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Despite national legislation and substantial donor investments, watershed degradation continues to threaten the sustained economic development and social welfare of millions of citizens in the developing world. Past efforts have largely concentrated on the physical rather than institutional aspects of watersheds, and have often relied on external incentives to coerce or persuade individuals to adopt conservation practices. In contrast to this conventional "physical" perspective, watersheds can be considered as sets of vested interests (and social relations) within a physically defined space. In essence, watersheds are physically defined subsets of rural society. Actors with vested interests within watersheds are interdependent because of water flow across political boundaries. From this perspective, the achievement of watershed management is a question of social relations, and cooperation between individual actors. Though there is growing realization for an expanded role of local, cooperative institutions in watershed management, theories on how such institutions might be identified, evolve or be promoted are limited. Toward this end, this paper examines some of the theoretical aspects of landholder cooperation for watershed management: the socio-political setting of upland watersheds; the physical attributes of watersheds influencing cooperation; the nature of externalities and incentives in watersheds; and the economic and socio-cultural factors affecting the emergence of collective action units. The processes by which collective action groups actually form are also reviewed. The paper concludes with a synthesis of the prospects for landholder cooperation approaches, the appropriate role of policy and a proposed process for promoting such cooperation.


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