Reflections on the "Tragedy of the Commons"

Wed, 2010-11-17 18:52 -- wprothero

I've been using Google Alerts to send me an email link every time a new mention of "Tragedy of the Commons" is found in a blog, web story, or discussion posting. This has taken me into some very interesting territory. Here are some of the links I found most interesting and pertinent.

In case you don't know what the "Tragedy of the Commons" is, the term was coined by Garrett Hardin in 1968, who observed that when a common resource is shared among multiple users, and behaving in good faith according to their rational self-interest, the resource will ultimately become depleted. 

When I think of the "Tragedy of the Commons," I think of the global fisheries, groundwater supplies, forests, the atmosphere, etc. We all have an interest in the long term viability of these resources, but to varying degrees, they are accessed by a number of individual and commercial interests. Interestingly, many of the links take me to discussions of economics and how to mitigate against the decline of the shared resource. This effect has been applied to the internet, taxes, and various kinds of open source and other endeavors.

In my "Tragedy of the Commons Fishing Simulation Game," I provide 4 different management strategies, all assuming the resource will be controlled by some government body. But, the most intriguing discussions that I've found through my Google links center around how to avoid the situation altogether. The assertion is that private ownership will lead to better outcomes than a resource run by "big government," which is asserted to have too much power already. The advantage of private ownership, say these proponents, is that privately owned entities will take better care of the resource and have an interest in its health over the long term.

This has gotten me thinking. How has this worked in the past? I think of the recent US banking crisis, fed by corporate inventiveness at a grand scale. Here the "commons" would be the pooled resources of all the people who have invested in the financial system (stocks, bonds, homes, etc). The value of these assets dropped significantly, and our taxes were used to keep the system going through bail-outs and stimulus investments. Strike 1 for corporate responsibility.

I remember the large numbers of sometimes hostile corporate takeovers of the late 1990's. For example, Pacific Lumber, which was acquired in 1986 by MAXXAM. MAXXAM decided to double the cutting rate of the redwoods, threatening the Headwaters forest and stimulating public protests for 11 years. It may be that the need to pay back the bonds for the takeover required additional profit, hence more cutting. In Oregon, over-harvesting led to a near disappearance of old growth forests, mill closures and lack of stability/unemployment for many of those employed in the forest industry. The issue of forest management is still controversial. My main point is that large corporations have the goal of maximizing their profit and a focus on maximizing short term profit often trumps long term profit. This goal may be incompatible with sustainable stewardship of resources that they own. These resources may also provide valuable public services. Examples are their role in providing clean water for fisheries (salmon) and groundwater, removal of CO2 from the atmosphere, wildlife habitat, etc. These services are often not directly valued by accountants, except for the grief they can cause when public outrage drives new, sometimes onerous regulations.

What about resource ownership by individuals or small companies? This certainly reduces the psychic distance between the resource and the management, and might encourage better stewardship. A similar strategy for managing the fisheries is "catch shares." The total catch is determined using the best science, and owners of the shares fish until they have caught their entitled share. This still involves some kind of governance, accountability and enforcement.

I have very little confidence that corporate America, without regulatory limits, will act in interests compatible with the rest of us. One thing seems reasonable, if not certain: if all of the stakeholders are involved in the management of a resource, good science is used to inform the management strategies, transparency is enforced, and the health of the resource is carefully monitored and fed back into the management strategy, the chance of long term sustainability is about the best we're going to get.