Common Pool Resources Flashcards
What are common pool resources?
How are they different from public goods?
Common pool resources are goods/resources that benefit a group/s of people, but provide diminished benefits to everyone if each individual pursues their own self-interest.
Non-excludability is a defining characteristic of common pool resources however these goods are subject to crowding out. Consumption by one individual lessens the amount of the good available to others.
What is the tragedy of the commons?
So, we have a pasture “open to all”: any herder in the
village can use it.
Each herder:
1) Receives a direct benefit from his own animals grazing on the
common.
2) Suffers the costs from the deterioration of the commons
when his & others’ cattle overgraze.
Each herder is motivated to add more & more
animals, since
he receives the direct benefit of his own animals but bears only a share of the costs from overgrazing.
What is the common-pool resources problem? (2)
1) Stock: Commonly held resources; difficult or impossible to exclude actors from using this stock.
2) Flows: Private consumption of the resource units; individual rationality leads to over-consumption.
What two related problems must be solved in order to solve the CPR problem?
1) How to coordinate the production/maintenance of the stock.
2) How to apportion the flows among the users.
What are possible solutions to the CPR problem?
Give examples.
1) The state should control common-pool resources.
e. g. The Brazilian government should have full control over the Amazon rainforest.
2) Privatisation and the assignment of property rights - how could this be done for water resources such as fishing grounds or rainforests.
What is the issue with using the state to solve the CPR problem.
Ostrom’s criticism: Assuming that an external (government) agency can determine the capacity of the common-pool resource (stock), unambiguously assign this capacity (flow), monitor actions and sanction non-compliance is asking too much from most agencies (governmental
or international.
This requires
a lot of ability & information on the part of the agency even if possible, there would be substantive costs involved.
What does Ostrom argue is the solution to the CPR problem? (2)
Ostrom argues that, rather than a single best solution, many solutions exist to cope with different problems.
1) Successful institutions are rarely either private or public - many are mixtures of “private-like” and “public-like”
institutions.
2) Other times, communal or grassroots solutions are required
i.e., self-interested participants themselves design, monitor & enforce agreements.
When do self-enforced institutional arrangements work?
List the internal (3) and external (2) factors.
Internal:
1) Communication, trust; social capital.
2) Similar interests, common fate.
3) Not too much heterogeneity:
- In power distribution: if some (powerful) individuals
stand to gain from a dysfunctional situation, a
consensual solution is less likely to arise.
- In technology: otherwise, some individuals may require
different arrangements than the rest.
External:
1) Do participants have the autonomy to change their
institutional structure, or are they constrained by external
(e.g., governmental) authorities?
2) Will the change in institutions be too fast? insufficient time
to adjust their internal structures.
What are the problems with self-enforced institutional arrangement? (3)
1) e.g., herders can over/under-estimate the carrying capacity
of the meadow.
2) Their own monitoring system may break down.
3) Getting the institutions right is a difficult, time-consuming, conflict-invoking process.
In what situations does Ostrom argue self-enforced institutional arrangements will work in solving the collective action problem? (4)
Hence, Ostrom argues that these “new” institutions
are more likely to work in situations:
1) Involving small-scale CPRs.
2) The CPRs are entirely located within one country or
community.
3) The number of individuals affected varies from 50 to 15,000.
4) These individuals are heavily dependent on the CPR for
economic returns ⇒ they are heavily motivated to try to
solve the common problem.
