Trust, Cooperation, and Implementation of Sustainability Programs: The Case of Local Agenda 21

Abstract

This paper provides evidence of the role of trust in ensuring desirable economic outcomes. We examine the implementation of Local Agenda 21, a regional sustainability initiative that requires the coordination of diverse decision-makers, in a sample of 67 developing and industrialized countries. We use a game theoretic framework to motivate our empirical study of the number of Local Agenda 21 programs implemented across countries. We find that, once a threshold level of trust is reached, higher levels of aggregate trust are associated with more communities adopting a program that requires coordination of multiple stakeholders. We also find that more programs are adopted when the country's institutional structure may reduce the cost of coordination and when the benefits of the program, measured by environmental quality, would be expected to be greater.