Do governance platforms achieve the aims of the platform sponsor? Principal-agent tension in environmental governance reforms

Abstract

State and federal governments use governance platforms to achieve central policy goals through distributed action at the local level. For example, California’s 2014 Sustainable Groundwater Management Act (SGMA) mandates local policy actors to work together to create new groundwater management institutions and plans. We argue that governance platforms entail a principal-agent problem where local decisions may deviate from central goals. We apply this argument to SGMA implementation, where local plans may respond more to local political economic conditions rather than address the groundwater problems prioritized by the state. Using a Structured Topic Model (STM) to analyze the content of 117 basin management plans, we regress each plan’s focus on core management reform priorities on local socio-economic and social-ecological indicators expected to shape how different communities respond to state requirements. Our results suggest that the focus of local plans diverges from problem conditions on issues like environmental justice and drinking water quality. This highlights how principal-agent logics of divergent preferences and information asymmetry can affect the design and implementation of governance platforms.