A: It doesn't. ...

Q: So, sort of the underlying problem that I'm thinking of behind that question is a situation where there is some sort of corporate entity that is more willing to bend environmental regulation or pollute at their will, if it is some how cost efficient for them to do so and where the power structure to prevent them from doing that is fairly weak. If they were to get in a collaborative process maybe for public relations purposes or something like that, then I mean it seems like the enforcement mechanisms for keeping them from breaking these regulations is very loose.

A: In the United States when we work in environmental justice disputes in the Southeast United States and for example, you have a poor community of color taking on a major Fortune one hundred corporation that's polluting disproportionately this neighborhood living near by, and they work out a good neighbor agreement in principle through an ad hoc negotiation of some sort. The neighbors are never convinced that this company is going to actually make the reductions in emissions that they promised or follow through over several years with the investment of mitigation or community compensation that they promised. The fact that there's a written agreement, that everybody had lawyers, that it's the United States, that there was state officials sitting at the table not withstanding there are inevitable concerns about implementation of these informally negotiated agreements. So what we have learned to do is to construct what we call "Nearly Self-Enforcing Agreements". I would say this would be as much on my concern in a brown fields mediation in a northeastern city of the United States as it is in Manila, when we go to Mendenow and were concerned about what their global mining interests are and aren't promising the Muslim minority on that island.

Nearly self-enforcing agreement, what makes an agreement nearly self-enforcing? First, that all the contingencies are spelled out in the agreement, so that everything doesn't come to a complete halt when step one by one side isn't followed precisely by step two from the second side because the conditions changed. "Oh and that wasn't spelled so I'm not suppose to do what I said I was going to do", and then everything falls apart. But, if I put down even in the unlikely circumstances such and such would happen, that step two still includes this, but if this happens then step two changes to that. The more contingencies you spell out in the agreement, the more likely the agreement is to be self-enforcing. Secondly, if I build monitoring into the agreement so that there's a neutral monitor who calls up the second side and says "It's your turn they did step one". You may not think they did step one, but I say they did step one and now it's your turn to do step two. You are building in neutral monitoring to the agreement to make it more likely that it's self-enforcing. And most importantly is you ask both sides to put up a stake that they'd sacrifice if they don't do what they promised. So if you say, "I'm going to build this thing in and I promise you it isn't going to reduce any of your neighbor's property values, just wait and see." Then they go, "I don't want you to build it. I'm too worried." You respond, "No, no, no, it's not going to hurt you." "Okay fine, buy me property value insurance for the next ten years. Guarantee me the value of my house goes up equal to all of the property after you build. If not, I sell my house and I dip into this insurance fund." "Well no wait a minute you don't really think that you could make me buy that insurance?" "Well you're telling me that you're never going to have to spend it. You're telling me not to worry, hold me harmless." "Well, will I get all my capital that I invested in the policy back at the end of the ten years?" "Yeah fine with interest. It's in a bank account. But I have no risk then." Nearly Self-Enforcing Agreement.

So we have learned in all context not to rely on regulatory enforcement as the sole guarantor of the commitments people make in negotiated agreements. But rather to design nearly self-enforcing agreements, and that's true here and other parts of the world. How you pull it off, what instrumentalities or institutional connections you lean on, is different in every circumstance. But if you take the idea of nearly self-enforcing agreements seriously, it produces a very different product.

Q: I just find it amazing that that could work in a context where the power differential would be so great and the regulatory magnet is so weak.

A: For example, we go to a poor island community where the national government has decided to give away certain rights to explore for minerals on this island. They didn't bother to consult the population and suddenly some corporation shows up from out of town with giant machinery to strip bear the place, looking for whatever it is that they claim now they have a contract to exploit and the community says no way. The community goes to some international body and demands an impact assessment be prepared. The government can't finesse it because it has too many other things at stake with this international body. At that moment, however unequal the power is between that national government, plus its ally in this international corporation, as compared to the island residents, it's maybe unequal, but if the government could do what it wanted there would be no negotiation.

Now there's going to be a negotiation because the government has decided that this group on the island has enough clout with its alliance, with the international agency, that it has to prepare the assessment and there's going to be a negotiation on whether the assessment was good enough. The assessment was prepared by the international corporation and it's submitted to the international agency. The international agency says to the island residents and their advocates, "Is this okay with you?" And they say, "Well, it doesn't forbid this thing and we don't want this thing." The government says, "That's not what this was about, this was about minimizing adverse environmental impacts. We don't have any environmental assessment law here on this island, but this international agency says this can be done in a way that is way more or less responsive to environmental concerns on the island. We'd like it to be more and if you guys would like to get some independent consultants to review this thing, then maybe you should do that." It's not about just turning this down, it's about producing the equivalent of the enforcement of an environmental impact assessment law in a place where one doesn't exist. As long as there is (there may be asymmetry), but as long as this national government doesn't feel that it can act with impunity and ignore everything, then there's an engagement.

Once there's an engagement, if there's a neutral process facilitating a negotiation, the fact that there are gaps in the regulatory system, the fact that there's political inequalities, I've never seen that, make it impossible to negotiate something. Remember we're trying to produce something better for both sides than no agreement. They should want this agreement to be implemented because the alternative is not as attractive to both sides, that's the point.

Q: If the no agreement alternative for the government or corporation is to act with impunity then that's what they'll do?

A: Then why would they have this conversation in the first place?