Tragedy of the Commons
The tragedy of the commons describes the depletion of a shared resource by individuals acting independently and in their own interest, even though their combined actions are contrary to the best interest of all. The concept, popularised by Garrett Hardin, illustrates the failure of unregulated access to common resources.
The Problem
In a common-pool resource, such as a pasture open to all, a fishery, or an aquifer, the resource is rival, meaning that one person's use reduces the amount available to others, but it is not excludable, meaning that it is difficult to prevent access. Each user has an incentive to use as much as possible, since the benefits accrue to the individual while the costs of depletion are shared.
The result is overuse and depletion, beyond the level that would be optimal for the users as a whole. Each individual, acting rationally in the short run, contributes to a collective outcome that is worse for everyone in the long run.
Solutions
Several approaches address the problem. Privatisation assigns property rights, internalising the externality and aligning private and social incentives. Regulation limits access or use, through quotas, licences, or restrictions on effort. Collective governance, in which users devise and enforce rules for managing the resource, can be effective where conditions allow.
Elinor Ostrom's work documented the conditions under which communities successfully manage common resources, including clear boundaries, rules adapted to local conditions, participation in rule-making, monitoring, and graduated sanctions. Her analysis challenged the view that only privatisation or state control can avoid the tragedy.
Applications
The tragedy of the commons applies to a wide range of resources, including fisheries, forests, water, and the atmosphere. The depletion of fish stocks, the degradation of grazing land, and the accumulation of greenhouse gases are examples of the failure to manage shared resources.
The framework informs the design of institutions for resource management, including international agreements, property rights regimes, and community-based arrangements. The choice of approach depends on the characteristics of the resource, the number and characteristics of the users, and the institutional context.
Global Commons
Global commons, such as the atmosphere and the oceans, present particular challenges, since no single authority can enforce rules and the users are sovereign states. International cooperation is required, and the design of agreements must address the incentives for free riding and the distribution of costs and benefits.
The analysis of global commons informs the design of climate agreements and of other international arrangements for managing shared resources. The challenges of enforcement and of coordination among sovereign states are central to the design and to the effectiveness of these arrangements.
Common-Pool Resources
Common-pool resources are characterised by rivalry in consumption and difficulty of exclusion. They differ from public goods, which are non-rival, and from private goods, which are excludable. The combination of rivalry and non-excludability creates the incentive for overuse that is the essence of the tragedy.
Examples include fisheries, groundwater basins, grazing land, and forests. The characteristics of the resource, including its renewability and the feasibility of exclusion, determine the severity of the problem and the appropriate response.
Ostrom's Design Principles
Elinor Ostrom identified design principles that characterise successful institutions for managing common-pool resources. These include clearly defined boundaries, congruence between rules and local conditions, participation of users in rule-making, monitoring, graduated sanctions, and mechanisms for conflict resolution.
The principles were derived from the study of diverse cases, including irrigation systems, forests, and fisheries, and they challenged the view that only privatisation or state control can avoid the tragedy. The analysis emphasises the importance of local knowledge and of institutions adapted to context.
Privatisation and Regulation
Privatisation, through the assignment of property rights, internalises the externality and aligns private and social incentives. Where rights are well-defined, enforceable, and transferable, owners have an incentive to manage the resource sustainably.
Regulation, through limits on access or use, addresses the problem where privatisation is infeasible. The design of regulation must contend with information problems and with the political economy of enforcement, and its effectiveness depends on the capacity of the regulatory authority.
Climate as a Global Commons
The atmosphere is a global commons, and the accumulation of greenhouse gases is a tragedy of the commons on a global scale. The problem is compounded by the sovereignty of states, the difficulty of enforcement, and the distribution of costs and benefits.
International agreements, including the Paris Agreement, seek to coordinate action, and the design of these agreements reflects the challenges of the commons. The analysis of the tragedy of the commons informs the design of climate policy and the assessment of the prospects for international cooperation.