Managing resources in the global commons.

This paper addresses a series of fundamental issues relating to the governance of common-pool resources at multiple scales. Perhaps the most important question is whether the "tragedy of the commons," as first articulated in Hardin's 1968 Science article, is inevitable. For many policy analysts

the answer to that question is usually "no." Avoiding the tragedy, however, is contingent on "their" policy prescription being adopted. The range of preferred approaches includes government ownership or private property. Some scholars will recommend community property. In the main, simple solutions are posed for complex problems. "One best way" is proposed by many analysts to a wide variety of problems.

Ecological diversity is something that many of us feel strongly should be protected. There is considerable interest in preserving biodiversity as one form of global commons. On the other hand, a frequent way of maintaining ecological diversity has been to reduce or eliminate institutional diversity at a variety of scales including indigenous local institutions as well as institutions at other scales. I would argue that we need as serious attention to the problem of understanding institutional diversity as we do understanding ecological diversity. We need to build on that understanding rather than presume that there is a single, best way.

At the current time, a large gap exists between policy recommendations about the commons and findings from empirical research. Underlying contemporary policy recommendations are three basic assumptions. One of the basic assumptions has to do with individuals using resources, e.g., fishermen, grazers, irrigators, farmers, users of the radio spectrum, and those of us who send smoke into the air, etc. All of these users are appropriating from a resource. We will use the term "appropriator" as the general, technical term for users or harvesters.

A common assumption is that appropriators are trapped in tragic overuse of most resources. Thus, whatever the solutions to overuse are, they must come from the outside. This perception is based on a series of assumptions. This first one emerges from training in economics--which offers a narrow model of the individual that is useful for many purposes. When it is applied as a general theory, however, it leads to a presumption that all appropriators are norm-free, short-term maximizers of selfish gains. In the same policy analyses, government officials are assumed to be people who maximize the public interest. Do public officials have different genes? How come individuals are narrow and selfish and government officials seek out the public interest? We need to reflect on how we arrived at these two disparate assumptions.

Secondly, there is a shared belief that it is feasible to design optimal rules by modelling and analysis. Models are useful, but it is unlikely, if not impossible, that one can get to optimality for a complex system through modelling. The third assumption that is frequently made is that to be organized you have to have a central direction. Unless the policy analysis finds a single central authority, an assumption that organization is lacking is made.

These three basic assumptions underlie a good deal of our current policy thinking. I will argue that all three are incorrect. All three are a poor foundation for public policy. The management and governance of the commons at multiple scales is a cogent example of how these assumptions are in error.

What are Common-Pool Resources?

Common-pool resources generate limited amounts of resource units that can be fish, mushrooms, timber, water. A variety of resources exist that have a finite stock at any particular time. One person's use subtracts from the corpus or stock. Thus subtractibility is a core concept in defining a common-pool resource. Secondly, it is difficult to exclude individuals who might benefit from using common-pool resources. A common-pool resource is similar to a public good in terms of non-excludability and free riding, but it differs from a public good in terms of the subtractibility of the resource unit (see Ostrom, Gardner, and Walker, 1994). Knowledge is a public good. For example, if I use Einstein's equations, all of you can use them at the same time. But when I use water, no one else can use the water I have just used.

When resource units--such as water, fish, or trees--are highly valued and many actors benefit from using them, appropriations made by one individual tend to create negative externalities or negative costs that are not taken into account. Subtractibility can thereby lead to negative externalities from use. All analysts agree that an unregulated, open access common-pool resource that generates highly valued products is likely to be overused if not destroyed.

When we conduct field research, we find that in many instances appropriators are far from helpless and have designed their own rules (Ostrom, 1990; Gibson, McKean and Ostrom, 2000). Many such local rule systems work very well. The harvesting of Maine lobsters, for example, is an inshore fishery that has evolved over time and is highly successful (see Acheson, 2003). Farmer-managed irrigation systems in many parts of the world frequently outperform very expensive government projects (Lain, 1998; Tang, 1992; Shivakoti and Ostrom, 2002). In southern California, there are some ingenious local groundwater basin institutions that were designed largely by participants (Blomquist, 1992).

These self-organized systems are not, however, a panacea. Local systems can also fail. We have also found that government ownership of large tracts of resources have frequently failed in the process of implementation (Bromley et al., 1992). Those of us who have studied in India and Nepal have watched places that had a high level of stewardship succumb to overuse after government ownership was declared (Agrawal and Ostrom, 2001). Privatization has worked well in some settings and failed in others (see National Research Council, 2002).

Complementing field research, laboratory-based experiments have been conducted in an attempt to test how individuals react when faced with the simulated management of common-pool resources. When we put people in a lab and give them a common-pool resource problem, where they cannot communicate among themselves and make independent and anonymous decisions, the result is resource overuse (Ostrom, Gardner, and Walker, 1994). However, when the experiment allows people to talk with one another repeatedly without being able to make third-party commitments, overharvesting is reduced substantially. Further, we find subjects willing to pay fees to fine someone else (Ostrom, Walker, and Gardner, 1992). In other words, individuals are willing to sanction others at a cost to themselves. When subjects are able to make their own rules about withdrawals and whether or not they will use punishment and how much, they move toward a withdrawal system in the lab that is very close to optimal. They rarely need to punish one another; but appear to do so when needed. So being able to design their own rules makes an immense difference.

There are a number of changes we need to make in the basic theoretical assumptions that we make as researchers and policy analysts. We need to assume boundedly rational individuals rather than individuals with full information. We need to assume that humans can learn social rules. Not that everybody does; but there is a capability that we possess to learn rules of how to interact with others. And we need to understand that humans can develop reciprocity as a key norm supported by trust and reputation. "You know me, I know you, we've worked together with one another or through others, over some time. I trust you to be cooperative. You trust me. If you don't come through, I'll be mad as anything. And similarly if I rink on you, you'll be mad as well" (Ostrom and Walker, 2003). This approach embeds us in a system that is quite different than anonymous, autonomous individuals with narrow and immediate interests (Ostrom, 1998).

We also need to understand how rules are tools. Rules are artefacts for improving trust and reciprocity. When rules are imposed from the outside, however, without people understanding why, when, and how, they rarely work well. We also need to understand that a large number of public and private agencies may interact as polycentric systems of governance and learn how to recognize the strengths and weaknesses of polycentric systems (McGinnis, 1999a, 1999b, 2000).

Factors Affecting the Likelihood of Successful Self-Organization to Manage Local Common-Pool Resources

We now have a large number of empirical studies on factors associated with managing resources (National Research Council, 2002; Dolsak and Ostrom, 2003). We are beginning to get some real consensus. This consensus focuses on what attributes of the resource itself and attributes of the appropriators increase the likelihood that people will organize their own rules (see Poteete and Ostrom, 2003, for an overview). There are four specific attributes of the resource associated with successful self-organization.

Feasible improvement: Resource units are not at a point of deterioration such that it is useless to organize or so underutilized that there is little advantage from organizing.

It usually is the case that you don't find people getting anxious about the improvement of a resource if it is not at risk. Only when a threat emerges, does the resource begin to get attention. However, if it is totally destroyed, it is useless to organize. So there is a curvilinear relationship between resource condition and the stimulus to get organized and respond.

Indicators: Reliable and valid indicators of the condition of the resource system are available at a relatively low cost.

Some resource systems generate rapid feedback about their condition that is unambiguous. Other resources, like groundwater basins, are hard to understand until you can apply modern science and conduct rigorous studies of the underlying geological structure.

Predictability: The flow of resource units is relatively predictable.

It does not have to be constant; it can be curvilinear or cyclical. But when resource systems approach mathematical chaos, as some multi-species fisheries do, it is very hard to develop rules for effective management, especially if you do not have the scientific knowledge to understand the workings of a chaotic mathematical system. So relative predictability is needed.

Spatial extent: The resource system is sufficiently small, given the transportation and communication technology in use, that appropriators can develop accurate knowledge of external boundaries and internal microenvironments.

It is important to recognize that size is always related to the technology available for observation. It should be relatively easy for people to visually observe, but if you have radio and roads around the periphery of a resource, you might also be able to see its condition and manage it successfully. With the development of modern satellite technology and remote sensing, there are now resources that groups can monitor that used to be impossible for people to understand and see. The spatial constraint is therefore relative and a function of technology.

In addition to characteristics of the resource required for effective self-governance, there are at least seven prerequisite attributes of the appropriators.

Salience: Appropriators are dependant on the resource system for a major portion of their livelihood or value it highly for other purposes.

Sometimes people live right next to a resource, yet they never use it, they never look at it, and it is not valuable to them. When this is the case, one cannot expect self-organization to occur. However, for many people in the developing world, local resources are a major part of their subsistence.

Common understanding: Appropriators have a shared image of how the resource system operates and how their actions affect each other and the system.

It is difficult to fashion a set of rules that will work if you all view the system differently. Prior to geologic studies, for example, people literally disagreed on where the boundaries lay for many groundwater basins. If you are arguing about who is in and who is out of each basin, it is hard to come up with a set of rules that helps you manage a resource.

Discount rate: Appropriators use a low discount rate in relation to future benefits to be achieved from the resource.

Appropriators who use a low discount rate, who see a long time into the future as being relevant, are more likely to organize for the future.

Distribution of interests: Appropriators with higher economic and political assets are adversely affected by a lack of coordinated patterns of appropriation and use.

This is a complex issue. There are very few resources where everyone is homogeneous. For example, there are people at both the head-end and tail-end of an irrigation system. There are people who have large or small land holdings. If there is a substantial difference in the economic interest, and if the people who do have greater economic and political assets are those who are interested in the long-term sustainability of the resource, the likelihood of self-organization is higher. There are settings, however, where it is much more difficult for those with few assets to organize if the economically and politically powerful want to use up the resource and go onto the next.

Trust: Appropriators trust one another to keep promises and relate to one another with reciprocity.

One of the key factors in the evolution of rules, especially when it is necessary to cut back on resource use, is that participants trust others to follow the agreed-upon rules.

Autonomy: Appropriators are able to determine access and harvesting rules without external authorities countermanding them.

This capacity emerges in two different ways. In North America--at least in the U.S. and Canada, and now more and more in Mexico--we have the right to self-organize. In many countries, especially those under Roman law, the capacity to self-organize at the local level is not supported by the legal system. Only those appropriators who live in remote places have the "autonomy" to manage their own resources. They are far enough away from the capital that they exert autonomy even without legal authority.

Prior organizational experience: Appropriators have learned at least minimal skills of organization through participation in other local associations or learning about ways that neighboring groups have organized.

The last attribute of appropriators that makes a difference is the existence of prior organizational experience, i.e., individuals in the community who have "know-how" in terms of what it takes to mobilize people, have productive discussions, and create rules.

It is important to note that the attributes of the resource and appropriators do affect one another. What is most important is that they affect the benefits and costs of institutional change. The challenge is how to get to a situation where the costs of organizing are lower than the benefits for those who are going to be making the key decisions about new rules. Costs are higher when the resource is very large or the boundaries are difficult to identify or demarcate; when the resource is unpredictable; when there is no trust or reciprocity; and when people have no prior experience with self-organization. Benefits are higher when the resource stock and flow are economically valuable; when people are dependent on the resource; and have a low discount rate.

In conducting analysis, both participants and observers need to recognize that if people perceive immediate costs that are higher than benefits over time, resource overuse will continue. It is not a panacea just to say "go local" if people do not see a long-term benefit-cost calculus that is weighted towards benefits. They will not organize and the tragedy of the commons will not be overcome.

In addition, small is not beautiful all by itself. Larger regimes can be important for three reasons: (1) Provincial Departments of Natural Resources in Canada, the U.S. Geological Survey, or other large units are extraordinarily important for the provision of accurate third-person information; (2) larger regimes can provide arenas in which participants can engage in discovery, debate, and conflict resolution; and (3) larger regimes can provide mechanisms for backing up local monitoring and sanctioning. These are all critical factors.

We have found cases of successful external interventions--some of which are donor-funded, some of which are Provincial level, some of which are National level--but all of which tend to respect the temporal and spatial considerations of local users. They involve locals in the physical design of new infrastructure, drawing on their local knowledge to build physical capital. They utilize existing social capital by involving locals in the design of rules based on indigenous culture. And they frequently provide funds for the purchase of materials that enhance local material and resources. But they still require the users themselves to contribute time, effort, and resources--they don't just buy everybody off. They take time to develop and they teach long-term skills rather than short-term fixes.

Can We Scale Up?

A fundamental question is whether lessons derived from successful self-organized systems--such as farmer-managed irrigation, community forests, groundwater basins, and inshore fisheries--are transferable to large-scale, common pool-resources. I think we can say a modest "yes." Many challenges exist, however, to scaling up. The more you move closer to a global commons, the more people are involved and the higher transaction costs you encounter. National governments must get involved. They may either help or hinder the process of finding solutions. There is no guarantee that international negotiation is going to generate a treaty that is enforceable. One faces substantial cultural diversity. While many lessons can be learned from the diverse ways that different people have managed resources when they do self-organize, heterogeneous interests can also reduce the likelihood of finding shared interests.

We also face the problem that some global commons are interlinked. For example, if we want to reduce global warming by planting massive tree plantations, we reduce biodiversity. Tradeoffs exist in terms of ecological diversity and global warming that must be ad dressed. Further, we are now facing accelerated changes at the global level. Population growth is a mixed blessing as it has helped people solve problems in some regions--but in many other places has detrimental consequences. Technological growth has similar divergent effects. More effective fishing technology has had a negative impact in most places, but has led to improvements in some areas.

One of the problems we face when we move up to the global level is that unanimity is required for most international treaties. That is hard to achieve as it increases the probability of strategic holdouts. While we have all sorts of chances to learn from experiments in local commons, we have only one globe and the risks of experimentation are much greater.

In sum, we do not have clear predictions for beating the tragedy of the commons at a global level (Ostrom et al., 1999; Burger et al., 2001). The lessons that have emerged from empirical studies must be tempered with caution. One of these lessons is that not all users will be able to solve this problem by themselves, especially if efforts are not made to change one or more of the variables affecting perceived costs or benefits.

We have a lot to learn in future research and action. If we have four potentially complex variables relating to a resource and seven variables applicable to appropriators, that is eleven variables that can operate interactively and subtly. We need major research projects to study their interaction and how they are measured over time so that the growing theoretical consensus is challenged and improved. We need to understand how external authorities can enhance or impede the likelihood and performance of self-governing institutions. We also need to focus on the relative size of the expected benefits and not assume that all attributes must be favourable.

The bad news is that when users cannot communicate, don't have trust, can't build it, and don't have rules, we have to expect the tragedy of the commons to occur. The partially good news is that when users can engage in face-to-face discussion--through representatives or directly--and, they have the autonomy to change some of their own rules, they may be able to organize and overcome the tragedy. Whether they can do so or not depends on the attributes of the system itself and the relevant larger political regime. The long-term success of such a self-organized system depends on whether the institutions they design are consistent with principles underlying robust, long-living, self-governed systems.

The theory of collective action applied to the commons has advanced substantially in the last three decades. But given the number and complexity of the variables involved, there is much work for us to do. Researchers need to undertake more case studies and in-depth, qualitative hard work to understand the complex interactions of variables in the field. We need to improve our dynamic theoretical analysis. We also need to conduct large-N studies where we can't go in and do in-depth case studies. We need to perform more experiments to examine very focused questions that you can't look at in the field. And we need to study dynamic systems as they evolve. All of these pose a major intellectual challenge.

Policymakers need to be active as well. They need to move toward the development of legal environments that enable users to take more responsibility, instead of taking it away. They need sources of accurate information about resource conditions. They need, at the policy level, fair, low-cost courts and other conflict-resolution mechanisms. They need to develop programs where users can derive tangible benefits in a relatively short time span. And when moving to the global level, they need to search out ways of finding mutual interests across national boundaries--despite the challenges this entails.

Resource appropriators also have tasks to confront. Creating associations that enable resource appropriators to share information is a critical step. Appropriators must search for ways to increase the benefits of working together instead of focusing on conflict. They must find ways to reduce the costs they face. Most important, they need to draw on their cultural endowments and knowledge of local resources to find innovative institutions that fit local conditions.

All participants--researchers, policymakers, and resource appropriators--can and must contribute to this major challenge if we are to ultimately succeed in overcoming the tragedy of the commons.

REFERENCES

Acheson, James (2003) Capturing the Commons: Devising Institutions to Manage the Maine Lobster Industry. Hanover, NH: University Press of New England.

Agrawal, Arun, and Elinor Ostrom (2001) "Collective Action, Property Rights, and Decentralization in Resource Use in India and Nepal." Politics & Society 29(4) (December): 485-514

Blomquist, William (1992) Dividing the Waters." Governing Groundwater in Southern California. San Francisco, CA: ICS Press.

Bromley, Daniel W., David Feeny, Margaret McKean, Pauline Peters, Jere Gilles, Ronald Oakerson, C. Ford Runge, and James Thomson, eds. (1992) Making the Commons Work: Theory, Practice, and Policy. San Francisco, CA: ICS Press.

Burger, Joanna, Elinor Ostrom, Richard Norgaard, David Policansky, and Bernard Goldstein, eds. (2001) Protecting the Commons: A Framework for Resource Management in the Americas. Washington, D.C.: Island Press.

Dolsak, Nives, and Elinor Ostrom, eds. (2003) The Commons in the New Millennium: Challenges and Adaptations. Cambridge, MA: MIT Press.

Gibson, Clark, Margaret McKean, and Elinor Ostrom, eds. (2000) People and Forests : Communities, Institutions, and Governance. Cambridge, MA: MIT Press.

Hardin, Garrett (1968) "The Tragedy of the Commons." Science 162 (Dec.): 1243-48.

Lam, Wai Fung (1998) Governing Irrigation Systems in Nepal." Institutions, Infrastructure, and Collective Action. Oakland, CA: ICS Press.

McGinnis, Michael, ed. (1999a) Polycentric Governance and Development: Readings from the Workshop in Political Theory and Policy Analysis. Ann Arbor: University of Michigan Press.

McGinnis, Michael, ed. (1999b) Polycentricity and Local Public Economies." Readings from the Workshop in Political Theory and Policy Analysis. Ann Arbor: University of Michigan Press.

McGinnis, Michael, ed. (2000) Polycentric Games and Institutions." Readings from the Workshop in Political Theory and Policy Analysis. Ann Arbor: University of Michigan Press.

National Research Council (2002) The Drama of the Commons. Edited by Elinor Ostrom, Tom Dietz, Nives Dolsak, Paul Stern, Susan Stonich, and Elke Weber. Washington, D.C.: National Academy Press.

Ostrom, Elinor (1990) Governing the Commons: The Evolution of Institutions for Collective Action. New York: Cambridge University Press.

Ostrom, Elinor (1998) "A Behavioral Approach to the Rational Choice Theory of Collective Action." American Political Science Review 92(1) (March): 1-22.

Ostrom, Elinor, Joanna Burger, Christopher Field, Richard B. Norgaard, and David Policansky (1999) "Revisiting the Commons: Local Lessons, Global Challenges." Science 284(5412) (April 9): 278-82.

Ostrom, Elinor, Roy Gardner, and James Walker (1994) Rules, Games, and Common-Pool Resources. Ann Arbor: University of Michigan Press.

Ostrom, Elinor, and James Walker, eds. (2003) Trust and Reciprocity: Interdisciplinary Lessons from Experimental Research. New York: Russell Sage Foundation.

Ostrom, Elinor, James Walker, and Roy Gardner (1992) "Covenants with and without a Sword: Self-Governance is Possible." American Political Science Review 86(2) (June): 404-17.

Poteete, Amy, and Elinor Ostrom (2003) "In Pursuit of Comparable Concepts and Data about Collective Action." CAPRi working paper no. 29. Washington, D.C.: International Food Policy Research Institute. Available at: <http://www.capri.cgiar.org/pdf/ capriwp29.pdf>.

Shivakoti, Ganesh P., and Elinor Ostrom, eds. (2002) Improving Irrigation Governance and Management in Nepal Oakland, CA: ICS Press.

Tang, Shui Yan (1992) Institutions and Collective Action." Self-Governance in Irrigation. San Francisco, CA: ICS Press.

Elinor Ostrom

Workshop in Political Theory and Policy Analysis

Indiana University