Reduction in size and increased specialization of central governments

The reduction in the responsibilities of state governments is also associated with a reduction in taxation to support state governments (or at least a reduction in the rate of growth of taxation). Moreover, a larger share of the tax revenues of the central governments is returned to local governments that actually provide services. There are several

5 See Wolf (1998) for evidence for England, Australia, and New Zealand. Some countries in Latin American, notably Nicaragua, are going through similar transformations.

government agencies now attempting to subcontract provision of key services (waste management and education) to private companies, thus significantly reducing the size of the public sector. Governments are attempting to concentrate on the areas that they do best, such as provision of public goods such as national defense, support for basic research, and monitoring and enforcement of environmental protection and economic competitiveness.

The declining role of central governments and the transfer of responsibilities to the private and nongovernmental sectors may lead to increased efficiency but may also lead to gaps in unsatisfied needs, and new arrangements need to be established to fill these gaps. In some cases, the reduced role of the central governments may negatively affect the poor, at least in the short run. On the other hand, the realignment of responsibilities will provide more resource mobility and flexible institutional infrastructure that will enable faster adoption of biotechnology innovations and better conservation of biodiversity.

Devolution changes the scale at which transfers are made and may create conflicts between local needs and the provision of goods and services that are national or global in scope. Biodiversity conservation clearly benefits a wide group but requires cost bearing at a local level, so there is a need for some sort of mechanism to address this. In terms of agricultural biodiversity, the relevant scale for management is often broader than the local level, which also creates some coordination problems. Thus, devolution may have opposing effects on the management of biodiversity, and increasing flexibility in management at the local level may be positive but can be offset by a decrease in the potential for coordination at higher levels.

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