Natural resources that are not owned by anyone are open to be misused by everyone.
“For That Which Is Common To The Greatest Number Has The Least Care Bestowed Upon It. Every One Thinks Chiefly Of His Own, Hardly At All Of The Common Interest; And Only When He Is Himself Concerned As An Individual. For Besides Other Considerations, Everybody Is More Inclined To Neglect The Duty Which He Expects Another To Fulfil; As In Families Many Attendants Are Often Less Useful Than A Few.”
- Aristotle
The principles behind ‘The Tragedy of the Commons’ idea have been understood since classical times but it was economist Garrett Hardin who coined the actual term in 1968.
Six years later Hardin found a powerful illustration of his theory:
“[Satellite] pictures of northern Africa showed an irregular dark patch, 390 square miles in area. Ground-level investigation revealed a fenced area inside of which there was plenty of grass. Outside, the ground cover had been devastated. The explanation was simple. The fenced area was private property, subdivided into five portions. Each year the owners moved their animals to a new section. Fallow periods of four years gave the pastures time to recover from the grazing. They did so because the owners had an incentive to take care of their land. But outside the ranch, no one owned the land.”
Any natural resources – like pasture or big game – are liable to deteriorate in quality or quantity if they are overexploited. The Tragedy of the Commons is based on the idea that, in the absence of ownership rights (which incentivise good stewardship), a resource that is freely open to everyone will be misused. Motivated by self-interest a shepherd, hunter or fisherman will have every incentive to increase his flock, shoot an extra elephant or fish with tighter nets, but no incentive to limit his activities to the ‘carrying capacity’ of the natural resource. Many species have become extinct because scarcity accelerates ‘The Tragedy’. The gain to every individual hunter can actually increase in proportion to the rarity of his quarry.
Solving ‘The Tragedy’
There are two basic ways of solving the problem – privatisation or nationalisation.
Privatisation immediately resolves the ownership problem but it is often unpopular. Many voters will object to public resources becoming private property. Unless sale of the resources raises a great deal of revenue the public can easily feel cheated.
Under nationalisation the state will take control of an area of land or stretch of sea. The state will then allocate grazing or fishing rights to a limited number of users. Implementing and policing a rights-of-access policy can become very expensive for the taxpayer. Politicians – who have to face re-election every few years – can also be tempted to grant more liberal access rights than long-term resource sustainability might demand.
Internationalising ‘The Tragedy’
The most difficult example of ‘The Tragedy’ concerns the earth’s atmosphere. Individual governments – particularly those of poorer nations that are anxious to grow their economies - have much more incentive to be permissive towards polluting industries than to reduce their share of world pollution. A 20% reduction in an individual nation’s externalities might make only a small dent in world pollution levels but it could be devastating to an area’s economy. Solving global environmental problems like the depletion of the ozone layer and acid rain depend, therefore, on international co-operation. More controversially they might also require rich polluter nations to compensate ‘poor wannabe polluter nations’.
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