Easter Island, located in the middle of the Pacific Ocean, is famous for its giant stone statues. However, what is less well-known is that the island was once covered with a lush palm forest. Over 800 years ago, the Rapa Nui people arrived and settled on the island. Gradually, the population grew, and so did their demand for resources. 

Settlers began to cut down trees to create farmland, clear land for homes, and use timber to build fishing boats. As the deforestation continued, the island’s ecosystem was irreversibly damaged. Ultimately, the depletion of natural resources is often viewed as the primary factor behind the societal collapse on Easter Island. This story serves as a poignant reminder of the dangers of overexploiting common resources, a concept now known as the tragedy of the commons.

The tragedy of the commons is a concept that describes the depletion or degradation of shared resources that are not owned or managed by any individual or group. It occurs when multiple individuals, each pursuing their own ends, overuse or exploit a shared resource to the point of depletion, resulting in harm to all users of that resource in the long run.

How does the tragedy of the commons work?

In 1968, Garrett Hardin published a seminal article, “The Tragedy of the Commons” (Science, Vol. 162, Issue 3859), describing this phenomenon. To analyze how the tragedy of the commons works in practice, let’s consider some examples.

Private land vs the commons

Imagine a fenced pasture that is maintained by private owners and compare it to a neighboring open area that is used by nomadic herdsmen.

The fenced pasture is owned by private individuals who have a vested interest in maintaining the health of the land, as it directly affects their livelihoods. These individuals are incentivized to take care of the pasture, limit the number of animals grazing on it, and allow the land to rest periodically so that it can regenerate.

In contrast, the neighboring open area is available for use by anyone, including nomadic herdsmen. These herdsmen have no ownership stake in the land and, therefore, no incentive to limit the number of animals grazing on it or to allow the land to rest. As a result, the open area becomes overgrazed, leading to soil erosion, loss of biodiversity, and other negative consequences.

The scenario described stems from a real-life example. When satellite images of the earth emerged in 1974, a strange dark patch was visible in northern Africa. It covered an area of 390 square miles. Upon further investigation, a fenced area was discovered within this region of depleted land. Notably, the area inside the fences had an abundance of grass, while everywhere outside of it appeared severely damaged.

This illustrates the importance of property rights and incentives in protecting and managing shared resources. When individuals have a stake in the health of a resource, they are more likely to take care of it and use it sustainably. On the other hand, when resources are open access and available to anyone, there is a risk of overuse and degradation.

The example of roads

The tragedy of the commons can also be viewed in relation to public roads. Indeed, public roads that do not charge tolls are an example of a government-created tragedy of the commons. If roads were privately owned, their owners would charge tolls, and people would consider the toll when deciding whether to use them. 

Private road owners would also engage in peak-load pricing, charging higher prices during peak demand and lower prices at other times. However, since governments own and finance roads with tax dollars, they normally do not charge tolls, making roads a commons. This often leads to congestion when people use the roads excessively without considering costs.

The tragedy of the oceans

The tragedy of the commons is also applicable to the oceans. Global fish populations have declined dramatically since the advent of fishing vessels due to the belief that the ocean’s fish were fair game for anyone, resulting in overfishing.

Overfishing can drive species toward extinction. For instance, in 2018, scientists monitoring the health of the Pacific bluefin tuna estimated that its population has plummeted to around three percent of its original number due to overfishing, posing a threat not just to the species itself but also to the entire marine ecosystem.

In the past 50 years or so, governments have increasingly claimed exclusive rights for their citizens to fish up to 200 miles from shore, but this did not solve the issue. Instead, it merely created a commons within each nation’s territorial waters.

Recognizing that the issue of overfishing persisted, most governments subsequently introduced further measures, such as restricting fishing to a set number of days or establishing a fixed aggregate catch. 

In both instances, government policy leads to excessive investment in fishing boats and equipment as individual fishermen are incentivized to compete with each other to catch fish as quickly as possible.

Solutions to the tragedy of the commons

One approach to solving the tragedy of the commons is to assign property rights to the common resource. This allows individual owners to control its use and generate income from it, thus having a clear incentive to ensure its sustainability. Privatization, where the resource is sold or leased to private entities, or community-based management, where local communities are able to regulate the use of the resource, are both possible approaches.

For the issue of overfishing, if governments allowed ownership of fish in specific areas and enforced the right to sue for encroachment, fishermen would be incentivized to fish responsibly. Norway, for instance, has a thriving aquaculture industry, with most of its privately-owned salmon farms located in the open ocean.

Another approach is to use market-based instruments, such as taxes, fees, or tradable permits, to internalize the external costs of resource use and create incentives for conservation. By pricing the external costs of resource use, these instruments would create incentives for individuals to conserve the resource and promote economic efficiency. 

For example, a carbon tax can be used to price the emissions of greenhouse gasses and encourage the shift to low-carbon technologies and practices. Similarly, a water pricing system can be used to allocate water resources more efficiently and encourage conservation.

Elinor Ostrom: a key figure in the search for solutions

Some of the most notable solutions in addressing the tragedy of the commons are the work of Elinor Ostrom (1933-2012). Ostrom was an American political scientist and economist who was awarded the Nobel Memorial Prize in Economic Sciences in 2009 for her research on economic governance, and specifically her work on the management of common-pool resources.

Ostrom’s key contribution to the field was her development of a framework for analyzing and designing institutions that can effectively manage common-pool resources. She identified eight design principles for successful self-governance of common-pool resources, including clear boundaries, proportional equivalence between benefits and costs, collective choice arrangements, monitoring, graduated sanctions, conflict resolution mechanisms, recognition of the rights of local users to organize, and nested enterprises. 

She demonstrated that when users of a common-pool resource are involved in its management, they are more likely to develop sustainable practices that balance short-term individual gains with long-term collective benefits.

Elinor Ostrom used the case of the common-pool resource of irrigation systems in the villages of Nepal in her research to demonstrate that users of a common-pool resource are more likely to develop sustainable practices when involved in its management. 

She found that the traditional irrigation systems in the Nepalese villages had been collectively managed by the farmers for centuries, and that these farmers had developed a set of rules and norms that governed the use of the irrigation system and allocated water among themselves. 

In contrast, when the government intervened and took over the management of the irrigation system, it failed. The government implemented a top-down approach that did not take into account the local knowledge and customs. The farmers were not consulted in the decision-making process and did not have a say in managing the irrigation system. As a result, the system deteriorated, and conflicts arose.

Ostrom’s research on the Nepalese irrigation system demonstrated that when users of a common-pool resource are involved in its management, they are more likely to develop sustainable practices that balance short-term individual gains with long-term collective benefits.

Ostrom’s ideas have had a significant impact on fields beyond economics, including environmental studies, political science, and sociology. Her work has emphasized the importance of bottom-up, community-led solutions to problems of resource management, and challenged the assumption that centralized control is always the best approach. Ostrom’s work continues to be relevant today, as societies around the world grapple with issues related to climate change, biodiversity loss, and sustainable development.

How should resources be managed?

The tragedy of the commons raises important questions about the role of government in environmental management. While some argue that the government should play a central role in regulating resource use and protecting the environment, others argue that the government is ineffective at finding optimal solutions and prone to corruption and capture by special interests. This has led to calls for decentralized and participatory approaches to environmental governance involving local communities, civil society organizations, and other stakeholders in decision-making processes.

Ultimately, in order to address the tragedy of the commons, property rights need to be clearly defined and enforceable. It would also be beneficial to implement market-based tools to ensure sustainable practice. The natural environment and precious resources are simply too important and complex to be centrally governed through ineffective and often counterproductive one-size-fits-all measures.

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