Can Collective Action Institutions Outperform the State?

ABSTRACT A core literature in the field of public policy seeks to understand whether decentralized collective action institutions will emerge to provide public goods. While some studies examine how they perform relative to public institutions, they fail to account for the possibility of public institutions self‐selecting into the most challenging contexts. If they do, finding that public institutions perform worse could reflect the greater challenge rather than differences in knowledge, skill, or motivation. We examine measures of performance in remediating polluted water discharges from abandoned mines, a task sometimes done by the state government and sometimes by nonprofit watershed associations. Accounting for self‐selection, we find that watershed associations are at least as effective as the state across a variety of outcomes measuring effectiveness and cost‐effectiveness. Moreover, associations better maintain their effectiveness over time. The findings suggest a role for sustained public investment in collective action institutions when providing public goods and services in complex and dynamic policy settings.