Tragedy of The Commons – Learn Liberty

November 28, 2019

The tragedy of the commons is a concern among
biologists and social scientists alike. I’d rather refer to this as the problem of open-access
resources. In short, the tragedy of the commons occurs because each user receives direct benefit
of using the resource but only bears a fraction of the cost of its exploitation. So examples abound. I mean, it could be African
elephants that are near extinction. It could be Amazon Rainforest deforestation. It could
be overfishing of many of the fisheries worldwide. It could be overfishing in the pond, say,
right here. The idea behind this has been around for many
years, but Garret Hardin in his 1968 piece in Science was the first to bring this to
the forefront about the time that the environmental movement began planning its first Earth Day.
In Garret Hardin’s example, he presents us with an open-access pasture. Anyone who
wants to can bring their cattle to graze. Each rancher’s goal is to maximize his or
her private benefit. Every rancher has the incentive to bring more and more cattle to
the pasture because they receive the direct benefit of grazing their cattle there. Unfortunately,
they only bear a fraction of the cost of the over-exploited pasture, so they’re going
to continue to add cow after cow until the pasture is overgrazed and destroyed and no
longer usable as pastureland. In other words, their individual incentive
invites overall ruin, for even though they recognize that the pasture’s being exploited,
somebody else will bring a cow if they don’t. And so they’ll continue to do so. It’s
not that they don’t know the asset’s being exploited. It’s that if they wait and try
to delay it’ll just be exploited by somebody else. The large issue here is there’s a lack of
excludability. The ranchers have no way of stopping others from adding cattle to the
pasture. In his piece, Garret Hardin suggested two main ways to go about solving the tragedy
of the commons. The first is through privatization or private ownership. The second is through
public ownership or government ownership. So whenever we have public ownership, one
of the benefits is that we still all share the collective rights of this asset. This
is one of the reasons why we have the National Park System: to protect natural open space
at Yosemite and the beauty of Yellowstone and things of that nature. But one of the problems of public ownership
is the decision makers don’t bear the cost of their actions nor do they receive additional
value from any good decisions they make. For instance, imagine if you’re a park ranger
and you find some innovative way to reduce large forest fires that adds value to the
park itself. You don’t receive the direct benefit of the decisions. You and your staff
are not going to receive large pay raises or are not going to receive the large stream
of value that comes from that decision. However, private ownership does solve this problem.
With private ownership, the decision maker bears the direct costs of their actions, and
so for any poor decision they’re going to bear the cost of. But any positive, innovative
decision, they’ll receive the benefits. So if you were a ranger or a park owner who’d
found this innovative way to solve the problem with forest fires, then you would receive
the stream of value from that good decision. There’s not a silver bullet to the problem
of open-access resources. There’s not a one size fits all strategy. But we do know
that limiting access and ensuring that decision makers bear the cost of their actions allows
us to address key concerns with open-access resource problems.

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