capacity of the owner to better achieve their objectives in the
future. Again, relatively good baseline data on nancial holdings and wealth is
available on a ne geographic scale for coastal Canada from Statistics Canada.
37. Helliwell, see n. 16 above.
38. Rudd, see n. 17 above.
39. C. Grootaert and T. van Bastelaer, eds., Understanding and Measuring Social
Capital: A Multidisciplinary Tool for Practitioners (Washington, D.C.: The World Bank,
2002).
40. See, for example, the NL Community Accounts, available online: <http://
www.communityaccounts.ca/> and Statistics Canada Community Proles, available
online: <http://www12.statcan.ca/census-recensement/2006/dp-pd/prof/92591/
index.cfm?Lang=E>.
9-36_CHIRCOP_F3.indd 22 4/12/2010 8:19:31 PM
Canadian Oceans Management, Policy and Governance 23
Efforts are being made to correct GNP and other measures of aggregate eco-
nomic activity to better reect natural capital depletion,
41
though relatively
little progress has yet to be made on incorporating natural (or cultural ) capital
into Canadian oceans industries reports or national accounts.
Actors may draw on their available resources in order to engage in activi-
ties and produce commercial goods and services or non-commercial outputs.
For example, an individual may use the ocean [K
n
], her kayak [K
m
], her leisure
time and individual paddling skills [K
h
], information about paddling condi-
tions gathered from other kayakers [K
s
], her money [K
f
] for fuel (a purchased
commodity) to drive to a launch site, and paddle to a traditional shing village
[K
c
] to produce a recreational experience that improves her quality of life.
42

Financial capital plays a unique role in the framework. In market economies, it
can be used to purchase commodities from outside the immediate system and
either consume them in the production process (e.g., fuel ) or to invest in other
types of capital (e.g., by purchasing a kayak, a type of K
m
) that enhances the
potential to improve ones quality of life in the future.
Formal rules and informal social norms shape both incentives and behav-
iors. For a kayaker, the formal rules may be simple, only relating to the
safety equipment one is required to carry on the kayak and property rights of
coastal landowners. There may be informal social norms that specify where,
for instance, it is permissible to launch a kayak. For commercial shing, on
the other hand, the institutions can be exceedingly complex.
43
For example,
access to a shery may be governed by boundary rules that stipulate formal
41. J. Boyd, Nonmarket Benets of Nature: What Should Be Counted in Green
GDP?, Ecological Economics 61 (2007): 716723; A.T. Charles, H. Boyd, A. Lavers and
C. Benjamin, The Nova Scotia GPI Fisheries and Marine Environment Accounts, (Halifax: GPI
Atlantic, 2001); K. Hamilton, Genuine Saving as a Sustainability Indicator (Washington,
D.C.: World Bank, 2000). There is no conceptual reason why a fully developed GDP
measure could not also account for the accumulation or depreciation of human, social,
and cultural capital.
42. An important point to note is that natural capital services need to be con-
sidered in the context of the nal user who derives well-being from those services and
that one element of the natural environment can provide different types of services.
For example, water quality is a nal ecosystem service for a kayaker: it has a direct
bearing on the quality of the recreational experience. Water quality is only an interme-
diate service, however, in the context of shing: improved water quality can increase
the quantity and/or quality of sh landed by the sher but it is the sh itself that is the
nal ecosystem service in this case. Care must be taken when economically accounting
for ecosystem services so that intermediate and nal services are not aggregated, result-
ing in double counting. See Boyd and Banzhauf, 2007, and Fisher et al., 2009, n. 15
above, for more details on proper procedures for distinguishing between intermediate
and nal ecosystem services.
43. M.C. Healey and T. Hennessey, The Paradox of Fairness: The Impact of
Escalating Complexity on Fishery Management, Marine Policy 22 (1998): 109118;
M. Sinclair, R.N. OBoyle, D.L. Burke and F.G. Peacock, Groundsh Management
in Transition within the Scotia-Fundy Area of Canada, ICES Journal of Marine Science
56 (1999): 10141023.
9-36_CHIRCOP_F3.indd 23 4/12/2010 8:19:31 PM
24 Issues and Prospects
licensing requirements or informal adjacency or kinship norms and position
rules that dene the type of sher that a particular person is (e.g., member of
the inshore, groundsh hand-line shery group).
44
Once ofcially authorized
to sh (e.g., by paying an annual license fee), a sher may be highly regulated
according to when, where, and how he is allowed to sh, and what reporting
requirements, size limits, and seasonal landing limits are in place. If any one of
those rules were to change, it could conceivably lead to substantially different
behavior on the part of the sher.
45
Production activities have direct and indirect outcomes that, when com-
bined with external inuences and driving forces from outside the system, have
impacts that lead to changes in the stock of various capital assets within the
system. Resources originating in one system may eventually be used as inputs
in other systems when commodity outputs are sold as intermediate goods to
downstream producers. Outcomes from within one system may also have
impacts not accounted for by markets, on other capital assets in other sys-
tems. These externalities can be positive or negative, providing benets for, or
imposing costs on, other actors in other systems.
The combined impacts of internal production processes and external
inuences are evaluated by actors and threats or opportunities are identied
and dened according to the mental model through which actors lter the
impacts. The mental lter through which people view the world depends fun-
damentally on their values, ethics, skills, and knowledge (human capital ), and
social norms and levels of trust of other people (social capital ). When people
perceive threats to important capital assets they can respond in a number of
ways, including: curtailing consumption of constraining resource ows; obtain-
ing better information about the state-of-the-world and how resource ows can
be transformed into outputs more efciently and effectively; obtaining better
information about the preferences and behavior of others (i.e., the market for
the good or service and the competition) to increase the benets derived from
a given quantity of output; and/or undertaking investments that build capital
assets, increase resource ows, and alleviate resource ow bottlenecks.
Linkages
Vertical Linkages
At the day-to-day operational level, formal rules, and social norms may be
taken as xed but the rules of the game can obviously evolve in response to
changing physical conditions, technology, and societal values. Formal rules
44. For example, Acheson, see n. 10 above.
45. Ostrom, 1990, and Ostrom, 2005, see n. 12 above.
9-36_CHIRCOP_F3.indd 24 4/12/2010 8:19:31 PM
Canadian Oceans Management, Policy and Governance 25
are under direct human control and the process of crafting rules
46
supporting
oceans management in multi-level, linked systems (see Figure 3) needs to be
a primary focus of policy analysts. Important links exist between operational,
implementation (collective action), and political (constitutional ) situations.
47
The rules governing operational situations are crafted in higher-level
collective action or implementation situations.
48
Actors in implementation
46. Ostrom and Ostrom, 2004, see n. 12 above; V. Ostrom, Artisanship and
Artifact, Public Administration Review 40 (1980): 309317.
47. Ostrom, 1990, see n. 12 above; Rudd, 2004, see n. 11 above; also see C.J.
Hill and L.E. Lynn Jr., Governance and Public Management: An Introduction,
Journal of Policy Analysis and Management 23 (2004): 311.
48. The Ostroms use the terms collective action and constitutional for
higher levels of analysis while Rudd uses the terms implementation and political
instead.
FIG. 3.Vertical linkages in the policy logic model.
9-36_CHIRCOP_F3.indd 25 4/12/2010 8:19:31 PM
26 Issues and Prospects
situations (often civil servants) use resources, undertake activities, and produce
outputs just as operational level actors do. Boundary, scope, authority, report-
ing, aggregation, scope, and payoff rules exist for bureaucrats and can be ana-
lyzed just as they would for operational-level actors. One implementation level
output is the creation of regulations or other formal rules for use in opera-
tional situations (i.e., sheries managers decide on what rules are implemented
regarding who may sh and when, where, and how they are permitted to sh).
Actors in implementation situations can also invest strategically in operational
level capital assets by allocating nancial resources to operational level activi-
ties within their organizations or grant-making (e.g., hiring and training eld
staff, building technological infrastructure, conducting research, operating edu-
cational programs, or making direct investments in habitat rehabilitation).
One important distinction between operational and implementation situ-
ations is that implementation level actors do not use natural capital directly.
Another distinction is that position and aggregation rules are likely to gure
much more prominently in an implementation level analysis. Positions within
bureaucracies tend to be well dened and aggregation rules often specify deci-
sion-making procedures in great detail.
49
In many cases, any particular person
in a position is mobile but the position itself is durable (e.g., the chair of a
species-at-risk recovery team can be changed but the mandate of, and author-
ity invested in, the position remains the same).
The rules that shape implementation-level behavior by civil servants and
other actors are created at an even higher constitutional or political level.
Political level situations involve actors (e.g., elected politicians, industry groups,
consumer advocates, and lobbyists) who engage in or inuence the process
of rule-making. Their outputs are: (1) policy directives and legislation for
implementation level actors to follow and implement; (2) rules that govern the
behavior of implementation level actors by setting bounds on their required,
permitted, or prohibited activities, reporting, and outputs; and (3) direct invest-
ments in implementation level capital assets (i.e., Treasury Board supplies
Fisheries and Oceans Canada with an annual budget that can subsequently
be internally re-allocated at a ner scale to operational level projects and ini-
tiatives that achieve departmental objectives). Human, social, and nancial
capital provides by far the most important resource ows for political-level
actors. Aggregation rules specifying how political decisions are taken become
extremely important (e.g., parliamentary protocol, committee voting rules) and
social networking becomes critical in advancing agendas.
50
49. E.g., J. Schoeld and J. Fershau, Committees inside Canadian Legislatures,
in Policy Analysis in Canada: The State of the Art, eds. L. Dobuzinskis, M. Howlett and
D. Laycock (Toronto: University of Toronto Press, 2007), 351374.
50. While manufactured capital does not generally feature prominently at the
political level, it is interesting to note the role of advanced communications technology
in social networking (e.g., U.S. President Obamas well-documented reliance on the
Blackberry smartphone).
9-36_CHIRCOP_F3.indd 26 4/12/2010 8:19:31 PM
Canadian Oceans Management, Policy and Governance 27
Outputs from one level cascade down to the next lower level, directly
inuencing behavior and its impacts on capital asset accumulation or deple-
tion at lower levels. The process is not unidirectional, however, and there
are also feedback mechanisms from the operational level to political level.
Political actors in liberal democracies are keenly aware that decisions at the
political level are constrained by societal preferences expressed through voting
behavior and polling. Some operational level actors will also be interested in
gaining direct access to the political process to favorably inuence decisions
about rules or resource allocations. If the potential nancial returns of favor-
able political decisions are sufciently large, it may make economic sense for
operational level actors or industry associations to invest substantial amounts of
nancial capital to get a seat at the decision-making table by lobbying political
actors. There can also be strong bottom-up links between the implementation
and political levels (e.g., between senior bureaucrats and elected ofcials) and
between operational and implementation levels (e.g., formal stakeholder and
community consultation processes, informal networking and lobbying, rela-
tionships between consultants and civil servants).
51
Horizontal LinkagesMarket Supply Chains
Besides vertical linkages within systems, systems can be linked horizontally
across space (and time) via commodity supply chains or via external impacts
that are not accounted for in established markets.
The two basic agents in economics are consumers, who may be individuals
(or households), and rms. Firms produce commodities traded in markets while
consumers provide rms with labor and consume commodities. Commodities
can also be used in the production of intermediate goods, used in the produc-
tion process by other rms producing goods or services ultimately destined for
consumers. Commodities can be either goods or services and each commod-
ity has a price dened in terms of commodity rates of exchange. The market
is an institutiona set of rules and proceduresthat provides a mechanism
for the exchange of commodities and does, or potentially can, exist for every
commodity.
In traditional subsistence societies, all resources for sustaining the local
human population had to be drawn from within the local ecosystem. The
advent of markets and trading facilitated the development of commodities and
commodity supply chains at regional levels.
52
As a result, people and rms
51. For an excellent overview of the Canadian policy system and the myriad rela-
tionships between different actors within the system, see L. Dobuzinskis, M. Howlett
and D. Laycock, ed., Policy Analysis in Canada: The State of the Art (Toronto: University
of Toronto Press, 2007).
52. See, for example, P.R. Milgrom, D.C. North and B.R. Weingast, The Role
of the Institutions in the Revival of Trade: The Law Merchant, Private Judges, and
the Champagne fairs, Economics and Politics 2 (1990): 123.
9-36_CHIRCOP_F3.indd 27 4/12/2010 8:19:31 PM
28 Issues and Prospects
in one system can use nancial capital to purchase commodities produced in
other systems, using resources that would otherwise be unavailable to them.
Of course, there are ultimately limits to the volume of resources that can be
appropriated for human consumption; already there is evidence that humans
appropriate more primary production from the coastal and marine environ-
ment than is sustainable.
53
A key challenge for oceans policy analysts is to
ascertain the level of sustainability of oceans activities over the long-term.
In market economies, each step in the commodity supply chain adds value
to the nal commodity used by consumers. For example, in Figure 4 a primary
producer (a sher) turns a natural resource (sh) into a commodity (seafood)
by harvesting them. The seafood is sold to processors who then add value by
preparing and packaging the seafood for consumer markets. Wholesalers and
retailers add value by consolidating products from many sources and offer-
ing diverse selection, thereby making purchase decisions more convenient for
consumers. Waste disposal rms are also part of the supply chain, providing
a service by conveniently disposing of waste packaging and by-products. Fuel
is used by transportation rms that move the commodities from link to link
along the supply chain.
For rms, whose objective in a market economy is to maximize prot for
its owners and shareholders (or minimally to generate enough prot that the
rm can continue to operate), the appropriate measure of economic benet
derived at each link in the chain is producer surplus. Producer surplus is the
net economic prot (revenue less costs) for a rm after accounting for normal
returns to management and adjustments for factors such as risk.
54
The appropriate measure of well-being for consumers is consumer surplus,
a measure which considers both the market price of commodities consumed
and the price above and beyond market price that consumers would have been
willing to pay for that good or service. When dealing with market commodities
with which consumers are very familiar (e.g., cans of tuna), it is straightforward
to calculate consumer surplus with existing sales and trade data. Care must be
taken, however, when commodities are produced in uncompetitive markets.
53. D. Pauly and V. Christensen, Primary Production Required to Sustain
Global Fisheries, Nature 374 (1995): 255257.
54. It is important to note that economic impacts, as commonly conceived
for oceans industry studies (e.g., M. Gardner, G. MacAskill and C. DeBow, Economic
Impact of the Nova Scotia Ocean Sector (Halifax: Gardner Pinfold Consulting Economists,
2009)), are not the same as the economic benets used in cost-benet analyses. For
a detailed discussion of the different type of analytical approaches for policy analysis
(and the weaknesses of the economic impact methodology), see A.R. Vining and A.E.
Boardman, The Choice of Formal Policy Analysis Methods in Canada, in Policy
Analysis in Canada: The State of the Art, ed. L. Dobuzinskis, M. Howlett and D. Laycock
(Toronto: University of Toronto Press, 2007), 4885.
9-36_CHIRCOP_F3.indd 28 4/12/2010 8:19:31 PM
Canadian Oceans Management, Policy and Governance 29
F
I
G
.

4
.

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o
r
i
z
o
n
t
a
l

l
i
n
k
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s

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s
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.
9-36_CHIRCOP_F3.indd 29 4/12/2010 8:19:32 PM
30 Issues and Prospects
Market prices may be skewed when sheries are subsidized
55
and market prices
may be much lower than they would be in free markets.
In economics, it is often assumed that people make consumption choices
based only on the market prices of commodities and consumer preferences
regarding commodity characteristics and service attributes (e.g., physical form,
expected personal health impacts, packaging, service attributes of retailers,
branding, etc. . .). If we take a broad view of quality of life, however, it is evi-
dent that consumers can also engage in citizen choices that place a great deal
of importance on other factors such as maintenance of environmental quality
in distant ecosystems, animal welfare, the use of genetically modied organ-
isms, and safe working conditions and fair returns for people that produce
commodities.
56
Broad preferences for credence attributes have been manifested
in recent years with the proliferation of green products and fair trade labels.
57

Consumers can, and do, derive economic well-being (consumer surplus) from
the activities and outcomes of production processes by rms throughout the
entire supply chain, and modern economic valuation methodologies can be
used to quantify many non-market consumer benets.
58
Horizontal LinkagesExternalities
Activities by one actor can have indirect impacts on capital assets within a
system. The consequences of the actors actions might be intentional or unin-
55. G. Munro and U.R. Sumaila, The Impact of Subsidies upon Fisheries
Management and Sustainability: The Case of the North Atlantic, Fish and Fisheries 3
(2002): 233250.
56. R. Costanza, B. Fisher, S. Ali, C. Beer, L. Bond, R. Boumans, N.L. Danigelis,
J. Dickinson, C. Elliott, J. Farley, D.E. Gayer, L. MacDonald Glenn, T. Hudspeth,
D. Mahoney, L. McCahill, B. McIntosh, B. Reed, S.A. Turab Rizvi, D.M. Rizzo,
T. Simpatico and R. Snapp, Quality of Life: An Approach Integrating Opportunities,
Human Needs, and Subjective Well-Being, Ecological Economics 61 (2007): 267276;
M.J. Kotchen and Stephen D. Reiling, Environmental Attitudes, Motivations,
and Contingent Valuation of Nonuse Values: A Case Study Involving Endangered
Species, Ecological Economics 32 (2000): 93107; D. Waltner-Toews and T. Lang, A
New Conceptual Base for Food and Agricultural Policy: The Emerging Model of
Links Between Agriculture, Food, Health, Environment and Society, Global Change
and Human Health 1 (2000): 11630.
57. J.A. Caswell and E.M. Mojduszka, Using Informational Labeling to Inuence
the Market for Quality in Food Products, American Journal of Agricultural Economics 78
(1996): 12481253; C.A. Roheim, Early Indications of Market Impacts from the
Marine Stewardship Council Ecolabeling of Seafood, Marine Resource Economics 18
(2003): 95104.
58. F. Carlsson, P. Frykblom and C.J. Lagerkvist, Consumer Benets of Labels
and Bans on GM FoodsChoice Experiments with Swedish Consumers, American
Journal of Agricultural Economics 89 (2007): 152161; R.J. Johnston and C.A. Roheim, A
Battle of Taste and Environmental Convictions for Ecolabeled Seafood: A Contingent
Ranking Experiment, Journal of Agriculture and Resource Economics 31 (2006): 283300.
9-36_CHIRCOP_F3.indd 30 4/12/2010 8:19:32 PM
Canadian Oceans Management, Policy and Governance 31
tentional. Indirect and unintended impacts may impair an actors own capac-
ity to achieve their own objectives in the future (e.g., over-harvesting sh may
reduce spawning stock biomass, reducing future recruits and shing ground
productivity). Their activities can also impact the ability of other actors within
the system to achieve their objectives (e.g., lower population abundance also
impacts the cost of shing for other shers in the same eet). The impacts of
their activities may also lead to changes in capital assets in other systems. For
example, harvesting adult sh from spawning aggregation sites may reduce
recruitment in downstream nursery areas.
59
This can give rise to increased
costs and reduced protability for rms in other regions.
In addition, the activities that an actor undertakes in one system may
impact consumers in other systems. For instance, tuna shing that kills dol-
phins imposes an externalitya coston some consumers and those people
should be willing to pay higher prices for dolphin-safe tuna.
60
Negative exter-
nalities can occur in geographically neighboring systems or at a global scale
(e.g., greenhouse gas production, climate change and its long-term impacts
on the sea level, ocean temperature and marine biodiversity), as can positive
externalities arising from the production of marine ecosystem services in one
location that provide national or global benets.
61
In many cases, actors may
not even know they are having external costs imposed on them due to their
limited understanding of how regional or global ecosystems and markets are
linked.
Taking a capital asset approach to marine policy analysis can help orga-
nize external effects. The externalities affecting ocean systems can be classi-
ed according to the type of impact they have on various characteristics and
attributes of capital assets: environmental impacts affect natural capital and
its resource ows; technological innovation and development impacts manu-
factured capital; demographic change (e.g., migration and mortality patterns)
inuences the stock of human capital in a system; shifting social networks
impact social capital; popular culture trends affect cultural capital (e.g., glo-
balization of music and fashion tastes via global media); and macroeconomic
59. C.M. Roberts, Connectivity and Management of Caribbean Coral Reefs,
Science 278 (1997): 14541457.
60. J. Haraden, S.F. Herrick, D. Squires and C.A. Tisdell, Economic Benets
of Dolphins in the United States Eastern Tropical Pacic Purse-Seine Tuna Industry,
Environmental and Resource Economics 28 (2004): 451468.
61. Two different types of examples are: carbon sequestration benets provided by
eelgrass beds (for an overview, see R.J. Orth, T.J.B. Carruthers, W.C. Dennison, C.M.
Duarte, J.W. Fourqurean, K.L. Heck, A.R. Hughes, G.A. Kendrick, W.J. Kenworthy,
S. Olyarnik, F.T. Short, M. Waycott and S.L. Williams, A Global Crisis for Seagrass
Ecosystems, BioScience 56 (2006): 98796); and the values that people hold for the
preservation of icon species such as whales, sea turtles, and Atlantic salmon (e.g., M.A.
Rudd, National Values for Regional Aquatic Species at Risk in Canada, Endangered
Species Research 6 (2009): 239249).
9-36_CHIRCOP_F3.indd 31 4/12/2010 8:19:32 PM
32 Issues and Prospects
factors (e.g., currency exchange rates, interest rates, global credit-default swap
mechanisms) affect nancial capital.
Ocean Sustainability
In traditional economic analyses, it is most common to assume that there is
perfect substitutability between different kinds of capital. From a weak sustain-
ability perspective, depletion of natural capital may still be deemed sustainable
if the growth in other assets is sufciently large to compensate for the loss of
natural capital. An alternative view is that the substitutability of manufactured
and natural capital is limited by the unique characteristics of natural capital
(e.g., threshold effects, uncertainty, and irreversibility). A strong sustainability
perspective maintains that the stock of natural capital must be non-declining
in sustainable systems.
62
Whether other capital assets can substitute for natural capital in various
transformation processes is likely most often between the two extremes. Ekins
et al. outline a way to deal with intermediate cases, dening critical natural
capital as natural capital which is responsible for important environmental
functions and which cannot be substituted in the provision of functions by
manufactured capital.
63
Critical natural capital can be dened by either its
importance (ecological, economic, and socio-cultural ) or the degree of threat
that it faces (a function of the size of the remaining stock and its inherent
vulnerability).
64
Ocean goods and services may thus be considered as a type of
critical natural capital for either ecological (e.g., species that play an important
role ecosystem function) or social, economic, or cultural reasons (e.g., species
that have special signicance for individuals or cultures).
While commodity supply chains, market institutions, and globalization
have permitted specialization, the division of labor, and the development of
efcient industries based on competitive advantage, it has also permitted indus-
tries to engage in activities that simply export sustainability problems to other
areas (or to future generations). Controlling biodiversity loss and other major
degradations in ocean natural capital may especially depend on consumer
market demand and signals being passed along commodity supply chains back
to primary producers and processors in systems geographically distant from
62. A. Jansson, M. Hammer, C. Folke and R. Costanza, eds., Investing in Natural
Capital: The Ecological Economics Approach to Sustainability (Covelo, California: Island
Press, 1994); J.C.V. Pezzey and M.A. Toman, Sustainability and Its Economic
Interpretations, in Scarcity and Growth Revisited: Natural Resources and the Environment in the
New Millennium, eds. D. Simpson, M.A. Toman and R.U. Ayres (Washington, D.C.:
Resources for the Future Press, 2003), 121141.
63. Ekins et al., see n. 15 above, at 169.
64. R. de Groot, J. Van der Perk, A. Chiesura and A. van Vliet, Importance and
Threat as Determining Factors for Criticality of Natural Capital, Ecological Economics
44 (2003): 187204.
9-36_CHIRCOP_F3.indd 32 4/12/2010 8:19:32 PM
Canadian Oceans Management, Policy and Governance 33
nal markets.
65
Understanding the critical linkages between geographically dis-
parate production and consumption regions, and the direct and indirect local,
regional, national, and global impacts of production activities on valuable pub-
lic goods, requires a rigorous and systematic logic model that facilitates cred-
ible policy analyses.
CONCLUSIONS
Effective governance of Canadas oceans requires a systematic framework for
conceptualizing ocean activities, providing a logic model for the design and
analysis of policy alternatives, and formalizing the monitoring systems neces-
sary for adaptive management. In this chapter, a modied IAD framework has
been proposed as a general purpose framework for policy design, analysis, and
monitoring. It has a number of potential advantages.
Using capital assets to describe the state-of-the-world allows analysts to
consider the full spectrum of resource ows from the marine environment that
help people improve their quality of life (or to take an even broader view, the
intrinsic quality of life of all species). Moreover, it allows analysts to examine
peoples preferences and frame their goals, strategic objectives, and operational
targets in terms of the elements, attributes, and characteristics of the various
capital assets. This facilitates transparent discussions regarding sustainability
and makes explicit the trade-offs that people are willing to accept between
different capital assets (a crucial factor for economists conducting cost-benet
analysis in support of political decisions regarding oceans policy and gover-
nance). In particular, the framework helps clarify the role of non-market eco-
nomic valuation
66
by transparently showing that economic value is simply a
quantication of the trade-off that people are willing to make between nan-
cial capital and other types of capital assets that are not traded in established
markets.
Second, there is a specic focus on human incentives and behavior.
Rules, monitoring, and enforcement, all of which critically affect incentives at
the individual level, directly impact the effectiveness and efciency of ocean
conservation. Systematically studying various institutional alternatives allows
policy analysts to develop adaptive management models and test hypotheses
about the causal relationships between rules, human behavior, and ecological
and socio-economic sustainability.
A third advantage is the incorporation of explicit linkages between differ-
ent levels of analysis within systems. Day-to-day human behavior is shaped by
65. Wood et al., see n. 2 above.
66. D. Pearce, G. Atkinson and S. Mourato, Cost-Benet Analysis and the Environment:
Recent Developments (Paris: Organization for Economic Cooperation and Development,
2006).
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34 Issues and Prospects
governance processes at the political level, where political actors make choices
about how to achieve broad societal goals and objectives, and at the imple-
mentation level, where bureaucrats make decisions about how to implement
political decisions. A framework that can account for these dynamics is nec-
essary for linking scientic research, management performance, conservation
outcomes, and political decisions.
Fourth, the incorporation of explicit linkages between different systems via
commodity ows along supply chains and/or through externalities allows for
analysts to design and evaluate policies that can potentially inuence conserva-
tion outcomes outside the realm of their own geographic and political system.
In recent years, supply chain linkages have become increasingly important foci
of life cycle analyses,
67
and credence attributes in all parts of the supply chain
have become increasingly important in shaping consumer choices and assess-
ing the true economic benets of production processes.
68
A fth advantage is that an institutional approach permits analysts to view
all management interventions, whether habitat rehabilitation, on-the-ground
monitoring, rule-making, or long-term changes to the process by which political
choices are made, as investments in various types of capital assets.

Cost-benet
and cost-effectiveness analysis can be applied and results use the standard lan-
guage of policy- and decision-makers. Irrespective of overall goals relating to
quality of life, cost-effectiveness of ocean governance investments will always
be important because of the competing demands for scarce nances in other
parts of the Canadian economy.
From a temporal perspective, it is possible to make institutional invest-
ments that focus on short-term solutions (i.e., operational-level investments
aimed at increasing compliance with existing rules), medium-term solutions
(i.e., implementation-level investments aimed at changing the set of rules that
govern operational level resource use), or long-term solutions (i.e., political-
level investments meant to shift political power and change the rule-making
procedures in society). While the investment costs rise substantially at each
level, so do the potential payoffs as the long-term benets of high-level invest-
ments in good governance can be great (particularly savings arising as a result
of reduced levels of conict).
What are the pragmatic implications or advantages of adopting this model
for oceans management and policy monitoring and research? Given the com-
67. M.C. Heller and G.A. Keoleian, Assessing the Sustainability of the US
Food System: A Life Cycle Perspective, Agricultural Systems 76 (2003): 10071041;
N. Pelletier and P. Tyedmers, Life Cycle Considerations for Improving Sustainability
Assessments in Seafood Awareness Campaigns, Environmental Management 42 (2008):
918931.
68. Caswell and Mojduszka, see n. 57 above.
9-36_CHIRCOP_F3.indd 34 4/12/2010 8:19:32 PM
Canadian Oceans Management, Policy and Governance 35
plexity of the management system for the Canadian oceans sector,
69
using the
framework to organize multi-level analyses of particular government depart-
ments and divisions could help to build understanding of how government
organizations relate to one another, and how particular regulations or policy
initiatives might mesh or clash in particular situations.
From a monitoring perspective, there often seems to be some confusion
in the unpacking exercises needed to develop balanced and effective monitor-
ing systems for oceans initiatives. Use of this framework should be able to
help organize balanced indicator systems that account for the full spectrum
of assets and processes important to coastal stakeholders and decision-makers;
specic demonstrations of indicator systems would be a valuable step forward
in demonstrating the utility of this approach for Canadian coastal monitoring
systems.
The framework also highlights key challenges that need to be addressed if
effective oceans management and policy initiatives are to be advanced. One of
those challenges relates to the issue of causality or attribution. That is, how do
oceans activities (whether we are talking about shing, other industrial activi-
ties, or research) lead to outputs that actually have impacts we can track?
Without understanding something of how investments and policy interventions
actually impact real things that matter to people, it may prove exceedingly
difcult to convince governments to allocate scarce resources to the ocean
sector.
One approach to this challenge involves extending our understanding
of the causal linkages using fairly standard qualitative (e.g., case studies) or
quantitative (e.g., forward projecting shery population models) methodolo-
gies. Other possibilities also exist, including causal models based on Bayesian
Belief Networks, which can use a combination of quantitative data and qualita-
tive input (e.g., expert opinion, solicited local ecological knowledge) to dene
conditional probabilities between links in the activity-output-impact chain.
70

Another alternative approach is, instead of focusing on quantifying the full
causal chain, to use methodologies such as Qualitative Comparative Analysis
69. Fisheries and Oceans Canada, The Role of the Canadian Government in the Oceans
Sector (Ottawa: Fisheries and Oceans Canada, 2009).
70. M.E. Borsuk, C.A. Stow and K.H. Reckhow, A Bayesian Network of
Eutrophication Models for Synthesis, Prediction, and Uncertainty Analysis, Ecological
Modelling 173 (2004): 219239; P. Reichert and M.E. Borsuk, Does High Forecast
Uncertainty Preclude Effective Decision Support? Environmental Modelling & Software
20 (2005): 9911001; and L. Uusitalo, S. Kuikka and A. Romakkaniemi, Estimation
of Atlantic Salmon Smolt Carrying Capacity of Rivers Using Expert Knowledge,
ICES Journal of Marine Science 62 (2005): 708722.
9-36_CHIRCOP_F3.indd 35 4/12/2010 8:19:32 PM
36 Issues and Prospects
(QCA)
71
or Robust Decision Making (RDM)
72
that do not necessarily require
a detailed understanding of the causal mechanisms or conditional probabilities
along the chain. An oceans policy research program would benet from specic
case studies comparing and contrasting various methodological approaches to
dealing with the causality challenge under a single conceptual framework.
A second major challenge relates to choosing the proper scale of policy
analysis. It is quite possible to use this framework at scales ranging from the
household level
73
to much higher levels of aggregation (e.g., industry sectors), as
well as on different parts of the governance hierarchy. Obviously there has to
be some sensible way to choose the appropriate scale of the analysis and there
is guidance on what factors to consider.
74
Still, rigorous analyses using the IAD
framework are relatively rare in Canada
75
and there is a need to move forward
with specic analyses of oceans management, policy, or governance initiatives
to help develop oceans-oriented policy research capacity in Canada.
In summary, this integrated institutional framework can be applied at dif-
ferent levels of analysispolitical, implementation, and operationalin such a
way that stimulates thoughtful policy design, analyses, and monitoring of oceans
governance investments and initiatives in Canada and elsewhere. Taking a
multi-level perspective to policy design, implementation, and monitoring is nec-
essary if we are to understand the dynamics of adaptive management, develop
effective and efcient investments in governance and management systems and
policy initiatives, and account for the full range of direct and indirect benets
of the diverse services that coastal and marine systems provide Canadians.
71. For examples of environmentally-oriented QCA studies, see T. Heikkila,
Institutional Boundaries and Common-Pool Resource Management: A Comparative
Analysis of Water Management Programs in California, Journal of Policy Analysis and
Management 23 (2004): 97117; and T.K. Rudel, Meta-Analyses of Case Studies: A
Method for Studying Regional and Global Environmental Change, Global Environmental
Change 18 (2005): 1825.
72. For further information on RDM, see Groves and Lempert, 2007, and
Lempert et al., 2006, n. 25 above.
73. Working through a personal household example is a very useful exercise for
readers interested in taking the theory presented in this article and applying it in a
well-known setting brimming with formal and informal rules, diverse resources, and
potentially conicting value systems (depending on the number and age of people in
the household).
74. Ostrom, 2005, see n. 12 above; E. Ostrom, A Diagnostic Approach for
Going beyond Panaceas, Proceedings of the National Academy of Sciences 104 (2007):
1518115187.
75. There are notable exceptions, such as M. Sproule-Jones, Restoring the
Great Lakes: Institutional Analysis and Design, Coastal Management 27 (1999): 291316.
Other authors draw quite heavily on related concepts although they do not explic-
itly adopt an IAD approach to policy analysis (e.g., R. Plummer and J. Fitzgibbon,
Co-Management of Natural Resources: A Proposed Framework, Environmental
Management 33 (2004): 876885).
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