Economía

Opportunity in the midst of chaos: The story behind The Tragedy of the Commons

All over the world, the newspapers announce almost weekly a story about the threatened destruction of a valuable natural resource. In June of 1989, for example, a New York Times article focused on the problem of overfishing in the Georges Bank about 150 miles off the New England coast.[1] The population of fish is now only a quarter of what it was during the 1960s. Although everyone knows what the problem is, those concerned cannot agree towards a solution. The main problem in this case -and in many others- is how best to limit the use of natural resources so as to ensure their long-term economic viability. Some people recommend that the state control most natural resources to prevent their destruction and overuse; others recommend that privatizing those resources will solve the problem. The reality is not that simple; the logic of the tragedy of the commons depends on a set of assumptions about human motivation, about the rules of governing the use of the commons, and about the character of the common resource.[2] According to Elinor Ostrom, “neither the state nor the market is uniformly successful in enabling individuals to sustain long-term, productive use of natural resource systems”. This means that there isn’t just “one way” to solve problems concerning common resources. Aristotle observed that “what is common to the greatest number has the least care bestowed upon it. Everyone thinks chiefly of his own, hardly at all of the common interest”.[3]  The purpose of this paper is to present what the tragedy of the commons is and the approach of the study of self-governance; also, to give an overview of the commons in modern life.

The Tragedy of the Commons

Professor Garret Hardin developed this idea in a well-known essay “The Tragedy of the Commons” (1968). He argued that commonly owned and freely accessible resources tend to become depleted when or if the population exploiting the resources is large enough; for example, a common grazing area that is made available for use to numerous ranchers will be overgrazed and its replenishment neglected. [4] The tragedy of the commons occurs mainly because people pursue their goals with the means available to them; this idea has been most frequently and fruitfully applied to environmental concerns. Communal resources are available to everyone, so everyone has an economic incentive to use them, but no one has an equal incentive to husband the resources. Public realms, such as the atmosphere or ocean waters, have seen considerable overuse at the hands of various private parties. In democratic societies, the disposition of resources depends on the degree of concern for the resources or for the uses to which they can be put. There have been various suggestions to explain why the “commons remorselessly generates tragedy”. One frequently mentioned reason is human greed: beings will always take advantage of free resources beyond what would be wise and prudent.[5] Yet, it is not necessary to posit greed or self-interest in order to understand the tragedy of the commons. It’s merely to understand that people tend to be dedicated to their various projects. As James E. Chesher puts it: “If an artist, scientist, merchant, or farmer is given the authority to make use of materials that supposedly all are entitled to use, it will by no means be necessary for such a person to be needlessly and even recklessly eager to gain wealth or other benefits in order to exploit them to the fullest possible extent”.[6]

What the real tragedy is about

The problem of the commons is not that people use the resources to which they have access, but that within that realm, there is no appropriate regulatory or coordinating mechanism that enables appropriate husbanding or maintenance of those resources. Nevertheless, there is a paradox concerning that individually rational strategies lead to collectively irrational outcomes. This premise seems to challenge a fundamental faith that rational human beings can achieve rational results. But, can we generalize over human behavior concerning collective action? The truth is that not only humans, but every-day situations are subject to unpredictable verdicts. Human action is an amalgam of different choices and decisions that lead to very different results; therefore, there can’t be a generalized rule or a unique way to solve the problems concerning common pool resources, for example.

The tragedy of the Commons, like the prisoner’s dilemma and the logic of collective action, are closely related concepts in the models that have defined the accepted way of viewing many problems that individuals face when attempting to achieve collective benefits. The common denominator in these situations is free riding. Whenever a person cannot be excluded from the benefits that others provide, each person has an incentive not to contribute to the joint effort, but to free-ride on the efforts of others. The free-rider problem leads to a less than optimal level of provision of the collective benefit. Garret Hardin’s Tragedy of the Commons is intended to be an understandable problem and is framed in terms of the rationality of the agents and a more or less utilitarian assessment of the overall good. To mention an example, each herdsman asks him or herself: ʺWhat is the utility to me of adding one more animal to my herd? ʺ Under the assumption that the pasture provided by the village of the Commons is free, and each additional animal can be obtained at a cost that, together with labor and minor supply costs, is well below what the animal can later be sold for, it is clear that it is rational for the herdsman to add an animal. Afterwards, this reasoning is duplicated by others herdsman, eventually making all the herdsmen far worse off than they would be with relatively small herds. According to Tibor R. Machan in his book The Commons: Its Tragedies and other Follies (Ibid, p. 35), it is clear that for Hardin, the tragedy consists of individuals pursuing what is rational for each, only to have their separate and collective well-being greatly diminished by the fact of everyone’s  pursuing this ʺrationalʺ strategy. Following this train of thought, the Tragedy of the Commons appears to be just an instance of the Prisoners Dilemma.

Traditional solutions to the tragedy

Generally, there are two different solutions to the Tragedy of the Commons. One is regulating, and the other is privatizing. The first option typically leads to state ownership, while the second tends to equalize mixed private-public condition that gives rise to the dilemma. However, many authors propose a third way which consists in the possibility that the herdsmen themselves will begin to cooperate. This could be trough agreements or arrangements grounded in clear, well-established property rights. Personally, I believe that just as some people attribute greed to human actions, cooperation is an almost inherent force that drives human beings to a better state. Although the benefits obtained from this scenario might not be maximized, they are optimal in the sense that they give the possibility of cooperation among rational agents, especially among those who regard themselves in some sense as ʺequalʺ human beings. In reference with public and private solutions, Ostrom again says:

One set of advocates presumes that a central authority must assume continuing responsibility to make unitary decisions for a particular resource. The other presumes that a central authority should parcel out ownership rights to the resource and then allow individuals to pursue their own self-interests within a set of well-defined property rights.

Later in the same paragraph, the Nobel Laureate in Economic Sciences replies: ʺInstead of there being a single solution to a single problem, I argue that many solutions exist to cope with many different problems.ʺ Ostrom argues that institutions are rarely either private or public – ʺthe marketʺ or ʺthe stateʺ. Many successful CPR institutions are rich mixtures of ʺprivate-likeʺ and ʺpublic-likeʺ institutions. Users of Common Pool Resources (a natural or man-made resource system that is sufficiently large as to make it costly to exclude potential beneficiaries from obtaining benefits from its use), have developed a wide diversity in their agreements, which are enforced by many mechanisms. Some of them are external government agencies, members of the user’s community who have been employed as monitors and enforcers, and the users themselves as their own monitors. A good example of this behavior is presented by Donald R. Leal concerning a fishery near Valensa, Brazil.

Example in Valensa, Brazil

The estuary fishery near Valensa, illustrates how fishing communities can solve problems, yet the solution can break down when governments ignore the forces that led to success. The mixed-species fishery began nearly a century ago. At first, notes John Cordell (1972), Valensa fishers fought over access to prime fishing spots. In addition, violence would often erupt when one type of gear became entangled with another, as when mobile nets run into stationary nets. Over time, local fishers came up with two harvesting arrangements to resolve these problems. To prevent one gear type from hampering another, they divided the estuary into different fishing zones, with only one gear allowed in each zone. They assigned fishing spots by drawing lots to determine the order in which each fisher could use a particular spot. After decades during which this arrangement operated successfully, the Brazilian government decided to “modernize” the Valensa fishery. The government made new nylon nets available to anyone who qualified for a bank loan arranged by the government. But local fishers did not qualify for the loan and did not have enough capital to purchase the nets on their own. A few wealthy individuals around Valensa did qualify for the loans, and purchased the nylon nets. They hired men who had never fished the estuary before to fish using the nylon nets. The local fishers’ management system crumbled as old and new fishers fought over fishing spots, and eventually the fishery was overharvested and, ultimately, abandoned.

Valensa provides an example of a self-governed common-property agreement in which the rules have been devised and modified by the participants themselves and also are monitored and enforced by them. Evidence from the real world suggests that the tragedy of the commons is not universal. In many places, local fishers manage fishing grounds, usually without much governmental interference, and they prevent overfishing. For the most part, these arrangements are “community-based, spontaneously developed and informally organized” (Jentoft and Kristoffersen 1989, 355). This type of CPRs institutional agreements have been well documented for many farmer-managed irrigation systems, communal forests, inshore fisheries, and grazing and hunting territories.

There are, however, assertions against the imposition of private property rights such as how the attributes of the goods involved will be measured, who will pay for the costs of excluding non-owners from access, and how conflicts over rights will be adjudicated. After all, all theories have limits, and as I mentioned at the beginning of this paper, rules used in one physical environment with certain kind of people might work, while there may be vastly different results if used in a different environment.

About self-governance and cooperation

The inevitable question to ask in the midst of the previous information will be how a group of independent people can organize and govern themselves to obtain join benefits when there are incentives to free ride or act opportunistically? After researching on many different examples where self-governed CPRs took place (Nova Scotia’s Port Lameron Harbor, Norway’s Lofoten Fishery, grazing and forest institutions in Switzerland and Japan, and irrigation systems in Spain and the Philippines), I think is correct to conclude that this self-organization movements have aroused through trial and error. In the Theory of the Firm addressed by Ostrom, an entrepreneur recognizes an opportunity to increase the return that can be achieved when individuals are potentially involved in an interdependent, voluntary relationship. Formal and interpersonal ways of cooperation are actually integral parts of civilized life. Either by formal contracts, or non-formalized cooperative behaviors, we are better off. Sheldon Richman in an issue of The Freeman, states that: ʺ…I would guess that “social cooperation” (or “human cooperation”) is the second most-used phrase in Ludwig Von Misesʾs Human Action. First is probably “division of labor,” which is another way of saying “social cooperation.” Human Action is about social cooperation or it isn’t about anything at all. The first matter Mises takes up after his opening disquisition on the nature of action itself is … cooperation. He begins: ʽSociety is concerted action, cooperation…. It substitutes collaboration for the – at least conceivable – isolated life of individuals’ʺ

According to Ostrom, this table shows the basic principles illustrated by long-enduring CPR institutions:

CONDITIONS EXHIBITED BY DURABLE CPR INSTITUTIONS:

1. Clearly defined boundaries: Individuals or households who have rights to withdraw resource units from the CPR must be clearly defined, as must the boundaries of the CPR itself.

2. Congruence between rules and local condition: Rules restricting time, place, technology, and/or quantity of resource units are related to local conditions. There should be a small set of simple rules related to the access and resource use patterns agreed upon by the appropriators, rules easy to learn, remember, use and transmit.*

3. Collective-choice arrangements: Most individuals affected by the operational rules can participate in modifying these operational rules. There is a need to remain adaptable, to be able to modify the rules with regard to membership, access to and use of the CPR and to remain responsive to rapid exogenous changes. *

4. Monitoring: Monitors, who actively audit CPR conditions and appropriator behaviors, are accountable to the appropriators or are the appropriators. The enforcement of the rules is shared by all appropriators sometimes assisted by “official” observers and enforcers. *

5. Graduated sanctions: Appropriators who violate operational rules are likely to be assessed graduated sanctions (depending on the seriousness and context of the offense) by other appropriators, by officials accountable to these appropriators, or by both.

6. Conflict-resolution mechanisms: Appropriators and their officials have rapid access to low-cost local arenas to resolve conflicts among appropriators or between appropriators and officials. There is also the need to adapt the rules to changing conditions and apply different rules to different problems and scales of problems. *

7. Minimal recognition of rights to organize: The rights of appropriators to devise their own institutions are not challenged by external governmental authorities. Appropriators must be able to legally sustain their ownership of the CPR.* Furthermore, their organization must be perceived as legitimate by the larger set of organizations in which it is nested. *

8. Nested enterprises: For CPRs that are part of a larger system, the appropriation, provision, monitoring, enforcement, conflict resolution, and governance activities are organized in multiple layers of nested enterprises

* See Ostrom, 1992

Many times, however, the costs of exploring and initializing CPR management options are high. Without a supportive procedure, crafting and exploring alternatives will prove too risky for small groups of individuals. De Young and Kaplan suggest another option called ʺadaptive muddling.ʺ People are empowered to apply local or personal knowledge to a situation creating a variety of potential solutions. According to these authors, it is just such enhanced and diverse creativity that is needed. Furthermore, as conceived, adaptive muddling contains a stability component that not only reduces the costs of failure for individuals but also makes highly improbable any unchecked and disorienting change and the widespread implementation of untested solutions.

According to Richard L. Stoup and Jane S. Shaw, private property rights and trade harness the narrow self interests of individuals towards goals desired by all who bear the costs. When private property rights are well-defined, well-protected, and transferable, all those in the economy tend to benefit for several reasons:

–       The person who wants to use a product or resource must pay for it by outbidding others who want it. Thus, the creation of value is rewarded by those who, in their own judgment, will benefit.

–       The cost of degrading a resource is paid by the one who degrades it.

–       A person who degrades someone else’s property can be sued by the owner to stop the harm and to collect for damages already done. Both parties have an incentive to avoid or stop this situation. This system, with each paying the cost of what he or she does, provides incentives to conserve and to protect natural resources and to avoid environmental damage.

–       The most important contrast between governmental and private control is the difference in the way each affects the future use of resources. Property rights provide long-term incentives for maximizing the value of what it owned.

–       The diversification risk reduces the exposure of individuals in the society to dangers caused by inevitable human mistakes. In the private sector, this risks are diversified because, instead of all the resources in society being committed to a single, agree-upon course of action, there are many diverse ideas, all of which may be acted upon at the same time.

 

Conclusions

Again, it is important to mention that not all the commons can be privatized. Air and large bodies of water are unlikely to be privately owned. Under these situations, many examples have proved that cooperation and self-governance helps creating new grounds for the administration of large, common resources. After writing this paper, I can now say that the so called “Tragedy of the Commons” is not a tragedy after all. Real life examples all over the world have proven that organized individuals, who pursue a better state of life, can rearrange and manage this “tragedy” giving it a glimpse of something different: an opportunity. Further study on this proves that human beings are not selfish individuals who only care about what they do and what they have. We are more than that. We can be cooperative people in search of solutions to situations that appear to be complicated. This shows that individuals are and can be creative, innovative and courageous. This also proves that there are many people who dare to look for answers instead of waiting for an institution, or a government to solve them. If we have the freedom to make our own decisions and start new projects in favor of what is proper for us as individuals and human beings, then we have to make use of that liberty in creative ways that will advance and foster the human life. Charles de Gaulle once said: “History does not teach fatalism. There are moments when the will of a handful of free men breaks through determinism and opens up new roads.” After all, if you want to be incrementally better: be competitive. And if you want to be exponentially better: Be cooperative”. The Tragedy of the Commons is not a tragedy anymore; it’s an opportunity to out find that, through cooperation, human beings achieve better results than through coercive and corrupt systems.


 

[1] Ostrom, E. (1990). Governing the Commons: The evolution of institutions for collective action. Cambridge

[2] Ostrom, Dietz, Dolsak, Stern, Stonich (2002). The Drama of the Commons. National Acadamy Press.

[3] Aristotle. (Politics, Book II, Chapter 3).

[4] Hardin,G. (1968). The Tragedy of the Commons. Science. PP. 1243-48

[5] Machan,T. (2001). The Commons: Its Tragedies and other Follies. Hoover Institution Press.

[6] Chesher, J. (1999) The Business of Commerce: Examining an Honorable Profession. Hoover Institute Press

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