Common pool resources

What Are Common Pool Resources?

Common pool resources (CPRs) are a type of good that is difficult to exclude users from, yet their use by one person diminishes the availability for others. This characteristic places them within the broader field of Resource economics, which studies how society manages and allocates natural resources. Unlike private goods, which are both excludable and rivalrous, common pool resources present unique challenges for governance and sustainability. Think of a common pool resource as a shared well: anyone can draw water, but if too many do, the water level drops for everyone. This inherent rivalry, coupled with the difficulty of exclusion, often leads to dilemmas in their management.

History and Origin

The concept of common pool resources gained significant academic attention with the essay "The Tragedy of the Commons" by Garrett Hardin in 1968, which posited that individuals acting in their own self-interest would inevitably deplete shared resources. Hardin argued that without external regulation or privatization, common resources would be overexploited.

However, groundbreaking work by political economist Elinor Ostrom challenged this conventional wisdom. Ostrom's extensive research, for which she was awarded the Nobel Memorial Prize in Economic Sciences in 2009, demonstrated that many communities around the world have successfully managed common pool resources for centuries without external intervention³. Her studies revealed that local users often develop complex, self-organizing institutional arrangements and rules for managing shared resources effectively. Ostrom's work highlighted that human societies are capable of collective action to overcome the "tragedy of the commons" by establishing clear boundaries, monitoring use, and implementing graduated sanctions for rule-breakers.

Key Takeaways

• Common pool resources are characterized by high subtractability (rivalry in consumption) and low excludability.
• Examples include fisheries, forests, irrigation systems, and groundwater basins.
• Effective management often requires community-devised rules and local governance structures.
• Overexploitation, known as the "tragedy of the commons," is a significant risk due to the inherent incentives for individual users to maximize their own consumption.
• Sustainable management strategies typically focus on balancing individual needs with the long-term health of the resource.

Interpreting Common Pool Resources

Interpreting common pool resources involves understanding the interplay between the physical characteristics of the resource and the social and institutional rules governing its use. Because these resources are rivalrous, meaning one person's use reduces the amount available for others, managing them effectively is crucial to prevent depletion. The challenge lies in devising appropriate rules for access and use, as well as enforcing them. Successful management often involves establishing clear property rights, even if these rights are communal rather than individual. The interpretation of a common pool resource's health depends on monitoring its availability, the rate of consumption, and the effectiveness of existing decision-making processes among users.

Hypothetical Example

Consider a small, remote village that relies on a single communal well for its fresh water supply. This well is a common pool resource. Each household needs water for drinking, cooking, and sanitation.

• Initial State: The well provides ample water for all 50 households, even during dry seasons. There are no formal rules, and villagers draw water as needed.
• Growing Population: The village population grows, and 20 new households arrive. Now, 70 households are drawing water.
• Resource Strain: During a prolonged dry spell, the well's water level begins to drop noticeably. Some households start drawing excessive amounts, fearing the well will run dry, further exacerbating the scarcity.
• Collective Action: Recognizing the impending crisis, the village elders convene a meeting. They propose a system: each household is allocated a specific daily quota of water, and a schedule is established for when each household can draw water to allow the well to replenish. A village committee is formed to monitor compliance and address disputes.
• Outcome: By implementing these self-imposed rules for resource management and ensuring collective adherence, the village prevents the well from running dry, maintaining the water supply for everyone. This demonstrates how shared responsibility can lead to sustainable outcomes for common pool resources.

Practical Applications

Common pool resources are ubiquitous in various aspects of life and are critical components of the global economic system. Their effective management is vital for environmental health and economic stability.

• Fisheries: Ocean fisheries are classic common pool resources. Fish stocks are finite, and one fisher's catch reduces the availability for others. Agencies like the U.S. National Oceanic and Atmospheric Administration (NOAA) Fisheries manage these resources through quotas, season limits, and gear restrictions to prevent overfishing and ensure long-term productivity².
• Water Resources: Groundwater basins and shared rivers serve as common pool resources, where excessive withdrawal by one user (e.g., for agriculture or industry) can lower water tables or reduce river flow for others. The U.S. Geological Survey (USGS) conducts extensive research and monitoring to assess water availability and support informed management decisions¹.
• Atmosphere: The Earth's atmosphere, acting as a sink for greenhouse gases, is increasingly recognized as a global common pool resource. Emissions from one country contribute to climate change for all. International agreements, such as those under the United Nations Framework Convention on Climate Change (UNFCCC), aim to coordinate efforts to manage this shared resource https://unfccc.int/.
• Forests and Grazing Lands: Historically, communal forests and pastures have been managed by local communities through traditional rules to ensure sustainable harvesting of timber or grazing for livestock.

Limitations and Criticisms

Despite the potential for self-governance, managing common pool resources is not without challenges. One primary criticism, as highlighted by Hardin's "Tragedy of the Commons," is the inherent vulnerability to externalities and potential overexploitation when clear rules or effective enforcement mechanisms are absent. Even with established frameworks, factors like rapid population growth, technological advancements (e.g., more efficient fishing vessels), or external economic pressures can disrupt existing resource management systems, leading to unsustainable practices.

Furthermore, implementing equitable and efficient management schemes for common pool resources can be complex. Determining fair allocations, monitoring compliance, and resolving conflicts can be costly and contentious, particularly for very large or globally shared resources like the atmosphere. While Elinor Ostrom's work provided optimistic insights into self-organization, she also emphasized that there is no "one-size-fits-all" solution, and successful common pool resource management requires adaptive governance structures tailored to specific local conditions. Failures in management can lead to the degradation or collapse of the resource, resulting in significant economic and social consequences.

Common Pool Resources vs. Public Goods

Common pool resources are often confused with public goods, but a key distinction lies in their rivalry. Both are non-excludable, meaning it is difficult to prevent individuals from using them. However, common pool resources are rivalrous (or subtractable), while public goods are non-rivalrous.

• Common Pool Resources: One person's consumption diminishes the availability for others. For example, when one person catches a fish from a communal fishery, there is one less fish for others.
• Public Goods: One person's consumption does not diminish the availability for others. A classic example is national defense; one person benefiting from national defense does not reduce the benefit for another. Similarly, a public radio broadcast can be enjoyed by many listeners simultaneously without diminishing the experience for anyone else.

This difference in rivalry means common pool resources face the risk of depletion through overuse, while public goods face the challenge of under-provision due to the "free-rider problem." Both types of goods represent instances of market failure, where free markets alone may not lead to optimal outcomes.

FAQs

What is the primary characteristic of a common pool resource?

The primary characteristic is that it is non-excludable, meaning it's difficult to prevent people from using it, and rivalrous, meaning one person's use reduces the amount available for others.

Can human-made resources be common pool resources?

Yes, common pool resources can be human-made. Examples include irrigation systems built by a community or a shared intellectual property pool where access is open but use can diminish the value if not managed.

Why are common pool resources prone to overexploitation?

They are prone to overexploitation because, while access is generally open, the resource itself is finite. Without clear rules or effective cost-benefit analysis by users, individuals have an incentives to consume as much as possible before others do, leading to depletion.

Who is Elinor Ostrom and what was her contribution to common pool resources?

Elinor Ostrom was a political economist who won the Nobel Memorial Prize in Economic Sciences for her work demonstrating that communities can successfully manage common pool resources through self-organization and the development of local institutional rules, challenging the traditional "tragedy of the commons" theory.